One of the biggest tax bills in 30 years is about to see some daylight, and there is a growing sense of anticipation among both lobbyists and lawmakers.
House tax writers are set to release their draft tax-overhaul bill next week, after Congress adopts and the president signs the 2018 budget resolution they’ll need to advance the measure. And while the past year-and-a-half has been a roller-coaster for tax experts, the next few weeks will be even more intense as lawmakers reveal how they will pay for their proposal to steeply cut income taxes.
“I’d say it’s like a team getting ready to go out for the Super Bowl, and your nerves are there, your adrenaline is there, and you just want to get the pregame ceremonies over so you can get out there and start playing,” Ryan Ellis, a conservative tax lobbyist, said of the climate in the tax world.
Lawmakers, too, are anticipating that once Ways and Means Chairman Kevin Brady reveals details of the closely held tax plan, every interest in D.C. will be on full alert.
“It’s not going to be easy, and some people are going to get upset, but that’s what we were sent up here for,” Sen. John Kennedy said Tuesday about the search to pay for the tax cuts.
What big revenue-raising provisions have been made public were met with opposition, and sometimes confusion. The border-adjustment tax, a levy on imports but not exports, died earlier this year after pushback from retailers. The proposal to eliminate the deduction for state and local taxes is facing steep opposition from lawmakers in high-tax states.
After reports surfaced that lawmakers were considering limiting 401(k) contributions as a way to raise revenue, President Trump tweeted Monday that the idea was going nowhere. Brady contradicted the president in a Wednesday breakfast with reporters, saying the tax writers were “continuing discussions with the president,” leaving open the possibility that lawmakers would change the tax treatment of retirement plans.
But Ellis said that among industry groups there is a sense that the train is leaving the station, and now is the time to make sure their companies’ interests are voiced as lawmakers write the tax bill.
“People realize that there is going to be a process here—that there is going to be a House process, a Senate process,” Ellis said. “What we saw in the blueprint evolved to what we saw in the framework; what we saw in the framework has evolved to where we are now.”
Jamie Gregory, deputy chief lobbyist at the National Association of Realtors, said his organization has been working for months on the details of the tax plan, notably on making sure that the proposal to double the standard deduction doesn’t dilute the deduction for mortgage interest, a prized provision for the real estate industry. If more people choose the bigger standard deduction, they won’t itemize and use the mortgage interest deduction, and thus may be less inclined to buy a home, critics of the proposal say.
“Going forward, when the draft is finally released we’ll do some fairly quick research, we’ll run the specifics through a model that we’ve created and try to hatch some hard information on exactly what the impact of the new language will be,” Gregory said.
NAR recently placed online video ads in every Ways and Means Committee member’s district, saying the plan shouldn’t increase taxes on middle-class homeowners.
Inside the government, the effort to push the tax legislation past the finish line is ramping up as well. Trump lunched with senators Tuesday and went over broad points of the tax bill.
The current tax-overhaul framework calls for a corporate rate of 20 percent. Any higher, and some conservative lawmakers have said they won’t support the measure.
Ivanka Trump is pressing for an expanded child tax credit, holding a Capitol Hill press conference Wednesday with key Republicans such as Sen. Marco Rubio and Sen. Tim Scott, a Finance Committee member. Ivanka Trump and Scott, along with other lawmakers, are pushing for a $2,000-per-child credit, double the current amount. Scott said that they were close to achieving that goal in negotiations, but haven’t secured a deal.
“This is a dynamic process. We certainly have proposals that have the $2,000 tax credit there, but we need to get our members involved in this process, so we are looking forward to a vigorous debate,” Scott said.
The Ways and Means Committee met Tuesday and Wednesday in an effort to iron out the final details of their tax bill.
But key questions remain unanswered. For example, lawmakers still haven’t worked out a compromise with Republican members in high-tax states such as New Jersey and California, who are concerned that the proposal to eliminate the deduction for state and local taxes will hit their constituents hard. If they can’t reach a deal, it may jeopardize the upcoming House vote on the budget resolution, set for a vote Thursday.
Brady said at the breakfast, sponsored by The Christian Science Monitor, that lawmakers will likely release a compromise before they unveil the tax bill next week.
“It’s a work in progress, but I think we’re making good progress,” Brady told reporters.