House Republican tax writers on Sunday prepared to make further changes to the sweeping legislation they released last week, including tweaks that could allow upper-middle-class homeowners to deduct more mortgage interest and make more business owners eligible for a lower tax rate.
It is also still possible that a repeal of the Affordable Care Act’s central insurance mandate could be added to the bill, with House Speaker Paul D. Ryan (R-Wis.) signaling in a television interview Sunday that party leaders are still mulling over that decision.
GOP members of the House Ways and Means Committee met behind closed doors Sunday to debate changes ahead of a scheduled “markup” of the tax bill Monday. Lawmakers will debate and vote on changes to the measure during the session, which is expected to last several days.
Two people familiar with the changes — one a senior Trump administration official, the other a lobbyist briefed on the status of the legislation — said the panel is considering increasing the GOP bill’s proposed $500,000 limit on the mortgage interest deduction. That limit could increase to $750,000 or so, the lobbyist said — still short of the current $1 million limit — but enough to ease concerns from lawmakers in states with high costs of living who fear a lower limit could hit middle-class households.
Another potential change, they said, concerns the treatment of “pass-through” businesses — through which a firm’s earnings are passed to its owners to be taxed as individual income. Lawmakers are exploring how to expand eligibility for a new 25 percent rate on that income, in part to address the concerns of the National Federation of Independent Businesses, a lobbying group.
Repealing the Affordable Care Act’s individual mandate could give the tax writers room to make these or other costly changes without exceeding a $1.5 trillion limit on the total cost of the bill over the coming decade. But two GOP officials said Sunday that repealing the mandate might not generate as much revenue as lawmakers hope. Although the Congressional Budget Office estimated last year that a repeal would have a $416 billion positive deficit impact, updates to the nonpartisan scorekeeper’s model have significantly reduced that figure, they said.
Ryan suggested that a repeal of the health-care law’s individual mandate is still up for discussion, while a key New York Republican warned that he and other GOP lawmakers from highly taxed northeastern states remain opposed to the legislation.
Appearing on “Fox News Sunday,” Ryan said that repealing the individual mandate is “one of the things that’s being discussed.”
“We’re listening to our members about what we can do to add to this bill to make it even better,” he added.
Despite the research and President Trump’s pleas, House Ways and Means Committee Chairman Kevin Brady (R-Tex.) said Friday that he is unlikely to add changes to health-care policy to the tax legislation, because doing so would doom its chances in the more closely divided Senate.
Meanwhile, Rep. Peter T. King (R-N.Y.) told ABCs “This Week” that the tax plan as written would have “a particularly devastating” effect on New York, which has some of the highest local and state taxes in the country.
“As of now, I would have to” vote against the plan, King said. He warned that in his Long Island-
area swing district, “the main objection I’m getting is from Trump voters” who have voted for Democratic presidents in the past.
King was among 20 House Republicans who withheld support for a budget resolution last month that set the rules for the forthcoming tax debate. King and many of the others voted no because GOP leaders were planning to eliminate deductions for state and local taxes. In a bid to win their support, the bill introduced last week would allow taxpayers to deduct up to $10,000 in property taxes.
Rep. Tom MacArthur (R-N.J.), who also voted against the budget resolution, on Sunday called the $10,000 limit “a huge win for middle-class taxpayers even in high-tax states like mine.” Appearing on Fox News Channel’s “Sunday Morning Futures,” he added that he now plans to support the legislation.
Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, told ABC that the tax plan was “a work in progress” that would ultimately lead to long-term economic growth, despite adding $1.5 trillion to the deficit. But another conservative, Sen. James Lankford (R-Okla.), told NBC’s “Meet the Press” that he remains concerned about how much the GOP plan could add to the debt and was not a guaranteed supporter of the legislation.
“The preliminary numbers really look very good in terms of economic growth,” Meadows said, adding that growth will “outweigh any short-term deficit increase.”
The Senate Finance Committee is expected to unveil its version of a tax bill on Thursday once the Ways and Means proceedings end, according to multiple aides familiar with the plans. News reports last week suggested that the Senate’s tax plan would propose phasing in a new corporate tax rate of 20 percent over five years instead of immediately.
But in an interview on “Sunday Morning Futures,” Vice President Pence said the new corporate tax rate “has to happen immediately. And we’re going to drive and drive hard.”
Democrats, meanwhile, rejected the GOP plan. House Minority Leader Nancy Pelosi (Calif.) described the proposal as a “Ponzi scheme” and “a “gift to corporate America.”
“They spread out a banquet for the wealthiest Americans and threw some crumbs to the middle class,” Pelosi said on CNN’s “State of the Union.”
Caitlin Dewey contributed to this report.