Senate GOP: We are unified on controversial tax policy change

Senate GOP: We are unified on controversial tax policy change
© Greg Nash

Senate Republicans say that a brewing controversy in the House on state and local tax deductions won’t be much of a problem in the upper chamber.

They point out that a test vote held earlier this year shows the Senate GOP conference is unified on changing the deductibility of state and local taxes to pay for significant reductions to individual and corporate rates.

Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellS.E. Cupp: 'The politicization of science and health safety has inarguably cost lives' Poll: Potential Sununu-Hassan matchup in N.H. a dead heat  Business groups urge lawmakers to stick with bipartisan infrastructure deal MORE (R-Ky.) is helped by the fact that there isn’t one Senate Republican who represents the nation’s largest high-tax states — California, New York, New Jersey and Illinois. 

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“I don’t think it’s going to be a problem,” said Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchDrug prices are declining amid inflation fears The national action imperative to achieve 30 by 30 Financial market transactions should not be taxed or restricted MORE (R-Utah), when asked Monday if any of his Senate colleagues are demanding that the deduction for state and local taxes remain in the law. “I don’t know anybody who’s advocating strongly for that.”

“Not on this side,” Senate Republican Whip John CornynJohn CornynSchumer feels pressure from all sides on spending strategy Data reveal big opportunity to finish the vaccine job GOP senators invite Yellen to brief them on debt ceiling expiration, inflation MORE (Texas) said Monday when pressed if anyone in his conference is opposed to eliminating the deductions.

It’s more of a problem in the House, where 35 Republicans hail from those four states, enough to defeat a tax-reform package if Democrats vote en bloc against it, as expected.

Republican leaders have rallied around eliminating deductibility for state and local taxes as a reform that would raise $1.3 trillion in revenue and help offset the cost of overhauling the tax code.

Senate Republicans voted mostly along party lines earlier this month for an amendment by Sen. Shelley Moore CapitoShelley Wellons Moore CapitoOfficials warn of cybersecurity vulnerabilities in water systems Graham, Hawley call on Judiciary Committee to hold hearing on US-Mexico border GOP senators urge Biden to keep Trump-era border restrictions MORE (R-W.Va.) to the budget resolution favoring the elimination of the tax break and using the money saved to “provide tax relief to the middle class.”

Only conservative Sen. Rand PaulRandal (Rand) Howard PaulWriter: Fauci, Paul clash shouldn't distract from probe into COVID-19 origins S.E. Cupp: 'The politicization of science and health safety has inarguably cost lives' Trust in Fauci, federal health agencies strong: poll MORE (R-Ky.), who regularly differs with his party leadership, voted no.

The Senate also voted during the budget debate against an amendment sponsored by Democratic Sen. Maria CantwellMaria Elaine CantwellCongress must act now to pass a bipartisan federal privacy law Democrats introduce equal pay legislation for US national team athletes Heat wave sparks historically unseasonable wildfires in West MORE (Wash.) that would have established a higher procedural hurdle for changing or scrapping the state and local tax deduction.

Every single Republican senator voted against the Cantwell amendment. 

A senior Senate Republican aide said GOP moderates in the upper chamber are more concerned about making sure their colleagues are willing to make hard choices about ending deductions and tax credits that can be used to keep the cost of the bill in check.

“We have our own problems,” the aide said.

Sen. Susan CollinsSusan Margaret CollinsTransit funding, broadband holding up infrastructure deal The Hill's Morning Report - Infrastructure vote fails; partisan feud erupts over Jan. 6 panel Senate falling behind on infrastructure MORE (R-Maine), a key moderate, on Monday told Bloomberg News that she does not support repealing the tax on large estates or cutting taxes for millionaires.

Senate Republicans control 52 seats and cannot afford any more than two defections, as Vice President Pence would break a 50-50 tie. 

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyTop Democrat offers bill to overhaul tax break for business owners What you need to know about the new monthly child tax credit payments On The Money: Biden fires head of Social Security Administration | IRS scandals haunt Biden push for more funding MORE (R-Texas) told reporters last week that he expects the Senate to accept whatever deal House Republicans strike on state and local taxes.

“My discussions with Chairman Hatch are pretty regular, and he’s fully aware that this is an important issue for our House members and that we are taking the lead to find a solution,” Brady told reporters. “I’m confident that will be honored.”

A group of House Republicans from New York and New Jersey voted against the budget last week in an effort to send a message that the state and local tax deduction can’t be fully repealed. The resolution, however, passed despite their concerns.


Even so, Brady has modified the bill to keep opposition from growing.

He pledged in a statement over the weekend to include language in the tax package that would allow people to take deductions for property taxes.

“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” he said.

It’s not much of an issue in the Senate, where moderate Republicans such as Sen. Bob CorkerRobert (Bob) Phillips CorkerCheney set to be face of anti-Trump GOP How leaving Afghanistan cancels our post-9/11 use of force The unflappable Liz Cheney: Why Trump Republicans have struggled to crush her  MORE (R-Tenn.) are more concerned about how much the tax package will add to future deficits.

Grover Norquist, president of Americans for Tax Reform, said he’s not aware of any significant Senate GOP opposition to eliminating the so-called SALT deduction.

He argues that it would affect relatively few people, as many Americans would stop itemizing their tax deductions and instead take advantage of the doubling of the standard deduction — a core component of President Trump’s plan.

Many wealthy taxpayers already cannot deduct state and local taxes because their incomes exceed the threshold set by the alternative minimum tax, which would be scrapped by the GOP plan.

“In the Senate, I don’t see it” as a problem, Norquist said in an interview. “It’s not a very defensible tax credit. It’s a subsidy for big government.”

He contends the deduction favors states with big governments that need to be funded with heavier tax burdens and that taxpayers in states with lower taxes such as Texas have to pay comparatively more in federal taxes.

“I thought it would be a bigger deal than it appears to be,” he said.

Senate Republicans are waiting for the House Ways and Means Committee to unveil its package later this week, but they are coalescing around a plan that would only keep intact deductions for charitable contributions, home mortgage interest payments and complex medical expenses.

“The proposal on the Senate side is going to be to double the standard deduction, keep the mortgage interest deduction, the charitable deduction and for some complex medical issues,” Cornyn said Monday. “That’s sort of the current discussion.”