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GOP sets 23 percent deduction for small businesses to save tax bill

GOP sets 23 percent deduction for small businesses to save tax bill
© Greg Nash

Senate GOP leaders have agreed to boost the deduction for pass-through businesses from 17.4 percent to 23 percent in a bid to save the teetering tax-reform bill. 

Sen. Ron JohnsonRonald (Ron) Harold JohnsonRand Paul clashes with Fauci over coronavirus origins Sunday shows preview: Coronavirus dominates as White House continues to push vaccination effort Overnight Health Care: WHO-backed Covax gets a boost from Moderna MORE (R-Wis.), who nearly derailed the legislation Thursday evening because he felt it did not do enough to help small and medium-sized businesses, announced the agreement. 

“I appreciate the Senate leadership’s willingness to work to close the gap between pass-through businesses and C corporations,” Johnson announced. 

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Johnson on Thursday initially called for increasing the deduction for pass-through businesses to 25 percent, but settled for 23 percent.

Entering a meeting of the entire Senate Republican conference on Friday morning, Johnson said he did not know how the increased deduction would be paid for. 

Johnson had proposed cutting the deduction large C corporations take for state and local taxes to raise revenue to offset a bigger tax cut for pass-through businesses. 

But Senate Republican Whip John CornynJohn CornynPolice reform talks hit familiar stumbling block CNN asks Carol Baskin to comment on loose Texas tiger Biden-McConnell cold war unlikely to end at White House MORE (R-Texas), entering the same meeting, said state and local tax deductibility for large companies would not be eliminated. 

Cornyn and Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchBottom line The Republicans' deep dive into nativism Press: Forget bipartisanship — it's dead! MORE (R-Utah) also told reporters that they felt confident they had 50 votes to pass the broader tax bill.