GOP chairman: Deduction compromise to be announced before tax bill

GOP chairman: Deduction compromise to be announced before tax bill
© Greg Nash

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyOn The Trail: Retirements offer window into House Democratic mood Members of Congress not running for reelection in 2022 Trump war with GOP seeps into midterms MORE (R-Texas) said Wednesday he anticipates announcing a compromise on the state and local tax deduction before a bill rewriting the code is unveiled next week.

“I expect before the bill is laid out next week that the solution will be announced,” Brady said at a Christian Science Monitor breakfast. “It’s a work in progress, but I think we’re making good progress.”

Congressional GOP leaders and the White House proposed eliminating the state and local deduction in a tax-reform framework they released last month. Doing so would help to raise revenue to pay for lower tax rates.


But the proposal has raised significant concerns from Republican House members in high-tax states such as New York, New Jersey, California and Illinois. Brady and other House GOP leaders have been meeting with the blue-state Republicans to try to find a compromise on the deduction.

Brady didn’t say what the compromise would be but hinted that it might focus on the ability of taxpayers to deduct their property taxes. The current state and local deduction allows people to deduct their property taxes as well as either their state and local income taxes or sales taxes.

“We think there is a way forward to help [blue-state lawmakers] with some of those local taxes, especially in the area of property taxes, so that’s where we’re having very good discussions with those lawmakers.”

Brady later said that he thinks the combination of setting the income levels for tax brackets in the right spots, expanding the child tax credit and addressing property taxes will ensure that Americans are better off, “even in those high-tax states.”

Companies can deduct their state and local taxes as a business expense, and Brady said that businesses will continue to be able to do so. Brady said the deduction is a “tiny part of business expenses” but a major part of the tax system for families.