Republicans Delayed Tax Reform. Here’s Where They Disagree

5 minute read

The release of the long-awaited Republican tax bill was pushed back a day as lawmakers hash out the final details of the plan. On Tuesday evening, hours before the bill was originally slated for release, House Ways and Means Chairman Kevin Brady said in a statement that the tax writing group is making progress but still working.

“In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday,” the statement read. “We are pleased with the progress we are making and we remain on schedule to take action and approve a bill at our Committee beginning next week.”

The tax-writing group has kept a tight lid on the particulars ahead of the full release, but broad outlines of the plan have been clear since late September when the White House and leaders in Congress released their “unified framework.” Republicans made clear they wanted to nearly double the standard deduction for both single and married filers, restructure income tax brackets, increase the child tax credit, repeal the estate tax and eliminate most itemized deductions.

A procedural rule will allow Republicans to move their proposed $1.5 trillion tax cut through Congress and to the President without support from Democrats, but the lead up to the bill’s release has exposed fissures within the GOP.

“I’m anxious to see the House bill,” Sen. Sen. John Kennedy of Louisiana told reporters on Tuesday. “I want to see the product of the House’s hard work and I fully expect once it’s released that all hell’s going to break loose. And if it doesn’t, then we haven’t done our job.”

Last week, 20 House Republicans voted against the budget that paves the way for the tax bill’s passage because of a proposal to end a deduction for state and local taxes, which is heavily utilized by constituents in high-tax states like New York and New Jersey. In an effort to bring them on board with the bill, the plan would permit property-tax deductions, but cut deductions for state and local income tax.

“Our lawmakers in those high tax states really believe their families are being punished most by property taxes,” Brady said in an interview with radio host Hugh Hewitt on Tuesday. “This property tax relief is really conditioned on members of Congress from high tax states who want to see that restored to the code.”

There has also been some disagreement on how to tax retirement funds. Republicans have floated cutting the amount of pre-tax money individuals can contribute to 401(k) plans to $2,400 down from $18,000 for workers under 50 and $24,000 for workers aged 50+. The cut has been put forward as a way to earn back some of the revenue that the government would lose as a result of tax cuts. President Donald Trump has rejected such a change, tweeting there will be ” NO change to your 401(k),” on Oct. 23. ” This has always been a great and popular middle class tax break that works, and it stays!” he said. Trump is also pushing an aggressive timeline for the bill, telling reporters Tuesday he wants to sign something by Christmas.

On Wednesday, Trump weighed in on Twitter again suggesting that the House and Senate should consider adding a repeal of the individual Obamacare mandate into the bill ahead of its release.

“Wouldn’t it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts for the Middle Class,” Trump said in a pair of tweets. “The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER.” Brady has said that likely will not happen. “What I don’t want to do is to add things that could again kill tax reform like health care died over there,” he told Hugh Hewitt.

After a meeting between Speaker Paul Ryan and a group of conservatives on Tuesday, an attendee told TIME that Republicans had agreed to drop the corporate tax rate to 20% from 35% and nix a plan to drop the top-tax bracket from 39.6% to 35%, though it wasn’t yet clear how the income threshold for that tax bracket would change. FreedomWorks president Adam Brandon said he felt there were things that still needed to be worked out, mainly on the state and local tax deduction, but he remains optimistic.

“We’re in a position we haven’t been in an while,” he said. “There’s a positive momentum building.”

In the meantime, Democrats have pounced on the bill — particularly the state and local tax changes, the 401(k) proposal, and the proposed elimination of the estate tax — in their efforts to paint the Republican’s plan as tax cuts for the wealthy. Minority Leader Chuck Schumer said Tuesday that once the bill is released the GOP will “ essentially be initiating open warfare on the middle class.”

“They should scrap the emerging framework once and for all. If this bill fails, if they withdraw it, we’re going to work with them on a good bill that benefits the middle class,” he said.

Sen. Ron Wyden, a Democrat from Oregon who serves as the ranking member of the Senate Finance Committee, told TIME the middle class is getting shorted as the GOP looks to pay for its plan.

“Their problem is they made $4 trillion worth of pledges to the super donors, the folks at the top,” he said. “They essentially have no pay-fors and now their looking at using the middle class as a pay-for.”

More Must-Reads From TIME

Contact us at