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Not on Same Page, House GOP Stalls Release of Tax Bill

House Republicans will delay releasing its tax bill until Thursday amid frustration from members.
Image: Kevin Brady
House Ways and Means Committee Chairman Kevin Brady, R-Texas, in Washington on Oct. 26.J. Scott Applewhite / AP

WASHINGTON — House Republicans will delay releasing their tax bill until Thursday, it was announced Tuesday night.

The bill had originally been scheduled to be unveiled Wednesday. But speculation over a delay was rampant on Capitol Hill on Tuesday night, with representatives of House leaders pointing to the Ways and Means Committee for any final decision or announcement.

"In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday," said Kevin Brady, R-Texas, the committee's chairman. "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."

Republican members privately aired their frustration with a process that they feel cut out of, and some issues were still unresolved hours before the bill had been slated for release.

A White House source confirmed that it had been made aware of the delay.

Republicans of all stripes believe that tax reform is do-or-die and that their majorities in the House and the Senate are at stake if they can't push it through. But the behind-closed-doors, late-night jockeying and lack of information for members who will have to vote on the plan are reminiscent of the health care debacle earlier this year.

A source familiar with the plans pointed to outside groups as the source of the trouble. House Speaker Paul Ryan, R-Wis., met with conservative stakeholders Tuesday afternoon after he spoke with President Donald Trump. They emerged from the meeting with details of the tax plan that some members of the committee had yet to receive.

Ryan's office said Tuesday's meeting with outside groups didn't directly affect the delay of the announcement.

"The meeting had no bearing on timing. It was a conceptual discussion of ideas included in the previously released framework, including issues that the Ways and Means Committee will need to decide," spokeswoman AshLee Strong said. "He was not pitching a plan. Decisions on those details will be coming from the committee."

The heart of the issue: whether the plan can meet the $1.5 trillion spending limit set by the budget and whether the cut will be distributed across the middle class. So-called distribution tables that outline the benefits for the wealth versus the middle class will be closely watched.

Republicans are under political pressure to make sure it's viewed as a broad middle-class tax cut and not a package of tax breaks for wealthy Americans.

A confident-sounding Ryan told a group of conservatives during a meeting Tuesday afternoon that lawmakers are close to a deal but that the remaining issue revolved around the state and local tax deduction, a prize issue for blue-state Republicans who are fiercely protective of the deduction.

Heading into Tuesday, the compromise on the table was to allow taxpayers from high-tax states, such as New York, New Jersey and California, to continue deducting their property taxes from their federal tax bills. But the state and local tax deduction, which allows taxpayers to deduct their local taxes from their federal tax bills, would be eliminated.

Ryan told the conservatives that the agreement wasn't set in stone and that there were additional meetings with New York and New Jersey Republicans into the evening.

The conservative source was skeptical, however, of Ryan's optimism. The conservative leader wondered whether Ryan was holding back and whether negotiations were further away from a final product than Ryan was letting on.

Eliminating the state and local tax would bring in $1.3 trillion of much-needed revenue to pay for large corporate tax cuts.

Ryan told the group that he was committed to a corporate tax rate of 20 percent — down from the current 35 percent rate — and that it wouldn't be phased in, the source said. The idea was being considered because tax writers are desperately looking for revenue. Trump has said he wants the rate at 20 percent, and members of the conservative House Freedom Caucus would likely withdraw their support if it was phased in.

Ryan also told the group that the highest tax bracket of 39.6 percent would remain in place for income thresholds between $750,000 to $950,000 a year. Ryan wanted to keep it below $1 million so it wouldn't be labeled a "millionaires' tax," the source said.

To that end, 401(k) retirement plans are likely to remain untouched, multiple sources said Tuesday, or the pre-tax contribution limit could be increased, at the president’s request.

Ryan told the conservatives who attended the meeting that he wouldn't give in to home builders and that the home mortgage deduction would be kept instead of implementing a tax credit, which would be a bigger tax break for more people.