Sparring Over SALT in Trump Tax Bill Threatens Fast Passage (1)

Republican infighting in the US House is threatening to sink President Donald Trump’s legislative agenda as competing factions spar over details of the giant tax bill.

A two-hour meeting Thursday in House Speaker Mike Johnson’s office failed to assuage the concerns, with lawmakers saying they’ll continue to negotiate throughout the weekend.

But first, Republican leaders must deal with a procedural matter once taken for granted: Friday’s debate in the House Budget Committee, which is charged with stitching together the various segments of the sprawling tax and spending bill.

With one Republican on the committee on paternity leave and at least two others — Ralph Norman and Chip Roy — say they’re opposing the bill, Budget Chairman Jodey Arrington is weighing whether to even go forward with his plans. A prolonged delay would risk Johnson’s plan to pass the measure next week.

“I wouldn’t advise voting on this tomorrow,” Roy said.

The biggest remaining issue is whether to increase the House’s tax-writing panel’s $30,000 cap on the state and local tax deduction. That’s three times the current cap, but doesn’t go as far as several Republicans in high-tax states demand.

Increasing the deduction costs billions, and efforts to appease SALT Republicans has angered fiscal hawks in the GOP ranks, several of whom could work to halt it in the Budget Committee.

“It’s not everything that some of the SALT members want, but I have members of our conference that don’t even think that you should be able to deduct $1, let alone $30,000. It’s a fair and balanced approach,” Jason Smith, chair of the House Ways and Means Committee, said Thursday at an Economic Club of Washington DC event.

Representative Nicole Malliotakis, a New York Republican, told Bloomberg Television that lawmakers are looking at adjusting several “dials” to get an agreement.

“Now, to adjust the size, maybe instead of 10 years, it’s for a five-year period, maybe we have to address the income levels, maybe there’s a phase out,” she said Thursday.

The current draft raises the cap on that benefit to $30,000, up from a $10,000 limit imposed in 2017, with a phase out for individuals making more than $200,000 a year and couples making more than $400,000.

Several Republicans from high-tax states have called to increase the cap as high as $62,000 for individuals and $124,000 for couples, a proposition that the Committee for a Responsible Federal Budget estimates would cost $900 billion over the course of a decade.

Republicans plan to work through the weekend on SALT and other unresolved issues, with plans to bring the bill to the House floor next week.

Smith said earlier Thursday he thought his panel had landed on a “good spot.”

Smith spoke a day after his committee advanced the tax-cut portion of Trump’s signature economic legislation, aimed for final passage this summer. The bill would make permanent the individual tax rates reduced in Trump’s 2017 package, and introduce new benefits, including eliminating levies on tips and overtime pay.

Smith has criticized the SALT lawmakers demands, saying the vast majority of taxpayers in high-tax areas would have all their state and local tax payments covered by a $30,000 cap.

Florida Republican Byron Donalds, a member of the ultra-conservative House Freedom Caucus, said after the meeting in Johnson’s office that an increase in SALT would necessitate cuts elsewhere, including to Medicaid.

“We have the smallest majorities in the history of Congress,” Smith said. “I could only lose three people. So trying to thread that needle on various provisions including SALT and find that balance is what I’ve been trying to do in this bill.”

Read more: GOP Tax Bill Seen Masking More Than $1 Trillion Hit to US Debt

(Updates with Malliotakis remarks)

--With assistance from Steven T. Dennis, Ari Natter, Jamie Tarabay, Kailey Leinz, Joe Mathieu and Nacha Cattan.

To contact the reporters on this story:
Jarrell Dillard in Washington at jdillard11@bloomberg.net;
Emily Birnbaum in Washington at ebirnbaum3@bloomberg.net;
Ken Tran in Arlington at ktran172@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Laura Davison

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