Senate Bill to Unwrap With Tax Cuts, End to Local Deduction

By MARCY GORDON and ERICA WERNER

WASHINGTON (AP) — Amid intense political pressure to achieve results, Senate Republicans prepared to unveil sweeping tax legislation Thursday that would usher in billions in cuts for people and corporations and repeal the federal deduction for state and local taxes.

On the other side of the Capitol, the House Republican tax-writing committee was pushing to approve its own measure after a dayslong amendment session and last-minute changes by its primary author.

The feverish efforts by Republicans in both chambers were aimed at fulfilling a self-imposed deadline to get legislation out of the House and Senate before Thanksgiving, so that the period between Thanksgiving and Christmas could be devoted to reconciling the two versions. But the Senate already seemed unlikely to meet that deadline because of complex rules governing how it must consider the tax bill.

The bills represent the first major reshaping of the U.S. tax code in three decades, and the effort is the top priority for President Donald Trump and Republicans who've failed to deliver any major legislation this year despite controlling the House, Senate and the White House.

Democrats are angrily opposed to the partisan rewrite, and the drubbing the GOP took in elections in Virginia, New Jersey and elsewhere Tuesday underscored the political peril of failing to deliver — but also the risk to Republicans in pushing ahead with legislation that polls poorly.

Top administration officials including Treasury Secretary Steven Mnuchin met privately with GOP senators late Wednesday as Senate tax writers put finishing touches on their bill.

Even as Senate Finance Committee Chairman Orrin Hatch, R-Utah, prepared to take the wraps off the new Senate, some elements appeared in flux.

As Republican leaders hunted for ways to pay for their tax cuts, Sen. David Perdue, R-Ga., said the Senate measure would fully eliminate the deduction people can take for state and local property, income and sales taxes. The House version would retain the deduction only for property taxes and cap that at $10,000, drawing opposition from GOP lawmakers from states with high local taxes like New York and New Jersey.

Perdue said the Senate plan would compress the current seven personal income tax brackets down to four. On Tuesday, two Republicans had said the bill would retain the seven brackets but cautioned that changes were possible.

Hatch's plan was likely to include a one-year delay in its reduction in the corporate tax rate, which will be permanent, said a GOP aide who spoke on condition of anonymity to discuss internal deliberations. Shrinking that rate to 20 percent from its current 35 percent has been a primary goal of Trump and the business community, and delaying that reduction would help contain the bill's costs.

In the House, Ways and Means Committee Chair Rep. Kevin Brady was making last-minute changes before the panel votes later Thursday to deliver it to the full House. Brady's changes presumably are being made to meet the $1.5 trillion maximum that the bill is allowed to add to the $20 trillion deficit. A preliminary estimate by Congress' nonpartisan Joint Committee on Taxation said the House measure as currently written would add $74 billion more to 10-year deficits than allowed.

With his revisions, Brady, R-Texas, also likely is looking to nail down Republican votes so the House can approve the legislation soon. Democrats are certain to uniformly oppose it.

"We're excited, everything looks good," Mnuchin told reporters after he and chief White House economic adviser Gary Cohn met with Republicans on Hatch's panel in the Capitol late Wednesday.

The tax bill must deepen federal deficits by no more than $1.5 trillion over the coming decade. If Republicans don't meet that, the measure would be vulnerable to a bill-killing Senate filibuster by Democrats that GOP senators lack the votes to block. It also cannot add to red ink beyond the first 10 years without facing the same fate.

Republican leaders' goal is for Congress to send legislation melding both House and Senate versions to Trump by Christmas, in hopes of protecting their congressional majorities in next year's elections.

House Speaker Paul Ryan noted Wednesday that Tuesday's sobering election results  "just puts more pressure on making sure we follow through" on the party's drive to overhaul the tax code.

Republicans have discussed repealing Obama's individual mandate in their tax legislation to raise more money to pay for tax cuts. That mandate requires most people to buy coverage or face a fine.

But the nonpartisan Congressional Budget Office lowered its estimate Wednesday for how much money repealing that requirement would save from $416 billion over a decade to $338 billion. Repeal would save money because without being forced to get coverage, fewer people would sign up for Medicaid or buy federally subsidized private insurance.

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Associated Press writers Andrew Taylor and Alan Fram contributed to this report.

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