Tax update: Brady says sales tax deduction in final bill

Taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies — up to a $10,000 cap

Dec 14, 2017 @ 12:27 pm

By Bloomberg News

Congressional leaders worked quickly to finalize compromise legislation for floor votes next week in an all-out effort to provide themselves and President Donald Trump with a major policy victory before the end of 2017. Here are the latest developments, updated throughout the day:

Brady Says State Sales Tax Break Part of Deal

House Ways and Means Chairman Kevin Brady, who's overseeing the House-Senate conference committee of tax negotiators, said Thursday that taxpayers will be able to deduct state income taxes or state sales taxes in addition to property levies -- up to a $10,000 cap.

The versions of the bills approved by the House and Senate preserved only the individual deduction for state and local property taxes -- capped at $10,000 -- but not for income or sales taxes.

Meanwhile, GOP lawmakers began to reveal their tentative plans for approving the legislation next week.

House Republicans have been told that the Senate will vote first on the legislation -- perhaps on Monday or Tuesday, said GOP Representative Tom Cole of Oklahoma. Then the House would vote on Tuesday or Wednesday, Cole said.

Before that, Brady said, members of the House-Senate conference committee will have a two-hour window to sign a report on their official agreement on Friday morning. He said he doesn't know yet when text of that agreement would be released.

But Senator John Thune, the chamber's third-ranking Republican leader, said Thursday that he expects that an actual bill for the compromise measure will be made public on Friday. -- Laura Davison and Erik Wasson

Rubio Opposes Bill Without Child Credit Boost

Republican Senator Marco Rubio said he intends to vote against Republican tax legislation as written unless the refundable portion of the child tax credit rises from $1,100, throwing a wrench into conference negotiations.

"I want to see the refundable portion of the child tax credit increased," the Florida Republican said Thursday. "If it stays at $1,100 I'm a no."

Rubio and Senator Mike Lee, a Utah Republican, have proposed expanding the credit to make more of it refundable against payroll taxes, a change that would help more working class families.

Republicans have a narrow majority in the Senate, where they passed an initial version of tax legislation with just 51 votes. Losing Rubio's support would still allow them to pass the final legislation, but would mean that Senate leaders could lose no others.

Earlier this month, senators rejected the Rubio-Lee proposal -- which would have been paid for by setting a slightly higher corporate tax rate. This week, as it became clear that lawmakers were instead considering increasing the corporate rate anyway -- while cutting the top individual income tax rate to 37 percent -- Rubio didn't hide his displeasure.

On Thursday, he said GOP leaders "found the money to lower the top rate" but "can't find a little bit" more to help parents raising children.

Senate leaders have said they feel confident they have the votes to approve the bill next week. But Rubio said he has not yet received any assurances on his demand.

The Senate bill would expand the credit to $2,000 per child. Asked if it'd be tough to vote no if he's the deciding vote, Rubio said, "Not tough at all." -- Sahil Kapur, Steven T. Dennis

Senate's Thune Says Bill Text Likely by Friday

Republican lawmakers are trying to release the text of a compromise bill by Friday in order to hold votes in the House and Senate early next week, said Senator John Thune, the chamber's third-ranking Republican.

Lawmakers last night had various changes to the legislation analyzed for their revenue effects, Thune said Thursday. "I would say it should be out there tomorrow, we need to have text out there tomorrow so we can vote on it Monday, Tuesday," he said.

If they stick to that pace, legislation could be delivered for President Trump's signature by mid-week next week. -- Ari Natter

What to Watch on Thursday

More details of the final legislation may emerge as lawmakers float trial balloons, count votes and prepare to release their plans on Friday. The plan may be tweaked as lawmakers receive "scores" of various proposals that gauge how much revenue they'd produce or cost. One sticking point that remained Wednesday was whether to permanently double the threshold at which the estate tax applies -- meaning that the levy would apply to fewer multimillion-dollar estates from now on. The Senate had earlier voted to double the exemption -- currently about $11 million for a married couple -- but only until 2026. Another centered on how quickly to phase out a provision that would allow companies to fully and immediately deduct the cost of their equipment purchases. More clarity may emerge on both measures Thursday.


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