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. Senate Republicans have not released their proposal yet.
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. While 1.6 million households in New Jersey claim the property tax deduction today, that number is expected to fall by almost 60 percent next year, to just 650,000, under the House bill. In the end, the House may be forced to swallow whatever the Senate passes and it's unclear if dissenting lawmakers from high-tax states have enough numbers to prevent it.
The Senate plan differs in some key ways from the version introduced by the House last week.
"The South Dakota Republican said the measure also preserves existing clean energy tax incentives such as for electricity production from wind. It preserves a tax credit for electric cars as well".
Both would increase a child tax credit, though not to levels sought by Sens.
The Senate bill would reduce the number of wealthy people who pay the estate tax by doubling the current threshold for the tax, which now kicks in for individuals on estates worth over $5.6 million.
Despite having property taxes that could potentially be deducted under the House bill, many of these taxpayers would not deduct those taxes in practice because the combination of itemized deductions they are allowed to deduct (which would no longer include state income and sales taxes) would be smaller than the standard deduction.
On the other side of the Capitol, the House Ways and Means Committee approved its own version of the legislation on a party-line 24-16 vote, amid intense political pressure on the GOP to push forward on the first major rewrite of the US tax code in three decades. Several GOP lawmakers in the House have already come out against their colleagues' plan.
In the newer version, the House reversed course on eliminating the adoption tax credit after an uproar from social conservatives (the Senate version preserves the credit). Both would drastically reduce the corporate tax rate and also lower rates for individuals, while eliminating deductions claimed by many people. The Joint Committee on Taxation has projected that an earlier version of the House bill will lead to $1.7 trillion more in budget deficits over 10 years.
That could force them to scramble for more revenue as the process moves along.