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Ryan Appears to Give Up on Repealing SALT Deduction

‘We don’t anticipate a big deficit effect from this tax reform,’ speaker says

Speaker Paul D. Ryan, R-Wis., appears ready to give in on keeping part of the state and local tax deduction. (Tom Williams/CQ Roll Call)
Speaker Paul D. Ryan, R-Wis., appears ready to give in on keeping part of the state and local tax deduction. (Tom Williams/CQ Roll Call)

Speaker Paul D. Ryan appears ready to let go of his wish to repeal the state and local tax deduction.

“I think there’s a way of addressing the concerns that members have,” the Wisconsin Republican said Wednesday at a Reuters Newsmakers event.

The comment was the speaker’s first public acknowledgment that the so-called SALT deduction might remain in some form. While noting members concerns are about middle-income taxpayers in their states, Ryan declined to say whether the fix would be to cap the deduction. There are three or four ways of addressing the issue, he said. 

In previous comments on the issue, Ryan has made clear his preference for repealing the SALT deduction

How to address SALT is one of several issues House Republicans still have to resolve before they finalize text of a tax overhaul bill they hope to release on November 1, just one week away. Concerned members met with Ryan and Ways and Means Chairman Kevin Brady yesterday and are expected to do so again today.

While acknowledging a likely concession on SALT, which was expected to be one of the major offsets in the bill, Ryan said there will many other deductions and credits eliminated in the effort to broaden the base to help pay for tax rate cuts.

Still, the pay-fors are expected to fall short – $1.5 trillion based on the number built into the Senate budget the House is planning to vote on Thursday — and Republicans are relying on economic growth to make up the difference.

“We are convinced, and the models are really clear, people will change their behavior, businesses will change their behavior if their taxes change,” Ryan said.  

“We don’t anticipate a big deficit effect from this tax reform,” he said. 

Asked if he could absolutely guarantee the tax overhaul won’t increase the deficit, Ryan said, “I can’t absolutely guarantee how businesses make decisions in the future, but I’m pretty darn confident.”

Staying in the boat

Ryan used a metaphor about white water rafting, an activity he says he enjoys, to describe where Republicans are in their tax overhaul effort. 

“We’ve been going through Class III rapids, which is a pleasant ride; everybody pretty much stays in the boat. But we’re about to go through Class V rapids,” he said, noting he hopes they can keep everyone in the boat. 

The change in tide will come when the bill is released and lobbyists flood the Hill to protect a host of tax breaks, he said. 

“The general interest so clearly will and needs to triumph over the special interests,” he said.

Ryan said he hopes legislators — including Democrats — consider the broader picture.

“It’s hard for me to see why, no matter what party you’re from, someone would vote against this,” Ryan said.

The speaker expects a few members of the minority party will ultimately support the bill despite pressure from their party leadership to oppose it. However, he acknowledged Republicans would likely have more Democratic support if they brought them in earlier in the process. But doing so would’ve involved sacrificing key elements of the GOP proposal, Ryan said.  

“We would have to basically destroy the growth elements of this tax plan,” he said. Democrats didn’t even want to go to a territorial system for international taxation, he said. 

Other topics

While most of the Reuters event focused on taxes, Ryan did address other policies Congress is working on like health care and immigration.

A health care stabilization plan Ways and Means Chairman Kevin Brady and Senate Finance Chairman Orrin G. Hatch announced Tuesday better reflects the thinking in the House than the proposal from Sens. Lamar Alexander and Patty Murray, Ryan said.

That’s because Republicans don’t want to just bailout insurance companies, he said, referring to the cost-sharing reduction subsidies both proposals fund. They want to make fundamental changes to the 2010 health care law they believe is not working, he said. The Brady-Hatch proposal would repeal and the law’s individual and employer mandates.  

On immigration, Ryan said talks continue on how to address the end of the Deferred Action for Childhood Arrivals program that provides work permits to young undocumented immigrants and shelters them from deportation.

“I don’t know when we’re going to do it,” he said. “We’re having lots of discussions about how to do it. And the timing is something that is open to debate.”

This public comment comes following a Huffington Post report that Ryan privately told the Republican Study Committee’s Steering Committee that he expected a DACA fix to be rolled into a year-end spending bill.

While Ryan was not asked about that report, he was asked about a Washington Post article citing anonymous sources that said Hillary Clinton’s presidential campaign and the Democratic National Committee partially funded the dossier that compiled research on President Donald Trump’s alleged ties to Russia.

The speaker said “it’s really frustrating” to read in the press information that Congress had long requested from the FBI and DOJ.

“They’ve been stonewalling,” he said of FBI and DOJ not responding to congressional requests for information about who funded the dossier research. “That makes it harder for us to do our job of conducting oversight of the executive branch.” 

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