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Ways and Means Panel Begins Marathon Markup of Tax Bill

House committee will set stage for floor consideration of legislation

Ways and Means Chairman Kevin Brady will preside over what will likely be a marathon markup of the GOP tax legislation. (Tom Williams/CQ Roll Call)
Ways and Means Chairman Kevin Brady will preside over what will likely be a marathon markup of the GOP tax legislation. (Tom Williams/CQ Roll Call)

House tax writers on Monday start slogging through the Republican tax plan, but an expected melee of political messaging is likely to eclipse any major policy changes during the marathon markup.

The Ways and Means Committee will meet at noon Monday to begin marking up the tax bill and is aiming to finish on Thursday, according to Chairman Kevin Brady. The Texas Republican promised much of the debate will take place during the regular workday, but long hours and some late nights are expected.

“Substantive changes” to the sweeping tax overhaul plan are still possible, Brady said Friday. But such changes could come in the form of a broad substitute amendment he plans to offer at the start of the markup, or else when the bill goes through the Rules Committee before reaching the House floor. Members and outside groups have raised concerns about how the plan treats deductions for state and local income taxes, so-called guardrails on “pass-through” tax rates for small businesses, mortgage interest deductions and other provisions.

Any changes can only go so far. Brady told reporters there’s “not a lot” of wiggle room because of the narrow deficit window allowed under the budget framework both chambers adopted. The tax legislation can add up to $1.5 trillion to the deficit over 10 years, under the so-called budget reconciliation instructions.

Monday’s House Tax Bill Markup Is Crunch Time for GOP

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The wide-ranging tax package was unveiled last week and met with broad support from Republicans of all stripes. Brady released a substitute amendment Friday, making mostly technical changes. 

[PODCAST: The GOP Tax Plan Unpacked]

Republicans on the committee could have their own amendments, too, but several said Friday that no decision on amendment strategy had been made yet.

Michigan Rep. Mike Bishop said he didn’t yet know what sort of amendments would be on the table this week but he’s expecting a truckload.

“I anticipate there will be a lot of amendments, from whose side I don’t know,” he told reporters. “I’m sure the Democrats will have plenty. Hopefully, they’ll be productive.”

Bishop also said tax writers will try to incorporate ideas from rank-and-file Republicans who aren’t on the panel. “We don’t want to be resistant to good ideas, and we’ve heard already from a lot of folks,” he said. “Obviously, something this big requires us to revisit [the legislation].”

Texas Rep. Kenny Marchant said he’s not planning to offer any amendments, and New York Rep. Tom Reed said “not necessarily,” noting it will depend on what changes Brady works into the underlying bill.

“It’s going to be a long markup and it’s going to be, I’m sure, very lively,” Reed said. “And that’s the way it should be. It should be an open and honest debate.”

‘SALT’ still an issue

Reed is one of the few New York Republicans not objecting to the bill’s elimination of the deduction for state and local income taxes and its $10,000 cap on the property tax deduction. Other GOP members from New York and New Jersey have already come out against the legislation because it scraps part of the so-called SALT deduction.

“I’m comfortable where it’s at, but I’m still trying to see if we can’t make it even better,” Reed said, noting that could involve raising the cap.

GOP Rep. Tom MacArthur, who’s not on the tax-writing panel but has been influential in negotiations, said Friday that he was “thrilled” with the compromise that led to the $10,000 property tax cap, after he ran the numbers on how it would affect his high-tax New Jersey district. “It’s a huge win, and I am now content with that part of the bill,” he said, adding that he still wants the $10,000 cap to be indexed to inflation.

He’s also pushing for changes to the mortgage interest deduction. Under the legislation, new homeowners could write off interest on the first $500,000 they paid for a house, down from the current $1 million cap. Also, mortgage interest on second homes would no longer be deductible under the tax bill.

MacArthur said the cap should be higher — he has proposed a new number to tax writers, but wouldn’t disclose it — and he wants it linked to inflation. He also said the deduction should continue to apply to second homes, which he called a “critical part of the economy” on both coasts and in other regions of the country.

Democratic amendments

Democrats are more likely to bring dozens of amendments to the markup, aimed at gutting portions of the bill or just putting Republicans on record defending controversial provisions.

Ways and Means ranking member Richard E. Neal said his members will have amendments covering a wide range of items in the 400-page measure.

“I think that we’re certainly interested in this notion of cradle-to-grave security,” the Massachusetts Democrat said. “We’re very interested in the idea of what happens at birth, what happens for education, what happens in retirement years. And certainly, I intend to focus on the housing side of it — as a former mayor, I have a pretty good idea of what income elasticity does in the housing market.”

That includes taking aim at the reduced mortgage interest deduction, he said.

Rep. Mike Thompson said “there’s a number of things” he is working on and will talk about during the markup. The California Democrat plans to offer an amendment to restore a provision designed to help victims of disasters like his constituents, whose homes were burned in the recent  wildfires in his home state.

“These guys, either just because of negligence or maybe even mean-spiritedness — I’m not sure which — took away in this bill the ability for people who lose their homes in disasters, such as fires, to be able to use the tax code to get some help on their uninsured losses,” Thompson said. “They’ve grandfathered in the hurricane folks but conveniently left out everybody else.”

Rep. Sander M. Levin of Michigan, who was the top Democrat on the panel before Neal, said he might offer an amendment to add the text of his carried interest bill, and he expects some amendments related to the pass-through provisions. Carried interest is a rule in the tax code that allows some managers of private investment funds to pay lower tax rates.

“But we need to keep the focus very, very sharp on essentially deepening the deficit, not benefiting the middle-income groups but mainly benefiting the very wealthy,” Levin said.

“So we’ll keep a very, very clear focus, because their castle is built on sand,” he added.

Whatever amendments are debated or added during the markup, provisions in the tax package will be mostly locked in by the time it hits the House floor. Brady said there won’t be an open amendment process on the floor.

“There is nothing like changing the … tax code in front of the world to see really bad things happen,” he said at a Politico Playbook event Friday in Washington. The legislative process needs to be “deliberative” and “thoughtful,” given the complexity of the tax code, he added.

Senate Republican tax writers are expected to release details of their own tax plan this week. GOP leaders in both chambers are racing to pass a final tax package and send it to President Donald Trump before Christmas.

Lindsey McPherson contributed to this report.

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