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Lobbyists Miffed at House Tax Bill Turn Attention to Senate

Some hope for different answers on mortgage interest deduction, SALT

Chairman Kevin Brady, left, and Rep. Richard Neal, ranking member, arrive for a House Ways and Means Committee markup of the Republicans’ tax reform plan Monday. (Tom Williams/CQ Roll Call)
Chairman Kevin Brady, left, and Rep. Richard Neal, ranking member, arrive for a House Ways and Means Committee markup of the Republicans’ tax reform plan Monday. (Tom Williams/CQ Roll Call)

The House Ways and Means Committee hasn’t yet approved its version of the tax overhaul, but already some lobbyists, miffed by how the legislation is shaping up, say they’re turning to the Senate. 

The Senate’s overhaul measure, which is expected to become public as soon as Thursday, may be wildly different from the House bill. It is likely to include more temporary tax breaks than the House product and may also delay corporate rate cuts

That could bring either opportunities or potential heartbreak for lobbyists, depending on how their clients fare in the House bill.

“We’ve shifted now, and it’s more of a dual track for us — it doesn’t look like the House bill will do anything to forestall a housing recession,” said Jerry Howard, CEO of the National Association of Home Builders, which opposes some House provisions, including a decrease in the deduction for mortgage interest.

The House bill would cap that deduction at $500,000 of new mortgage debt, down from the current $1 million.

While Howard said his group was not giving up on it entirely, it “doesn’t look like anything good’s going to be in the House bill.”

The National Association of Realtors has a three-pronged lobbying campaign underway, according to Jamie Gregory, the group’s deputy chief lobbyist. That includes trying to influence the Senate, Ways and Means and members on the House floor.

Because of Senate procedure and rules, including the Byrd rule, senators will have less leeway than House members, lobbyists say — making the Senate version potentially the more important legislation. The Byrd rule restricts provisions in bills being considered under budget reconciliation from adding to long-term deficits. 

“The Senate has more restrictions, so I do think whatever is signed is going to look more like the Senate bill than the House bill,” Gregory said.

Lobbyist Dawn Levy O’Donnell, who runs D Squared Tax Strategies, said even as she’s been in the weeds this week on the Ways and Means markup, she has pondered an oft-quoted line. According to lore, George Washington once said to Thomas Jefferson, “We pour our legislation into the senatorial saucer to cool it.”  

“We’ve been thinking about the Senate and working with the Senate,” said O’Donnell, a former Senate Finance Democratic staffer, whose registered clients include the American Society of Association Executives and Dominion Resources Services Inc.

“But the House is acting right now, and there’s momentum. If I stop and think about it, the whole reason of the Senate is to cool off the fervor of the House,” she said. 

Though many of the biggest fights are likely to play out on the Senate side and may well be settled there, O’Donnell and other lobbyists said some tax debates, such as the one over deductions for state and local taxes, will likely be more heated in the House.

Republican opposition to the so-called SALT provisions appears less intense in the Senate because the high-tax states that are most affected, like New York and California, are blue states represented by Democrats.

Even so, as Ways and Means members sparred over state and local tax deductions during the markup Tuesday, the committee room audience in the Longworth House Office Building was relatively sparse, and few lobbyists were observed in the hallways outside.

The battle over how small business owners are taxed is expected to play out in both the Senate and House. So far, the National Federation of Independent Business says it does not support the House measure. 

Still, lobbyists such as Gregory from the Realtors say they don’t yet have a good read on how the Senate measure may address some of the most contested issues, such as the mortgage interest matter.

Former Senate aide David Castagnetti, a Democratic lobbyist with Mehlman Castagnetti Rosen & Thomas, said he knows one thing for certain about the Senate proposal.   

“The bill’s going to look different,” he said. 

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