House Republicans on Tuesday evening mulled a compromise that would pair state and local tax relief with a conservative policy priority as a possible solution for an impasse between tax writers, blue-state Republicans and the House Freedom Caucus.
One idea under consideration would be to move a second tax bill in parallel with the $78 billion family and business tax cut deal negotiated by Ways and Means Chairman Jason Smith, R-Mo., and Senate Finance Chair Ron Wyden, D-Ore.
That second bill would pair relief from the $10,000 state and local tax deduction cap with a requirement that parents collecting the child tax credit provide a Social Security number, a source familiar with the negotiations said. The new child credit requirement could offset some of the cost of expanding the current “SALT” limit, helping alleviate concerns of deficit hawks, the source said.
Blue-state Republicans have criticized the Smith-Wyden package for leaving in place the SALT cap, while the potential for undocumented immigrants to access the child credit has been a sticking point for House Freedom Caucus members.
Smith, who left the Tuesday night meeting without taking questions, has opposed adding SALT relief to the deal that would revive a trio of business tax credits and expand the child tax credit.
But a handful of New York Republicans pushing to raise the SALT cap flexed their muscles earlier in the day by nearly sinking a rule for floor debate on separate immigration policy measures, relenting only after extracting a commitment from Speaker Mike Johnson, R-La., to revisit the matter.
House Freedom Caucus Chairman Bob Good, R-Va., said earlier Tuesday he would be open to providing “some modest help with the SALT tax situation” in exchange for the changes he wants to see to the child tax credit. Good and other Freedom Caucus members have criticized the package, saying it would provide the child tax credit to undocumented immigrants.
Smith earlier characterized that assertion as “completely false.” The package would maintain the requirements currently in place for families collecting the credit, including providing the child’s Social Security number.
“It’s the same language that was in Trump’s tax cuts in 2017,” he said referring to the 2017 law. “There’s very few items in the code that require a Social Security number. You have to have a Social Security number as a child in order to get it.”
Rep. Nick LaLota, R-N.Y., leaving the meeting said discussion focused on a bill introduced by Rep. Mike Lawler, R-N.Y., that would double the cap for married couples filing jointly to $20,000.
“The ideal thing would be to stuff it into the bill that everyone seems to agree on. The Ways and Means folks, specifically, the chairman suggests that that would blow the bill up,” he said earlier in the day. “Of the rest of the options, it seems like the most desired option is a stand-alone bill, contemporaneous with the overall package, that focuses on eliminating the marriage penalty.”
Rep. Mike Garcia, R-Calif., said he and others pushing for SALT relief sought to stress the political ramifications of lifting the cap in the meeting.
“SALT matters in some districts, more than it does in other districts. It happens to be the districts that are the majority-making, swing districts where SALT matters the most,” Garcia said. “There’s political value to getting a win here.”