House Republicans in swing districts are flexing their political muscle to force changes to an $80 billion bipartisan tax deal, raising questions about whether GOP leadership can advance a bill that has widespread support.
A small group of New York Republicans is demanding that the cap on federal deductions for state and local taxes — known as SALT — be raised, a long-standing policy position among lawmakers in both parties from predominantly Northeastern states and California.
The SALT Republicans made the blunt case on Tuesday that House Speaker Mike Johnson and Ways and Means Committee Chairman Jason Smith — who negotiated the tax deal with Senate Democrats — need to heed their calls on SALT because their competitive reelections this November are key to keeping a narrow House majority.
“To not include a SALT fix is idiotic, and it’s political malpractice,” said Rep. Mike Lawler, New York Republican. “It’s an issue that matters to districts like mine, which is the reason Jason Smith even has a gavel. If Jason Smith would prefer to be a ranking member, then by all means knock yourself out.”
The tax package centers on expanding the child tax credit for predominantly lower-income families and reinstating expired credits for corporations under the 2017 Trump tax cuts. But those Trump-era cuts instituted a cap of $10,000 per household on SALT deductions, which the New York Republicans want lifted to $20,000 per household for married couples. Previously, there was no limit.
While the SALT deduction cap is set to expire after 2025, the current tax deal Congress wants to pass would be retroactive and apply to tax years 2023, 2024 and 2025.
Mr. Lawler and three of his New York GOP colleagues — Reps. Nick LaLota, Andrew Garbarino and Anthony D’Esposito — on Tuesday took a page from conservative hard-liners’ playbook by initially voting with all Democrats against a procedural measure for unrelated legislation in a form of protest.
They ultimately changed their votes and allowed it to pass after the quartet huddled with Republican leadership on the floor. They secured a meeting on the subject later that evening with leadership — but made no policy changes.
“We should be able to have [SALT] under a rule in which members can debate it. If it doesn’t have the votes, it doesn’t have the votes,” said Mr. LaLota. “But merely denying members an opportunity to debate the most important issue for my constituents is a challenge for me.”
The Tuesday evening meeting was to include Mr. Johnson, SALT Republicans and members of the House Ways and Means Committee, in addition to the Freedom Caucus so the conservative faction can raise its objections over expanding the child tax credit.
Mr. Johnson has been unamendable on SALT and praised the tax deal in its current form. He declined to say when the chamber will vote, but has suggested it could come as early as this week. It would require a two-thirds majority and thus significant buy-in from Democrats.
Democrats said they were ready to pass the legislation and sought to capitalize on the Republican divisions.
“The New York Republicans, many of them ran on one issue: to fix this SALT issue. They literally had one job, and they failed,” said House Democratic Caucus Vice Chair Ted Lieu of California. “It shows how incompetent and weak and ineffective they are. It also shows that the Republican [Conference] has largely given up on trying to protect these vulnerable New York Republicans.”
Mr. Johnson agreed with the notion from anti-abortion groups that the expansion to the child tax credit buoys pro-life goals.
“They make a very good point. We want to do well by families,” he said. “Lots of members from the Pro-Life Caucus to everybody across the spectrum understand what this means for small businesses, for all the great benefits that are in the bill. We’re working toward a consensus on that.”
For most families, the annual child tax credit of $2,000 per child would increase by $100 in 2025 because of inflation. Those with lower incomes that have little or no tax liabilities would qualify for the first time to receive the full amount as a cash payment.
The three main business tax policies that proponents say will juice the economy include allowing corporations to immediately expense research and development investments, full expensing of new equipment and technology, and easing restrictions on interest expense deductions.
The Democratic-led Senate also has hurdles to overcome, despite the agreement being bipartisan.
Some Republicans have lamented that leadership is subverting the usual legislative process by ushering through major tax policies written by few lawmakers without committee hearings; others reject more tax breaks because of the ballooning national debt.
Some progressives, meanwhile, say they can’t stomach the business tax cuts.