By Bo Erickson
WASHINGTON (Reuters) -Republicans in Congress are expected this week to reveal whether they are willing to go ahead with President Donald Trump’s suggestion to raise taxes on the rich, which would break with decades of party orthodoxy.
After weeks of closed-door talks, the House of Representatives Ways and Means Committee is due to unveil full details of tax-cut legislation that would be the centerpiece of a sweeping budget package that also would raise spending on the military and border security.
The legislation would build on a measure enacted during Trump’s first presidential term that lowered tax rates, especially for the wealthiest.
Late on Friday the panel made some details public, but without providing the outcome on the thorniest matters under debate within Republican ranks.
Still unknown is whether the legislation will deliver on Trump’s promises to discontinue taxes on tips, overtime pay and Social Security retirement benefits, and whether the bill would increase the deduction for state and local taxes. That is an issue particularly important to moderate Republicans, mainly in coastal states, as well as to Democrats.
Trump has indicated a willingness to raise taxes on the wealthiest in what would be a stark departure from a red line drawn by Republicans for many years.
These questions might be answered as soon as Tuesday, when the House committee plans to debate the complex legislation.
Republicans did unveil provisions for increasing the child tax credit to $2,500 through 2028, from $1,000. Trump’s presidential term ends on Jan. 20, 2029.
The House Republicans’ bill also would reduce some taxes for multinational companies and unincorporated businesses.
Republicans also have been at odds over spending cuts to safety-net programs — mainly the Medicaid health insurance program for the poor and disabled — to offset some of the costs.
Trump has privately urged House Speaker Mike Johnson to raise the tax rate on the wealthiest Americans, sources say, though publicly he has been more ambivalent. Some on the party’s right flank have come out in favor of it.
Johnson has told some Republicans that he might have to scale back the tax cut package by $500 million to $4 trillion.
House fiscal hawks are pushing for deep spending cuts of up to $2 trillion to allow for deeper tax cuts. But some moderates are resisting cuts to Medicaid and SNAP, the crucial food assistance program.
Democrats are warning that Republicans could put other social service programs on the chopping block.
“Their legislation feeds corporate and wealthy individuals’ greed by abandoning vulnerable children, starving seniors, and cutting off families in need,” a group of Democratic senators said in a letter on Friday.
Republicans aim to extend Trump’s signature 2017 Tax Cuts and Jobs Act. Some of its provisions are due to expire at the end of this year.
“He’s wanting to help the blue-collar worker,” Representative Kevin Hern, a Republican tax writer from Oklahoma, said. “So we’re going to make that happen.”
“This is where the rubber hits the road for tax writers, who will be challenged to preserve President Trump’s first-term legacy at a fiscal cost that is acceptable to the conference,” said Mimi Bair, a former Republican tax staffer now at McGuireWoods Consulting. “We’re all eager to see the tax committee shed more light on how they will strike that balance.”
Meanwhile, a handful of Republicans from high-tax states like New York, New Jersey and California are pressing for a higher deduction amount for state and local taxes. The Ways and Means committee is expected to offer a $30,000 limit for these state and local taxes, up from the current $10,000, according to a Republican aide.
However, these Republican lawmakers have said that is not enough.
“Either we’re going to have a bill that has a fix that assuages the concerns of constituents like mine, or we won’t have a bill and the tax cuts will expire,” Representative Nick LaLota, a New York Republican, told reporters last week.
That could sink the budget bill in the House, which Republicans control by a narrow 220-213 margin.
(Reporting by Bo Erickson and Valerie Volcovich; additional reporting by David Morgan, Susan Heavey and Jeff Mason; Writing by Richard Cowan; editing by Andy Sullivan and Deepa Babington)
