Go time in the House

Politico

12-05-2025

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With help from Benjamin Guggenheim
LET'S DO IT: Here's some of the bad news for House GOP tax writers — they still need to bring down the cost of their tax bill ahead of a planned Tuesday mark-up, as Pro Tax's Benjamin Guggenheim noted over the weekend.
Now, for some good news for them: There are certainly feasible paths for House Republicans to bring the cost of the tax portion of their one large fiscal package to around $4 trillion over a decade — which is about where they'll need to land, given the amount of spending cuts they're poised to compile.
And then more bad news: Those paths might require difficult political decisions on ways to generate more cost-savings in the tax code.
JCT estimated over the weekend that the more bare-bones version of the Ways and Means tax plan, released deep into Friday evening, would cost around $5 trillion over a decade.
But by design, those 28 pages of text avoided hot-button issues like how Republicans might raise the $10,000 cap on state and local deductions, whether they'll seek to limit companies' ability to write off their SALT payments and how they might try to wring savings out of the green energy incentives passed by Democrats during the Biden administration.
House Ways and Means Chair Jason Smith (R-Mo.) is expected to release fuller details on the tax plan as soon today, ahead of that Tuesday mark-up. Smith will be hosting a briefing on the full tax bill this afternoon, along with his fellow House GOP tax writers.
All of that suggests that House Republicans likely have already made some of the hard choices they were faced with on the tax bill. Smith and the other Ways and Means Republicans largely have succeeded in keeping the details close to the vest, and they surely have incentive to keep that going as long as they can heading into the markup — to keep any opposition from mobilizing against their more controversial decisions.
So stay tuned also for more on how House Republicans plan to disperse further tax goodies, including President Donald Trump's favored tax relief ideas and restoring incentives prized by the business community.
And keep in mind: This is far from the final stage for a big GOP tax bill in 2025.
House and Senate Republicans also have stayed in close contact in recent weeks as the Ways and Means Committee was developing its tax bill.
Senate Republicans will face the larger procedural hurdles in trying to pass a large fiscal package by budget reconciliation. But by most accounts, top GOP tax writers in both chambers have tried to coordinate to avoid a particularly bumpy process if and when the House sends the one big, beautiful bill to the Senate.
MORE ON ALL THIS in a bit, after we welcome you to a mark-up week version of Weekly Tax. What's a better combo than Barcelona and Travis Scott, we ask? A winter coat and 1100 Longworth.
Is this part in the movie? Today marks 62 years since a then-unknown Bob Dylan declined to appear on 'The Ed Sullivan Show,' after lawyers at CBS raised concern that the singer-songwriter's number 'Talkin' John Birch Paranoid Blues' might open the network up to a defamation suit.
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LET'S DIVE IN FURTHER: Perhaps the most contentious issue still facing House Republicans is what to do on SALT deductions for individuals.
And we know this is an issue where the GOP still needs to find some common ground: House GOP leaders, tax writers and blue-state Republicans are set to huddle again this morning to work toward a solution.
It's not just a political issue for House Republicans, either. They need a SALT deal because the House has to have the revenue to make the math work. (Even a SALT cap a fair bit higher than $10,000 would raise hundreds of billions of dollars against the budget baseline the House is using.)
Negotiations over the last week or so underscored that Republicans from California, New Jersey and New York aren't totally on the same page on what kind of SALT cap might be acceptable.
And there's also some debate over just how much leverage the truly committed members of the SALT caucus have. More hardline SALT Republicans have said they're willing to tank an entire GOP tax bill over the issue.
But would they follow through? Allowing the temporary provisions of the 2017 Trump tax cuts to expire would mean a net tax increase on the vast majority of residents in even those wealthier blue-state districts.
The waiting is the hardest part: The business community has made it clear for weeks that they're worried that House Republicans might eat into their SALT deductions.
Probably with good reason, too — there's still chatter that Republicans are eyeing that area for fresh revenues.
Business advocates argue that such a move would amount to keeping companies from deducting ordinary expenses — a long-accepted part of the tax system. (They'd also say it's a false symmetry to say that business SALT should be capped because individual taxpayers face SALT limits.)
'Business SALT is an important tax tool used by companies of all sizes across the country, and capping it is a backdoor corporate rate increase that would reduce the ability of retailers to invest in their workers, operations, and communities,' Courtney Titus Brooks, the vice president for tax at Retail Industry Leaders Association, said over the weekend.
How about some immediate benefits: House Republicans did fiddle around with some of those expiring parts of the Tax Cuts and Jobs Act, at least in part to offer some added benefits to voters before next year's midterms.
That includes a temporary boost to the Child Tax Credit, which would max out at $2,500 (instead of the current $2,000) for the current tax year. The standard deduction would increase by $2,000 for married couples for this year, as well for taxpayers to claim in the 2026 filing season.
Still, progressive advocates knocked the House GOP's proposed CTC expansion, arguing that it gave more assistance to better off families than to those who need it the most.
Around 17 million children currently live in families where the parents don't earn enough to get the maximum $2,000 credit, and the new House bill doesn't give them a boost. 'Republicans' new Child Tax Credit proposal pushes MORE children into poverty,' said Adam Ruben of Economic Security Project Action.
The House GOP proposal also requires that both parents have a Social Security number to claim the CTC, something that could make around 4.5 million children who were born in the U.S. or are legal permanent residents ineligible for the credit. But it's probably not too big of a surprise that House Republicans went in that direction, given the party's current stance on immigration.
And how about one more: The House GOP proposal also makes some changes to the current 20 percent deduction for pass-through businesses — boosting it to 22 percent, while also making a variety of eligibility changes.
That change comes as business lobbyists are pressing Republicans to make sure that they extend the expiring TCJA provisions for good, as well as taking care of the pass-through deduction and lower rates on the foreign income of multinational corporations, among other things.
'For the past two years, we've worked in lockstep with Congress to ensure the success of this bill,' said Stef Webb of the National Association of Manufacturers, which sent a letter on the matter to Smith and Speaker Mike Johnson on Friday.
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Did you know?
Tedham Porterhouse and Blind Boy Grunt were among the various aliases used by Bob Dylan over the year.