“I know, and they know, that there were people that voted yes only to keep the process going forward but who disagree with the fact that we don’t have a deal yet.”
Tax Deductions and Finding Consesus
The GOP plan to scale back local tax deductions is both a political speed trap and also the lynch pin to the tax plan. Residents in high-tax states like New York are able to deduct their taxes payed to the state from their federal liability. If the GOP gets rid of that requirement, those residents would be paying much more federal tax as a result. Furthermore, this would generate an estimated one trillion dollars over the coming decade. This increase would offset proposed GOP tax cuts to various brackets.
The House Budget Committee drafted a budget plan that cut $200 million in spending over 10 years and was deficit neutral. The Senate plan has no such spending cuts, but has tax breaks that would add $1.5 trillion to the debt over the years.
It remains to be seen which plan will win the day when a tax bill is finally unveiled.
