U.S. Markets

Republican tax fight complicates plan to pass budget in House

WASHINGTON (Reuters) - A budget plan crucial to President Donald Trump’s hopes for large-scale tax cuts looked set for a close vote in the U.S. House of Representatives on Thursday after some Republicans vowed opposition in an effort to protect a popular tax break.

House Majority Whip Steve Scalise (R-LA) speaks at the Values Voter Summit of the Family Research Council in Washington, U.S. October 13, 2017. REUTERS/James Lawler Duggan

The rebellious faction is resisting a proposal to eliminate a federal deduction for state and local income taxes, which would hit middle-class voters in high-tax states like New York, New Jersey and California.

The idea is one of several that have been floated as Republicans craft a tax-cut plan. The budget blueprint, which has already been approved by the Senate, is central to their efforts to push tax legislation through Congress in the face of staunch opposition from Democrats.

The proposal “is obviously an issue of concern to a group of members, and the shared goal is to work together to address the issue and move forward,” an aide to House Majority Whip Steve Scalise said on Wednesday.

With the clock ticking toward a vote, the impasse had yet to be settled. Republican lawmakers had planned to meet in House Speaker Paul Ryan’s office at 9 p.m. to try to hammer out a resolution, but the meeting was postponed until after the budget vote, which was set for 10:30 a.m. (1430 GMT).

Republican Representative Tom MacArthur of New Jersey told reporters it was possible there were enough votes to block the budget plan. “It’s got to be close,” he said.

Scalise predicted victory. “We’re going to get it done,” he told Fox News Channel.

Republicans have sketched out a tax package that independent analysts say would cut taxes for businesses and individuals by up to $6 trillion over the next decade, but detailed legislation is not expected to be unveiled until next week.

If Congress approves a tax-cut plan, it would hand Trump his first major legislative win since he took office in January.

“I am urging Republicans who have questions about SALT (the state and local tax deduction) to vote no tomorrow, and keep voting no until we get some compromise we can live with,” Republican Representative Peter King of New York told Reuters.

An aide to Republican Representative Tom Reed of New York said there was discussion of a compromise that would call for a tax credit up to a certain income amount to replace the deduction, and that he would support it.

Republican Representative Leonard Lance of New Jersey told Reuters he was not interested in a compromise at this time, and instead wanted the repeal provision taken off the table.

“I will be voting no on the budget tomorrow,” he said.

Reporting by Richard Cowan and Amanda Becker; Additional reporting by Susan Cornwell; Writing by Tim Ahmann; Editing by James Dalgleish and Peter Cooney