Despite having no support from Democrats and the opposition of 20 Republicans, the Senate voted 216-212 on Thursday to pass a reformed tax budget plan.
The plan will cut the corporate income tax rate to 20 percent from 35 percent while practically doubling the standard deduction for individuals to $12,000, according to The New York Times.
Because of the significance of these cuts, there has been debate as to where to make up for lost revenue. Republican lawmakers have, despite President Trump’s opposition, been considering lowering pretax amounts for 401(k) accounts as the Times reports.
The most contested issue of the tax plan is how the State and Local Tax deduction or SALT will be affected. New Jersey, New York, Illinois, and California republicans who didn’t vote for the plan cited the necessity of SALT as their major reason to oppose the plan, according to CNN.
Republicans of the above mentioned states believe that their constituents heavily rely on SALT and Democrats argue that its removal will be harmful to middle class families. Republicans who support eliminating or reducing SALT cite its use by upper middle class families in high-cost-of-living areas as being the reason for the change, according to the Washington Post.
House Ways and Means Chairman Kevin Brady has said Republicans “need this problem solved before they vote yes on tax reform,” as CNN reports.
The Washington Post says that Speaker of the House Paul Ryan believes that a compromise will be reached on the issue of SALT and that its elimination is unlikely.
The issue of where to establish income cut offs for tax brackets is also yet to be established, according to the New York Times.
In order to reduce the possibility of opposition, Republican leaders hope to get the plan passed as soon as possible. To help this cause, the budget includes reconciliation rules that would allow the Senate to pass it with a simple majority rather than 60 percent support, according to CNN.
Senator Chuck Schumer, D-N.Y., has responded to this plan to expedite the bill’s process of becoming law by saying “the more people see it, the less they’ll like it,” according to the New York Times.
Some Republicans, including Rep. Doug La Malfa of California, supported the bill despite reservations about its current state because of confidence that a compromise will be reached before it is passed into law, according to the Washington Post.
The Washington Post reports that if all goes according to the plan of Republican leaders, the tax budget bill will be passed before Thanksgiving.