Senate Finance Committee Chair Mike Crapo informed his fellow Republican senators during a briefing that the GOP’s megabill will make three significant business tax provisions permanent, including larger deductions for research-and-development costs, business equipment purchases, and interest on debt. These provisions are seen as vital to economic growth, but the decision will come at a cost, requiring trade-offs that could create political challenges as the bill moves forward. To offset the financial impact, Crapo plans to scale back the state-and-local-tax (SALT) deduction, a key break for individual taxpayers, to a lower level than the $40,000 deal previously brokered by the House.
Crapo’s plan has the support of Senate Republicans, including Montana’s Steve Daines and North Dakota’s John Hoeven, who have been strong advocates for business tax cuts. Yet, House Republicans are raising concerns about the potential cost of reducing the SALT deduction, which they say could amount to a $350 billion tax hike. Senate Majority Leader John Thune, who first outlined the plan to POLITICO, has expressed caution, while Rep. Nick LaLota and Rep. Nicole Malliotakois have warned that altering the House SALT deal could jeopardize the bill’s passage and result in a major tax increase for Americans.
Crapo and Thune are set to meet with President Trump at the White House to brief him on the tax plan, with Crapo also expected to present the Senate GOP with further details next week. Beyond the tax language, Crapo is responsible for drafting the bill’s Medicaid provisions, though he has not yet provided much detail on the changes. Some GOP senators, including Susan Collins of Maine and Kevin Cramer of North Dakota, have raised concerns about the handling of Medicaid, suggesting it may need further revisions. The Senate’s approach to the bill indicates that, despite its large scale, there may be significant compromises and adjustments to be made before finalizing the legislation.