Senate Finance Committee Chair Mike Crapo told fellow Republicans in a Wednesday briefing that three major business tax provisions will be made permanent in the GOP’s megabill, senators who attended said, while a key break for individual taxpayers will be scaled back.
The pledge to restore larger tax deductions for research-and-development costs, business equipment purchases and interest on debt fulfills a major priority for Crapo and members of his panel, who consider them a major driver of economic growth.
But making the breaks permanent is costly, and it will require tradeoffs that could cause political problems as GOP leaders seek to finish work on the bill in the coming weeks. Crapo said one such move will be scaling back a House-brokered deal on the state-and-local-tax deduction.
GOP Sens. Steve Daines of Montana and John Hoeven of North Dakota, who have both pushed for the business tax cuts, confirmed Crapo’s remarks. “Yes, he did” guarantee business tax permanency, Hoeven said. “I’ve been adamant from the start, and he’s been adamant from the start.”
The House-passed version of the bill restores the trio of tax incentives through 2029; making them permanent would likely add hundreds of billions of red ink to the bill.
Permanency is mainly a Senate priority; President Donald Trump has signaled he’s fine with a short-term extension of the business tax cuts. To help offset the additional costs, Crapo is targeting a hot-potato House priority in the SALT deduction.
He told GOP senators he plans to cap SALT at a lower level than the $40,000 deal Speaker Mike Johnson cut with his own members. Blue-state GOP lawmakers are already raising warning bells over the plan, which Senate Majority Leader John Thune first outlined to POLITICO.
Crapo didn’t give a precise SALT number in the meeting, attendees said, but some GOP senators have floated going down to $20,000 while others are floating that they should offer the House the same $30,000 that Johnson initially offered to his holdout members.
“The House did $40,000; we’re going to do something less,” Hoeven said. “We know there’s a potential $350 billion there, but we haven’t settled on a number.”
The move on SALT is a blow to Johnson and other House Republicans who have urged Thune to make as few changes as possible to the House bill. While the Senate bill is likely to mirror large swaths of the House language, Crapo’s presentation is the most significant indication yet that the Senate will alter some of the most politically sensitive areas of the bill.
“I’m very, very concerned about what they might do on the SALT number and a number of provisions in the bill,” Johnson told reporters after the Senate meeting broke. “They need to hopefully modify it as little as possible.”
Responding to Crapo’s comments, Rep. Nick LaLota (R-N.Y.) said, “I can guarantee you: any bill that passes here will have a SALT provision of $40,000 or more.” Rep. Nicole Malliotakois (R-N.Y.) warned Senate Republicans are “running the risk of this entire bill imploding” if they alter the House SALT deal, adding that “they will be responsible for the largest tax hike on the American people.”
Crapo and Thune will meet with Trump at the White House on Thursday to walk him through the tax plan, said two people granted anonymity to describe the private plans. Crapo is also expected to brief the Senate GOP in greater depth early next week.
In addition to the tax language, Crapo is responsible for drafting the bill’s Medicaid provisions, and he gave considerably less detail about what changes he is eyeing there, senators said. Many of the GOP senators who have concerns about the bill’s handling of the program are not on the Finance Committee.
Sen. Susan Collins of Maine, who is seeking to protect rural hospitals in her state, told reporters after the meeting she’s “making some suggestions” on Medicaid tweaks but did not elaborate. Sen. Kevin Cramer of North Dakota added that “some of the Medicaid stuff is going to have to be scrubbed” and suggested it would be subject to further changes.
Lisa Kashinsky and Meredith Lee Hill contributed to this report.
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