âTo me, the only way to stop this is to defeat the budget tomorrow,â Representative Peter T. King, Republican of New York, said on Wednesday. âOnce the budget passes, they hold all the cards.â
âTheyâre asking us to vote on the budget for a tax bill they havenât shown us on a promise that somehow itâs going to be fair, even though theyâre talking about knocking out SALT,â Mr. King said. âI donât see how anyone from those districts can vote for the budget under that, even if they promise us something.â
The challenge facing Republicans is trying to mitigate the revenue-losing effects of cutting tax rates, particularly Mr. Trumpâs push to reduce the corporate rate to 20 percent from 35 percent, which the White House says is nonnegotiable. The budget resolution that is supposed to win final approval on Thursday would allow for $1.5 trillion in additional deficits from tax cuts over the next decade, but the proposed tax cuts already revealed would cost well over $2 trillion.
Cutting rates unifies Republicans. Finding offsets, either by eliminating tax deductions or employing accounting tricks, divides them.
On Wednesday, Representative Kevin Brady, Republican of Texas and the chairman of the House Ways and Means Committee, acknowledged a long list of still-unresolved issues in the Houseâs draft bill, which is to be released Nov. 1. They included where to place the income limits for various tax brackets, whether to maintain or cut tax rates on top earners, and the fate of several critical components of the revamped corporate code.
Two issues in dispute flared up publicly: changes to retirement savings and to individualsâ ability to deduct their state and local taxes.
Mr. Brady seemed to defend a proposal to drastically lower the cap on tax-free retirement account contributions. He indicated that there were better ways to encourage the bulk of workers to save, even after Mr. Trump declared on Monday that âthere will be NO change to your 401(k).â
âRight now, we are not a nation of savers,â Mr. Brady said at a breakfast convened by The Christian Science Monitor, adding: âWe think in tax reform we can create incentives for Americans to save more and save sooner.â
Privately, though, a member of House leadership assured lobbyists on Wednesday that retirement account limits would not be touched in the draft bill.
House Republicans have been considering sharply reducing the amount that Americans are allowed to save, before taxes, in 401(k) retirement plans to $2,400 a year, from the current $18,000, or $24,000 for workers who are over 50. Lowering the cap would be unlikely to encourage more savings, research suggests, but it would amount to an accounting maneuver that would help Republicans make up some of the lost revenue from large cuts to business tax rates. Money in such retirement accounts is taxed when it is withdrawn. By taxing most deposits immediately, Republicans would push future tax revenue into the 10-year budget window they are now working in.
Mr. Trump was not giving up. He told reporters that he wanted to âquicklyâ end speculation because â401(k)âs, to me, are very important.â Asked whether he might negotiate over the changes, he replied, âmaybe weâll use it as negotiating,â then added that Mr. Brady knew how critical the retirement accounts were.
Representative David Schweikert, Republican of Arizona and a member of the Ways and Means Committee, said the issue of tax rules for retirement savings was far more complicated than Mr. Trumpâs declaration.
âWeâre the ones writing the bill,â Mr. Schweikert said. âAt some point, he gets to agree or veto. And ultimately, we have to make the math work.â
Mr. Brady also said Republican leaders were seeking a deal on the state and local tax deduction, which they had targeted for elimination. Mr. Brady seemed to suggest the deal could focus on maintaining deductions for property taxes, but not for income or sales taxes.
That would reduce the savings from eliminating the deduction to about $1.3 trillion over 10 years, from an estimated $1.9 trillion over 10 years for eliminating the deduction entirely, according to the nonpartisan Tax Foundation. But it may be the key to passing the budget resolution, which appears in jeopardy if Republicans from high-tax states are not pacified.
A protracted fight over taxes would be particularly rough on a Republican Party already fraying on the edges. Mr. Trump is feuding with two Republican senators who plan to retire, Jeff Flake of Arizona and Bob Corker of Tennessee, as part of a growing rift between old-guard conservatives and Mr. Trumpâs new-wave populists in Washington.
In the face of those divides, Republican leaders aim to deliver a completed tax bill to Mr. Trumpâs desk by Christmas. The stakes are rising by the day, as Republican donors and voters worry about the party advancing the legislative priorities it has long espoused. A failure on taxes, after the Republicans did not succeed in repealing the Affordable Care Act, could jeopardize its congressional majorities in the 2018 midterms.
âThe Republicans are finally figuring out if they donât pass this, the political consequences are going to be catastrophic,â said Stephen Moore, a senior fellow at the Heritage Foundation who is advising Mr. Trump on tax policy. âThe attitude of the conservative base is, âIf they donât do this, theyâre worthless.ââ
Finding common ground will only get more difficult as the effects of specific tax changes on constituents become clearer.
Polling suggests Republican voters subscribe less to the tax cut philosophy than their elected representatives. A report this week from the Pew Research Center, based on polling in August, found that âRepublicans were not especially unified in support of tax cuts,â said Carroll Doherty, the centerâs director of political research.
A September poll from the online survey company SurveyMonkey found that three-quarters of Republicans and Republican-leaning independents approve of cutting corporate taxes, which is the centerpiece of the tax plan. But that poll, and a related one in October, found a divide: Republican voters who approve of Mr. Trump were far more likely to approve of corporate tax cuts and to say that they believe their individual taxes will fall next year than those who have turned against the president.
The divisions in the party do not, at this point, appear to imperil the tax-cutting effort. Mr. Corker, an outspoken deficit hawk, gave his blessing to parliamentary language that would allow the tax bill to add $1.5 trillion to federal deficits, though he made clear he could still vote against the final legislation. And Mr. Flake â diatribe on Tuesday aside â is still viewed as a likely âyesâ on whatever tax bill makes it to the Senate floor, provided it survives several weeks of political kicking and screaming.