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House leaders consider keeping popular deductions to get California votes on tax bill

House Majority Leader Kevin McCarthy of Bakersfield, front left, and House Speaker Paul D. Ryan talk with reporters about the GOP tax plan. (Jacquelyn Martin / Associated Press)
House Majority Leader Kevin McCarthy of Bakersfield, front left, and House Speaker Paul D. Ryan talk with reporters about the GOP tax plan. (Jacquelyn Martin / Associated Press)

House leaders are considering keeping a version of the state and local tax deductions used widely in California in order to get the state’s Republican members on board with the final GOP tax bill.

Three California Republicans voted against the House version of the tax bill in October, and several others said they voted to advance the bill with the hope that their concerns would be fixed in a final compromise with the Senate.

Chief Deputy Whip Patrick T. McHenry of North Carolina told Roll Call on Tuesday that the potential deduction tweak would be made to appease lawmakers from California.

Rep. Mimi Walters (R-Irvine), who was among those who voted for the bill in hopes of improvements in a deal with the Senate, said details of what that tweak will look like are still being negotiated.

“We’re running numbers right now just to make sure we can have enough of a fix where we know that everybody is going to have a tax deduction. Not sure what that number looks like right now,” Walters said.

One idea under consideration is to let taxpayers claim either a state and local income tax deduction or a property tax deduction up to $10,000, or perhaps a combination of both.

“The biggest concern, the biggest fix, for me is the [state and local tax] deduction and what we do about it. I’m confident we’re going to get a fix,” Walters said.

Rep. Steve Knight (R-Palmdale) also voted for the House bill, but said he would lay out his concerns about the Senate bill Thursday in a meeting with House Majority Leader Kevin McCarthy (R-Bakersfield).

McCarthy is credited with keeping most of the California Republicans together in the vote on the House bill, with the promise of fixes when the House and Senate meet in what is known as a conference to find a compromise on the separate versions. The Senate could vote on its bill by the end of the week and a conference would be called soon after.

“There’s got to be something that California is going to have to get. We moved the vote forward, we moved it [out of] the House,” Knight said. “There are some things in the Senate bill that I absolutely don’t like and when it conferences together, if it doesn’t get there, it doesn’t get there for me.”

Knight said the state and local tax deduction has to continue in some form in order for him to support the final bill, and he echoed Walters’ idea of allowing taxpayers to use a combination of the deductions that were limited or cut in the House version. Knight also said he wanted a compromise on how much mortgage interest taxpayers can deduct. The House bill limits it to the first $500,000 spent on a mortgage, the Senate bill keeps the current $1-million limit.

“We’ve got to get a bill that we’re really, really happy with,” Knight said. “We’re a ways away.”

Rep. Tom McClintock (R-Elk Grove), one of the three California Republicans who voted against the House bill,  said he has heard that retaining the deductions is a possibility, but hasn’t talked with House leaders about it. He’s urged colleagues to keep the major deductions in place and lower tax rates, and said news that the state and local tax deduction is being reconsidered is “encouraging.”

“I believe that we should leave no taxpayer behind,” McClintock said.

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