House Ways and Means Committee Chairman Kevin Brady gives his opening statement during the first day of a tax reform markup session in the Longworth building on Monday. | John Shinkle/POLITICO House tax writers eye changes to reform bill as committee work gets underway

The House’s top tax writer made some modest changes to his tax reform legislation Monday, but more are likely coming to mollify some powerful interests that have objected to various details of the plan

Among the changes that are being weighed: raising a cap on the mortgage interest deduction that was included in the original bill.


The amendments by House Ways and Means Chairman Kevin Brady came as the committee kicked off four days of meetings to formally draft the legislation, with lawmakers on a mad dash to meet their self-imposed goal of passing a bill in the House by Thanksgiving.

The debate was heated at times, with Democrats repeatedly charging the legislation was a giveaway to the wealthy.

“You are desperately looking for something to pass, and it’s the blind leading the blind,” said Rep. Sander Levin of Michigan, the top Democrat on the committee. “This is a total disgrace.”

The tweaks Brady made to the legislation included requiring taxpayers to hold investments for a longer period of time if they want to take advantage of a low tax rate for "carried interest," a perk that has been hotly debated for years. Another change would exempt more private colleges from a proposed new tax on their endowment earnings.

In a statement, Brady said: "I will also note that this is not the last effort to continue to make further improvements on the base bill. As we work to deliver more and targeted relief to small businesses, working with organizations — like [the National Federation of Independent Business] and others — and working to address unintended consequences of certain insurance provisions."

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Rank-and-file Republicans largely praised the tax bill when it was released last week. But lobbyists and some GOP lawmakers had complaints about, among other things, the bill’s treatment of housing and some proposed business provisions. Both remain possible targets for changes.

Republicans are considering allowing home owners to deduct interest on mortgages up to $750,000, according to one K Street source. The House GOP bill currently would allow a deduction on mortgages up to $500,000 — half of what’s allowed under current law. The Washington Post first reported that the committee was considering the $750,000 figure.

Brady also has been considering changes to his bill’s treatment of tax rates for businesses that pay taxes through their owners’ returns, commonly known as pass-throughs.

The NFIB, a powerful small business lobby, said last week that it couldn’t support the House GOP bill in its current form because it didn’t help enough companies. House Republicans have proposed a special 25 percent pass-through rate that NFIB says wouldn’t offer any assistance to as much as 90 percent of its members.

Other advocates for the pass-through industry say that proposed rules to keep that 25 percent rate from being abused would actually add up to a tax increase for many businesses.

The adjustments Brady made Monday covered numerous provisions, including tweaks to a proposed corporate excise tax to combat corporate tax dodges, the Earned Income Tax Credit and the treatment of “self-created musical compositions and copyrights in musical works as capital assets.”

His amendment also would require investors to hold assets for at least three years to take advantage of a the carried interest tax rate, instead of the current one-year requirement. Carried interest allows investors to pay a lower tax rate on some income than they would normally have to; it has been a source of controversy for years, with critics saying it gives the wealthy an unwarranted tax break.

The amendment was silent on repealing the Obamacare individual mandate.

Republicans are awaiting an updated CBO analysis on repealing the mandate as part of tax reform. Some rank-and-file members — and President Donald Trump — want to ax the mandate as part of the tax bill but GOP leaders are skeptical such a bill can get through the Senate.

Michael Stratford contributed to this report.

