Senate Tax Bill Faces Delays as Republicans Seek Amendments

The Republican leadership is urgently seeking to negotiate necessary amendments to the newly released Senate tax bill, as the current version lacks the votes needed to pass in both the Senate and the House. The Senate bill, which proposes more aggressive cuts to Medicaid spending compared to the House version passed last month, has sparked opposition from moderate Republicans and lawmakers concerned about the political implications of limiting healthcare benefits for voters.

The Senate bill's strict stance on capping state and local tax deductions (SALT) at 10,000 dollars has drawn immediate backlash from representatives in New York, New Jersey, and California. These representatives have threatened to block the bill unless it includes a 40,000 dollar SALT cap agreement reached with House Speaker Mike Johnson. To reduce the bill's cost, generous tax breaks for tips, overtime pay, and sole proprietorships have been scaled back. However, conservatives remain dissatisfied with these efforts to lower overall costs and plan to delay the Senate vote, originally scheduled for next week, until August.

Texas Senator John Cornyn, an ally of the leadership, stated that many Republicans only saw the bill for the first time on Monday, indicating the urgency of the situation. The bill requires at least 50 out of 53 Republican senators to vote in favor, with Vice President JD Vance breaking the tie. Currently, more than three Republican senators have expressed reservations about the bill.

Missouri Senator Josh Hawley criticized the bill for limiting taxes on Medicaid providers, stating that this would reduce state compensation and potentially lead to the closure of rural hospitals. Senators Susan Collins of Maine, Lisa Murkowski of Alaska, and Jim Justice of West Virginia have also opposed the more moderate Medicaid cuts in the House bill and could pose obstacles to the Senate bill's passage.

Moderate senators supporting clean energy tax breaks, such as North Carolina's Thom Tillis and Utah's John Curtis, are still reviewing the bill and hinted that further adjustments may be needed to extend the phase-out period for renewable energy tax credits. Conservative Senator Ron Johnson of Wisconsin has strongly opposed the bill, citing the need for further spending cuts and the reduction of the proposed 23% tax cut for sole proprietorship income to 20%.

Johnson expressed confidence that a group of senators would delay the vote until at least August recess to study the issue further. He mentioned Florida's Rick Scott, Utah's Mike Lee, and Kentucky's Rand Paul as potential allies in his opposition. Scott also advocated for more spending cuts, while Paul stated he would oppose the bill if it included a 50 billion dollar increase in the debt ceiling, which Senate leaders hope to raise to avoid dealing with the issue before the 2026 midterm elections.

The Senate bill's temporary 10,000 dollar cap on SALT deductions has set the stage for negotiations with the House, which passed a 40,000 dollar cap. This provision has sparked strong opposition from swing-district House Republicans, for whom SALT is a top political issue. New York Representative Nicole Malliotakis described the 10,000 dollar cap as "a slap in the face to the Republican districts that won us the majority and the trifecta."

Senate Majority Whip John Thune has expressed confidence in finding a compromise between the two positions, while Tillis suggested the Senate might ultimately consider a 30,000 dollar cap, which was the initial proposal from House Republican leaders before negotiations with SALT-focused members increased the cap. The ongoing negotiations and potential delays highlight the challenges faced by the Republican leadership in securing the necessary votes to pass the tax bill.