Senate Majority Leader John Thune and his tax writers will huddle with President Donald Trump at the White House on Wednesday as Republicans race to resolve a growing list of tax policy disputes in their megabill.
Thune detailed what to expect in an exclusive interview with POLITICO:
BUSINESS TAX PERMANENCE: Thune emphasized that one of the biggest tax issues for him and other Finance Republicans is making key business tax incentives, such as full expensing for research and development costs, permanent.
“There’s a lot of interest in growth in the economy among our caucus,” Thune told POLITICO. “Permanence, I have been told by a number of our members, is a red line for them.”
But it’s a costly ask, and senators have been cagey on how they’ll make the numbers work.
TAXES ON TIPS: One long-shot idea that could come up is from Sen. Thom Tillis (R-N.C.), who suggested to POLITICO that the $40 billion “no tax on tips” proposal could drop out of the bill and get passed later on a bipartisan basis.
Don’t expect Trump to jump at the idea. Trump campaigned on making tips tax-free, and it’s one of his top priorities in the megabill.
CLEAN-ENERGY CREDITS: Tillis also plans to raise concerns Wednesday about House Republicans’ plan to gut clean-energy tax credits, amplifying the warning he and GOP Sens. Lisa Murkowski (Alaska), John Curtis (Utah) and Jerry Moran (Kan.) previously delivered to GOP leaders that a full-scale repeal won’t fly in the Senate. Democrats are working to drive a wedge on the issue.
SALT: Some GOP senators are pushing back against the deal House GOP leaders struck with blue-state moderates to quadruple the state-and-local-tax deduction cap to $40,000. Thune signaled to POLITICO that the Senate is likely to scale it back.
“It would be very, very hard to get the Senate to vote for what the House did,” Thune said.
But SALT Republicans are digging in. Rep. Nick LaLota (N.Y.) told POLITICO on Tuesday that such a move could “unwind many of the other connected policies” in the many interlocking deals Speaker Mike Johnson negotiated to muscle the first draft of the megabill through his narrower majority.
“It would likely stall the bill,” LaLota warned.
Meanwhile, Thune seems optimistic as he works to douse other flare-ups within his conference (Medicaid, food aid) and outside of it (hello, Elon Musk).
The majority leader also told POLITICO he expects every committee to release its bill text by the end of next week as he pushes toward a pre-July 4 vote. Armed Services kick-started that process Tuesday with draft text that increases funding for nuclear weapons, munitions production and new technology beyond what the House GOP proposed.
POLITICO Pros can dive deeper into the full Thune Q&A.
What else we’re watching:
— Vought hits the Hill: OMB Director Russ Vought testifies Wednesday in front of House Appropriations on the OMB budget. Expect plenty of questions about rescissions, impoundments and other cuts to come as House Republicans prepare to vote next week on the $9.4 billion rescissions request Trump just sent over.
— In the DOGE-house: A House Oversight subcommittee will scrutinize fraud risk in the Defense Department during a hearing Wednesday morning, with testimony from a deputy Pentagon inspector general and an official from the Government Accountability Office. It comes after a GAO report found $10.8 billion in fraud within DOD for fiscal years 2017 through 2024.
— Trump’s attempt to reshape the courts: Nearly six months into Trump’s second term, the Senate will finally start to consider his nominees to fill vacancies across federal courts. On Wednesday, Senate Judiciary will consider picks for vacancies in Missouri and on the Sixth Circuit Court of Appeals.
Jordain Carney, Brian Faler and Hailey Fuchs contributed to this report.
