00:59 - Source: CNN
Graham: Tax reform failure could be end of GOP

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Republican leaders had said that the GOP tax bill would be unveiled Wednesday

One key point: Sources say the plan will keep a top tax bracket at 39.6%

(CNN) —  

Republicans announced late Tuesday night that they would release their tax reform bill Thursday, missing their self-imposed deadline by one day because of continued negotiations over key provisions in the bill.

“In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday,” Rep. Kevin Brady, the chairman of the House Ways and Means Committee, said in a statement. “We are pleased with the progress we are making and we remain on schedule to take action and approve a bill at our committee beginning next week.”

The statement capped a hectic night of mixed messages as to whether Republicans were still planning to release the bill on time. Less than an hour before the statement went out around 9:30 p.m. ET, Brady and other Republicans on the committee emerged from a nearly three-hour meeting to announce to a hallway full of reporters that they were still on track to release the bill Wednesday.

But earlier – as night fell and trick-or-treaters took the streets, as well as the halls of the Capitol – sources were saying otherwise, signaling that a delay was coming as GOP leaders and the White House continued discussing parameters of the tax legislation, multiple sources told CNN.

The delay is a setback for Republican leaders who have been laser-focused on tax reform since returning from their August recess and who enthusiastically spotlighted the November 1 announcement to unveil their bill in recent weeks.

Sources told CNN the delay was not be due to the New York terror attack that killed at least eight people Tuesday, but instead due to ironing out key details on the tax plan.

A White House aide said the administration is not worried about the one-day delay in unveiling the tax plan, saying it allows House members more time to discuss the language and resolve differences.

Trump himself tweeted about the bill, highlighting congressional Republicans’ efforts.

“The Republican House members are working hard (and late) toward the Massive Tax Cuts that they know you deserve. These will be biggest ever!” Trump tweeted.

Of concern were issues surrounding retirement savings and the state and local tax deduction, two key provisions that involve raising revenue to pay for the plan.

While the bill is expected to preserve the property tax deduction, leaders will still hashing out the final details Tuesday night around the deduction, according to multiple sources, including whether a cap would be placed on the amount that could be deducted.

House Majority Whip Steve Scalise spoke Tuesday night with New York and New Jersey members, many of whom are still frustrated by plans to eliminate the state income tax deduction. The White House had a similar call with members Monday night.

“Some will get there. Some won’t,” the White House official said.

This official expressed confidence the plan would be unveiled Thursday.

House Speaker Paul Ryan discussed the bill in a meeting with leaders of outside conservative groups and told them that the full text of the bill would not be released Wednesday, but rather significant details of the bill would be discussed instead, according to multiple sources. A spokeswoman for Ryan says timing was not discussed in the meeting.

One key development as of Tuesday: Republicans plan to keep a top income tax rate of 39.6% for individuals in the expected tax reform plan, a move designed to uphold promises made by President Donald Trump that any tax cuts would not benefit top income earners.

Ryan, according to multiple sources, told conservative leaders in the meeting that the bill will keep the top rate, but it would apply to people who make substantially more money than those who currently pay the same rate.

“They are still tweaking things through,” said Adam Brandon, president of the conservative group FreedomWorks. “That is what I heard, is that the top rate would stay the same.”

The Washington Post first reported that the top rate would remain.

Republicans had already announced earlier this year that they would be reducing the number of tax brackets from seven to three – 12%, 25%, and 35% – but stipulated that they might add a fourth tax bracket for top income earners.

Ryan announced earlier this month that the plan would in fact include the fourth rate, but he declined to say what the rate would be at the time.

Democrats have been demanding that the plan help only the middle class, not the wealthy. Even if top income earners pay the same rate that they pay currently, Democrats will likely point to other expected changes that they say will benefit the wealthy, such as a repeal of the estate tax.

The House ways and means committee was also still deliberating over how to repeal the estate tax – whether to do it all at once, or wait a few years and repeal it later. The latter option would help raise more money for the plan.

As for the corporate rate, conservative leaders were told at the meeting that the top rate would be immediately reduced from 35% to 20%, despite recent reports suggesting a possible phase-in to 20%.

Sources also confirmed other items in the bill that were to be expected, such as a repeal of the alternative minimum income tax and an increase in the child tax credit.

Those who attended the meeting with Ryan were largely receptive to the plan.

“Overall, I’m real pleased. I’m real happy,’ Brandon said. “It’s better than I thought it was going to be.”

While the Republican tax negotiators continued Tuesday night, trick-or-treaters took to the neighborhoods outside on Capitol Hill and even some House staffers passed out candy in the hallways.

North Carolina Republican Rep. Richard Hudson walked by Brady’s office with a toddler in a Spider-Man costume who was licking a lollipop and staring up at Brady’s office door.

At one point, Ryan, surrounded by a large security detail, walked past reporters waiting outside Brady’s office. One reporter asked the Wisconsin Republican if the bill would come out on time.

“Ask those guys,” Ryan said, pointing to the closed doors of Brady’s office.

CNN’s Sunlen Serfaty, Jeff Zeleny and Phil Mattingly contributed to this report.