Republicans Struggling with Tax Plan on Eve of Deadline

House Republicans will miss their self-imposed deadline to release a bill to overhaul the U.S. tax system Wednesday.

As night fell and trick-or-treaters took the streets — as well as the halls of the Capitol — GOP leaders and the White House were still discussing the parameters of the tax legislation Tuesday night, multiple sources told CNN, hours before it was originally scheduled to be unveiled. Two House GOP aides confirm the plan is now to unveil the tax bill Thursday.

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 is not due to the New York terror attack that killed at least eight people Tuesday, but instead is due to ironing out key details on the tax plan.

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.

That would contradict the timeline made by House Ways and Means Chairman Kevin Brady, who told reporters Tuesday afternoon that it was still their plan to release the full bill Wednesday.

“We’re focused on delivering a full text, which is why we’re spending time with our lawmakers and make sure we’re listening to their concerns,” Brady said.

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 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 currently.

“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 that would apply to 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.

Also in the final hours of the negotiations, members were still negotiating the state and local tax deduction, commonly known as SALT. The tax writers want to eliminate SALT, but in a compromise to please Republicans upset with the elimination, the bill is expected to preserve the property tax deduction.

But leaders were still hashing out final details Tuesday night around that deduction, according to multiple sources, including whether a cap would be placed on the amount that could be deducted.

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.

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

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, 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, 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.