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Eliminating state and local tax deductions will create a more level playing field: GOP senator

  • While eliminating state and local tax deductions will "hurt in some places," it's something that has to be done, Sen. David Perdue, R-Ga., told CNBC on Tuesday.
  • "We're going to clean that up. Create a more level playing field, both on the individual side and on the corporate side as well," he said.

While eliminating state and local tax deductions will "hurt in some places," it's something that has to be done, Sen. David Perdue, R-Ga., told CNBC on Tuesday.

While the Senate Finance Committee is working on its version of the tax bill, the draft of the GOP House tax bill released last week included the repeal of the deductions for state and local income tax (SALT) payments.

"There's no reason in the world … that a couple with two children in Iowa pay more federal tax than the same couple with two children, same income, same deductions, in California," Perdue said in an interview with "Power Lunch."

"We're going to clean that up. Create a more level playing field, both on the individual side and on the corporate side as well."

New York, California and other high-tax states would be hard hit by the removal of the deduction, a fact seized upon by Democrats to bolster their argument that Trump's plan is a gift to the wealthiest Americans and the corporate sector.

House Ways and Means Chairman Kevin Brady has said lawmakers would have a chance to propose changes to the bill. The House is marking up, or debating and amending, the legislation, this week.

Brady has already agreed to retain the deduction for property tax payments up to a cap of $10,000 as part of a SALT compromise and has said he would be open to raising it.

Meanwhile, it's unclear when Senate Republicans will release their tax bill. Senate Majority Leader Mitch McConnell said Tuesday it would be out on Friday, but his spokesperson later said he misspoke. Earlier in the day, Sen. Orrin Hatch, R-Utah, chair of the Senate Finance Committee, told NBC News the proposal would be released Thursday.

McConnell also said the chamber will aim to mark up its legislation next week.

Ultimately, the Senate bill would have to be reconciled with the House version before it is sent to President Donald Trump to sign.

Perdue told CNBC he's optimistic Republicans will wind up with tax legislation that will cause the economy to "really pop," noting that this is "what America wants."

"We're in a good position to get this across the line. The president wants to get this done in the House and Senate, get it passed by Thanksgiving so it's on his desk by Christmas."

On Tuesday, Fitch Ratings said the proposed cuts will not pay for themselves through growth and will "significantly" add to the long-term U.S. debt.

— CNBC's Jacob Pramuk and Reuters contributed to this report.