Gary Cohn says GOP is working toward fixing one of the tax bill's biggest issues—deductions

Key Points
  • Republicans are making progress on changes to state and local tax deductions, White House advisor Gary Cohn says.
  • Dozens of House members are seeking to expand tax breaks for people in high-tax blue states after House and Senate bills limited those deductions.
  • Senate leaders have signaled that they would be open to state and local deduction changes.
Gary Cohn: There's a lot of progress being made on taxes
Gary Cohn: There's a lot of progress being made on taxes

Republicans are working to appease lawmakers concerned about proposed limits on popular tax deductions, White House advisor Gary Cohn said Friday.

Dozens of lawmakers from high-tax blue states have pushed for more generous state and local tax deductions under the planned GOP tax overhaul. The bills already passed by the House and Senate would significantly curb those tax breaks, leaving some taxpayers in states like New York, California and New Jersey shouldering a higher tax burden.

Cohn, President Donald Trump's chief economic advisor, tld CNBC on Friday he is "concerned" about hiking taxes on those Americans.

"You know, I was on a phone call this morning. We were talking about the SALT issue and what potential SALT fixes are. There's 70 members of the House from SALT states," Cohn said on "Squawk on the Street."

"They have to have a solution that allows their residents to come away from this in a position that allows those members to support this. We're cognizant of those issues. No one wants to see tax increases. That's not what we're trying to do," he added.

Gary Cohn
Andrew Harrer | Bloomberg | Getty Images

Cohn did not signal how the GOP would specifically tweak the plan to win over House members. However, he said, "there's a lot of progress being made." He expects more when members of a House and Senate conference committee working on a final, joint bill meet this weekend.

Senate Majority Leader Mitch McConnell, R-Ky., and Majority Whip John Cornyn, R-Texas, have signaled that the treatment of state and local deductions could change in the final bill. The plans currently allow up to $10,000 in property tax deductions, but some lawmakers seek state and local income tax deductions, as well.

Expanding the state and local tax breaks creates another issue. Reducing the deductions will help pay for the tax cuts.

The GOP may have to consider other measures, like cutting the corporate tax rate to 22 percent rather than the planned 20 percent, to offset costs of the tweak.

Cohn on Friday did not answer whether he was open to a 22 percent corporate rate. On CNBC in September, he said 20 percent was a line in the sand. However, Trump last week expressed a willingness to give ground.

A tweet by Sen. Marco Rubio, R-Fla., also raised the revenue issue on Friday morning. He said there would be "problems" if the final bill weakens the child tax credit or raises the corporate rate without expanding tax breaks for parents.


WATCH:  Rep. Josh Gottheimer: Tax bill will make home prices plunge

Rep. Josh Gottheimer: Tax bill will make home prices plunge
Rep. Josh Gottheimer: Tax bill will make home prices plunge