I've posted recently on the question of how the House bill treats state and local income taxes paid by "business owners" - a term that includes Trump, hedge fund managers, and, for that matter, law firm partners who generally wouldn't get the special 25% plutocrat rate because they are in a service business. [Side note: calling it the "plutocrat rate," while perhaps a bit aggressive, is more accurate than calling it the "small business rate." I'll stop if they do.]
As David Kamin lucidly explains here, it appears that the state and local income tax deduction has NOT been repealed for these individuals. The longstanding itemized deduction for these taxes is gone under the bill, but the business owners would get to deduct the taxes as a business expense, whereas employees would be denied the same deduction (even though it would technically qualify as a business expense for them, too) because they're in the trade or business of being an employee, and employee business expenses are disallowed under the bill.
Kamin's eye-opening follow-up, available here, is strongly recommended reading. Without putting words in his mouth that he didn't say, it raises questions about the accuracy, and perhaps even the integrity, of the revenue estimating process for this bill.
As Kamin explains:
(1) the House Ways and Means Republicans, whose bill this is, "intend to write a loophole into the limitation on the state and local income tax deduction - or have us believe they are. They've said so. Repeatedly. Over time. And the statutory language, though ambiguous, could get them there."
(2) Thomas Barthold, Chief of Staff for the Joint Committee on Taxation, believes otherwise. When asked in a Way and Means mark-up hearing on the legislation, "he said the loophole doesn't exist and that owners and investors wouldn't be able to take the deduction for state and local income taxes, though he conveyed this in a confusing fashion."
Barthold also made a clearly erroneous suggestion to the effect that, among business owners, those engaged in service businesses certainly wouldn't get the deduction. But while service businesses don't get the special 25% plutocrat rate, there is no ambiguity in the legislation about the lack of any tie between this issue and that of state and local income tax deductibility by business owners.
You can check it out for yourself here (footage of the relevant moment in the mark-up hearing).
Now, I don't mean in any way to criticize Tom Barthold for this. Even leaving aside the ridiculously abbreviated process that has got to be over-taxing (so to speak) the entire JCT staff, he is a person of great integrity, in keeping with a proud tradition of JCT integrity that goes back to long before my own days there (I was on the JCT staff from 1984 to 1987). It would be amazing if the JCT chief got everything right in a markup under these circumstances.
But if I understand how a JCT chief prepares for hearings like this, he works closely with his staff. What he says about a particular issue is highly likely to reflect what those among his staffers who are working on the issue believe to be the case. There are JCT staffers on point of two relevant kinds: (1) the lawyers, who are working on structuring, drafting, and explaining the legislation (possibly with an economist or two), and (2) the revenue estimators, who determine the revenue "score." And of course these groups (1) and (2) are talking to each other as well.
So I consider what Barthold said to be plausible prima facie evidence of what JCT believes about the legislation, and assumed for purposes of its revenue estimate.
This brings us back to the House Republicans whose bill this is believing something else about state and local income tax deductibility - or at least, as Kamin says, wanting to "have us believe" they are creating the loophole. (For "us," perhaps one might substitute "the lobbyists who are also pushing for the 25% plutocrat rate.")
Have the House Republicans tried to communicate their true understanding (assuming it's true) to the JCT? Have they tried to avoid communicating it? Has it simply been a huge oversight? If so, has anyone been eager to correct it, and thus fix the revenue estimate if necessary, before the House votes on the bill? Are the lobbyists, not the JCT, the ones who are being fooled? (But in that case, why wouldn't the loophole prevail, given the evidence supporting its being intended?)
These questions ought to be answered, and the sooner the better.