Democrats have opened the door for collaborating with Republicans to create a tax bill, as the GOP faces a number of obstacles in extending the tax cuts law passed by President-elect Trump.

Although it may be difficult for Democrats to achieve their goals in a GOP-sponsored tax bill, the small Republican majority and the significant divisions within conference have some Democrats optimistic about achieving bipartisanship.

The Hill reported that Gwen Moore, a Democrat who serves on the House Ways and Means Committee and is a member of the House Ways and Means Committee told The Hill that there were some things we could probably negotiate.

Hakeem Jeffreys (D-N.Y.), the House Democratic Leader, also stated recently that his caucus could work with the GOP on certain tax issues.

Jeffries, a reporter last week, said that there could be some common ground in certain areas of tax legislation.

Republicans want to extend the key provisions of Trump’s 2017 Tax Cuts and Jobs Act. These include reductions in personal income tax rates that are set to expire at the end 2025.

Many House Republicans, including tax-cut supporters, believe that the GOP should begin with a tax measure. However, some Trump advisors and GOP Senate leadership want to start 2025 off with a border safety measure.

Lack of clarity and difficulty in uniting Republicans around a tax plan could undermine attempts to pass a bill along partisan lines via budget reconciliation.

Republicans could be forced to collaborate with Democrats if they don’t get near-unanimous support from the House GOP for a tax measure that is partisan.

Jeffries stated that there is a broad Democratic interest to strengthen the Child Tax Credit (CTC) as well as the Low-Income Housing Tax Credit (LIHTC).

Republican Sen. Josh Hawley, (Mo. ) This week, Republican Sen. Josh Hawley (Mo.) proposed a massive increase in the CTC. The credit would go from a maximum amount of $2,000 per child to $5,000.

The plan also allows parents to use the CTC as a way to offset their payroll taxes, and receive the credit in regular installments over the course of the year instead of a lump-sum during tax season.

Moore told The Hill, Democrats also want to reinstate the R&D tax credit for business.

The House passed a bill to restore this credit by a large bipartisan margin earlier this year as part of larger tax legislation, but it didn’t pass the Senate before the election.

“A lot Democrats — or at least Democrats in the Ways and Means Committee – are really looking at… the R&D credit as a possible place to find bipartisan support.”

Republicans in Congress know that their narrow majority in House poses a threat to the tax cuts they have enacted.

Last week, Mike Crapo, the incoming chair of the Senate Finance Committee (R-Idaho), told The Hill that “everyone is concerned” about this.

“A significant amount of non TCJA tax policies are being considered.” I don’t think all of this can be done but I am not saying that it cannot. He said that they would do their best to fit as many of the suggestions as possible.

The state and local taxes (SALT) deductibility is a particularly difficult issue that could lead Republicans to consider collaborating with Democrats.

In the Trump tax cuts, the SALT deduction is capped at $10,000. This has aggravated many Republicans from blue states.

The SALT Caucus, the group of Republicans that wants to eliminate the cap, has more than enough members for the GOP-controlled House to pass a bill with Democratic support. This gives the group a disproportionate amount of power in shaping a GOP tax plan.

The Democratic tax writers enjoy the tension within the GOP conference about what to do with the SALT cap.

Richard Neal, ranking member of Ways and Means (D-Mass. ), told reporters last week: “I am overjoyed by their problem.” Last week, Richard Neal (D-Mass.) told reporters that he was “overjoyed” with their problem. “They said that everyone was going to have an easy time. I warned them that it wouldn’t be easy. My prediction is it won’t.

Trump made a number of promises during his campaign, including the removal of the SALT limit.

In September, he posted on social media: “I’ll turn it around. Get SALT back. Lower your taxes. And so much more.”

The Congressional Budget Office reported earlier this month that eliminating the SALT deduction would reduce the deficit by over $1.6 trillion between 2034 and 2034.

The Republicans also differ on how to implement their tax legislation. While the incoming Senate Leadership wants to pass a reconciliation measure on border security and the production of energy first, many House representatives insist that tax is their number one priority.

Tax policy disagreements are common, despite some shared interests and internal Republican conflict that has Democrats reaching out to Republicans.

Moore said that the Trump tax cuts of 2017 were little more than “crumbs off the master’s plate” for those earning less than $100,000 per year.

She said that the Democrats were not interested in the 20% income deduction for passthrough business and the faster depreciation schedule which allows businesses to write-off capital investments upfront instead of over time.

Republicans’ top priority is the passthrough tax deduction.

In recent decades, businesses classified as S corporations, LLCs and sole proprietorships — entities that pass through their tax liabilities to their owners instead of paying corporate income tax — are becoming more common.

A study published earlier this year revealed that “almost 50% of private employment in the United States occurs within businesses that don’t pay corporate income taxes.” They also discovered that the percentage of jobs classified as passthroughs had more than tripled from the 1980s.

The IRS created a special unit in its division for large businesses and international to pursue unpaid taxes by passthroughs. This includes partnerships.