House of Representatives Partially Give Up On Tax Deductions
WASHINGTON - The chairman, Kevin Brady of the House of Ways and Means committee has made a statement on Saturday saying, “we are restoring an itemized property tax deduction to help taxpayers with local tax burdens.” A step backwards for the GOP representatives who wanted to remove the state and local tax deductions. An action that had to be done to satisfy Republican representatives from high-tax states.
The announcement by Brady was a great compromise for Republicans who represent states that have high-taxes. Chris Collins a Republican New York representative praised the action saying it will, “protect middle income working families” in states like his. This action may be praised by Republicans like Collins but makes Brady’s job harder as he now has to figure out how to make a revenue neutral bill with massive tax breaks for corporations. Brady has considered to repeal tax breaks that support the housing market causing the National Association of Realtors to release a statement saying they, “will vigorously oppose this plan.”
The property tax deductions were a massive part for tax breaks for corporations because they would save $1.3 trillion dollars over a ten year period. Since they are no longer removing the property tax deduction it cut that saved revenue by $430 billion. However, the proposed House tax bill will still remove state and local income taxes and sales tax deductions. Brady and Speaker Paul Ryan also want to almost double the standard deduction which is an option when filing federal tax returns. Anyone filing for federal tax returns has two options as a taxpayer which is itemize their deductions such as donations for charity or home mortgage interest or claim a standard deduction. Ryan and Brady both want to make the standard deduction more attractive by almost doubling it from $6,000 for individual or couples filing separately to $12,000 and $24,000 for couples filing jointly. If more taxpayers chose the standard deduction over the itemized deduction for home mortgage interest rate it decreases support for home realtors and for current homeowners and house prices. But the NAHB was negotiating a tax credit that would be available for people taking the standard deduction which would help middle class homeowners. This tax credit is no longer being considered.
This has caused the NAHB (National Association of Homebuilders) to oppose the bill because Ryan told the CEO of the association that the bill won’t include a tax credit for home mortgage and state property taxes. The NAHB has come out and said that they will do everything within their power to prevent the bill from passing. Which should be concerning for GOP representatives because NAHB is a very big lobbyist in Washington. The NAHB initially supported the bill by negotiating for two months and lobbying $3 million to make sure the bill would pass but this is no longer the case.
Another lobbying group that is fighting for the state and local tax deduction has also come out against brady saying that it would directing hurt states like his own Texas because they have no income tax and is heavily dependent on property taxes. It has also caused Americans Against Double Taxation a coalition of state and local government organizations to go release a statement saying how they are against the proposed bill. They have said the proposed bill, “would insert the heavy hand of Washington into state and local finance decisions, dictate winners and losers among states and unfairly penalize states that rely significantly on income taxes.”
Overall, it seems that Republican representatives have given up on the idea of removing itemized property tax deductions. This was done in a compromise to please Republicans who represent states with high state and local taxes. Also Ryan and Brady want to double the standard deduction in an attempt to make it more attractive over itemized deductions to make it so people don’t take an advantage over the mortgage interest deduction and removing the discussed tax credit when people take the standard deduction. Doing this has caused several PACS and associations to withdraw support for the bill including NAHB and the Home Association of Realtors. Ryan and Brady are still removing state, local income tax deductions and the sales tax deductions.
