Trump tax overhaul under intensifying fire
WASHINGTON: President Donald Trump’s plan for overhauling the US tax system faced growing opposition from interest groups, as Republicans prepare to unveil sweeping legislation that could eliminate some of the most popular tax breaks to help pay for lower taxes.
Republicans who control the US House of Representatives will not reveal their bill until Wednesday.
But the National Association of Home Builders, a powerful housing industry trade group, is already vowing to defeat it over a change for home mortgage deductions, while Republican leaders try to head off opposition to possible changes to individual retirement savings and state and local tax payments.
Trump and Republicans have vowed to enact tax reform this year for the first time since 1986.
But the plan to deliver up to US$6 trillion in tax cuts for businesses and individuals faces challenges even from rank-and-file House Republicans.
House and Senate Republicans are on a fast-track to pass separate tax bills before the November 23 US Thanksgiving holiday, iron out differences in December, send a final version to Trump’s desk before January and ultimately hand the president his first major legislative victory.
Analysts say there is a good chance the tax overhaul will be delayed until next year.
The NAHB, which boasts 130,000 member firms employing 9 million workers, says the bill would harm US home prices by marginalizing the value of mortgage interest
We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated.
deductions as an incentive for buying homes.
The trade group wants legislation to offer a tax credit equalling 12 percent of mortgage interest and property tax payments but says it was rebuffed by House Republican leaders.
“We’re opposed to the tax bill without the tax credit in there, and we’ll be working very aggressively to see it defeated,” NAHB chief executive Jerry Howard told Reuters.
Republicans warned that the Trump tax plan is entering a new and difficult phase as lobbyists ramp up pressure on lawmakers to spare their pet tax breaks.
“When groups start rallying against things and they succeed, everything starts unraveling,” Senator Bob Corker, a leading Republican fiscal hawk, told CBS’ Face the Nation.
One of the biggest challenges involves a proposal to eliminate the federal deduction for state and local taxes (SALT), which analysts say would hit upper middle-class families in high income tax states such as New York, New Jersey and California.
The states are home to enough House Republicans to stymie legislation.
The top House Republican on tax policy gave ground over the weekend, saying he would allow a deduction for some local taxes to remain.
“We are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Committee Chairman Kevin Brady said in a statement.
But the gesture appeared to do little to turn the tide of opposition to SALT’s elimination.
“I’m not going to sign onto anything until the full package is fully analyzed by economists,” Representative Peter King of New York told the Fox News programme Sunday Morning Futures.
“The fact that we’re getting it at the eleventh hour raises real issues with me,” he added.
A lobby coalition representing state and local governments, realtors and public unions rejected Brady’s statement outright, saying the move would “unfairly penalize taxpayers in states that rely significantly on income taxes.”
House Republicans have also faced opposition from Trump and others after proposing to sharply curtail tax-free contributions to 401(k) programs and move retirement savings to a style of account that allows tax-free withdrawals, rather than the tax-exempt contributions that are popular with 401(k) investors.
House Republicans now say they could permit higher 401(k) contribution limits but continue to talk about tax-free withdrawals.
“We will expand the amount that you can invest. But we’ll also give
Jerry Howard, NAHB chief executive
you an option to actually not be taxed later in life,” House Republican leader Kevin McCarthy told Fox News.
The current cap on annual 401(k) tax-free contributions is US$18,000.
Corker said congressional tax committees seem to be falling short of their goal to eliminate US$4 trillion in tax breaks to prevent the Trump plan from adding to the federal deficit.
“They’re having great difficulty just getting to US$3.6 trillion,” said the Tennessee Republican, who has vowed to vote against tax reform if it increases a federal debt load that stands at more than US$20 trillion.
Ohio’s Republican governor, John Kasich, told Fox News Sunday that spending on entitlement programs such as Medicare, Medicaid and Social Security should also be reviewed as part of the effort to pay for tax cuts.
“It may be separate from the tax bill, but it needs to happen,” Kasich said. — Reuters