Republicans face setbacks on tax bill
Powerful home builders association comes out against the proposal
WASHINGTON — The Republican effort to overhaul the tax code suffered a bruising setback over the weekend when a powerful corporate interest group came out against the proposal just days ahead of House leaders’ planned release of the legislation to the public.
President Donald Trump and GOP leaders are casting the measure as a once-in-a-generation rewrite of the federal tax code, one they say will stimulate the economy, create millions of jobs and give voters a reason to stick with their party in next year’s midterm elections. Rep. Kevin Brady, R-Texas, the chairman of the House Ways and Means Committee, is scheduled to reveal the House version of the bill on Wednesday.
A discouraging clue emerged for House Republicans on Saturday, when the National Association of Home Builders came out against the bill after Brady informed the group’s chief executive about key details.
“We will do everything we can to defeat this thing,” said Jerry Howard, chief executive officer of the National Association of Home Builders.
For Trump and House Speaker Paul Ryan, R-Wis., the stakes couldn’t be higher. With the approach of the end of their first year controlling the White House and Congress, and the failure of health care legislation still fresh, Republicans are desperate to post a win before next year’s midterm election cycle begins in earnest. By their own account, failure to pass tax legislation could lead to an electoral bloodbath and the end of Ryan’s political career in 2018.
Much of the pressure, and spotlight, will fall on Brady. An unfailingly sunny former Chamber of Commerce executive largely unknown outside of Washington after 20 years on Capitol Hill, Brady’s challenge is to build consensus while fellow Republican lawmakers, corporate lobbyists and perhaps Trump himself pick the bill apart.
Ryan and Brady had been hoping to stave off corporate defections as long as possible, arguing that the plan’s benefits to the economy would outweigh the loss of any industry-specific tax break. But a decision to roll back key itemized deductions has already alienated the home builders as well as the National Association of Realtors, both major lobbying forces on Capitol Hill.
Home builders are considered among the most politically influential groups, since they play a large role in the local economy for virtually every congressional district — and contribute millions to political campaigns. Lawmakers have frequently leaned in whatever direction the home builders have taken.
Howard and Brady’s aides spent weeks working together to add to the bill a “homeownership tax credit,” which would essentially have replaced the mortgage-interest and property-tax deductions, combining both benefits into a new tax credit.
Howard said home builders like other parts of the tax plan, such as tax cuts for businesses and lower rates for many families. But he feared that other changes could tip the housing industry into a recession. He was particularly concerned about ideas to eliminate the federal deduction for state and local taxes and doubling the standard deduction, which could remove incentives for all but the “very wealthy” to deduct their mortgage interest — and have a chilling effect on homeownership.
He said the White House was also open to the idea, and as of Wednesday night they were fairly certain the change would be in the GOP bill.
After Brady communicated that the changes would not be made, top NAHB officials agreed unanimously to oppose the bill and campaign against it.
Brady said the homeownership tax credit could still be added, but the advocates will have to make the case directly to lawmakers.
Republicans also appear poised to limit what American workers will be allowed to contribute pretax to their retirement plans — a change that stands to generate strong opposition.