SENATE’S SHARP TAX AX
Tougher dedux nix than House’s
The Senate’s GOP tax-reform bill would wipe out federal deductions for all state and local taxes — including the property tax, it was disclosed Thursday.
It’s a deduction heavily used by middle-class filers in high-tax states such as New York and New Jersey.
The upper chamber’s move is a sharp break with the House tax bill, which would keep the property-tax deduction with a $10,000 cap.
To mollify the real-estate industry, the Senate retained mortgageinterest deductions for homes worth up to $1 million, double what the House proposed.
GOP lawmakers in the highesttaxed states warned that the loss of local and state deductions would make it difficult to get tax reform enacted.
“I will be very clear. Repealing the state and local tax deduction is just not a policy that will make its way through the House side,” Rep. Tom Reed (R-NY) told CNN.
“The Senate indications that they may potentially do that, I just don’t see how that math works to get to tax reform. I think it’s very clear. You have 73 Republicans from the House that come from high-tax states. If you go down the path of trying to repeal the entire state and local tax in the Senate, then that is just not going to work.”
Like the House bill, the Senate plan would slash corporate taxes from 35 to 20 percent.
But the Senate’s corporate cut would be delayed a year, to Jan. 1, 2019, and not this coming New Year’s Day, as President Trump has demanded.
The plan also retains the current seven tax brackets — com- pared with the four proposed by the House — according to The Wall Street Journal.
The top tax rate would be 38.5 percent and would apply to individuals making $500,000 a year or households making $1 million, Sen. John Hoeven (R-ND) told the newspaper.
Other changes from the House plan include keeping the medicalexpense deduction, which the lower chamber wants to eliminate.
The Senate bill would double the size of inheritances exempt from the estate tax, while the House bill would eliminate it entirely.
Senate Republicans declined to repeal the mandate that individu- als buy health insurance or pay a penalty, under the Affordable Care Act, a step that would have raised hundreds of millions of dollars for tax cuts — along with controversy.
Senate Democrats trashed the GOP bill, with Minority Leader Charles Schumer saying elimination of the state and local deductions would doom it in the House.
“House suburban Republicans beware. They are setting you up for a big fall,” he said.
But Republicans said their bill was a winner.
Sen. Orrin Hatch (R-Utah) chairman of the Finance Committee, took the Senate floor to de- clare that the Senate bill would finally “reduce individual rates across the board and direct substantial relief to low- and middleincome families and workers.”
The high-stakes overhaul of the nation’s tax system — which would be the first in three decades — is considered critical by the GOP, which is desperate for a legislative victory before the 2018 midterm elections.
Democratic victories in Tuesday’s elections added to the pressure, senators admitted.