Tax deductions take central role in reform debate
WASHINGTON — The chairman of the House’s taxwriting committee said Sunday that he’s confident that his chamber won’t go along with the Senate’s proposal to eliminate the deduction for property taxes, setting up a major flash point as Republicans try to put a tax cut bill on President Trump’s desk before Christmas.
The GOP is moving urgently to push forward on the first rewrite of the U.S. tax code in three decades, but key differences promise to complicate the effort.
Among the biggest differences in the two bills that have emerged: The House bill allows homeowners to deduct up to $10,000 in property taxes, while the Senate proposal unveiled by GOP leaders last week eliminates the entire deduction.
The deduction is particularly important to residents in states with high property values or tax rates, such as New Jersey, Illinois, California and New York. Rep. Kevin Brady, chairman of the House Ways and Means Committee, said he worked with lawmakers in those states to ensure the House bill “delivers this relief ” and that he is committed to ensuring it stays in the final package.
“It’s important to make sure that people keep more of what they earn, even in these hightax states,” Brady, R-Texas, said during an appearance on “Fox News Sunday.”
Both the House and Senate bill would eliminate deductions for state and local income taxes and sales taxes paid. Sen. Chuck Schumer, D-N.Y., said in response to Brady’s pledge that Republicans should fully restore what is referred to as the SALT deduction, or millions of middle-class families would end up paying higher federal income taxes, not less.
“The House’s so-called ‘compromise’ would be saying to the middle class we’ll only chop off four of your fingers instead of all five,” Schumer said in a statement.
A key feature of both bills is a reduction in the corporate tax rate from 35 percent to 20 percent. But the Senate version delays the cut for one year. Treasury Secretary Steven Mnuchin said on CBS’ “Face The Nation” that he is confident the issue would not be a stumbling block to reaching an agreement.
“Obviously we would prefer if they kicked in sooner rather than later, but we’re going to work with the Senate on that issue,” Mnuchin said.
Mnuchin also rebuffed projections that the proposed tax cuts would increase the national debt. He said creating sustained economic growth of 3 percent or higher would generate trillions of dollars in additional revenue to the government.