Watch your wallets

There are a few clear winners in the Republican “tax reform” bill that cleared the House of Representatives on Thursday. Corporations, which will get their top rate cut from 35 to 20 percent. Heirs of the rich, who will be able to shield $11 million of their inheritance from taxes — double the current limit. States such as Florida and Texas, which will enjoy a disproportionate share of the cuts.

The outlook is not nearly so upbeat for many California families, especially for those in the upper-middle class. The capping of the interest deduction on mortgages over $500,000 and a limit on the property tax deduction at $10,000 is likely to suppress home values — a primary source of wealth and retirement security for many. Elimination of the deduction for other state and local taxes could exceed the savings from other tax breaks in the bill.

First-time home buyers might appreciate a correction in the real-estate market, but those with student loans will no longer be able to deduct the interest they’re paying. And those who want to live in many parts of the San Francisco Bay Area might be hard pressed to finance a family home with a mortgage of less than $500,000.

Another point to consider: The corporate tax cuts are permanent, while the individual tax cuts are not. Nationwide, only one income group — individuals making $20,000 to $30,000 — would still be receiving a tax cut by 2027. An analysis by the Institute on Taxation and Economic Policy projected that Californians would be paying a cumulative $12.1 billion in personal income taxes in 2027.

The Senate is working on its own version of tax reform, and in some ways it’s even more ominous for Californians. While it preserves the interest deduction on mortgages at $1 million, it eliminates all state and local tax deductions.

Republicans are gambling that the corporate tax cuts, in particular, will stimulate enough economic growth to avoid deficits that otherwise could reach $1.5 trillion. If that gamble falls short, the long-term impact on Californians, and all Americans, could be devastating.