Bowing to concerns from Republican House members in high-tax states, the chamber’s chief tax writer said he’ll preserve a federal income-tax break for property taxes.
“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” House Ways and Means Chairman Kevin Brady said in a statement Saturday afternoon.
The announcement was welcomed by Representative Chris Collins, a New York Republican, who said the compromise would address the need “to protect middle income working families” in states like his own. He predicted it would assuage Republicans’ concerns.
But in a sign of the complex balancing act that Brady must perform to produce a tax-overhaul bill this week, the property-tax announcement came on the same day that the National Association of Home Builders pulled its support for the legislation. The group’s chief cited concerns that the bill might undermine existing tax breaks that support the housing market. Likewise, a coalition that includes the National Association of Realtors said in an emailed statement that it “will vigorously oppose this plan.”
Brady’s statement was aimed at resolving an impasse between House leaders and roughly two dozen Republican lawmakers from states including New York and New Jersey over an attempt to repeal federal tax breaks for state and local taxes. The issue threatened the bill’s prospects in the House. Brady plans to introduce actual bill text Wednesday.
$1.3 Trillion
Congressional leaders and President Donald Trump have suggested ending the existing state and local tax deductions as a way to generate as much as $1.3 trillion over 10 years -- revenue that would help offset the deep tax-rate cuts they want for businesses and individuals. Restoring the property-tax deduction would trim that revenue projection by about a third -- or $430 billion -- said a conservative tax lobbyist who asked not to be named because discussions about the bill were private.
It would appear that deductions for state and local income taxes and sales taxes would still be repealed under the planned House bill.
In an earlier blow, Jerry Howard, chief executive officer of the NAHB, said the group will oppose the legislation because House Speaker Paul Ryan told him it won’t include a tax credit for mortgage interest and state property taxes. The association, which claims 140,000 members, will “do everything that we can now to make sure that it doesn’t pass,” Howard said.
Brady’s office released a statement Saturday afternoon that praised the home-builders group and called on members of Congress to study the tax-credit proposal closely “to determine if they want it included before tax reform heads to the president’s desk.”