Published: Tue, November 14, 2017
World | By Melba Underwood

Brady: House Won't Accept Repeal of State, Local Tax Deductions

Brady: House Won't Accept Repeal of State, Local Tax Deductions

If the Senate bond provisions are adopted by the full Senate in their current form, the divergence between House and Senate versions on three categories of municipal bonds creates the opportunity for the municipal bond community to work toward moving the reconciliation process to accept the Senate version and retain the ability to issue private activity, tax credit and stadium bonds; however, this result can not be presumed and continued engagement by this community is critical. Ron Wyden of OR, says the legislation has become "a massive handout to multinational corporations and a bonanza for tax cheats and powerful political donors".

An analysis showed, meanwhile, the Senate version of the legislation would actually increase taxes for some 13.8 million US households earning less than $200,000 a year.

At times, the president has even predicted he will pay more under a GOP plan (Trump has not released his tax returns, but multiple provisions in the House and Senate bills appear likely to benefit his business and family). The legislation, promoted as a boon to the middle class, would steeply cut corporate taxes, double the standard deduction, and limit or repeal completely the federal deduction for state and local property and income taxes. By 2025, 21.4 million households would have tax increases.

Brady said including a repeal of the Obamacare individual healthcare mandate in the tax bill "remains under consideration".

It carries high political stakes for President Donald Trump and Republican leaders in Congress, who view passage of tax cuts as critical to the GOP's success at the polls next year.

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If this provision is not stripped from the Senate version before it is approved by that chamber, the likelihood of eliminating it during the reconciliation process is doubtful at best. Both versions of the tax plan cut the top individual rate, but the Senate version only lowers it to 38.5 percent.

In addition the loss of state and local tax deductions, there are "other frightful things" in the GOP bill, Crowley said, including eliminating a tax credit for hiring veterans, or deductions for people like teachers for buying extra school supplies.

The Senate's tax-writing committee will wade through its newly unveiled measure starting Monday. That group pushed Brady to keep the property tax deduction in the House bill.

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