U.S. House will reject total elimination of state and local tax deductions - Brady

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U.S. House will reject total elimination of state and local tax deductions - Brady

By Doina Chiacu

 

Rep. Kevin Brady (R-TX) speaks during a House Ways and Means Committee markup of the Republican Tax Reform legislation on Capitol Hill in Washington, U.S., November 9, 2017. REUTERS/Aaron P. Bernstein

 

WASHINGTON (Reuters) - The head of the House of Representatives' tax-writing committee said on Sunday he would not accept elimination of a federal deduction for state and local taxes, opposing a proposal from Senate Republicans that would hike taxes for some middle class Americans.

 

House Ways and Means Committee Chairman Kevin Brady said he guaranteed the deduction would not be entirely scrapped in a final tax bill that emerges from dueling plans already unveiled by Republicans in the House and the Senate.

 

Asked on "Fox News Sunday" if House Republicans would reject a bid by Senate Republicans to do away with the deduction entirely, Brady said: "That's what I'm saying."

 

The deduction for state and local taxes, known as SALT, has been one of the most hotly contested issues as Republicans seek to achieve a significant overhaul of the U.S. tax code and hand President Donald Trump his first major legislative victory.

 

It is a chief concern for a group of House Republicans who face re-election battles next year in high-tax, typically Democratic-leaning states such as California, New York, New Jersey, Connecticut and Massachusetts.

 

Other sticking points include a proposal by the Senate to delay implementation of a cut in the corporate tax rate and a House plan to eliminate the estate tax on inheritances. Republicans control both the House and the Senate.

 

Lawmakers will debate their respective plans this week before heading home for the Thanksgiving Day holiday. Republicans hope to resolve their differences in time to reach their goal of enacting the legislation by the end of the year.

 

The Senate tax blueprint introduced on Thursday would repeal the SALT deduction entirely. The House bill would repeal it only for state and local income and sales taxes, but preserve it for property tax up to $10,000 a year.

 

Brady said there were many similarities in the rival tax proposals. "I know that everyone's stressing the differences - there are some - but there's far more common ground," he said.

 

Both the House and Senate plans would add $1.5 trillion over 10 years to the budget deficit and national debt, an increase that has worried some fiscally conservative Republicans.

 

Both plans also call for deep tax cuts for high-earners and businesses and would reshape how the United States taxes multinational corporations. They are both widely seen as a boon for business.

 

CORPORATE GIVEAWAY OR RECIPE FOR GROWTH?

 

Congressional Democrats have criticized the Republican plans as lopsided, favoring wealthy Americans and corporate interests.

 

"Both the House and the Senate bills would raise taxes on millions of middle-class families, particularly in the suburbs, while providing a huge giveaway to corporations and the wealthy," Senate Democratic leader Chuck Schumer said.

 

"Republicans should go back to the drawing board and fully restore the SALT deduction," he said in a statement.

 

Some analyses show that some Americans would see a tax increase under both plans. Treasury Secretary Steve Mnuchin acknowledged that on CNN's "State of the Union" on Sunday, although he said most middle-class families would be better off.

 

"For most people - and, again, it may not be 100 percent, but by far the majority - both the House and Senate version provide middle-income tax relief," he said.

 

White House economic adviser Gary Cohn said both plans adhere to Trump's two main objectives in overhauling the tax code: a tax cut for middle-income Americans and a deep reduction in the corporate tax rate to make U.S. businesses competitive.

 

"That's how we're going to grow the economy. That's how we're going to pay for the tax bill," Cohn said on Fox's "Sunday Morning Futures."

 

A report by Congress' Joint Committee on Taxation estimated earlier this month that the House bill could raise taxes on as many as 38 million people who earn between $20,000 and $40,000 per year, beginning in 2023.

 

Republican Representative Peter King has fiercely opposed the elimination of the SALT deduction, saying many in his home state of New York earning $300,000 a year were hardworking, two-income families facing a very high cost of living.

 

"They're not hedge fund people," King said on "Sunday Morning Futures." "These are hardworking people and they're going to get screwed by this bill."

 

(Reporting by Doina Chiacu; Additional reporting by Sarah N. Lynch; Editing by Kieran Murray and Dan Grebler)

 

-- © Copyright Reuters 2017-11-13

[connda]

15% flat tax for individuals and corporations, do away with all exemptions.  Easy.

[Jingthing]

The kill the state tax deduction gambit was an obvious play to punish the blue, anti-trump, states. Another case where trump is the president of only his base. He's all about dividing. It's not the United States anymore. It's the divided states of the trump era. 

[Jingthing]

15 minutes ago, connda said:

15% flat tax for individuals and corporations, do away with all exemptions.  Easy.

Too easy. 15 percent is too low for corporations and ruinously high for poor people. The deficits would explode.

I'm not entirely against a radical simplification but your idea is not good. 

[BuaBS]

What a surprise !

[boomerangutang]

The House and Senate trying to make Trump's tax recommendations (though typically vague) fair or reasonable is an impossible task.  It's akin to taking shards of glass and trying to make them into a diamond.  

 

Trump, with his infantile knowledge of taxes to begin with, is not the person who should be steering the ship of state or the barge of taxes.  He starts with the premise of making the tax code as cushy as possible for very rich.  That's a bad premise.

 

It's like talking about about lowering cost of government, but in the same breath, insisting that Pentagon expenditures should go up 10%.  That's another of Trump's ridiculous mandates.  The Pentagon, which spends a half a billion dollars/day to keep several hundred soldiers cool in their tents in the Arab dunes.

[Foozool]

US entering to a new slavery age. 

 

Edited November 13, 2017 by Foozool

[Trouble]

8 hours ago, connda said:

15% flat tax for individuals and corporations, do away with all exemptions.  Easy.

Agree.  There is no doubt tax reform is needed and whether one keeps a set of tax brackets or a flat tax, the point is that they should do away with all deductions. You can bet the things that need to be done to revise the tax code will never get done.  Neither Republicans nor Democrats will do the "right" thing.  Interesting that the new tax reform will add 1.5 Trillion to the budget deficit over 10 years. Are they all forgetting that during the Obama years the deficits exploded.  Neither party can see fit to reduce spending and entitlement programs because they all pander to voters special interests. The result of doing away with SALT deductions definitely hurts people in certain high cost states and that also makes people pay taxes on taxes. However I can get behind that IF they would really make the tax code fair. What needs to happen is that they gradually shift to a flat tax or a set of tax brackets without deductions over a 10 year period gradually reducing deductions so that people can adjust. The current tax code is nothing but instructions to treat different classes of people differently regardless of income level.  In my case my tax guy goes and puts in what few deductions I get and comes out with a adjusted gross income and then the alternative minimum tax calculations kick in and negates all the deductions.  It is a convoluted mess of a tax system that only benefits the CPA's.  The bunch of idiots in Congress, both Republican and Democrats, couldn't fix something if their lives depended on it.  They are a bunch of inept buffoons.

 

With regard to Trump, I don't think he has a desire to revised the tax code for the sole purpose to benefit the wealthy.  The tax code is a convoluted mess that no one understands, is not transparent, and is difficult to find your way through.  He is a businessman and see things in terms of simplification.  Just because one doesn't like Trump, is no reason to not see that the tax code is a mess. The Democrats have been harping on the idea that the rich don't pay taxes and all the tax information points to the fact that they pay the largest percentage while about 50 percent of the population pays next to nothing.  The statistics are provided each year by the IRS but no one on the left wants to read them. I simply want a tax code that is fair and reasonably easy to interpret.  But I can't count on Congress to give me that. 

[lannarebirth]

9 hours ago, Jingthing said:

Too easy. 15 percent is too low for corporations and ruinously high for poor people. The deficits would explode.

I'm not entirely against a radical simplification but your idea is not good. 

That is what the standard deduction is for. 15% is too low. Better would be a 4 tier. 10% to $50k, 25% to $300k, 35% to $1 million, 45% above. That would fund many programs including healthcare out of the general fund. And dump the AMT.

Edited November 13, 2017 by lannarebirth

[gk10002000]

Dump the AMT for sure.  It just doesn't make much sense.  Tax or don't tax. Don't make me muddle through circuitous and then recursive calculations.  A few less tax brackets is a non issue and doesn't make much of a difference in the over all picture.  A little more gets taken from one old bracket but it is given back by one of the newer brackets.   As for personal versus corporate tax rates and issues, well, those really are different things. Not sure how much corporate parts were addressed in the new tax bills/proposals

[Scott]

Troll post removed.  

[Dumbastheycome]

21 hours ago, Foozool said:

US entering to a new slavery age. 

 

lmao! Not  new.  Intensified.

[observer90210]

Not defending or accusing the US tax policy, but just keep in mind that certain European countries, have a special tax if you own your home called "rental value tax". Simply put, besides the regular house/land tax/municipal/state/federal taxes, it is a sort of fiscal punishment (no other way to put it) ... a fiscal punishment to the home owner for not paying rent !....

 

But to raise US taxes on folks earning 20K to 40K/annum ?....seems rather harsh ? Can one live decently with such an amount in NYC or LA, if I may ask ?

Edited November 14, 2017 by observer90210

[stevenl]

28 minutes ago, observer90210 said:

Not defending or accusing the US tax policy, but just keep in mind that certain European countries, have a special tax if you own your home called "rental value tax". Simply put, besides the regular house/land tax/municipal/state/federal taxes, it is a sort of fiscal punishment (no other way to put it) ... a fiscal punishment to the home owner for not paying rent !....

 

But to raise US taxes on folks earning 20K to 40K/annum ?....seems rather harsh ? Can one live decently with such an amount in NYC or LA, if I may ask ?

When paying 'rental value tax' they also get tax refund for interest paid on the mortgage.

 

But European taxes are not really the topic here.

[Jingthing]

Not defending or accusing the US tax policy, but just keep in mind that certain European countries, have a special tax if you own your home called "rental value tax". Simply put, besides the regular house/land tax/municipal/state/federal taxes, it is a sort of fiscal punishment (no other way to put it) ... a fiscal punishment to the home owner for not paying rent !....
 
But to raise US taxes on folks earning 20K to 40K/annum ?....seems rather harsh ? Can one live decently with such an amount in NYC or LA, if I may ask ?

No.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

[observer90210]

5 minutes ago, stevenl said:

When paying 'rental value tax' they also get tax refund for interest paid on the mortgage.

 

But European taxes are not really the topic here.

Fine...then what would be your opinion on the tax hike for the 20k - 40k/annum earners, that should be "on topic".

Edited November 14, 2017 by observer90210

[Andaman Al]

Rep Larson slam dunks it!

 

 

 

[gk10002000]

6 hours ago, observer90210 said:

Not defending or accusing the US tax policy, but just keep in mind that certain European countries, have a special tax if you own your home called "rental value tax". Simply put, besides the regular house/land tax/municipal/state/federal taxes, it is a sort of fiscal punishment (no other way to put it) ... a fiscal punishment to the home owner for not paying rent !....

 

But to raise US taxes on folks earning 20K to 40K/annum ?....seems rather harsh ? Can one live decently with such an amount in NYC or LA, if I may ask ?

As for living in NYC or LA, it all depends on how you define living.  Can one afford a standard mortgage, handle a car payment, raise kids, support a wife?  No.  can you do those things if you are living or sharing a house with your parents, or 2 room mates, have no children, don't save for retirement at any decent level, don't pay for school at night or weekends, don't drive a fancy car.. maybe some piece of junk handed down from a sibling or the parents, then yes to some degree.