House Votes Yes, Propels Tax Reform Forward

Washington — Today, the House  passed its version of a sweeping overhaul of our nation’s tax code, moving our nation one step closer to achieving major reform for the first time in more than three decades. Heritage Action released the following statement from chief executive officer Michael A. Needham:

“House Republicans should be proud of the work they’ve done to move tax reform forward. Since the last major update to our nation’s tax code in 1986, lawmakers from both parties have talked about providing relief to families and made repeated promises to help Americans keep more of their hard-earned dollars. The Tax Cuts and Jobs Act has paved the way to achieve just that, and marks a critical step in the legislative process.

“While there is more work ahead to ensure strong tax reform becomes a reality for the American people, the House bill makes substantial strides in simplifying the code, lowering rates, helping workers and small business owners, and unleashing growth. All taxpayers have reason to be optimistic for the future of our economy.”

Ending Obamacare Mandate will Advance Tax Reform

Washington — Tax reform continues to move forward in Washington as the House Ways and Means Committee nears the end of its work on the Tax Cuts and Jobs Act (H.R. 1) and the Senate prepares to release its version of tax reform. According to numerous press reports and various cost estimates, the TCJA is outside the bounds of the congressional budget resolution and additional changes will be required.  As Heritage Action argued last week, zeroing out Obamacare’s individual mandate penalty would help the reforms budget score and allow lawmakers to “deliver tax relief to the American people, they should also ensure they are not forced to pay a penalty to the IRS for not buying unaffordable and unworkable health insurance.” Heritage Action released the following statement from chief executive officer Michael A. Needham:

“While no tax reform is perfect, many of the concessions made in the House proposal are the direct result of self-serving special interests groups. Those trade offs result in bad policy, like the creation of a 45.6 percent bubble rate in the House bill that Barack Obama could only dream of implementing.  Heritage Action shares the GOP’s desire to grow the economy and deliver meaningful tax relief to all Americans. To make that possible within the bounds of artificial budget constraints and Senate rules, Congress should eliminate Obamacare’s individual mandate tax penalty and the property tax deduction. These two changes would allow Republicans to fulfill their pledge to grow the economy and provide meaningful tax relief for the American people.”

In addition to correcting the “bubble tax” that would reportedly raise $50 billion over the next decade, The Heritage Foundation recommended five ways to improve the TCJA in the House, writing:

“While the tax package as a whole is certainly a positive step in the right direction, there are important ways to improve the Tax Cuts and Jobs Act to both meet the goals of pro-growth tax reform and avoid increasing marginal rates on any taxpayers.”

Those changes include 1) Lower marginal rates at every level; 2) Increase expensing; 3) Maintain the commitment to a territorial tax system; 4) Full repeal of the state and local property tax deduction; and 5) Repeal the individual mandate of Obamacare.

House Republicans Unveil Tax Reform Plan

Washington — This morning, the House Ways and Means Committee released preliminary legislative text of a sweeping overhaul of America’s long outdated tax code. Similar to the framework announced in September, the plan would slash the corporate and pass-through rates by 15 percentage points each, simplify the individual tax code by moving from seven brackets to four, nearly double the standard deduction, and provide temporary expensing for capital investments. Heritage Action released the following statement from chief executive officer Michael A. Needham:

“At first glance, the preliminary text released today has the potential to unleash economic growth, create American jobs, increase wages for American workers, allow families to keep more of their hard-earned money, and make U.S. businesses competitive across the globe. Heritage Action applauds President Trump, Chairman Brady and congressional leaders for producing a serious plan to fundamentally reform a stagnant and convoluted tax code that suppresses American job creators and workers.

“Many of the concessions made in the proposal are the direct result of self-serving special interests groups like the National Association of Realtors and a small group of lawmakers placing parochial interests above the nation’s interests. As Heritage Action reviews the text and subsequent revisions, it is imperative the administration and congressional leaders work hand-in-hand with conservatives to make improvements where possible.

“One improvement would be the elimination of Obamacare’s individual mandate tax penalty. As the Trump administration and congressional Republicans work to deliver tax relief to the American people, they should also ensure they are not forced to pay a penalty to the IRS for not buying unaffordable and unworkable health insurance. This once in a generation opportunity to unleash economic growth, create jobs and increase wages cannot be squandered.”

The Heritage Foundation released the following statement from tax policy analyst Adam Michel:

“The details of the Tax Cuts and Jobs Act released today by the House Ways and Means Committee include some of the essential components of pro-growth tax reform. As it currently stands, the plan would significantly lower business tax rates and provide temporary expensing for new capital investments. These components would be a boost for working Americans who will see increased wages and greater job opportunities. The plan also takes huge strides in simplifying the tax code by lowering tax rates for a majority of Americans, reducing the use of itemized deductions, and significantly scaling back the state and local tax deduction which vastly benefits the wealthiest Americans.

“Future changes and amendments to this tax legislation have the opportunity to further increase the pro-growth potential of tax reform. Congress should turn its focus to expanding and making expensing permanent, fully eliminating the property tax deduction, eliminating the additional fourth tax bracket, and limiting the scope of the new international minimum tax. Pro-growth tax reform is critical to unleash the U.S. economy and strengthen workers’ wages and job opportunities. While the Ways and Means proposal is a big step in the right direction, Congress has the chance to improve the tax plan to further enhance the proposed reforms’ benefits for all Americans.”

Real Estate Professionals Sign Letter Supporting Tax Reform

Washington — This morning, Heritage Action released a letter signed by 146 real estate professionals from all across the country in support of tax reform. The signers write, “If passed, the GOP tax proposal would unleash economic growth, create jobs and increase wages for American workers by dramatically cutting taxes on U.S. businesses, lowering and simplifying tax rates on all individuals, and eliminating special interest handouts.” The letter continues:

“We specifically encourage you to keep the proposal to double the standard deduction and repeal the state and local tax (SALT) deduction. Contrary to what the National Association of Realtors (NAR) claim, doubling the standard deduction and repealing SALT does not increase taxes on homeowners and millions of middle class families. The 70 percent of taxpayers who don’t itemize will receive a significant tax cut break through the doubling of the standard deduction.”

The National Association of Realtors and the National Association of Home Builders are opposed to the tax reform effort. Heritage Action chief executive officer Michael A. Needham hammered the two groups yesterday on Fox News Sunday:

“Every single corrupt force of the status quo in Washington, D.C., the [National Association of Realtors], the Home Builders, the representatives of high-tax state are going to all come in and try to pick apart this plan and protect their little carve out. … [The National Association of Realtors] is just making totally kind of the arguments about themselves and what’s good for themselves. This is a tax cut that will be good for people who don’t itemize, for people who do itemize. This is a great plan for the country and we need to get it done before the forces of the status quo and the special interests tear it apart.”

The full letter is below and signers can be found here.

Dear Speaker Ryan and Leader McConnell:

We the undersigned real estate professionals are writing to express our strong support for the Unified Framework for Fixing Our Broken Tax Code recently released by the so-called “Big Six.” If passed, the GOP tax proposal would unleash economic growth, create jobs and increase wages for American workers by dramatically cutting taxes on U.S. businesses, lowering and simplifying tax rates on all individuals, and eliminating special interest handouts.

We specifically encourage you to keep the proposal to double the standard deduction and repeal the state and local tax (SALT) deduction. Contrary to what the National Association of Realtors (NAR) claim, doubling the standard deduction and repealing SALT does not increase taxes on homeowners and millions of middle class families. The 70 percent of taxpayers who don’t itemize will receive a significant tax cut break through the doubling of the standard deduction.

Those few Americans who continue to itemize, which NAR points out will only be the top 5 percent of tax filers, will also receive a tax cut as the marginal rates will likely come down across the board. By eliminating state and local tax breaks, lawmakers could use the increased federal revenue to reduce marginal tax rates by as much as 16.4 percent without adding to the deficit.

In addition, while doubling the standard deduction would nullify the need for middle class families to take the mortgage interest deduction (MID), it would have the positive effect of lowering housing prices and help expand the first time homebuyer market. Repealing the SALT deduction would finally put pressure on fiscally irresponsible state and local politicians, specifically in California, New York and New Jersey, to lower their income and property taxes. Why would a state like New York lower taxes if federal taxpayers continue to subsidize its out of control spending?

It’s been far too long since Congress reformed our broken tax code and our economy has suffered as a result. According to the Tax Foundation, pro-growth tax reform has the potential to grow the economy by 10 percent over the next 10 years and increase the average American family’s wages by more than 7 percent or about $4,000 for someone earning $50,000 a year.  This GOP tax proposal is a serious tax reform package that will grow the economy and help create a healthy and robust housing market. The time for action is now.

Sincerely,

House Passes Budget, Officially Begins Tax Reform Effort

Washington — This morning, the House approved the Senate-passed Fiscal Year 2018 Budget Resolution (H. Con. Res. 71), which contains reconciliation instructions for a $1.5 trillion revenue reduction. Heritage Action released the following statement from chief executive officer Michael A. Needham:

“Now the real work begins. With today’s vote, Congressional Republicans have the ability to reform our nation’s stagnant and convoluted tax code without fear of Democrat obstructionism. This once in a generation opportunity to unleash economic growth, create jobs and increase wages cannot be squandered by petty personal differences or special interest pandering.

“Specifically, the GOP framework was right to call for the elimination of the state and local tax deduction.  SALT is bad policy, and Congress should not allow low tax states to subsidize reckless, big-government tax-and-spend policies in liberal states. Similarly, the National Association of Realtors, defenders of corporate loopholes and proponents of the death tax should not stand in the way of tax reform that is vital to unleash growth and opportunity in our nation.”