UPDATE #2: Don’t hold your breath:
— Kara Mason (@karanormal) November 2, 2017
UPDATE: The National Association of Home Builders joins the chorus against the House GOP’s tax bill in a strongly-worded statement today:
“The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations. The bill eviscerates existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives.
“And capping mortgage interest at $500,000 for new home purchases means that home buyers in expensive markets will effectively lose this housing tax benefit moving forward.
“The House leadership killed a cost-effective plan proposed by NAHB that Ways and Means Committee leaders agreed to include in the legislation. It would provide a robust homeownership tax credit that would have helped up to 37 million additional home owners who do not currently itemize. Most of them are low- and moderate-income home owners.
“Meanwhile, as corporations receive a major tax cut, small businesses, which generate the lion’s share of job growth, get limited relief.
“The bottom line: Congress is ignoring the needs of America’s working-class families and small businesses.
“And by undermining the nation’s longstanding support for homeownership and threatening to lower the value of the largest asset held by most American families, this tax reform plan will put millions of home owners at risk.”
We’ll be very curious to see how Colorado’s most politically-connected homebuilder, Republican Larry Mizel, responds. What appears to be a solid wall of resistance to this bill from the homebuilding and real estate industries could put Colorado Republicans in an interesting predicament.
Politico reporting on the release today of details from the House’s tax reform legislation, which would make sweeping changes to the tax code while blowing an estimated $1.5 trillion-with-a-t hole in the budget for future Congresses to reckon with:
House Republican leaders unveiled a tax plan Thursday that would make sweeping changes in corporate and individual taxes, including deep tax cuts, limits to the mortgage interest deduction and bigger family tax credits.
It also includes provisions that are likely to stoke controversy and fierce lobbying, including limiting the deduction of mortgage interest for newly purchased homes up to $500,000, according to a summary…
The unveiling of the legislation kicks off what is likely to be a grueling slog to get legislation to Trump by the end of the year.
The proposal calls for the biggest rewrite of the code in a generation. Its cuts in tax rates on businesses and most individuals will come in exchange for killing scores of narrowly drawn tax breaks.
Exactly who would lose in the proposal, and possibly have to pay higher taxes, has been a closely held secret, and many lawmakers will surely be surprised at the scope of changes required to make the numbers behind the plan work.
The decision to limit mortgage interest deductions on new home purchases to $500,000 isn’t a problem in states where property values have not risen that far for most homeowners. Unfortunately that does not include the state of Colorado, the location of one of the nation’s hottest housing markets in the Denver area–where the median home sale price almost hit $500,000 back in May. That’s why the National Association of Realtors is sounding the alarm over this provision of the bill:
Eliminating or nullifying the tax incentives for homeownership puts home values and middle class homeowners at risk, and from a cursory examination this legislation appears to do just that.
There’s a telling correlation between lower property values and politically red states that bears further discussion in any debate over limiting the mortgage interest deduction–especially for Republicans in prosperous swing states like Colorado. It makes the question of supporting this tax reform bill much dicier for Rep. Mike Coffman, who represents rapidly-developing areas of the east Denver metro area that could be profoundly impacted by throttling back the mortgage interest deduction.
In Colorado, watch for Coffman to be the focus of intense lobbying from both sides. Coffman’s vote in favor of the budget proposal that set up passage of the tax reform bill doesn’t bode well, but as the debate on the tax bill proceeds and unpleasant details are publicized Coffman could certainly be peeled off if the potential damage to his re-election prospects becomes great enough. In fact, we’d consider Coffman a bellwether for success or failure of the entire effort, since it’s unlikely his vote can be spared. Coffman’s “defection” would likely only come in the event that GOP leadership accepts failure and allows him a face-saving out.
By all accounts passage of this bill is not assured, with objectionable details for left and right alike that have yet to be overcome to the satisfaction of a majority. For swing-state Republicans like Coffman, the question is whether the Republican Party’s failure to pass this tax reform bill would be a failure for their own political careers–or whether passing it would hurt them more in the long run.
It’s a question Mike Coffman had better answer correctly.