With the strong backing of the nation’s home builders, several Republican members of the House Ways and Means Committee are taking steps to kill a presidential panel’s tax reform proposal that would eliminate or sharply curtail the mortgage-interest deduction and do away with state and local taxes.
“We stand shoulder-to-shoulder with the members of the tax-writing Ways and Means Committee who support these important housing tax provisions,” said Jerry Howard, executive vice president and CEO of the National Association of Home Builders.
“As the Administration finalizes its tax simplification plan, we will continue to work with members of Congress to convince the White House to reject proposals that would harm homeowners, the housing sector and the economy,” he added.
Eight members of the Ways and Means Committee recently sent a letter to Treasury Secretary John Snow urging the Administration to “preserve some important incentives for homeownership investment that clearly work.”
“While many investment opportunities exist today,” the letter states, “perhaps none provides more in return for individuals, families and communities than homeownership. That is why we urge you to preserve the deductions for mortgage and home equity interest, and state and local taxes, which underpin home ownership and the social and economic benefits it generates.”
The White House and Treasury Department have yet to comment on the proposal, which was presented Nov. 1 by the President’s Advisory Panel on Federal Tax Reform as part of an overall attempt to revamp the tax code. The plan calls for replacing the popular mortgage-interest deduction with a far more limited 15 percent tax credit. Also gone would be deductions for state and local taxes (including property taxes) and interest deductions for home equity loans and second homes. It would also eliminate the Low Income Housing Tax Credit, which accounts for the construction of more than 130,000 affordable rental-housing units annually.
Commenting on the plan during a Nov. 10 joint media news teleconference with NAHB leadership, Rep. Jerry Weller, R-Ill., a member of the Ways and Means Committee, reported a widespread “sense of alarm” from his constituents over proposals to scale back or eliminate the mortgage interest deduction and eliminate state and local taxes.
Declaring that these proposals would be “dead on arrival” if presented to his committee, Weller said that a typical middle-class homeowner in his state would see a tax hike of $2,000-$2,500 if the advisory panel’s tax plan went into effect.
Homeowners in his state would also face the danger of seeing a reduction in the value of their property, and that would have negative implications for the health of the nation’s economy, the congressman indicated.
During the phone conference with the news media, NAHB released results from a national survey by Public Opinion Strategies that found wide-ranging public disapproval of efforts to tamper with the mortgage-interest deduction and other important housing tax incentives promoting home ownership.
Also released were detailed scenarios outlining how typical home-owning families in Chicago, San Jose, Calif., and Binghamton, N.Y., would face tax hikes under the proposal.
Survey results and examples showing how homeowners would fare under the tax plan are available online at NAHB’s Web site.
In addition to Rep. Weller, other Ways and Means Committee members who signed the letter to Treasury Secretary Snow opposing removal of the housing tax incentives were: Reps. Kevin Brady, R-Texas; Eric Cantor, R-Va.; Mark Foley, R-Fla.; Wally Herger, R-Calif.; Nancy Johnson, R-Conn.; Ron Lewis, R-Ky.; and Clay Shaw, R-Fla.
The National Association of Home Builders is a Washington-based trade association with more than 220,000 members.
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