The House of Representatives’ tax bill passed by a 227-to-205 vote on Nov. 16, paving the way for high-tax suburban regions like Long Island to be hit hard by tax increases while much of the rest of the country could see at least modest cuts in federal taxes, according to local elected leaders. The legislation would limit or eliminate deductions for property taxes, mortgage interest and state and local taxes.
All 192 House Democrats opposed the measure, including Rep. Tom Suozzi, who represents the 3rd Congressional District, which includes Glen Cove. Long Island Republicans Peter King, of Seaford, and Lee Zeldin, of Shirley, were among 13 GOP members who voted against the bill.
“For those who supported this bill, they are complicit in what will be a devastating tax increase on the middle class,” Suozzi said. “I urge the Senate to reject this legislation and instead work with the House to pass a bipartisan bill that makes sense and protects hard-working middle-class families in New York and across the country.”
Glen Cove resident Stuart Held also opposed the bill. “I think the bill that passed in the House favors the ultra-rich,” he said. “The little guy looks like they aren’t getting any recognition.” He added that he hopes the Senate bill will not be approved, so the two versions can be renegotiated.
The nonpartisan Congressional Budget Office last week released its analysis of the legislation. According to the CBO, the House plan would add roughly $1.7 trillion to the U.S. debt over 10 years. The Senate plan was still being analyzed at press time.
If the House plan were to become law, the national debt would increase by 6 percent over a decade, after which it would nearly equal the nation’s gross domestic product, according to a letter to Congress written by CBO Director Keith Hall.
Both the House and Senate bills would keep tax exemptions for employer-sponsored health plans and retirement savings accounts, explained Howard Gleckman, a senior fellow a the Tax Policy Center at the Urban Institute and Brookings Institution, a Washington, D.C.-based think tank.
The House bill would repeal most of the state and local tax deduction, but would retain a limited deduction of $10,000 for property taxes. The Senate bill would scrap the deductions entirely. The House bill would impose new caps on mortgage interest deductions, while the Senate bill would end them. And the House bill would end the deduction for medical expenses, while the Senate bill would retain it, Gleckman said.
Both bills would cut corporate income tax rates and tax rates on pass-through businesses, such as partnerships, from 35 percent to as low as 20 percent. The standard deduction for average tax filers would be doubled.
The tax cuts “would primarily benefit businesses and high-income households,” Gleckman said.
“I feel unequivocally that the removal of the deductions is going to hurt my constituents, and that’s why I’ve been so vocal about putting those deductions back into a compromise bill,” said District 18 Legislator-elect Josh Lafazan. “We’re not talking about aristocrats here. These are hardworking families, and if these deductions are removed, we’re talking about thousands of dollars that have to be paid . . . dance lessons for the kids are tabled ... investing in local businesses is put on hold.”
Sea Cliff Mayor Edward Lieberman said that the New York Conference of Mayors has taken an official position opposing the elimination of tax deductions. “To me it’s another example of prejudice, both financial and otherwise,” Lieberman said. “If [they’re] eliminated, it’s going to affect approximately 35 percent of New York state’s population who uses those itemized deductions.”
Lieberman called the proposal an “unfair assault” on local taxpayers. “Hopefully the Senate will amend that aspect of the bill to ensure the elimination doesn’t take place,” he said.
Alex Gallego, president of the Oyster Bay Chamber of Commerce and senior vice president of investments at Raymond James, said that tax reform is needed, but the proposed legislation could go either way, to benefit or hurt Oyster Bay residents. “It is important to note that the detailed framework still needs to be translated to legislation,” Gallego said, “and details of the final legislation could differ significantly from the framework.”
The two tax plans will be debated and modified in the coming weeks, before a unified bill can be agreed on and sent to President Trump for signing. Trump made tax reform, in particular simplifying the tax code, a centerpiece of his 2016 campaign, and is banking on passing legislation this year to bolster his declining poll numbers, according to a number of pundits.