The House of Representatives’ tax-reform 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 tax bills, 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. Long Island Republicans Peter King, of Seaford, and Lee Zeldin, of Shirley, were among 13 GOP members who voted against the bill. Before the vote, King, who has supported President Trump on a number of fronts, said he would not support tax reform legislation that eliminated deductions for property taxes and state and local taxes, noting that the deductions have been in place since 1913.
“While I strongly believe our tax code needs to be reformed and simplified, everything must be done to ensure property tax and state income tax deductions are preserved,” King said. “No one should be taxed again on money you have already been taxed on at the state level.”
The nonpartisan Congressional Budget Office recently 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.
Leon Sanchez, a broker for Newman Realty in Malverne, said that limiting or eliminating deductions for property taxes would be a big blow to residents. “It would hurt a tremendous amount,” Sanchez said. “We’re a small village that’s self-sustained by our residents, so it’s a big deal to have that deduction.”
Sanchez added that the large deduction is one of the reasons why people buy homes. He said that while he doesn’t believe that eliminating it would affect home sales, it would harm other industries closely related to real estate.
“When real estate dies, contractors, banking, engineers, appraisers — they all die,” Sanchez said. “With all the other tax increases, it would become a nightmare.”
If the House plan were to pass, 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.
“The Long Islanders I represent feel completely sold out by this tax plan,” State Sen. Todd Kaminsky said in a statement. “Hardworking middle class families are at the brink, and I fear that any additional tax increase will push them over the edge. I have communicated my very strong thoughts to our representatives in Washington that this plan is unacceptable.”
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 at the Tax Policy Center at the Urban Institute and Brookings Institution, a Washington, D.C.-based think tank.
“Representative Rice voted no on the House Republican bill because it would raise taxes on many middle-class families in our district to pay for a huge tax cut for the wealthy and big corporations,” said Coleman Lamb, Congresswoman Kathleen Rice’s communication director. “Half of our constituents deduct state and local taxes — this bill eliminates that deduction for individuals and families, but lets corporations keep it. It adds trillions to the deficit, which will lead to cuts to health care, education, Social Security and other programs that hardworking Americans depend on. Representative Rice will keep working to defeat this bill and keep demanding real, bipartisan tax reform that puts the middle class first and provides relief to people who really need it.”
The House bill would retain a limited deduction of $10,000 for property taxes, but the Senate bill would scrap that deduction 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 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.
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’s desk 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.