The proposed tax overhaul isn’t a done deal just yet. While the House Republicans’ bill was approved on Thursday by the House Ways and Means Committee, the Senate Finance Committee unveiled its own version that is sure to cause delays in a tax reform resolution.
After only four days of debate, the House Ways and Means committee passed through a winning vote (24 to 16) on the Republican bill, but not without changes. Committee Chairman Kevin Brady restored the adoption tax credit and added an amendment that has “three crucial priorities: helping American families, providing tax relief to Main Street startups and increasing American competitiveness,” he said.
Mostly Democrats proposed amendments during markup, leading to a last-minute Republican outcry for a win with a Senate Finance Committee submission into the tax policy ring. The new proposed overhaul is identically named “The Tax Cut and Jobs Act,” but differs in tax policy that affects both businesses and individuals.
Here’s a quick breakdown of the Senate bill:
- Keeps the 7 current tax brackets, but adjusts qualifying income levels
- Doubles the standard deduction for individuals, married couples and single parents
- Protects deductions that the House bill threatens: medical expenses and interest on student loans for college
- Protects mortgage interest rate deduction and charitable giving deductions
- Increases child tax credit from $1,000 to $1,650—as does the House bill
- Doubles the gift tax amount that is exempt from taxation to $11 million
Most importantly to the real estate industry, the Senate tax bill maintains the threshold for the mortgage interest rate deductions for future purchases at $1 million, instead of lowering it to $500,000 as proposed in the House bill.
National Association of REALTORS® (NAR) President Elizabeth Mendenhall said that as NAR reviews the legislation, REALTORS® are steadfast in ensuring homeownership is protected throughout the tax debate.
“While we are still reviewing the outlines of this proposal, we are watching closely for changes to current law that might leave middle-class homeowners—and homeownership broadly—in a worse place than it is today,” says Mendenhall. “We’ve already seen that a near-doubling of the standard deduction, combined with the elimination of other deductions like the state and local tax deduction, can turn the American Dream into a nightmare for families as the rug is pulled out from under them. Simply preserving the mortgage interest deduction in name only isn’t enough to protect homeownership.
“America still believes in the promise of homeownership,” Mendenhall says. “Tax reform should reflect that belief, and as we continue to examine this proposal, that’s exactly what we’ll look to see.”
While the Republican party is searching out ways to pass a successful tax reform bill with an aggressive deadline, the two options may cause delays in Congress due to clashing beliefs.
Stay tuned to RISMedia for more developments.