The real estate lobby spent big trying to defeat the biggest tax cuts since the Reagan administration. According to recently released lobbying disclosure reports, the National Association of Realtors spent more than any other interest group as Republicans were putting finishing touches on their tax overhaul.
Though always a big player, NAR dropped $22.2 million on lobbying in the fourth quarter of 2017 alone. That spending dwarfed the other usual lobbying giants, even making the Chamber of Commerce’s $16 million look like child’s play. And the surge makes sense in a cynical sort of way. While the new tax code lets consumers keep more of their money, realtors fear it will hurt their bottom line.
It’s not that realtors oppose tax breaks per se. It’s that realtors oppose tax breaks that weaken incentives for homeownership, and that don’t provide a subsidized boon to their industry. Specifically, they opposed the reform to the federal standard deduction. And they said so while under oath.
Testifying before the Senate Finance Committee last September, Iona Harrison of the National Association of Realtors warned that doubling the standard deduction “destroys the incentive value of itemized deductions for most, as the great majority of taxpayers would receive the same tax benefit whether or not they engaged in the behavior the deduction is designed to encourage.”
What’s that mean in English? When middle-class families sit down to do their taxes, they can choose either to itemize their deductions or claim the standard deduction. To streamline the tax code, Republicans nearly doubled the standard deduction, from $6,500 to $12,000 for individuals and from $13,000 to $24,000 for married couples.
So why does your realtor care how you do your taxes? Because with that kind of cash on the table because of the doubled standard deduction, fewer taxpayers will have to bother with itemizing, and that means they don't have to worry about taking the mortgage-interest deduction, which is supposed to create incentives for them to buy homes. Again, and as Washington Examiner's Tim Carney pointed out during the debate over the tax bill, realtors don’t mind if their customers keep more money in their pocket. They just want that tax break to be conditional on buying one of their homes.