The House of Representatives’ top tax writer pushed back Wednesday against suggestions that the GOP might not fully repeal the state and local tax deduction in its quest to lower tax rates in tax reform.
Kevin Brady, the Texan chairman of the Ways and Means Committee, which is charged with writing the tax legislation, brushed off those claims as “speculation” and not accurate in interviews Wednesday morning.
“Here’s what I can confirm, that we are listening to lawmakers, especially those in high tax states, where those governors and those mayors are really putting the screws to hard-working taxpayers,” Brady said in an interview on Hugh Hewitt’s radio show. “We want to make sure we lower taxes for every American, regardless of where they live.”
At stake is the future of the federal deduction for taxes paid at the state and local levels. That break, which the Treasury expects to total $1.3 trillion over the next 10 years, is the single biggest pay-for the Trump administration has identified for the tax reform effort.
Nevertheless, some blue-state Republicans have said they won’t vote for a bill that removes the deduction, out of fear of tax hikes for their constituents who have high property tax bills.
On Tuesday, Rep. Chris Collins of New York suggested that Brady had committed at a Monday night dinner to dialing back the plan to eliminate the break, allowing people to keep some deductions for property taxes.
Yet on Wednesday, Brady cautioned that decisions haven’t yet been made, and that he hosts frequent dinners to talk over the plan with lawmakers.
“We are listening very carefully to lawmakers, especially in high-tax states,” he said on CNBC, where he also called Tuesday’s reports “speculation.”
Taxwriters have several options for addressing the fears of blue-state members, including consolidating housing tax breaks.
On Tuesday, the National Association of Homebuilders announced it had voted to allow more flexibility on the form that those breaks could take, no longer insisting on the mortgage interest deduction.
Nevertheless, the GOP can allow only so many targeted tax breaks without compromising on its goals of lowering business and individual tax rates across the board.
Sen. Bob Corker, R-Tenn., warned Monday evening that he was already seeing “softness” on the state and local tax deduction, which he described as one of the less “offensive” offsets for tax reform. The Trump administration has cast the break as a subsidy to high-tax and high-spending states such as California and New York.
