The National Association of Home Builders, after learning that a “homeownership” tax credit it had wanted will not be in an initial version of the bill, is preparing a nationwide campaign against it. The development underscored just how difficult the prospect of a successful tax overhaul will be, given the complex and competing interests that President Trump and GOP lawmakers are trying to serve.
“We will do everything we can to defeat this thing,” said Jerry Howard, chief executive of the National Association of Home Builders.
.. Much of the pressure, and spotlight, will fall on Brady.
.. Ryan and Brady had been hoping to stave off corporate defections as long as possible, arguing that the plan’s benefits to the economy would outweigh the loss of any industry-specific tax break.
.. Home builders are considered among the most politically influential groups, as they play a large role in the local economy for virtually every congressional district — and contribute millions to political campaigns.
.. Howard and Brady’s aides spent weeks working together to add to the bill a “homeownership tax credit,” which essentially would have replaced the mortgage-interest and property-tax deductions, combining both benefits into a new tax credit.
.. he feared that other changes could tip the housing industry into a recession. He was particularly concerned about ideas to eliminate the federal deduction for state and local taxes and doubling the standard deduction, which could remove incentives for all but the “very wealthy” to deduct their mortgage interest — and have a chilling effect on homeownership.
.. federal government would gain revenue in the short term as a greater portion of initial savings is taxed — but lose revenue in the long term.
.. On Saturday, Brady gave ground on the planned elimination of the federal income tax deduction for state and local taxes — a provision that had put Republican House members from New York, New Jersey, California and other high-tax states on edge — agreeing to maintain a deduction for property taxes but not for income or sales taxes.
.. He has been a relentless advocate for “pro-growth” measures — which largely refer to business provisions meant to goose investment.
..
The idea seemed “brilliant,” in Schweikert’s recollection. But then Brady started asking questions. And not long afterward, Schweikert withdrew his idea and the debate quickly moved along. Thanks to Brady’s soft touch, he said, he understood the decision.
“I don’t know of many members here who could handle the ideological or even the temperamental range that’s in the room,” Schweikert said. “Instead of saying, ‘That’s a dumb idea,’ or, ‘No, I’ve got to get you back over here,’ it’s, ‘Let’s walk through that. How would that work? How would you enforce that?’ ”
How tax breaks could break tax reform
Hundreds of special tax provisions for groups of all stripes litter the tax code, and clearing them out won’t be easy.
But most of the lawmakers weren’t around for the last tax overhaul, in 1986, and many longtime tax aides say they are seriously underestimating the degree of difficulty that comes with uprooting hundreds of provisions. Many predict they will have no easier time undoing loopholes that have been in the code for decades than they’ve had rolling back Obamacare.
“Oh my Lord, people come out of the woodwork,” said Dean Zerbe, a former congressional tax aide.
.. Still, even though they’re caricatured as special-interest breaks, many of the narrow provisions are for average people doing mostly average things.
.. One problem for tax reformers is that many of the biggest provisions that would go furthest towards financing a tax-code rewrite — like the deductions for mortgage interest and charitable contributions — have become all-but-untouchable.
.. On the other hand, it’s also tough for lawmakers to go after smaller ones, especially those benefiting politically popular groups, because they promise difficult fights over relatively little money. Section 107, for instance, excuses a “minister of the gospel” from paying taxes on the share of her income deemed to be a housing allowance.
.. So one trick for Republicans will be knowing which provisions are big enough to fight over, when it comes to raising cash, but not so large that they cannot be undone.
.. many predict Republicans will be forced to settle for something more narrow, like a tax cut that’s partially paid for, in order to reduce the number of losers to a more doable level.
Just. Cut. Taxes.
But the world is what it is, and a party that offers nothing, whose ideological sclerosis and internal contradictions allow it to offer nothing, might as well just go pass a tax cut and call it a day.
.. the Republican leadership in Congress persuaded itself that it could pull off a complicated fiscal maneuver, using health care reform to change the budget baseline in anticipation of a tax reform more comprehensive and enduring than George W. Bush’s tax cuts 15 years ago.
.. Republicans could just go ahead and cut taxes the way Bush did — without major offsets but with a 10-year expiration date, so that all you would need is 50 votes plus Mike Pence to do it.
.. there are still lots of clever and plausible ways to overhaul and improve the tax code without sacrificing revenue.
.. You could cap various perverse deductions that mostly benefit wealthy blue-state taxpayers, like the home-mortgage and state and local tax deductions, and use the savings to lower rates across the board. You could cut the corporate tax rate and raise the capital-gains tax rate to compensate, as Senator Mike Lee has proposed. You could even (gasp, heresy, gasp) raise the top income tax rate, as Steve Bannon reportedly wants to do, and use the savings to cut payroll taxes or fund a new child tax credit.
.. Republicans don’t seem equipped to pull off anything complicated, they don’t look united enough to take political risks, and they aren’t ideologically ready to pass anything heretical. So barring a sudden transformation in the party and its leadership, a temporary, deficit-financed tax cut is the only thing that has a decent chance of happening
.. One reason among many that Obamacare repeal has run aground is that the deficit picture doesn’t look as dire as it did when the health care law was passed — and Obamacare itself is not driving the kind of spending surge that many of its critics (myself included) feared.
.. Instead, the ugly years of fiscal cliffs and shutdowns and sequesters produced a certain amount of deficit reduction even without a grand bargain, Medicare spending has been coming in lower than expected, and interest rates have stayed historically low.
.. without doing much entitlement reform, we’re in much better shape than either the Simpson-Bowles commission or the deficit hawks of the 1990s projected.
.. I can live with a Trump administration that appoints conservative judges and fails at everything else, since judicial appointments are about the only thing I trust this G.O.P. to do.