House Won't Accept Repeal of Local Tax Break, Brady Says

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  • Committee chairman says bill brings relief to taxpayers
  • King says he can’t vote for bill, bemoans ‘class warfare’
U.S. Tax Battle Heats Up, What to Expect

The House of Representatives wouldn’t accept a tax bill that, like the Senate’s, eliminates deductions for all state and local taxes, the chairman of the House’s tax-writing committee said.

The comments from House Ways and Means Chairman Kevin Brady show that although both the House and Senate are moving forward with plans to overhaul the U.S. tax code under tight, self-imposed deadlines, the path forward remains difficult because of differences in their legislation.

“I’m committed to” a compromise that would preserve the deduction for state and local property taxes, Brady said on “Fox News Sunday.” The House bill would eliminate existing federal tax breaks for state and local income or sales taxes, but preserve a property-tax deduction capped at $10,000. Combined with a new family-tax credit and a deduction for mortgage interest for new purchases that would be capped at $500,000 of debt, the House bill “gets the job done,” Brady said.

The Senate plan proposes to eliminate federal tax breaks for all state and local levies, including property taxes. That provision will almost certainly meet resistance from Republican House members in high-tax states such as New York, New Jersey and California. They pushed Brady to keep the property-tax deduction in the House bill.

“What we’ve worked so carefully with our lawmakers from New York and California and New Jersey is to make sure we deliver this relief,” Brady said.

Representative Peter King, a Long Island Republican who has been among the most vocal opponents of the planned repeal of state and local tax breaks, said he remains committed to trying to preserve them.

‘Class Warfare’

King said he can’t vote for the bill right now and bemoaned the justification of taking deductions away from “high-tax” states such as New York. He said his state sends more tax money to the federal government than it gets back, and that the House bill would have a “devastating” impact on taxpayers in areas such as Long Island.

“Since when did the Republicans become the party of class warfare?” King said on Fox’s “Sunday Morning Futures.” “These are hard-working people, and they’re going to get screwed by this bill.”

King said if his is the final vote needed to pass the bill, “then they better restore the state and local tax deduction. Otherwise, they’re not getting my vote.”

On Sunday, Brady rejected the idea that some middle-class families would be “losers” under the House plan because of provisions that include ending deductions for student loans and for medical expenses that exceed certain individual thresholds.

“I believe there’s tax relief all up and down the income level for families,” he said. “Every income bracket sees a tax relief.”

Your Guide to Following the U.S. Tax-Cut Debate: QuickTake Q&A

The language echoed comments from House Speaker Paul Ryan, who last week walked back his statement that “everybody gets a tax cut.” Ryan asserted in a radio interview on Wednesday instead that “there is a tax cut for the average family” in each bracket. Senate Majority Leader Mitch McConnell also acknowledged on Friday in a New York Times interview that he had erred when he said that “nobody in the middle class is going to get a tax increase.”

Brady’s committee approved its bill last week, and it’s headed for a planned vote of the full House this week. He said he believed the House is “on schedule.”

The Senate Finance Committee is scheduled to begin considering its version of the bill on Monday. Senate Republican leaders have said they want to hold a full Senate vote before Thanksgiving, which falls on Nov. 23.

President Donald Trump’s top economic adviser, Gary Cohn, said on “Sunday Morning Futures” that he expects the legislation to go to a conference committee that reconciles differences between the House and Senate versions before returning a report to both chambers for final passage.

The conferees “will decide what stays and what goes, and they’ll pick and choose the different parts that they think are important and they’ll pick the pay-fors,” said director of the White House’s National Economic Council.

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