Earlier this month, the House GOP detailed their new tax plan that could potentially reduce our federal revenues by $1.5 trillion. If the bill goes into effect, it will make widespread changes to the tax code, effectively rewriting it.
One of the interesting points in the proposed bill is a change to the popular mortgage interest deduction which currently allows people to deduct the interest paid on their first and second mortgage up to $1,000,000. However, with the new plan the limit for deductions will be cut in half and left at only $500,000. The National Association of Realtors came out against the bill, according to William E. Brown, the president of the association, “Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and from a cursory examination this legislation appears to do just that.” The plan will severely limit typical homebuyers’ ability to use their mortgage as an interest deduction.
The true ramifications of the bill are yet to be seen and the bill still needs to go through the Senate, which will vote on the legislation after Thanksgiving. If the bill does go into effect, we will most likely see temporary tax cuts but in the long run the middle-class breaks are set to expire whereas corporate tax breaks are permanent. It also remains to be seen how much of a negative impact the cut on mortgage interest deduction will have.
Long, Heather. “Analysis | The House Just Passed Its Big Tax Bill. Here’s What Is in It.” The Washington Post, WP Company, 16 Nov. 2017, www.washingtonpost.com/news/wonk/wp/2017/11/16/the-house-is-voting-on-it....
Rappeport, Jim, et al. “Republican Plan Delivers Permanent Corporate Tax Cut.” The New York Times, The New York Times, 2 Nov. 2017, www.nytimes.com/2017/11/02/us/politics/tax-plan-republicans.html.
Times, The New York. “$1.5 Trillion Tax Cut Passed by House in Mostly Party-Line Vote.” The New York Times, The New York Times, 16 Nov. 2017, www.nytimes.com/2017/11/16/us/politics/tax-bill-house-vote.html?ribbon-a....