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Thursday, January 17, 2019

Reprinted with permission from Creators.

The story making the rounds is that the Republican tax plan targets homeowners only in expensive blue states — people who tend to vote for the other party. That’s only partly true. Homeowners everywhere would get hit. The reasons will follow.

As a whole, the “reforms” are an abomination. Through some tricks to hide its effects early on, the plan would move more of the nation’s tax burden down to the middle class and lower. Some 13 million could lose their health coverage.

Worst of all, the GOP tax plan would cost between $1.5 trillion and $2.2 trillion over 10 years. As a result, the national debt would explode to 123 percent (!!!) of the gross domestic product by 2037 — that is, unless Republicans were to raid Social Security and Medicare.

That said, not all the proposals affecting homeowners are awful. Just some. The proposal dealing with the deductibility of interest on large mortgages makes sense.

The House plan would cap the amount of mortgage debt eligible for the deduction at $500,000. That would clearly apply to only higher-priced homes, and because housing costs more in the expensive parts of the country, that change would affect more properties in blue states.

But set aside the political implications. The mortgage interest deduction was never wise policy. It favors homeowning over renting. Renters can’t take this deduction (although their landlords can).

Canada does not allow deductions for home mortgage interest. And Canadian rates of homeownership are comparable to ours.

But another proposal regarding homeowners and the taxes they pay is downright evil. That is the plan to curb the deduction for local property taxes. The Senate tax bill would kill the deduction altogether. The House version would limit it to $10,000.

Property taxes are how cities and towns pay for police, schools and roadwork. Doing away with their deductibility would hurt local governments’ ability to raise revenues to cover such services. It would pain the places with the highest cost of living hardest. And it would, in effect, levy a tax on money people already paid in taxes.

This is an obvious and nasty game to make blue states shoulder more of the nation’s tax load, which, because of their higher incomes, they’re already doing. But it’s also an attack on the principle of federalism — the idea that power should flow from Washington to the governments closest to the people. By the way, Washington politicians have no business lecturing local governments on what they spend.

There’s another sneaky little item in the Republican House tax plan that would make it harder for local governments to finance their projects. It would end the tax exemption on certain kinds of bonds cities, towns and states issue to refinance old bonds. Almost no one’s talking about this tax hike, which would move another $17.3 billion into federal coffers, according to the nonpartisan Joint Committee on Taxation.

Homeowners in red states should know that their wealth would also take a hit under the Republican tax plan. As noted, the tax package would probably add $2 trillion to the deficit, give or take. Economists are warning that the rampaging debt would send interest rates into the heavens. Government borrowing would crowd out businesses and people needing loans. That would depress the economy, which is why the tax plan wouldn’t pay for itself.

Homeowners from Mississippi to Washington state would see mortgage rates spike upward. Higher interest rates would also reduce the resale value of their real estate.

Tax reform is a good idea, but Republicans really ought to send this monster packing. Must they elect a pedophile to keep it alive?

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com.To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

 

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9 responses to “GOP Tax Plan Would Hurt Homeowners Everywhere”

  1. Dominick Vila says:

    The worst part of the Republican tax reform proposals is its myopia. The easiest way to stimulate economic growth is by putting money in the pockets of the middle class. Doing so invariably results in increased spending, increases in sales and corporate profits, job creation, and reductions in unemployment. The idea that giving more tax breaks to corporations that already pay little or no taxes, and eliminating the estate tax, which benefits only the super rich, is a chimera. What is being proposed will help Wall Street, the elite, and the super rich, and will only lead to leveraged buyouts, corporate mergers that often result in reductions in force, increased investments overseas, and high profits by foreign and domestic investors. Needless to say, it will also contribute to reliance on deficit spending, borrowing, increases in the national debt, potential inflation and higher interest rates caused by the very people that a year ago used the debt as a weapon to attack the man who managed to reduce deficit spending by two thirds. Perhaps the most worrisome part of all this is the indifference of the American public, and the fact that this time we are not going to have a Barrack Obama to prevent the collapse of the U.S. economy. With the White House, Congress, and most State governments in GOP hands, they own what is going to happen, including the misery their fiscal irresponsibility is going to bring to millions of Americans and to our economy.

    • Independent1 says:

      Below are a couple articles that more Americans need to see in order for them to be encouraged to contact their Senators to ensure the GOP tax scam is killed before it destroys the country.

      New dynamic score shows the Senate tax bill raises debt by more than advertised

      Kent Smetters was in the trenches in the Newt Gingrich-era Congressional Budget Office and he’s a veteran of George W. Bush’s Treasury Department. His well-regarded new analysis just concluded the Republican tax plan won’t raise nearly as much revenue as its proponents say, or provide a meaningful boost to economic growth.

      The problem, according to a pair of new analyses by the Penn-Wharton Budget Project, is that the Senate Republicans’ tax bill would increase federal debt by more than advertised, and increased debt accumulation would counteract much — or potentially all — of the positive growth impact of tax cuts. The result will likely be lower incomes for the bottom half of the income distribution even before considering the negative impact of inevitable spending cuts to offset
      the surprisingly low federal tax intake.

      https://www.vox.com/platform/amp/policy-and-politics/2017/11/24/16689998/penn-wharton-budget-model

      Hidden in GOP tax bill: A plan to turn churches into dark-money spigots

      There’s no doubt that the main purpose of the Republican tax bill, in both its House and Senate forms, is to slash taxes for corporations and the rich while making the rest of the country pay for it. But Republicans are also stuffing a wish list of right-wing goals into the bill. One provision of the House legislation that has gotten relatively little media attention has the potential to drastically remake our campaign finance system, and tilt the already unfair playing field even further toward the Republicans.

      https://www.salon.com/2017/11/23/hidden-in-gop-tax-bill-a-plan-to-turn-churches-into-dark-money-spigots/

      • Dominick Vila says:

        I agree. The current tax reform proposals will provide a temporary boost for Wall Street and corporate America, but it will be a disaster in the long run, largely because what really contributes to sustainable economic growth is putting money in the pockets of the middle class and the poor, who will spend it immediately, rather than money in the pockets of the mega rich, who already have enough to invest, but prefer to stash it away in foreign tax havens or lucrative investments at home or overseas. Another facet of this issue is that the proposed tax cuts will help foreign investors a lot more than the average American.

        • Independent1 says:

          Yes, and Ruth Marcus may have said it best today, that there’s a complete lack of shame among today’s Republican politicians, including a worthless nondescript human like Donald Trump, in pushing for the victory of a pedophile fraudulent candidate just so a Democrat cannot get the opportunity to maybe help prevent them from enacting a piece of legislation they have even outwardly admitted is nothing but total fraud against the vast majority of the American people.

          The end of shame

          Excerpts

          “I never wonder to see men wicked, but I often wonder to see them not ashamed,” Jonathan Swift observed. That was three centuries ago, so our current, degraded condition has deep historical roots. Yet it feels, more and more, that we are
          experiencing the end of shame.

          Our sad national trajectory has been on display recently with two oddly connected stories: Alabama Republican Senate nominee Roy Moore and the tax bill. They share a common thread in President Trump, but their significance goes beyond the president. Trump surely helped fuel the end of shame, but just as surely we were already on that degraded path.

          We know this from the president’s own team. “There’s no Senate seat more important than the issue of child pedophilia,” said White House legislative affairs director Marc Short, in the that-was-then world of mid-November. “There is a special place in hell for people who prey on children,” said Ivanka Trump, adding, “I have no reason to doubt the victims’ accounts.”

          Which brings us to the tax bill, and Trump’s budget director, Mick Mulvaney. The shameful part of the tax bill — shameful in the sense that it heralds the end of shame, not that it is morally deficient, although that too — is not that the former South Carolina congressman once styled himself a deficit hawk and now is pushing a measure projected to add at
          least $1.5 trillion to the debt over 10 years.

          The shameful part is not that the bill is so studded with gimmicks that the real cost is more like $2.2 trillion. It’s not that the Mulvaneys of the world have managed to convince
          themselves of supply-side gobbledygook in which tax cuts pay for themselves.

          What is truly stunning is Mulvaney’s brazen willingness to admit that the price tag is phony — specifically the notion that individual tax cuts will expire. Mulvaney, making the rounds of the Sunday shows, felt no need to dissemble. “One of the ways to game the system is to make things expire . . . a lot of this is a gimmick,” he told NBC. And, on CNN, “It’s simply trying to essentially manipulate the numbers and game the system.” In other words, we’re lying to you to ram this through, and we’re not even going to bother to hide it.

          https://www.washingtonpost.com/opinions/the-end-of-shame/2017/11/24/439c4f12-d13b-11e7-81bc-c55a220c8cbe_story.html?utm_term=.d53b8ba4fb17&wpisrc=nl_opinions&wpmm=1

  2. FireBaron says:

    While I normally take a more lighthearted approach to my comments, this in one of those lines in the sand. I am a property owner in a blue state. Based on the current GOP plan, my State Income Tax, Mortgage and Property tax deductions would all be in peril. Bad enough that my property has not yet recovered from Mister Bush’s property bubble burst, now the federal government needs more of my money so the top 1%ers do not have has high of a tax bill.
    Also, I work for a company that is one of those already finding ways to not pay taxes. I am certain their lawyers and accountants will figure out how to not pay taxes even with the loss of many of the deductions they currently employ.
    And to add insult to injury, the GOP has effectively decided to ignore the CBO’s projections of the deficit, determining those numbers are too pessimistic in regards to tize of the deficit their plans will generate.
    Enough of the Senate’s GOP members are so skeptical about this bill that Teflon Donnie wants the Pedophile Judge elected to vote for it. He would be better off pushing McConnell to hold the vote now, with Big Luther still there for him, rather than waiting to see if those good Church Going Alabamans elect a White Republican Pedophile.

  3. Richard Prescott says:

    And the sicker part about what both FireBaron and Dominick Vila have said is that the companies who were supposed to benefit so much from the favorable to business tax changes have not passed much down to those that work for them. While unemployment is low (percentage wise) I am in agreement that many have stopped pretending they are in the “looking for work” reporting group.
    And through those years companies have found ways to not give out pay raises, or to limit severely the amounts. In other words, more money stayed at the top and the people who actually do need it and would spend to help the economy don’t.
    The GOP has not cared for the people for years. And until they are out the plight of the not so rich will continue.

    • Dominick Vila says:

      Another facet of this issue to keep in mind is that Congress will have no choice but to severely cut social programs, such as Social Security, MEDICARE, MEDICAID, and the ACA even more than they are already proposing to offset the inevitable increases in deficit spending. Who knows, that may be part of the plan…

      • Richard Prescott says:

        Well they tried the “entitlements tag, until people pointed out that they paid for the SS and Medicare.
        So if they plan to cut SS, Medicare and further ruin the ACA and make it more difficult for many to get health care as well as still be covered, just how will they approach those already getting SS and Medicare?
        Their whole series of plans are simply eugenics in disguise.

        • Dominick Vila says:

          Cutting Social Security and MEDICARE benefits would be the hair that broke the camel’s back. That would enrage seniors like nothing else…and seniors vote!

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