House Speaker Paul Ryan (R-WI), Ways and Means Committee Chairman Kevin Brady (R-TX), and other Ways and Means Republicans unveiled the sixth and final plank of the House Republican’s A Better Way policy agenda last week. The final plank provides a “Blueprint” for their ideas on tax reform. The intent of the Blueprint is to allow the Ways and Means Committee to “turn its attention to the work of building the tax reform legislation that will encapsulate the policies and provisions reflected in the Blueprint” and to allow House Republicans “to work with America’s next president to hit the ground running on pro-growth tax reform in 2017.”
According to the Blueprint, the ideas are centered around three basic themes: simplicity and fairness, jobs and growth, and a service-first IRS. The proposal is portrayed both as “a dramatic reform of the current income tax system” and as “a move toward a consumption-based approach to taxation.” The Blueprint envisions tax reform that is revenue neutral as compared to the current policy baseline, which assumes that certain temporary tax relief provisions – costing $400 billion over the next decade – that are scheduled to expire under current law would instead be made permanent. Revenue neutrality would be achieved under the plan “in part by including the positive revenue effects from the economic growth that would result from a simpler, more pro-growth tax code,” a reference to dynamic scoring.
The Blueprint would retain only two major deductions, including the mortgage interest deduction (MID). But the Republicans note in the Blueprint the need for an “evaluation of options for making the current-law mortgage interest provision a more effective and efficient incentive.” The text also notes a need, when considering possible modifications to the MID, to ensure that existing mortgages are not affected by any changes in the tax code and that no changes will affect re-financings of existing mortgages.
NLIHC looks forward to working closely with the Ways and Means Committee to offer proposals to make the MID a more effective and efficient incentive. The United for Homes Campaign, led by NLIHC and endorsed by more than 2300 organizations and state/local elected officials, proposes to reduce the portion of a mortgage eligible for a tax break from $1 million to $500,000 and convert the deduction to a 15% non-refundable credit, helping millions of low and moderate income homeowners who currently don’t benefit from the MID. These two changes would save more than $200 billion over ten years to invest in expanding affordable rental housing programs like the national Housing Trust Fund and Housing Choice Vouchers.
The Republican Blueprint stays silent on the Low Income Housing Tax Credit (LIHTC) program, only noting that the Ways and Means Committee should “generally eliminate special-interest deductions and credits to provide lower rates for businesses.”
The Blueprint on Tax Reform can be found at http://abetterway.speaker.gov/
More information on United for Homes, including an opportunity to join and endorse the campaign, is available at: http://nlihc.org/unitedforhomes