Weeks after the House GOP released its blueprint for tax reform (See Memo, 6/27), Representative Jim Renacci (R-OH) released his own on July 14 in a white paper titled “Simplifying America’s Tax System (SATS).” Among the proposals is one to reform the mortgage interest deduction (MID) by reducing the amount of mortgage against which the MID can be claimed from $1 million to $500,000.
The SATS blueprint mirrors the House plan in terms of the size of tax cuts but proposes alternate means to recoup lost revenue. Representative Renacci would do away with the corporate income tax in its entirety instead of reducing it to 20% as called for under the House Republican plan. The SATS plan would offset that lost revenue by implementing a new 7% value-added tax (VAT). The VAT would apply to the federal government and all private businesses, but would exempt state and local governments and non-profit organizations.
The plan also calls for changes to individual income tax rates. SATS would consolidate the current seven tax brackets into three, with a top marginal tax rate of 35%, and would tax capital gains as ordinary income. The blueprint increases standard deductions for both single and joint filers and significantly expands the Earned Income Tax Credit. The Renacci plan also lowers the cap on the MID to the first $500,000 of acquisition debt, down from $1 million today. The NLIHC-led United for Homes campaign calls for lowering the portion of a mortgage against which tax relief can be claimed to $500,000, converting the deduction to a nonrefundable credit, and investing the savings into ending homelessness in America.
See Representative Renacci’s tax reform plan at: http://bit.ly/29Tk2en