The clock keeps moving forward on tax reform as Senate Republicans on Thursday released their version of a overhaul plan while House Republicans on the Committee on Ways and Means advanced their reform bill that was initially announced last week to the House floor. The House and Senate must come in line with their tax visions to create one uniform plan to pass through Congress.
While the House bill is expected to cost $1.51 trillion over a decade, the Senate version comes with the major difference of waiting to cut the corporate tax rate from 35 percent to 20 percent until 2019. This move would lower the cost of the bill by over $100 billion.
Another major difference is that the Senate bill has more individual tax brackets at seven compared to the House’s four. The Senate bill merely seeks to change the estate tax, as opposed to the House bill that proposes to eliminate it entirely by 2024.
The Washington Post reports that the Senate bill seeks to reduce the number of people who are required to pay the estate tax by doubling the size of the estates that are tax-exempt.
Perhaps the biggest difference presented by the Senate bill impacting housing professionals is that the Senate plans to keep the mortgage interest deduction intact at $1 million while the House counterpart seeks keep existing homeowners at the deduction while capping future purchases at $500,000.
Finally, CNN reports that the Senate bill seeks to potentially repeal the state and local tax deduction, known as SALT, which is a priority for moderate House Republicans to keep in the bill. The current plan for the House bill is to keep the tax deduction for property taxes up to $10,000 while repealing deductions on income or sales taxes.
“While we are still reviewing the outlines of this proposal, we are watching closely for changes to current law that might leave middle-class homeowners–and homeownership broadly–in a worse place than it is today,” said National Association of Realtors President Elizabeth Mendenhall. “We’ve already seen that a near-doubling of the standard deduction, combined with the elimination of other deductions like the state-and-local tax deduction, can turn the American Dream into a nightmare for families, as the rug is pulled out from under them. Simply preserving the mortgage interest deduction in name only isn’t enough to protect homeownership.”