By Ben Brody
Bloomberg News
WASHINGTON, D.C. — The head of the National Association of Home Builders said Saturday that the group pulled its support for a planned bill to change the tax code, dealing a blow to the legislation before it’s introduced next week.
Jerry Howard, CEO of the NAHB, said the group will oppose the bill because House Speaker Paul Ryan, R-Wis., told him it won’t include a tax credit for mortgage interest and state property taxes. The association, which claims 140,000 members, will “do everything that we can now to make sure that it doesn’t pass,” Howard said.
In response, House Ways and Means Chairman Kevin Brady’s office released a statement Saturday afternoon that praised the home-builders group and called on members of Congress to study the tax-credit proposal closely “to determine if they want it included before tax reform heads to the president’s desk.”
The Saturday flare-up signals the difficult path ahead for the tax changes that Congress and President Donald Trump have pledged to deliver by year’s end.
Brady, R-Texas, plans to release the text of the bill Wednesday. Even Republican members of his committee said they weren’t aware of the details that would be included in the final bill. Now, as Ryan and Brady decide the final provisions of the legislation, they’ll have to contend with vocal opposition.
Howard, of the home-builders group, said Ryan called him Saturday to say the NAHB’s sought-after credit won’t be part of the bill. The speaker said he didn’t believe rank-and-file Republicans understood the proposal well enough, Howard said.
The mortgage and property-tax credit would have helped lessen the impact of two proposals that Ryan and Brady are pursuing. They want to almost double the standard deduction and abolish or limit the deduction that’s available for state and local taxes. In combination, home builders and other groups fear, the two proposals would undermine the value of the mortgage-interest deduction.
Taxpayers have a choice — they can either itemize their deductions for items including gifts to charity and home-mortgage interest or they can claim the standard deduction. By almost doubling the standard write-off to $12,000 for individuals or $24,000 for couples, Congress would make that option far more attractive. At the same time, limiting the deduction for state and local taxes would make itemizing less attractive.
And if taxpayers don’t itemize, they can’t take the mortgage deduction — which real estate brokers and home builders view as an important support for home ownership.
So the home builders proposed a credit — which would have been available even to people taking the standard deduction. Deductions decrease taxable income, while credits decrease taxes owed. Howard said the credit would better spur middle-class home ownership.
The credit also would have taken into account state property taxes paid, Howard said. Republicans from high-tax states have already threatened the tax process over a possible end to a federal deduction for state and local taxes.
Howard said Brady called him Friday night to express his ongoing belief that the credit was “a great solution to a couple of their problems” while alerting him to Ryan’s decision, Howard said.
Ryan said he “did not personally have any policy problems with” the credit and would allow it “if we were able to convince enough people during the process that the credit could still be included,” Howard said.
