House Republicans on Thursday unveiled their long-awaited tax bill which preserves the popular 401K retirement account, lowers rates for many individual households but trims deductions for state and local taxes.
The proposal, which was touted as a “game changer,” would add $1.5 trillion to the nation’s debt over the next decade as Republicans largely abandoned fiscal discipline in a plan that could secure a legislative achievement for President Trump and score a political win ahead of next year’s midterm elections.
Trump promised in a statement that his administration “will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms — the rocket fuel our economy needs to soar higher than ever before.”
A summary of the plan, which was made available to reporters ahead of its public release, would also reduce the cap on the popular deduction to interest on mortgages to $500,000 for newly purchased homes. The current cap is $1 million.
The plan also limits the deductibility of local property taxes to $10,000 while eliminating the deduction for state income taxes. Republicans in high-tax states such as New York and New Jersey had come out strongly against it.
“I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” New York Republican Rep. Lee Zeldin said. “I don’t want my home state to be a loser, and that really shouldn’t come as any surprise.”
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