U.S. Rep. Barbara Comstock (R-VA-10) has voted yes on a Republican-led tax reform bill that has caused concern among local government, business, and nonprofits.
House Republicans yesterday passed their version of the Tax Cuts and Jobs Act 227-205. Only Republicans voted yes; every Democrat voted no, and 13 Republicans from New York, New Jersey, California and North Carolina broke ranks to vote against. Two Democrats were listed as not voting.
“This bill will jumpstart businesses of all sizes and get wages rising again and put more money in the paychecks of our constituents and provide more opportunity for all,” Comstock said in a statement.
The bill has raised concerns among local business and government leaders. Several of the provisions in the bill—including the elimination of the state and local tax, or SALT, deduction, which allows taxpayers to avoid being taxed on income they’ve already paid out in state and local taxes—could have a particularly large impact on Loudoun.
According to the Government Finance Officers Association, 49 percent of federal tax filers in the 10th Congressional District claim the SALT deduction, above the national average of around 30 percent. In total, 10th District taxpayers deduct $3.39 billion in state and local taxes.
Supervisor Matthew F. Letourneau (R-Dulles) said the bill “disproportionately impacts us versus other places.”
“I’ve spent a heck of a lot of time with this tax plan, and I’m telling you—a lot of people in a typical Loudoun situation, with a fairly expensive house and a couple of decently new cars, you’re probably going to be net negative on this, even with the lower brackets,” Letourneau said at a Board of Supervisors meeting last week.
That information was highlighted in a letter sent to Comstock’s office from County Chairwoman Phyllis J. Randall (D-At Large) on behalf of the Board of Supervisors, then retracted by the county.
“Unfortunately, we prematurely forwarded the letter to the Congresswoman prior to a full review by all Board members,” wrote County Administrator Tim Hemstreet in requesting its retraction. The Board of Supervisors as a whole has not taken a position on the bill.
The retracted letter also quotes estimates from the National Association of Realtors, which warns capping the mortgage interest deduction at $500,000, half of what it is now, could push the cost of homeownership up and the value of homes down. The association estimates eliminating that deduction will cause housing prices to fall by 10.2 percent on average.
The 10th District has both unusually high homeownership rates and housing costs.
The letter also calls out several other challenges the bill presents to Loudoun and the 10th District, including provisions that are expected to limit the county’s ability to refinance its bonds at better rates, hampering its ability to build infrastructure.
Elsewhere, the bill has been criticized for giving larger tax breaks to large corporations and the country’s wealthiest people, while giving smaller or no cuts for low- and middle-income people and passing over some small businesses.
The Tax Policy Center has found that taxes would be reduced for all income groups on average, although nearly half of the benefit would go to people in the top 1 percent of incomes.
According to the center’s report, by 2027, taxpayers making less than $55,000 would see little change in their taxes. Middle-income taxpayers would see an after-tax increase in their income of 0.5 percent. Taxpayers in the top 1 percent of incomes would receive nearly 50 percent of the total benefit of the tax cuts, receiving an average 2.6 percent bump in after-tax income.
The Joint Committee on Taxation has estimated that after 2023, only 40 percent of Americans would see a tax break. Twenty-two percent would pay more.
In her statement, Comstock pointed to the bill’s simplified rate structure, reducing tax rates from seven brackets to four, and doubling the standard deduction for people who choose not to itemize deductions.
“I am also pleased that this tax reform package included our hard-fought provisions to increase the child tax credit from a current $1,000 that phases out currently at $110K to an increased $1,600 per child tax credit that goes up to $230K for families,” Comstock said. “The bill also provides an additional $600 credit for parents which means a total of $3,800 tax credit for a family of four.” It also, she pointed out, preserves the Child and Dependent Care Tax Credit to help families with more than one person working care for their dependents.
Comstock said, “the process still continues” and that she would “continue to work to improve this bill as it proceeds through the process– in particular my concerns and those of my constituents about state and local tax deductions and the need for more support for home owners and those who will still itemize under a new system.” She also acknowledged the “need to provide more support for our small businesses so that all will benefit from updating our tax code for the first time in 30 years.”
Democrats were quick to jump on the vote.
“Barbara Comstock just voted for a brutal tax hike on middle class families and homeowners in Northern Virginia in order to give huge breaks to the ultra-rich and big corporations,” said state Sen. Jennifer T. Wexton (D-33), one of at least nine Democrats vying to challenge Comstock in the next election, in a statement released shortly after the vote. “By gutting the SALT deduction, reducing the ability to write off student loan debt, capping the mortgage tax deduction, and eliminating the medical expense deduction, this bill hits NOVA harder than any other area in the country.”
Republicans are attempting to pass the bill on a tight timetable, with the goal of passing it into law by Christmas.