New Report Details How GOP Tax Law Hurts Homeowners And Helps Wealthy Developers
Washington, D.C. (July 5, 2018)—Today, Rep. Elijah E. Cummings, the Ranking Member of the House Committee on Oversight and Government Reform, issued a new staff report detailing how the Republican tax law signed by President Donald Trump on December 22, 2017, imposes significant new financial penalties on American homeowners across the country, while essentially using the funds raised by these tax increases to help pay for more than $66 billion in lucrative new tax breaks for real estate developers.
In a statement on the release of the new staff report, Cummings said:
“Republicans in Congress punished middle-class American homeowners while lavishing tens of billions of dollars in tax breaks on wealthy real estate developers like President Trump and his rich friends. For the first time, this new report shows how big the payoffs were to wealthy real estate developers—more than $66 billion over the next ten years, according to the Joint Committee on Taxation. This was a choice by the GOP to harm middle-class American homeowners and help rich real estate developers, and it shows exactly where their priorities lie.”
The staff report explains that, under the new tax law, homeowners across the country are now prohibited from deducting interest on home equity loans if they use those funds for unexpected medical emergencies, to pay for college education, or for any purpose other than home improvement. This retroactive provision applies even to future interest payments on loans taken out by homeowners in the past. The staff report explains:
- None of the approximately 75 million homeowners in the United States will be allowed to claim deductions for interest on home equity loans they use for any purposes other than home improvement.
- Beginning in 2018, about 10 million homeowners throughout the United States with existing home equity loans will not be allowed to claim full home equity interest deductions as they did in the past.
- Approximately 12.5 million homeowners in the United States no longer will be allowed to deduct their full property taxes.
“For example, if parents refinanced their mortgage or took out a home equity loan in 2016 to cover medical bills for a loved one or college tuition for a child, they would have had every expectation that they would be able to continue deducting interest on those loan payments well into the future,” the staff report states. “Under the new Republican tax bill, they are now prohibited from doing so.”
In contrast, the new tax law grants real estate developers significant tax breaks worth billions of dollars. According to new estimates issued by the Joint Committee on Taxation, four new tax breaks will result in a stunning $66.7 billion windfall for real estate developers over the next ten years.
Just next year, the windfall for real estate developers due to these four tax changes will total nearly $3.7 billion, according to the new estimates.
These tax breaks include:
- $30 billion windfall for new pass-through and real estate dividend deductions;
- $16 billion windfall for real estate exemption from limitations on interest deductions; and
- $22 billion windfall for real estate exemption from like-kind exchange repeal.
“President Trump and Republicans in Congress made a clear choice when they enacted the tax bill last year,” the staff report concludes. “They chose to take away longstanding tax deductions that American families have relied on for decades while at the same time creating $66 billion in new tax breaks for real estate developers. Although some may reap large financial windfalls as a result of the changes in the new tax law, many American families will be penalized despite their ongoing efforts to faithfully invest in their single biggest asset—their home.”
Click here to read today’s staff report.