By No Labels
So far, tax reform has been a one-sided effort. The House and Senate both passed bills without a single Democratic vote. So it is a welcome surprise to see two lawmakers from New Jersey — a Republican and a Democrat — working together to propose solutions as a final tax bill emerges.
Democratic Rep. Josh Gottheimer and Republican Rep. Leonard Lance, both members of the Problem Solvers Caucus, have put forward a tax proposal that contains several major provisions. They hope the ideas will be considered by the conference committee charged with merging the House and Senate bills into a single piece of legislation.
The Gottheimer-Lance plan starts with the Senate bill as a base, and endorses some of the major provisions that have broad support. For example, it would reduce the corporate tax rate to 20 percent and double the standard deduction for individuals.
One primary aspect of their proposal is preserving the 100-year-old provision that allows taxpayers to deduct the cost of state and local taxes on their federal returns. Currently state and local income and property taxes are deductible. The House and Senate bills both eliminate income tax deductions and limit property taxes to $10,000.
In areas where property values and taxes are high — like parts of New York and New Jersey — that could have a heavy impact, increasing taxes for hundreds of thousands of residents. Some also argue that puts an unfair burden on these states, whose residents pay more in federal taxes but don’t necessarily receive more federal services.
Lance and Gottheimer propose leaving the provision as is, allowing the state and local deductions. “We think it’s a win-win-win, and something that the conference committee should address to look out for New Jersey and the Northeast instead of leaving us on the road like roadkill,” Gottheimer said.
The proposal would also add to the current Senate tax bill, preserving deductions for interest on mortgages and student loans; eliminating deductions for donations to private foundations; doubling the estate tax exemption; closing special interest loopholes; and adding other provisions.
Gottheimer and Lance say that their proposal could also reduce the cost of tax reform. The idea that a tax bill could swell the deficit — some estimates say by $1 trillion or more over 10 years — has been a sticking point for some Republicans. Gottheimer and Lance say their proposal would reduce that amount by more than $100 billion.
It remains to be seen whether the proposal can gain traction. But Gottheimer and Lance have put it in the mix at a time when discussions over budget and tax legislation are widespread and ongoing. Congressional leaders hope to pass both by the end of the year.