WASHINGTON — Allowing taxpayers to use the proposed $10,000 deduction for property taxes also for state income and sales taxes is one option on the table as Congress begins to hammer out differences in the House and Senate tax bills, a key lawmaker said Tuesday.
That idea ranks among a handful of options being discussed to address New York’s and other high-tax states’ concerns at losing the state and local tax deduction, said Rep. Kevin Brady (R-Texas), chairman of the tax-writing House Ways and Means Committee.
“Possibly there’s four or five incentives tax relief that can help our high-tax states that we’re working with our lawmakers on,” Brady said outside his office in the Capitol, where he met with Republican House members to discuss the tax overhaul.
One of them, he said, was “a $10,000 deduction that could be used for income, sales and property taxes.”
Long Island’s Republican congressmen voted against the tax bill — and the Island’s Democratic representatives condemned it — because it scraps the state and local tax deduction, which those lawmakers said will harm constituents and badly damage the real estate market.
Brady also mentioned two other options: a change in the tax rates themselves, which will have to undergo modifications in the final legislation because the House and Senate bills have differing rates; and making the family tax credit larger or available to high-income taxpayers.
But he also acknowledged that each change in the tax code to extend relief for taxpayers in New York, New Jersey, California and other high-tax states comes with a price tag in terms of lost revenue that must be made up by other taxes. “It’s got a pretty big figure to it,” Brady said.
Rep. Peter King (R-Seaford) rejected the expanded use of the $10,000 deduction. “It’s not enough,” he said through his top aide.
The formal sessions to agree to a final version of the sweeping changes to the tax code are expected to begin Wednesday, after the Senate votes to send its version of the bill to the conference and appoints its members.
The House approved the conference and named its conferees on Monday. Brady said he does not believe the final version of the bill will be forged this week.
Brady, the point man on taxes for the House Republican majority, said House members lean toward sticking with their bill’s repeal of the alternative minimum tax for both individuals and corporations, instead of retaining it as the Senate’s legislation does.
“Both of them are very costly and they add complexity,” Brady said. “For families who have to refigure taxes a second time, on average it increases theirs by about $7,500. Many of those families are in the high-tax states, one of the reasons we repealed it.”
He added that the cost and complexity of the business AMT “undermines some of the pro-growth provisions that we kept in the tax code, such as the research-and-development tax credit.”
Brady said House members are kicking around ideas about possibly reviving tax-exempt private activity bonds, with some restrictions, to address the alarms raised across the country about their elimination in the House bill — including by King and Rep. Lee Zeldin (R-Shirley).
“We’re getting feedback on the private activity bonds, especially about what role they should play in the future,” Brady said.