Congressional Republicans pass sweeping tax bill

by Kelly McCabe

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After being approved by the House of Representatives and Senate on Dec. 20 after months of deliberations and negotiations, the Republicans’ so-called Tax Cuts and Jobs Act is set to land on President Donald J. Trump’s desk for final approval. The new tax bill was approved mostly along party lines, with a 222-201 vote in the House and a 51-48 vote in the Senate.

Under the bill, mortgage interest deductions for primary and secondary homes will be capped at $750,000, down from the current limit of $1 million. State and local tax deductions, which currently aren’t capped, will be capped at $10,000 now. The bill also retains the exclusion for capital gains taxes, so individual sellers aren’t responsible for taxes on the first $250,000 in a sale if it’s a primary residence that has been occupied for two of the past five years.

One previous iteration of the bill left the mortgage interest deduction in place while another capped it at $500,000. Because of this compromise, the National Association of Realtors, which had previously denounced the first bills, is displaying a wait-and-see stance on the bill that ultimately passed.

“The new tax regime will fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors,” NAR President Elizabeth Mendenhall said in a statement. “That should concern any middle-class family looking to claim their piece of the American dream.”

The $1.5 trillion tax bill is favored by a paltry 33 percent of the U.S. population, according to a CNN poll, due to perceptions that it will greatly help upper-class Americans while harming the middle class.

In a Dec. 18 report, the Tax Policy Center found that while most Americans initially will receive tax cuts under the Tax Cuts and Jobs Act, it will be short-lived. While just 5 percent of Americans will pay more in taxes this year, by 2027, 53 percent of Americans will owe more.