Housing group opens new crack in support for GOP tax plan

WASHINGTON (AP) — Another deep crack opened in support for President Donald Trump and the Republicans’ tax-cutting plan on Monday, as a powerful lobbying group in the housing industry withdrew its blessing for the GOP’s top legislative priority just as its details are set to be revealed.

The move announced by the National Association of Home Builders adds to breakaway threats against the legislation from House Republicans from high-tax states and with strong conservative views, and from defenders of 401(k) retirement savings plans.

The building opposition to the sweeping tax overhaul plan comes as House Republicans work behind closed doors on proposed legislation for the plan that they’ll unveil this Wednesday.

“It’s the biggest thing we can do to help the middle class,” House Speaker Paul Ryan said in a radio interview on WTAQ in Green Bay, Wisconsin. “Basically we’re talking about lowering tax rates for everyone except for” top-income earners.

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Noting that the plan calls for doubling the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families, and increasing the per-child tax credit, Ryan, R-Wis., said, “Those things are huge middle-class tax cuts.”

The nearly $6 trillion tax plan also seeks to slash the corporate tax rate from 36 percent to 20 percent and repeal inheritance taxes on multimillion-dollar estates, a huge break for the wealthy. The number of tax brackets would shrink from seven to three or four, with respective tax rates of 12 percent, 25 percent, 35 percent and to be determined.

It remains to be seen whether the middle class will see a significant tax break as details are still being finalized.

The Republicans are driven to enact the first major tax overhaul in some 30 years to show a legislative accomplishment to voters in next year’s elections and keep their majority in Congress. They were stung by their failure this year to replace President Barack Obama’s signature health care law.

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As with that failed legislative effort, though, Republican leaders are writing the critical tax legislation in secret with Democratic lawmakers excluded and no hearings planned before formal drafting begins.

The homebuilders’ group objects to the removal from the tax plan’s latest version of a low-income housing tax credit.

“Lawmakers missed a golden opportunity to give the American people a tax reform package that would boost middle-class families and promote greater housing opportunity for Americans,” said Granger MacDonald, the group’s chairman, in a statement.

The move marks a flip-flop-flip for the homebuilders’ group, which originally opposed the Republican tax plan then split from other housing industry groups to support it. NAHB officials said the proposed doubling of the standard deduction meant the plan had already eroded the value of the mortgage interest deduction — a darling of the industry — because people wouldn’t be likely to itemize deductions given the bigger standard break.

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As a result, the group was open to other options, especially the low-income housing tax credit that was previously in the plan.

At the same time, Republican lawmakers from high-tax states have rebelled against the plan’s proposed elimination of the federal deduction for state and local taxes. They mustered a show of force on Thursday that nearly sank the plan in a vote on the budget that cleared the way for the tax overhaul.

A battle over contributions to 401(k) retirement accounts has broken open. The financial industry and some Republican lawmakers insist that the plan not change the tax benefits of the popular savings vehicles, as has been floated by GOP leaders. Trump has given conflicting signals, promising the retirement plans won’t be touched, but then saying changes may be on the table.