Andy Barron / Reno Gazette Journal via AP
Saturday, Sept. 9, 2017 | 2 a.m.
Tax reform is anticipated to be the next big issue before Congress, and Sen. Dean Heller, R-Nev., should have a front row seat since he sits on the Senate Finance Committee and Senate Banking Committee.
The cherished mortgage-interest tax deduction will survive but with changes, Heller said on “Nevada Newsmakers” on Thursday.
“It is one of the few taxes that Gary Cohn, the president's economic adviser, and Steve Mnuchin, the treasury secretary, said that is off the table,” Heller said of the mortgage-interest deduction.
“I'm hearing rumbling about it, but I don't think they are talking about the average family's deduction for mortgage interest,” Heller said. “I think they are talking about, perhaps, they may cap it (mortgage-interest deduction) at $500,000, and they may cap it on second and third homes.”
Homeowners who itemize deductions on tax returns can deduct the interest on mortgages worth up to $1 million combined for their primary residence and second home, according to CNN Money. The $500,000 mortgage interest cap mentioned by Heller was also proposed in 2014 by former House Ways and Means Chairman Dave Camp.
The change in the mortgage-interest deduction would target the higher-end homeowners, since they're the ones who can afford $1 million homes or second homes.
Any change to the mortgage-interest deduction will most likely draw the ire of the nation's real estate businesses.
“Proposals limiting tax incentives for homeownership would cause home values everywhere to plunge,” the National Association of Realtors warned in a talking points memo about tax reform.
The association also noted "homeowners already pay 83 percent of all federal income taxes,” in the memo.
The mortgage-interest deduction costs the federal government an estimated $80 billion a year.
Congress could also consider lowering the tax rate for corporations and the wealthiest individuals. Heller sees the corporate rate as a barrier.
“We are taking a look at our highest (tax bracket) right now with is the highest (rate) in the world at 35 percent, which makes America non-competitive with the rest of the world," Heller said. “(We're trying) to try to lower that rate. I know right now that the White House has it pegged at 15 percent. I hope they are right. I will support 15 percent.
“The reality of the situation maybe will be something a little bit different," Heller said. "But as far as I'm concerned, getting that tax rate as low as possible and as aggressive as we can is key to getting this done."
President Donald Trump has been pushing the 15 percent corporate tax rate. Yet some congressional leaders say the proposal doesn't add up on tax ledgers.
“The numbers are hard to make that work,” U.S. House Speaker Paul Ryan told The New York Times. “He obviously wants to push this as low as possible I completely support doing that, but at the end of the day we’ve got to make these numbers work.”
Heller said any tax relief must include small businesses and average Americans. He said the Trump administration also wants any new plan to be easier for taxpayers to navigate.
“If you are talking about the average taxpayer, I don't believe we can do corporate tax reform without helping the small businesses and the individuals,” Heller said.
“The goal from this administration, as they have reiterated time and time again — they want you to be able to do your tax form on a large postcard. It used to be a postcard. Now it is a large postcard. But if they can manage a large postcard, I'm all in.”
Trump has more expertise in taxes than he does on health care, Heller said.
“The obvious difference between this and health care is that we have a president who truly understands taxes,” Heller said. “He will be more engaged in the process. The big news and the good news is that the Big Six, which is the White House and leadership in both houses, are all on the same page.
“With health care, the House came in with their bill, the Senate came in with their bill, the White House had their bill. Everybody was on a different page. We're all on the same page with this.”
Ray Hagar is a retired political journalist from the Reno Gazette-Journal and current reporter/columnist for the Nevada Newsmakers podcast and website, nevadanewsmakers.com. Follow Ray on Twitter at @RayHagarNV.