Washington — The National Lumber and Building Material Dealers Association (NLBMDA) released the following statement regarding the House passage of major tax reform legislation.
Today, the House of Representatives passed the Tax Cuts and Jobs Act (H.R. 1) by a vote of 227 to 205. Attention now turns to the Senate, which plans to vote on tax reform after Thanksgiving. NLBMDA agrees that comprehensive tax reform is needed, but is extremely concerned that several changes in the House-passed legislation will have a negative effect on residential construction, the lumber and building material (LBM) industry, and the economy overall.
NLBMDA strongly supports several provisions in the legislation. First, full and permanent repeal of the estate tax. Second, lowering the corporate income tax rate to a flat rate of 20 percent. Third, the immediate write-off (or “expensing”) of the cost of new qualified property through 2022.
However, NLBMDA strongly opposes changes to the state and local tax (SALT) deduction. The legislation eliminates the itemized deductions for state and local income and sales taxes, but allows individuals to deduct up to $10,000 for property taxes. These changes will harm individuals living in areas with higher local and state taxes, and make it more difficult for businesses in those areas to retain and attract workers.
The mortgage interest deduction is also reduced. The bill lowers the amount of mortgage debt eligible for deduction from $1 million to $500,000. This drastic reduction will hurt many housing markets across the country, including high cost states and states that rely on second homes. In addition, the interest deduction for mortgages on second homes and home equity loan debt is eliminated. It will create an artificial line of demarcation on home prices that could devalue equity for homeowners across the country and start another crash of the housing market.
NLBMDA supports comprehensive tax reform to increase economic growth and opportunity. However, NLBMDA has serious concerns that the House-passed legislation will harm residential construction and the LBM industry.
Dealers should take action now by visiting NLBMDA’s Legislative Action Center and contact their Senators in support of responsible tax reform.