Tuesday, September 11, 2018
President Trump and Republicans in Congress rammed their tax scheme through Congress without a single hearing or considering any Democratic amendments. Unlike many members of Congress, I met with community stakeholders and held a public roundtable to hear firsthand how the bill would affect our region. Overwhelmingly, I was told the bill would hit most Northern Virginian taxpayers hard in their pocketbooks. On top of that, it added $1.9 trillion to the deficit, completely unpaid for.
In the months since President Trump signed the new Republican tax plan into law, the fallout for Northern Virginians has become clear. A new report, prepared by the House Oversight and Government Reform Committee, confirms our worst fears and finds the Republican tax law will disproportionately hurt Northern Virginia homeowners’ biggest asset — their homes.
The report details how the new law’s changes to the mortgage interest deduction, home equity loan deduction, and state and local income tax deduction will result in tax increases for many families in our region.
Homes are one of the largest source of savings for American families, and home equity loans are often the most affordable way for these families to obtain credit. The proceeds from these loans are often used to pay for important expenses such as college tuition and medical expenses. Prior to the GOP tax law, interest on these loans was tax deductible. Under the new law, those deductions are now limited exclusively to home improvements.
This means none of the approximately 547,600 homeowners currently living in Northern Virginia will be allowed to claim deductions for expenses like an unexpected medical emergency. On top of that, beginning in 2018, nearly 106,800 homeowners in our area with existing home equity loans will not be allowed to claim full home equity interest deductions as they’ve done in the past.
Another concern for many of our neighbors is that the new law caps state and local tax deductions (SALT) at $10,000. In Virginia, we have the nation’s fourth highest percentage of tax filers claiming the SALT deduction in the country. More than 1.5 million households claim $16.5 billion in SALT deductions for an average deduction of $11,288 per household. Fairfax County residents alone claim nearly $4.62 billion in these deductions. However, under the new tax law, 174,100 homeowners in Northern Virginia will lose the ability to deduct the full amount of their property taxes.
These findings are not hypothetical. This report lays out the real-world impacts of a misguided law that will harm Northern Virginia families. To make matters worse, just last week the President decided to cancel a scheduled federal employee pay increase citing concerns about the deficit. His tax bill exploded the deficit, and now he is trying to balance the budget on the backs of federal workers.
As the former chairman of the Fairfax County Board of Supervisors, I know how important the housing market is to our region. By targeting the housing market and home values, the new tax law has serious consequences for our community. It puts additional pressure on local government budgets and crowds out investment in our local roads, our first responders, and our education system. We should be protecting those investments at all costs, not undermining them so billionaires get another handout.