WASHINGTON – Republicans will try to muscle their massive tax bill through the House on Thursday.
The plan, which was approved in the House Ways and Means committee last week, has garnered support from most of the GOP in the house including Rep. Tom Reed (R-Corning, NY 23), all but assuring it will see passage by the end of the week.
Supporters say the bill would put more money back into the pockets of middle class Americans, with Reed saying the average family in his district would see a $1600 annual savings. Republicans also say the savings to corporations will allow them to reinvest in the economy by creating more jobs.
But not everyone is in support of the overhaul plan, which would cut federal revenues by $1.5 trillion over ten years, with the majority of that savings going toward corporations and big business. Critics say the plan is nothing more than a tax break for the wealthy on the backs of the working and middle class, with poor Americans also being effected due to threats to entitlement programs that will be needed to offset the tax cuts.
Another group that could see an impact are developers and preservationists who want to renovate and improve aging buildings. Both the House and Senate tax reform plans would either eliminate or scale back the federal historic tax credit, which critics say would be “a death blow” to older neighborhoods and small towns across the country.
Currently, the tax credits allow developers of “certified historic structures” to deduct up to 20 percent of rehabilitation costs. It goes toward “income generating” properties, like commercial buildings or apartments, and cannot be used to rehabilitate a private residence.
The program has been in place since 1976 and it has leveraged more than $84 billion in private investment to preserve 42,293 historic properties across the United States, according to the National Park Service.
With its large population and aging building stock, New York State ranked first in the nation last year in the use of the federal tax program. Currently, you can also couple the 20 percent federal credit with a 20 percent state income tax credit. As a result, the owner or developer can use the credits to offset their own tax liabilities, or they can sell the credits to one or more investors. The money freed up by these credits creates a pool of capital to devote to the renovation project, thus incentivizing development on buildings that desperately need the attention.
The two most recent Jamestown buildings to take advantage of the tax credit were the Wellman Building and the former Erie Railroad Station. With the recent spike in downtown development and growing interest from developers, access to tax credits could potentially enable millions of dollars in new investment in Jamestown.
But the house plan that could reach a vote as soon as Thursday would completely eliminate the historic tax credit, while a separate Senate plan would cut the credit in half from 20 percent to 10 percent.
Congressman Reed earlier this month said that he supports the credit and was working to find a way to keep it in the final tax reform bill.
“We are working every angle. Also are our partners in the Senate,” Reed said during a conference call with regional media on Nov. 2. “So we have a plan A and we have a plan B and as we go through this process I just ask you to bear with us because I know the benefits of this program and I’m very interested with many members that want to see this credit continue.”
Reed also said, though, that even if the final version of the bill were to not include the full 20 percent historic tax credit deduction or the complete elimination, it still wouldn’t prevent him from voting yes on the tax reform plan.
“If you hold out for 100 percent purity, that leads to obstruction and gridlock,” Reed said. “I’m a Ronald Reagan guy. I’m a Jack Kemp guy. I believe that 80 percent of a loaf is not a defeat. That is a victory you should celebrate and then come back at it and keep fighting for the rest of what you’re fighting for.”
Passage of the tax reform plan seems assured Thursday in the House, where a handful of dissidents conceded they expected to be steamrolled by a GOP frantic to claim its first major legislative victory of the year.
But it’s a different story in the Senate, where the tax overhaul hit a roadblock Wednesday as Sen. Ron Johnson of Wisconsin became the first Republican senator to say he opposes his party’s politically must-do tax legislation.
That signaled potential problems for GOP leaders in the Senate, who can ill-afford to lose any votes on the plan since they only hold a narrow majority over the Democrats, who, like their counterparts in the House, are expected to not support the proposal.
Editor’s Note: A previous version of this story incorrectly gave the total cost of the tax plan as $2.5 trillion, which was incorrect. The actual total is $1.5 trillion.