How New GOP Tax Plan Could Impact Massachusetts Residents

BOSTON, MA — The tax reform bill from Congress that President Donald Trump is pushing would cut rates for millions but "disproportionately harm Massachusetts taxpayers," according to state officials.

Thursday morning, the House Ways and Means Committee released the reform plan that would cut income tax rates, lowering the top rate to 35 percent. It also proposed to double the standard deduction, but eliminate personal exemptions. Additionally, the plan would reduce the corporate tax rate from 35 percent to 20 percent.

Personal exemptions would be eliminated, too, to help pay for the tax cut that some estimate could cost more than $1 trillion. Three important components of the plan could end up costing Massachusetts taxpayers more by:

• Eliminating deductions for state income or sales taxes
• Capping the deduction for property taxes at $10,000. (This element is viewed as a compromise because original tax reform plans called for doing away with the deduction entirely)
• Preserving the mortgage interest deduction only for existing mortgages and new purchases, and only with loans of $500,000 or less

Massachusetts residents would also pay a hefty price because of cuts in deductions, according to Secretary of State William Galvin.

"Eliminating the state and local tax deduction would disproportionately harm Massachusetts taxpayers," Galvin said. "Capping the property tax deduction at $10,000 would hurt middle-class homeowners in many Massachusetts communities and the rest of the Northeast, where property tax bills can easily exceed that amount."

Analysts say it's too early to calculate what sort of increase the average taxpayer could face.

U.S. Rep. Richard Neal, the dean of the Massachusetts Congressional delegation, is the ranking Democrat on the House Ways and Means Committee and will be the Democrats' point person as the GOP tax plan wends its way through Congress.

After Ways and Means Chairman Kevin Brady of Texas postponed the unveiling of his tax plan from Wednesday to Thursday, Neal used a Republican icon to ask Brady to give Democrats more time to read the bill that "will fundamentally reorganize 100 percent of the United States economy."

"You and your fellow Ways and Means Republicans often invoke President Reagan's memory when you discuss fundamental tax reform. I would encourage you to look to the leadership example he and his Democratic colleagues in Congress set during the 1986 tax reform debate," Neal wrote in a letter to Brady, referencing the 30 hearings of the full Ways and Means Committee, the 12 Ways and Means Committee subcommittee hearings, the 450 witnesses who testified on the 1986 plan and the 26 days of committee markup that went into the 1986 tax law's drafting.

"Especially given your caucus' inability to reach even internal agreement on the proposal currently under discussion, it would be reckless in the extreme to rush this process through the committee next week," Neal wrote. "As I have said both publicly and privately: let's slow down and get this right -- the stakes are too high to bow to self-imposed deadlines and procedural gimmickry. It is better to do this right than to do it fast."

Two high-ranking senators, Elizabeth Warren and Bernie Sanders, released a video Thursday morning lamenting the tax breaks that would benefit the rich.

Patch file photo

Colin A. Young, State House News Service, and Tom Davis, Patch Staff, contributed to this report