GOP Tax Plan: Long Island's Winners And Losers

House Republicans briefed lawmakers Thursday on their plan to overhaul the tax code, the first rewrite of tax laws in a generation, and cut taxes by $1.51 trillion. The plan, to be formally rolled out later, preserves pre-tax contributions of up to $18,000 to 401(k) retirement plans, a key savings vehicle for many middle-income Americans, and also reduces the number of tax brackets, slashes corporate tax rates and sharply reduces a cherished deduction for mortgage interest — something that could greatly affect the tax bills of high-value real estate areas like Long Island.

A summary of the plan released Thursday follows months of internal debate, delays and conflict. It is far from a final product, and lobbyists are already lining up in opposition to some of the key provisions, including limits on the amount of mortgage interest homeowners can deduct and a sharp reduction in the corporate tax rate some conservatives argue could mean more overseas outsourcing of American jobs.

One of the things that will hit Long Islanders the hardest is a proposed limit on the deduction of local property taxes to $10,000, known as the SALT deduction. The deduction for state income taxes would be eliminated, which generated significant opposition from Republicans in high-tax states such as New York, New Jersey and Connecticut.

Another threat to Long Islander homeowners is the plan to limit the deduction on mortgage interest for purchased homes at up to $500,000, while the current limit is $1 million. The National Association of Realtors is lobbying against that provision, warning in ads that could mean a tax increase for middle-class homeowners.

"I want my hardworking middle income and low income constituents to see tax relief under the plan," Representative Lee Zeldin, a Republican from Shirley, posted on Facebook. "You all desperately deserve it. I also don't want to see my home state get screwed just to pay for deeper tax cuts elsewhere. Our country needs a big, beautiful tax cut plan, but New York and NY-1 better be part of that."

Peter King, a longtime Republican Congressman from Seaford, said days ago that he would oppose any bill that eliminated the SALT deduction. It was a sentiment that he still expressed on Thursday.

"I cannot support the current version of the tax bill because it will increase taxes for many of my constituents to subsidize tax cuts for the rest of the country," he said. "My job is to protect the taxpayers of Long Island and New York."

Jerry Howard, chief executive of the National Association of Homebuilders, told the New York Times the provision limiting mortgage interest deduction could create a recession in the housing market, and picks "rich Americans and corporations over small businesses and the middle class."

"It puts such severe limitations on home buyers ability to use the mortgage interest deduction that home values will fall," he said. "If a home seller takes a loss, that's money they were counting on for retirement."

Also seen as a benefit to the wealthy is a provision that would immediately double exemption for inheritance taxes and repeal the tax after six years.

The Clinton-era 39.6 percent income tax rate for the wealthiest Americans was retained, but a minimum level of income to qualify for the bracket increases to $1 million for couples or families from the current $470,000, which would reduce tax revenue. The brackets announced Thursday are:

• 12 percent: Individuals earning up to $45,000 and married couples earning up to $90,000 would file in this bracket.
• 25 percent: Individuals earning up to $200,000 and married couples earning up to $260,000 would fall in this bracket.
• 35 percent: Individuals earning up to $500,000 and married couples earning up to $1 million would fall in this bracket.
• A fourth bracket is yet to be determined.

Among the details released Thursday:

• The plan increases the child tax credit from $1,o00 to $1,600, but repeals the $4,050 per child exemption. It also adds a $300 credit for parent and non-child dependents.
• The number of tax brackets would be reduced from seven to three or four with rates of 12 percent, 25 percent, 35 percent and a category that is yet to be determined. Most people would be able to file their taxes on a postcard-sized form under the simplified tax system outlined in the plan, Republicans said.
• The standard deduction used by most average Americans would nearly double — $12,000 for individuals and $24,000 for families.
• Deductions for medical expenses are eliminated in the plan, which Republicans said would be offset by an overall lowering of tax rates.

Though many local Republicans are against the bill, some critics see the GOP's support of Trumps other policies as a reason why this bill is even being considered.

"Trump and his Republican colleagues have been scrambling all year to pass trillions in tax cuts for folks like Trump at the expense of hardworking Americans, and Peter King is part of the problem," said Liuba Grechen Shirley, who is running against King next year. "King supports Trump and Republican leadership 90 percent of the time. His support is one of the reasons bills like this are even on the table. At a time when many people are struggling to make ends meet, New York taxpayers deserve real relief and this bill is an abomination."

In a statement, Trump said:

"We are just getting started, and there is much work left to do. The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts. But my administration will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms — the rocket fuel our economy needs to soar higher than ever before."

Rich Scinto, Beth Dalbey and The Associated Press contributed to this report.

Photo: AP/Evan Vucci