Dispute over mortgage interest, deductions stalls tax reform bill

Posted June 5, 2013

— The tax reform plan House leaders are backing is on hold Wednesday morning after divisions within the majority caucus surfaced in an Appropriations meeting. 

Those divisions apparently centered around what might be called the "the Howard Amendment," a tweak to the bill put forward by Rep. Julia Howard, R-Davie, during the House Finance Committee Tuesday.

"We will vote this bill out," said Chairman Nelson Dollar, R-Wake, at the beginning of Wednesday's meeting on House Bill 998.

Dollar's fellow caucus members thought otherwise.

Howard, a finance chairman, objected to the motion to bring the proposed committee substitute before the panel for debate. 

"I object to the PCS being before you," Howard said, talking over Dollar. "This is not the bill that came out of Finance." A PCS is a proposed committee substitute. It is essentially a rewrite of the bill. 

Specifically, the bill was rewritten overnight to roll back the amendment Howard pushed through in House Finance Tuesday. That amendment would have removed a cap on taxpayer deductions for the combination of mortgage interest, charitable deductions and local taxes.

The original version of the bill capped those deductions at $25,000. The version Dollar tried to bring before the Approps committee Wednesday restored the cap, undoing Howard's amendment. 

After the meeting, Rep. Paul "Skip" Stam, R-Wake, said the Howard amendment would have required cutting more than $500 million from the state budget. Howard told WRAL News that she had a fix to the bill that would have avoided her amendment having such a large impact on spending

But that debate never got the chance to play out. 

Dollar initially refused to recognize Howard's objection, calling for a vote on the motion. 

Moving a bill before the committee to begin debate is usually just a formality of parliamentary procedure. But some members of the Republican caucus have been chafing at the leadership's fast-track handling of the massive overhaul.

The voice vote was clearly against the motion, but Dollar ruled it had passed, resulting in calls for division – a counted vote – from Republicans and Democrats across the room.   

House committee talks tax reform House committee talks tax reform

After a roll-call vote, the count was 44-34 against taking up the bill, with Howard, Iler, Arp, Conrad and several other Republicans joining Democrats in voting against the motion.

Dollar adjourned the meeting.  

Speaker Thom Tillis, who was in the room, was overheard commenting that it might be time for a caucus meeting.

That seems especially true since it is unusual to see senior chairmen and other party leaders openly disagreeing with one another over a high-profile bill. 

"You would have thought that everybody would have voted yes," Stam said, saying that the PCS should have appealed to both Democrats and Republicans.

But Rep. Mike Hager, R-Rutherford, the House Majority Whip, said he voted against the new version of bill because he believed the version with the Howard amendment, and bigger tax cut, should be the version that goes forward.

"That's the bill that should come to the floor," Hager said. Committee members, he added, did not have enough time to consider the new version of the tax bill that came before Appropriations Wednesday morning. 

No word yet on when the bill may resurface.  

The dust up may be particularly troublesome given that the state party convention is this weekend. Being the first chamber to pass a massive tax overhaul would have been quite a coup for House lawmakers, especially Tillis, who just announced plans to run for the U.S. Senate. 


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  • oldaltar Jun 5, 2013

    Do not worry if these guys have their way we all going to be paying much more out of our pockets. The fact of the mattter is that not one of you can justify their actions. But you continue to try. Crazy, crazy, crazy!

  • rroadrunner99 Jun 5, 2013

    A rewrite overnight? Dealing in the dark. Crack's are starting to show looks like to me.

  • lem07 Jun 5, 2013

    "...but most of the time that I go to the grocery store, there is someone in front of may 'paying' with their food stamps card and wearing tons of gold jewelry,..." - bcde

    Have you ever considered that maybe the person 'paying' gave someone else cash for the card? It happens.

  • HeadsUp Jun 5, 2013

    The reasonable House tax reform plan is much better for the middle class and the *working* poor than is the radical Senate proposal, which RAISES taxes on families earning $40K or less.

    And taxpayers can't claim the modest mortgage interest deduction unless they itemize -- which most of us don't, but the very wealthy do for their first and second (and third, and fourth...) homes.

    Instead of subsidizing lavish personal excess, we should encourage the growth of small businesses across North Carolina.

    Some people oppose tax reform, period. Fine. But if you want it, the House approach is far superior.

  • junkmail5 Jun 5, 2013

    If someone is truly poor then you can't afford coach purses, gold jewelry or iphones. - bcde

    the plural of anecdote is not data, so all the "Well I saw someone in a lexus use food stamps!" stories don't really add up to much.

    And you don't really know the story on any of those items- jewelry could be something a relative left em- the purse can be a cheap knockoff, or something they found a deal on at the thrift store... iphones can be quite cheap for older models and you can do prepaid from there.

    For that matter- maybe they bought it all new 3 years ago, then lost their jobs and had to go on food stamps 6 weeks ago because they've used up savings and been unable to find anything that paid like their old job.

    But fact is, YOUR taxes would be going up TOO unless you're in the top 20% of income, so even if you don't care about the food stamp persons taxes, you ought care about your own.

  • bcde Jun 5, 2013

    There are definitely some people that are truly poor and can't pay this tax, but most of the time that I go to the grocery store, there is someone in front of may 'paying' with their food stamps card and wearing tons of gold jewelry, carrying a coach bag and talking on their iphone, while I am using coupons and paying with money that my husband has earned and using a prepaid ($20 every 3 months) cell phone for emergencies. If someone is truly poor then you can't afford coach purses, gold jewelry or iphones. If people can afford to do those things then they can afford to pay the same percentage of their income in tax as I can, as they obviously can afford more 'luxury' items than I am able to afford.

  • junkmail5 Jun 5, 2013

    An added bonus is the elimination of the IRS- gnewsome1

    this is more nonsense by the way... even if you change the TYPE of tax, you still need people to collect it, enforce against non-payment, etc.

    You can likely make that group SMALLER if you go to a simpler tax code.. (but the same is true if you just simplify the current progressive income tax code) but you can't "eliminate" them, or anywhere close to it.

  • junkmail5 Jun 5, 2013

    We all consume and we all should pay the same ratio of taxes to our income.- gnewsome1

    But again, that's IMPOSSIBLE.

    because poor people spend 100% of their income for basics like food, shelter and clothing.

    So they can't pay 10-30% of it for taxes. There's simply no money to do so.

    Rich people spend a much smaller % of their income on basic food/shelter/clothing needs, so they actually HAVE money left over after they've paid their basic bills with which to pay taxes, so even with a 30-40% tax rate they've got more "left over" than everyone else started with.

    Middle class people are in the middle, and the rates usually reflect it, subject to a lower rate than the rich since they have less left over, but not 0 because they do have some.

    I'm really thinking a basic econ class ought be taught in high school or something given how many people don't grasp the basics of why progressive taxation rates are necessary.

  • downtowner Jun 5, 2013

    proponents of flat tax do not understand basic math.

  • gnewsome1 Jun 5, 2013

    Democrat or Republican, I agree with mep and taxman. We all consume and we all should pay the same ratio of taxes to our income. People should not be punished because they work hard in life and succeed. We do not owe slackers a living. Get off your duff and work for it like the rest of us have to do. An added bonus is the elimination of the IRS, a rogue government entity.