Rep. Julia Howard, R-Davie, is defending her move to block the progress of House Bill 998, a tax reform plan backed by her caucus leadership.
An amendment Howard ran in Finance Tuesday passed "with overwhelming support," she said, but was missing from the version of the bill that surfaced in Appropriations Wednesday.
The tax reform package, sponsored by Rep. David Lewis, R-Harnett, and backed by House Speaker Thom Tillis, would put a $25,000 cap on the amount taxpayers can deduct for mortgage interest, charitable contributions, and local property taxes.
Howard's amendment would remove the cap and restore the right to full deductions. That would increase the cost of the tax reform plan by an estimated half a billion dollars.
Lewis pushed to keep the cap in place, arguing it would affect mainly taxpayers making over $100,000 a year.
But Howard, who is a realtor, said it would also hurt homebuilders.
Restoring the full deduction for mortgage interest “is very important to people in the homebuilding industry,” Howard told WRAL. “And also to allow people to deduct their local property tax, that’s a part of the building industry.”
“We’re in a very fragile economy with the building industry and we don’t need to do anything right now that would hurt them,” she said.
Howard denied rumors that she is trying to kill the tax reform plan: "Absolutely not."
"There’s a way you can do tax reform and not penalize the homeowners that we have contracts with,” she said. “Most of them are in 30 year mortgages, and we told them that this [deduction] is a part of that. It’s not right for us now to take it out and arbitrarily pick winners and losers on tax reform.”
“You’re gonna hear from other folks that I created a $450 million hole in the budget. That isn’t true," she said Wednesday. "The budget is one document and the tax reform is another. They’re not tied together."
"You can bring the tax rate from 5.9% [in the bill] to 6.1%, and you’re revenue-neutral,” she said.
For people paying only 6% now, she said, blended rates would allow a small tax reduction for everyone. "It’s an easy fix."
Howard said she also feels strongly about removing the cap on charitable contributions. “At a time when we’re asking the private sector to do more and more, we should be attentive to that.”
House Republicans held a lengthy caucus meeting on the tax reform plan at lunchtime Wednesday. There's no word yet when the bill will reappear.