FOR TEXAS, GOP TAX BILL HAS ITS HITS AND MISSES
Posted January 3, 2018 4:57 p.m. EST
WASHINGTON - Call it a postcard from Texas.
The Republican tax overhaul that Congress sent to President Trump on Wednesday bore the fingerprints of a cadre of powerful Texas legislators, notably House Ways and Means Chairman Kevin Brady of The Woodlands, whose legacy promise was a tax system so simple people could file their taxes on a postcard.
While the tax cut legislation got a push from other prominent Texans, including Senate Majority Whip John Cornyn and House Rules Committee Chairman Pete Sessions, the Lone Star State also provided some of the bill's fiercest critics, the most conspicuous being Austin's Lloyd Doggett, a top Democrat on Brady's tax writing Ways and Means panel.
The divisions in Texas mirrored those throughout the country, which, polls showed, received the promise of across-the-board tax cuts with some skepticism.
In a state the size of Texas, the stakes were big. While most taxpayers will see smaller tax hits on their paychecks in January, others, particularly those with high-end real estate in Houston and other urban areas, stand to lose valuable deductions that were shuffled around in last-minute legislative horse-trading.
On the other end of the income ladder, more than a million Texans could lose health coverage in 2025 due to the repeal of the individual mandate to buy insurance under Obamacare, one of the central pillars of the health care law to push down skyrocketing premiums.
Eleventh-hour complications - including a snag that blocked a plan by Texas Republican Ted Cruz to provide tax breaks for home-school families - might give many middle-class taxpayers pause before they try to file their taxes on a postcard.
Democrats chided Brady's promise, pointing to a flurry on newly-structured individual and business deductions and tax rates, some of which phase out in different years and are heavily weighted toward corporations and the upper end of the income ladder.
Brady also has had to retreat on the pledge to simplify the tax code by compressing the seven current tax brackets down to three or four. The final tax bill maintains seven individual tax brackets - eight, if a separate zero tax bracket is counted.
"What happened to the postcard?" said Rep. Richard Neal of Massachusetts, the ranking Democrat on Ways and Means. "You have to carry around a billboard for tax simplification to figure out what's in it."
Brady, leading up to the final 224-201 House vote, said nearly 9 in 10 taxpayers could avail themselves of "post card style" filing because they can take advantage of a doubling in the standard deduction. Currently, about three-fourths of Texas filers - about 9.2 million people - use the standard deduction, which rises from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for couples.
But another 2.8 million people in Texas itemize some combination of sales, property and income taxes, as well as interest payments they make on their home mortgages. About half of these people - including more than 200,000 in Harris County alone - make more than $100,000 a year. Given new limits, more of these taxpayers could end up taking the standard deduction.
Any added complexity, Brady said, was the result of listening to what constituents wanted - a formulation that critics de-code as what special interests wanted.
Many wealthy Texans dodged a few bullets, particularly the 2.3 million residents - 380,000 in Harris County - who write off their property taxes.
Originally eliminated in the Senate version of the bill, the state and local tax deduction remains, including for property and sales taxes, though it's capped at $10,000.
There was another near miss for some 2 million Texas homeowners who deduct their mortgage interest. Originally set to be capped at $500,000, the limit was raised to $750,000 in the final version of the bill, at least on new loans. But that's down from the current $1 million threshold.
"We stripped the tax code down to its basics and started listening to the American people about what is important to them in a 21st century tax code," Brady said. "The final bill truly reflects the priorities of the American people."
Texas Democrats - not a single Democrat from any state voted for the tax bill - argued that it merely reflected the priorities of the rich - at the expense of growing deficits.
"They camouflage this corporate tax giveaway with some changes for individuals," Doggett said. "Who gets the most? Well, it's a Who's Who of not you.... Disguised as middle-class tax relief, this wretched bill targets the middle class with a dime for every dollar that is in the bill."
They also sought to make a billionaire president the face of the GOP tax bill.
"This is a Christmas gift for the Trump family," said Houston Democrat Sheila Jackson Lee. "No one else."
A few Republicans complained of the disparate effect on people in high-tax states who benefit the most from the current state and local tax deductions. New limits on those deductions, which could increase the tax bills for millions of Americans, prompted 12 House Republicans to balk. Most came from New York, New Jersey and California.
The entire Republican delegation from Texas supported the bill - most enthusiastically.
"This tax reform may not bear the ribbons and bows of a Christmas present, but the men and women who are trying to make ends meet will benefit from lower taxes, bigger paychecks, and a resurgent economy that will produce more jobs and better opportunities," Cornyn said before Senate's 51-48 vote early Wednesday morning. "American families need more take-home pay. They need the higher wages. They need greater job opportunities. And they need a competitive economy and the benefits that brings."
The bulk of the Republican tax cuts are aimed at business, dropping the top corporate rate from 35 percent to 21 percent. Individual rates also drop at all income levels, though the savings increase dramatically in the upper income brackets.
Families bringing home less than $25,000 a year will see an average tax cut of $60 next year, compared to those earning more than $733,000, who would average $51,000 in savings, according to the nonpartisan Tax Policy Center.
Moreover, many of the individual tax breaks are set to expire over the next decade. Unless a future Congress extends them, the Tax Policy Center estimates that the GOP bill would raise taxes on 53 percent of Americans by 2027.
Brady and other Republicans, however, have focused on the here and now. They point out that a typical family of four earning the median income of $73,000 will receive a tax cut next year of $2,058. With a doubling of the child tax credit, a single mom with one kid making $41,000 will see a tax cut of $1,304.
"In Washington, Democrats and the media sneer at that amount," Brady told Texas reporters. "But for hard-working families in Texas, $2,000 more in their pocketbook each year is really important."
Texas Gov. Greg Abbott, like other Republican governors, praised the bill as an economic boon. "Any law the reduces the money the federal government takes from taxpayers is a good law," Abbott said. "In addition to helping working Texans keep more of their paycheck, the law encourages employers to issue more paychecks to more employees. The law should create even more jobs in Texas and allow employees to take home more of their hard-earned money."
'A proud moment'
Republicans in Washington billed passage of the tax overhaul as an historic, once-in-a-lifetime opportunity. For Brady, it was a legacy project capping his 20 years in Congress, the last two of them as Ways and Means Chairman.
Brady took in the two final votes Tuesday and Wednesday beside House Speaker Paul Ryan, his partner in a GOP "Better Way" blueprint that served as the outline for the Republican tax reform effort even before Trump was elected.
"It was a proud moment, no doubt," Brady said. "We've both worked for this day. In a sense, it's a little hard to believe... It was a pretty special moment."
Ryan singled out Brady for praise. "His endless patience and his persistence and his great demeanor have seen us through and gotten us to where we are today," he said.
Brady was cheered Wednesday in a GOP rally at the White House, where he cited Trump's election as the key to success. "That's when I knew it was real," Brady said.