As the first comprehensive tax reform in over 30 years is debated in this final week of the congressional session, it’s critically important for our representatives to get this right.
As a small-business owner, I am concerned about a particular aspect of tax reform – encouraging the ability to own a home.
Homeownership is an essential element of the American dream and adds to the economic and social vitality of our community. It is important that the final tax reform plan approved by Congress contain provisions that continue to empower Americans to become homeowners.
The bills approved by the House and Senate make it possible for homeowners to continue deducting up $10,000 in state and local property taxes from their federal tax. And a positive for Californians in our high-cost state, the Senate version keeps provisions that cap the home-mortgage interest deduction at $1 million.
The Senate bill also keeps the deduction for second homes, which helps families that move, flip or build a new house.
We are in the midst of a housing affordability crisis, where the number of renter households paying more than half of their income on rent is at an all-time high of more than $11 million. The House bill would eliminate the tax-exempt status of private activity bonds, severely reducing the effectiveness of the Low-Income Housing Tax Credit, the most important tool to produce affordable rental housing units.
Without private activity bonds, we face the loss of between 788,000 and 881,000 affordable rental units over the next decade. Congressional conferees must retain private activity bonds.
Small business owners employ most of our citizens in this country, so I am especially pleased with the efforts in the Senate to improve the tax treatment of pass-through businesses relative to their corporate competitors. Small businesses act as an engine of job and economic growth.
House and Senate conferees must continue to ensure that that pass-through businesses are on a level playing field with large corporations. These savings directly improve the lives of hard-working people in the Valley and throughout California.
In turn, this will enable employees to spend more money, which will improve conditions for our citizens. Young couples can save more for the down payment on their first home. Parents can buy more items that their children need. Businesses will benefit from an increased bottom line, and we will remember how it feels to be prosperous once again.
And it all starts with making sure congressional conference negotiators come up with a final tax reform package that benefits us all. Providing tax relief for middle-class California families and small businesses and keeping the nation’s long-standing commitment to housing will create a catalyst for new economic opportunity.
This tax reform bill is an opportunity for us to get it right and ensure prosperity for generations to come.
Mariann Hedstrom is a longtime business owner in Visalia. She is also chairwoman of the Tulare County Republican Party.