The U.S. tax code is undergoing its biggest overhaul since the 1980s. And the GOP tax plan could become a reality in as little as two weeks according to congressional Republicans. The House and Senate must still hash out their differences, though.
Someone who's been following developments in D.C. is Mark Matthews. He's the Denver Post's Washington correspondent.
The Congressional Budget Office estimates the Senate version of the tax plan could add $1.4 trillion to the country's deficit in the next decade. But Matthews says Colorado's senators differ on their takes of the tax plan.
"Right now [Republican Senator Cory Gardner] is saying that...these cuts will ultimately pay for themselves. That economic growth will cover these tax cuts. Most analysts including the Joint Committee on Taxation which is non-partisan, they're paid by Congress to do this analysis, don't agree [with Gardner]," Matthews said.
At this point, Democrats, including Colorado's Michael Bennett see this as an attack point. They say the tax plan isn't fiscally responsible. And Matthews says they're worried about what comes next: "You're starting to see a lot of talk in the hallways, and around the Capitol Hill that the next piece of agenda is what President Trump referred to as welfare reform."
That would mean entitlement programs like Social Security, Medicare and Medicaid. Matthews said there are many parts of the GOP tax plan that could impact Coloradans:
How the plan will impact housing along the Front Range:
"One of the big impacts you're going to see here in Colorado potentially is the housing boom along the Front Range. This bill might in some ways may act as a chill on that. The reason for that is how these bills address things such as mortgage interest deduction. Right now, you can deduct interest payments for the first $1 million of a mortgage. The House cuts it in half to about $500,000. The Senate still keeps it at $1 million. About seven in 10 homeowners carry a mortgage in that [$500,000] group, and almost one in five above $500,000. Also, with capital gains...if you want to benefit, you'll have to stay in your home longer. So if you're looking to buy a house an flip it? This is going to make it much more difficult."
How the plan will impact Colorado brewers big and small:
"There's a big big break for the microbreweries which make up the vast majority of the 300 breweries in Colorado. But it also gives a little bit of a tax break, for 6 million barrels, to importers or local producers [of beer]. So, anybody who makes beer could benefit from this, but certainly the microbreweries have the most to gain from this.
On why tax cuts for families and individuals have expiration dates, but corporate tax cuts are permanent:
"Congress is trying to fit inside this box. There's only a certain amount they can spend given Congressional rules. And so to help fit within that gap they had a choice of trying to limit some of the corporate taxes or limit the personal taxes. At this point, they chose to keep the corporate taxes going, with the idea some of the economic gains from that would trickle down. As we all know, the trickle down theories is a controversial term and controversial way of paying for things. But right now it feels like we're almost kind of fighting the economic debates of the 1980s."
On how special interests are positioning themselves with this tax plan:
"If there's one industry doing well right now is 'K Street." That's why there's always been such a challenge for doing tax reform here. They get paid to try to influence these bills. Look at energy tax credits. There's a debate about what to do with wind energy tax credits, which is big for Colorado. But, the House bill version shortens them a bit, cuts them back a little bit so that this break won't be available for as long. But the Senate says, 'no, we're going to keep this [as is.]' These types of very small, internal industry-driven debates, multiply that by 1,000. That's what these tax writers are going to have to do."
Related:
