Though Congressman Steve Knight voted in favor of the House’s tax reform bill Thursday, he admits there’s work to be done to better benefit Californians.
In Knight’s eyes, the bill passed on this week is only the first step.
“There’s still a lot more to go,” Knight, R-Palmdale, said Friday.
Specifically, eliminating itemized deductions will need to be addressed, he said.
“The people who are itemizing out there, and I’m one of those people, that taking away some of these deductions is a problem,” Knight said.
Knight noted national figures that indicated 3-out-of-every-10 Americans itemize their taxes, a figure that’s closer to 4-in-10 for Californians, according to the TaxFoundation.org.
While doubling the standard deduction will help offset some of these problems, the congressman said this part of the bill should be changed when the Senate and House conference their bills.
Some of these issues could be solved with a tax credit, homebuyer credit, another bracket change or a bracket drop, he said.
The bill passed Thursday also limits the mortgage interest deduction for home mortgages up to $500,000, decreasing from its current cap of $1 million.
The Senate’s pending bill maintains the $1 million cap, according to Knight. When it comes time to converge the bills, he said he wants to increase it to at least $750,000 or higher, which he knows will affect his constituents in the Santa Clarita Valley.
“The $500,000 is definitely going to be something that is looked at and changed,” Knight said. “I think that’s going to be a place where it gets negotiated and something happens there.”
Lowering rates and “softening” a tax bracket will help ease some of the issues, according to the representative.
Knight admits he can’t control what the Senate decides with their bill, but commits to ensuring these issues are addressed when the two groups come together.
“It’s not out of our hands (in the House),” he said.
Also, he said the Senate could have issues passing a tax bill as they have with other legislation this year.
Ways and Means Committee Chairman Kevin Brady, R-Texas, is willing to listen and change the bill as it moves forward, Knight said.
California is not being forgotten, Knight insists.
“We have to wait and see what the Senate can pass and then start looking at the ideas in there that maybe we do like or we don’t like,” Knight said, “and how we conference those together.”
The Southland Regional Association of REALTORS® have taken an official stance against the bill as it was passed Thursday, according to President Nancy Starczyk.
She believes the bill is too generalized and neglects some “important details.”
“With all of these changes, my greatest fear is that it is going to stagnate the housing inventory even more,” Nancy Starczyk said. “The availability and affordability are both huge issues.”
There ought to be more incentives to help Californians become homeowners despite the housing shortage, according to Starczyk.
“I worry that people will sit on the fence because they don’t understand the ramifications,” she said.