Just hours before House Republicans passed the revised version of the tax reform bill Tuesday, Congressman Steve Knight announced his support of the legislation and his intent to vote in its favor.
However, the bill the House voted for on Tuesday is not the Senate’s final version of the bill, so representatives must revote on the Senate’s version on Wednesday.
“Comprehensive tax reform is long overdue, and the Tax Cuts and Jobs Act will help grow the economy, create jobs and expand opportunities for everyone,” Knight said in a statement. “I look forward to supporting this bill as it passes the final hurdles before being delivered to the American people.”
The bill helps Americans keep more of their income by reducing tax rates, Knight said. The Tuesday vote was 227-203 with no Democrats’ support and 12 Republicans voting against it.
In a recent CNN poll, 66 percent of Americans said they believe the bill would benefit people who are wealthy more than it will benefit the middle class.
In the original version of the bill, some Californians cited concerns with various elements, including eliminating itemized deductions and limiting new mortgage interest deductions to $500,000 from the original cap of $1 million. The new version of the bill brings the cap up to $750,000.
This covers 98 percent of mortgages in California’s 25th Congressional District, according to a Los Angeles Times analysis.
The bill also allows deductions of up to $10,000 for state and local income, property or sales taxes.
Knight said he argued in favor of a deal on state and local tax breaks.
“I fought hard with my colleagues from California to secure a deal on state and local tax deductions to retain the ability to use these deductions,” Knight said, “and to provide more flexibility to households who itemize their taxes.”
Tuesday’s bill strengthens the Child Tax Credit, provides relief for medical bills, improved education savings vehicles and supports graduate students, according to Knight.
Locally, the pending analysis of the final version has left quite a few questions, according to a pair of local Certified Public Accountants.
“When I look at my clients, they all have different mixes of which of those areas will affect them,” said Scott Ervin, principal at Krycler, Ervin, Taubman & Kaminsky, AAC, referring to some of the more significant areas on returns, such as rates and brackets, the state tax deduction cap, the standard deduction, mortgage interest cap and the alternative minimum tax, among other areas.
“My gut feeling is that the mortgage interest cap at $750,000 won’t affect that many people. And, presumably, the ones it will affect can afford it.”
The panicky questions he’s been fielding from clients are from those who just bought or are trying to buy now, he added. Most are making, or have made, the same calculation, namely: How much of a mortgage payment can I afford considering that I’ll be paying less in taxes?
For potential buyers, there’s more to consider, he added. “Suffice it to say,” he added, “the week between Christmas and New Year’s is going to be very busy.”
Matt Denny, a CPA with Denny & Company, LLP in Santa Clarita, pointed to Tax Policy Institute projections in noting most in the 25th Congressional District likely will be paying less in taxes.
“While some taxpayers in the 25th Congressional District will see an increase in their taxes,” he said, “I believe a large majority, particularly including renters and senior citizens, will see a tax cut.”
Although, he cautioned that his forecast is based on a breakdown of a bill that isn’t quite complete, yet.
“Of course,” he added, “I’m still waiting for analysis of the fine print of the bill.”
Deputy Managing Editor Perry Smith contributed to this report.