Congressman Lowenthal Releases Govt Report Detailing Negative Impacts To Orange County Homeowners from GOP Tax Bill

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Washington, D.C., September 21, 2018 | comments
Congressman Alan Lowenthal (CA-47) today released a commissioned Congressional report that reveals that each of the nearly 600,000 homeowners in Orange County could be adversely impacted by the Republican tax bill passed late last year. The report, issued by the staff of the Committee on Oversight and Government Reform, found at the same time the tax bill will give developers nationwide more than $66 billion in tax breaks over the next ten years.

“I knew last year that the Republican tax bill was bad for Orange County, and this report only confirms my suspicions” Congressman Lowenthal said. “Just in my district, 34,000 families face a tax hike because of the new cap on property tax deductions, and the report estimates that 17,000 taxpayers with home equity loans won’t be able to deduct the interest on those loans. These families took out loans to pay for an expensive surgery, start a business, or help with the skyrocketing cost of higher education. The GOP tax plan sticks them with a higher bill while granting huge tax breaks to multinational corporations and the wealthiest families in America.”

The report found that none of the approximately 579,900 homeowners currently living in Orange County will be allowed to claim deductions for interest on home equity loans they use for any purposes other than home improvement. Beginning in 2018, about 100,000 homeowners in Orange County with existing home equity loans will not be allowed to claim full home equity interest deductions as they did in the past. Also, while 468,900 homeowners in Orange County used to be able to deduct their full property taxes, about 180,600 no longer will be allowed to do so due to changes made by the tax bill.

In contrast to these negative impacts on Orange County homeowners, the report finds that the new tax law grants commercial real estate developers significant new tax breaks worth billions of dollars. Real estate developers are now allowed to take new deductions on pass-through income, pay dividends that are taxed at reduced rates, take advantage of an exemption from a provision that otherwise limits businesses from deducting interest, and utilize another exemption to avoid paying taxes on property exchanges. New estimates included in the report from the Joint Committee on Taxation conclude that these tax giveaways to real estate developers nationwide total a staggering $66.7 billion in lost revenue over ten years.  Just next year, the windfall for real estate developers due to these four tax changes will total nearly $3.7 billion.

The Committee on Oversight and Government Reform report is based on data from the U.S. Census Bureau, the Federal Reserve Bank of New York, the Federal Reserve Board of Governors, and the Internal Revenue Service.  Estimates of the impacts on homeowners with property taxes are based on data from the Institute on Taxation and Economic Policy.  Estimates of the impacts on homeowners with home equity loans are based on a methodology from Co-Equal.

To view the full report, please click here.

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