The Democratic leaders in California rejected the GOP tax plan introduced by the House Ways and Means Committee on Thursday. They said it is bad for California and the entire Country.
In separate statements, Senator Dianne Feinstein and House Minority Leader Nancy Pelosi said the Republic tax proposal is a gift to corporations and to the wealthy. California Governor Gerry Brown shared Pelosi and Feinstein’s view on the issue.
Under the GOP tax plan, the corporate tax rate will decline from 35% to 25%. The tax rate for pass-through businesses (owners file taxes as individuals) will drop to 25% from the current 39.6%. The tax rate is applied on 30% of their business income.
Additionally, the bill puts a limit on the popular state and local tax (SALT) deduction to $10,000 a year. It also puts a cap on home mortgage interest deduction for exiting mortgages and newly-purchased homes. The bill allows taxpayers to claim interest paid on home mortgage debt of $500,000, down from the current $1 million. The legislation will no longer allow deductions for second homes.
According to experts, the change on the tax rate for pass-through companies is beneficial to small businesses. However, it is also a blessing to law firms, partnerships, and real estate companies including those owned by President Donald Trump.
GOP tax plan will likely increase deficit by $1.5 trillion
In a press release, Sen. Feinstein slammed Republicans’ effort to provide big tax cut for large corporations and wealthiest Americans. She also emphasized that the GOP tax plan will likely increase the deficit by $1.5 trillion
Feinstein said, “It’s unbelievable the lengths that Republicans will go to give the richest Americans a huge tax cut. She is “concerned about the limitation on essential tax provisions” beneficial for working families and the middle class.
The senator added that the GOP is lowering “key deductions and credits for families in order to give the richest Americans and large companies a tax cut.” Feinstein is referring to the mortgage interest and state and local tax (SALT) deductions.
According to Feinstein, putting a cap on mortgage interest deduction “could create a huge barrier to home ownership. It could also reduce the existing home values across the country.
In addition, Feinstein noted that five million households in California claimed the SALT deductions on their tax returns in 2015. She stressed that ending this important deduction for the middle-class could lead to reduction of critical state and local services.”
Furthermore, Feinstein said, “This bill would harm families and is a non-starter for me.” She promised, “I’ll fight to defeat it in the Senate.”
Pelosi says GOP tax plan will plunder the middle-class
On the other hand, Pelosi called California Republicans members of the House as “lemmings” lining up to support the tax legislation.
In a statement, House Pelosi said the GOP tax plan is “devastating” for California. Her concerns about the bill are similar to Feinstein’s.
According to her, Republican lawmakers from California went “straight down the line like lemmings to the sea to vote against the interest of their constituents, against the interest of our state.”
During a press conference, Pelosi emphasized that the GOP tax legislation will “plunder the middle class.” He reiterated that it is a deficit exploding, multi-trillion dollar giveaway to the wealthiest and the corporations.”
Meanwhile, Gov. Brown said the GOP’s “hurried tax proposal” is harmful to Americans. It is a “bad economic policy.” He also emphasized that the legislation “transfers income from individuals and families to large and powerful corporate structures.”