As Washington prepares to tackle the daunting task of tax reform it will be sold as providing relief for the middle class. Sen. Rob Portman (R-Ohio) believes it will do that and more.
"First you're going to get a doubling in your standard deduction, right now that's about $12,000 bucks per family it goes up to $24,000 per family,” said Portman. “That would be a zero tax rate up to $24,000, that’s helpful to everybody but particularly the folks who are in the middle class.”
“Second the child tax credit will be increased so if you have kids that's really important to you," he said.
“And then third is just where the rates are, where the brackets are so I think it’s important and I think at the end of the day if we can get the middle-class tax cut done and to help businesses come back to America, that would be a victory.”
But what Congress gives they’d also take away, most notably SALT, the deductions for State And Local Taxes. This is a point of contention in high taxed blue states but also in high taxed sections of red states. Cuyahoga County, for example, is home to eight of Ohio’s top 15 municipal property tax rates which along with income taxes people could no longer deduct.
"If you take the standard deduction you don't worry about that because you're not going to itemize and about 2/3's of people in Cleveland already take the standard deduction,” Portman said adding that if it’s doubled as proposed to $24,000 that number might go as high as 80 or 90 percent of people.
“So for them it’s not an issue, for people who are at a little higher income, that's going to be a concern,” he said adding there are discussions ongoing to address that.
“There are some things being talked about where you could not allow the deduction for state and local taxes but you would allow a deduction for property taxes the theory being that's schools and fire and police. So there are some things that can be worked out there,” he said.
Portman is hopeful the end result can be something closer to a bi-partisan effort, “that way it will have a longer shelf life,” he said.
Portman said he thinks getting something passed by the end of the year is “possible, it’s ambitious but it’s possible because the house is going to move very quickly. I think next week you’ll see a house proposal out there.”
