A popular provision that allows homeowners to deduct state and local property taxes is gone under the current reform proposal, White House economic advisor Gary Cohn said Friday.
Discussions over the tax exemption have indicated that one of the ways the Republican-backed plan would pay for itself is by eliminating the write-offs. Cohn confirmed that at least in its present form, that’s how the new plan will work.
“You’ve seen our blueprint. You’ve seen our plan. Our plan at this point does not allow for deductions of state and local taxes,” Cohn told Bloomberg News in a television interview.
The nine-page draft released earlier this week makes no mention of the exemptions either way. However, the GOP will have to find ways to pay for the cuts, which the plan’s sponsors estimate to be $1.5 trillion.
Cohn told CNBC in a Thursday interview that economic growth would more than offset the reductions in corporate and personal tax rates. But there also will be tightening of deductions to help defray the cost as well.
“We set out to achieve a couple main goals: No. 1 was lower rates for everyone. No. 2 was simplification,” the former Goldman Sachs chief operating officer said in the Friday interview. “By creating simplification, we were trying to get rid of all of the loopholes and all of the deductions that mostly wealthy people use.”
However, the issue looks to be open for negotiation.
The White House has said the reduction in the corporate tax rate from 35 percent to 20 percent is a “red line,” meaning it is not open to negotiation. There have been no red-line…