You’ve probably heard that the new congressional tax plan is detrimental to middle class Americans who are homeowners.
But really, how much will they be impacted?
A new study conducted by Americans Against Double Taxation (AADT) indicates that most middle class homeowners will see a tax increase next year – some as great an increase of $6,167 – and then get an additional $600 increase once the family flexibility credit expires after 2022.
The states where homeowners would feel the greatest impact include New York, New Jersey, California, Virginia, Minnesota, Utah, Pennsylvania, Ohio, Illinois and Michigan.
“The partial elimination of the state and local tax deduction (SALT) will raise taxes for many middle-class suburban homeowners even with the other changes included in the Brady tax bill,” said Bob Chlopak, Co-Director of Americans Against Double Taxation. “These tax hikes will hit both middle-class families and individuals owning homes, who have been promised for months they would get a tax cut, and will be as widespread as they are costly. The analysis makes it clear that these suburban homeowners are paying much of the $1.1 trillion tab resulting from the loss of the SALT deduction.”
The AADT study examined 39 suburban congressional districts in the aforementioned states. In 32 of those districts, the average increase would be more than $1,000 and that total would increase to 38 of 39 districts paying more than $1,000 more than they are today within six years.
In suburban Minneapolis, (MN-3) the average homeowner in ever ZIP code would see a tax increase with some as high as $2,300 annually. This is the same for middle class taxpayers who own a home in most of Northern or Eastern Virginia.
But California is one of the hardest hit states – with increases climbing over $5,500.
The reason there are differences in every state and district and even ZIP code is the elimination of SALT is only partial, making the numbers different for every homeowner.
What tends to be most disconcerting to those analyzing this proposed legislation is that the tax plan has a double standard. In the same geographic region that homeowners are eliminating or drastically reducing tax deductions on individuals and families they are allowing corporations for fully deduct state and local taxes – placing the corporate tax burden on the residents who just happen to live in the same community.
Individuals are more at stake in these areas of the country because of an increase in the child tax credit for families – but that tax credit increase will only last for five years, meaning the families will feel the impact come 2023.
Both AADT and the National Association of REALTORS® are strongly suggesting that constituents contact their Senators to tell them to oppose this legislation and to continue to do so in the future until middle class American homeowners are protected and not asked to bear a double tax burden to put more money in the coffers of corporate America.