Dear Friend:
This week, the President’s Advisory Panel on Federal Tax Reform released its recommendations for changing our tax code.
Simplifying the tax code while recouping needed revenues are important aspects of any reform proposal. But, there are many simple options available. For instance, unnecessary deductions and tax credits for the wealthy could easily be eliminated with little or no effect on working families. Unfortunately, the President’s advisors suggest the opposite. Their plan would further shift the tax burden from the wealthy to the working.
One recommendation would hit Californians especially hard: eliminating the home mortgage interest deduction and replacing it with a limited credit. If the recommendations become law, all homeowners will receive a 15 percent mortgage interest credit on loans up to $400,000. The median price of a home in the Bay Area is now more than $700,000. This change would cost California homeowners thousands of dollars in deductions currently received,and could further decrease home ownership opportunities in our community.
Additionally, under current law, Californians can deduct state and local taxes from their federal income tax, resulting in an average tax savings of $2,200. The President’s panel recommends eliminating this deduction. That’s a tax increase, plain and simple.
But, that’s not all the bad news for working families in this plan. The President’s Panel also recommends limiting the deduction that employers can take for the cost of providing employees’ health benefits. If implemented, this recommendation has the potential to dismantle our current health care system. By limiting this exclusion, up to 160 million working Americans and their families will be forced to fend for themselves as employers reduce coverage and shift even more costs to employees. As health care premiums continue to rise far faster than inflation, our current system will collapse.
I support real efforts for simple and fair tax reform, but the President’s Advisory Panel plan is merely a tax-hike for working families cloaked in the ideology of tax reform. It is not fair to increase taxes for those who are least able to afford such increases, while continuing Bush’s tax breaks for the wealthiest Americans. I strongly oppose the reforms recommended by President Bush’s tax panel, and I will fight to ensure Californians – and all Americans – are protected from this tax hike on working families.
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