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White House considers lower deduction for U.S. homeowners: Politico
August 4, 2017 / 4:23 PM / 4 months ago

White House considers lower deduction for U.S. homeowners: Politico

WASHINGTON (Reuters) - The Trump administration is considering reducing the annual $1 million mortgage deduction cap for U.S. homeowners as a part of its broader tax reform, despite earlier promises to protect the tax advantage, Politico reported on Friday.

Homes are seen for sale in the northwest area of Portland, Oregon March 20, 2014. REUTERS/Steve Dipaola

Politico said the popular deduction came up this week at a White House roundtable with real estate industry representatives led by National Economic Council Director Gary Cohn. The publication quoted an attendee as saying Cohn was willing to “ruffle some feathers” by putting everything on the table.

The Internal Revenue Service says homeowners can deduct all interest on mortgages of up to $1 million. Lowering the mortgage deduction cap could help pay for major tax cuts for businesses and individuals that Republicans view as crucial for driving U.S. economic growth.

But the White House pushed back on the notion that its position has changed.

“As we’ve said since we introduced our principles in April, we intend to protect the homeownership deductions,” White House spokeswoman Natalie Strom said.

Cohn told Bloomberg TV on Friday that the 35 percent U.S. corporate tax rate should be more in line with the 24 percent average rate among other countries in the Organization for Economic Cooperation and Development.

“We cannot be substantially higher than the OECD average tax rate out there,” he said. “We’ve got to get in line with the rest of the world, we’ve got to entice capital to be invested in the United States.”

President Donald Trump wants to cut the corporate rate far lower to 15 percent, a level that Republicans in Congress view as unlikely. Senate Finance Committee Chairman Orrin Hatch told Reuters this week it would be a challenge to get the rate to 25 percent.

In a separate Friday interview on Fox Business Network, Cohn said the administration and Congress are committed to get as low a rate as possible for businesses.

Two congressional tax committees are drafting tax legislation that is expected to be unveiled in September. Republicans hope to pass the bill before the end of 2017.

Congress faces a packed legislative agenda when lawmakers return to Washington in September after their August break, including the task of raising the debt ceiling before October, when the Treasury Department is expected to fully exhaust its remaining borrowing capacity.

Cohn told Fox the administration is well aware of the calendar and that Treasury Secretary Steven Mnuchin is working to ensure the debt ceiling gets raised.

Reporting by David Morgan; Editing by Bill Trott

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