Upon reading a report entitled “Trump Tax Law Hurts Homeowners and Helps Real Estate Developers” prepared at the direction of and for Congressman Elijah E. Cummings, I became interested both in the report and in the workings of the House of Representatives’ Committee on Oversight and Government Reform. The report prepared for Congressman Cummings was marked: “Democratic Staff Report”.
Chairman Gowdy is an outstanding member of Congress and it is understood that the organization and to some extent, the costs of operating the committee are a hand dealt to Chairman Gowdy and likely identical organizational charts exist with respect to every committee in the House of Representatives.
The mission statement of the House Oversight Committee includes promises to“ensure the efficiency, effectiveness, and accountability of the federal government and all its agencies” and states “genuinely good government requires a commitment to expose waste, fraud, and abuse. We ultimately report to hard working taxpayers to ensure their investment in government is spent effectively, efficiently, and transparently.”
Ignoring the extremely one-sidedness and quality of the report, two questions arise regarding organization and idleness. Why are taxpayers paying for both a majority and a minority staff for a committee on oversight and government reform? George Washington warned Americans against excessive party spirit. Here, we have politics into a committee that should not be political. The duplicative expenses should be borne by whoever wants to pay for them, not taxpayers. And, why is a report being prepared by the Committee on Oversight and Government Reform on a narrow area of a recent tax bill? The report demonstrates a complete lack of expertise in the area. Is there not enough to do regarding oversight and government reform or are taxpayers paying for a political statement for a political party?
The report provides carefully selected “facts” without context and results in what essentially should be referred to as a hit piece. Why this would be part of the charge of the Oversight committee is a great unknown.
The report attacks the elimination of the deductibility of interest from home equity loans. While it is an interesting issue, the report does not discuss that this puts homeowners on equal tax footing for deductibility of interest with non-home owners, the dramatic increase in the standard deduction that will make this an issue only for taxpayers with home interest, taxes and charitable contributions in excess of $24,000 or the reduction in tax rates. Without context, this “discussion”, the centerpiece of the report, is essentially nothing more than a partisan attack on the president.
The report goes on to make context free observations on tax breaks impacting the real estate industry. The classic discussion here is with respect to new rules limiting interest deductions for large non-real estate businesses. The argument is that leaving the unlimited deduction for interest in place for real estate is a windfall for the real estate industry. Undiscussed or even considered is that applying these interest deduction rules to real estate would lead to a banking crisis unmatched by the great depression as such a change for real estate would instantly and significantly devalue every real estate asset in the country. Also undiscussed is the plethora of income tax rules and regulations that essentially limit the ability of real estate owners to use real estate losses against other income.
As a tax professor, the preparers of the report entitled “Trump Tax Law Hurts Homeowners and Helps Real Estate Developers” would not pass my introductory tax class. But the point is that the staff of a committee that is not expected to know anything about taxes is preparing reports on taxes and the report is only being prepared for political purposes. And we the taxpayers get to pay the costs of preparation.