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What the New Tax Overhaul Means for Truckee/Tahoe

Jessica Morse on the tax bill
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The tax bill currently pushing through congress has had an interesting story here in California’s 4th Congressional District. Rep. Tom McClintock, who originally cast a “no” vote for the bill in November along with 12 other Republican house members, was the only one to flip his vote to a “yes” in the latest vote this Tuesday. A cap of $10,000 on state and local tax deductions in a district where 45 percent of 2015 tax returns included these deductions instigated the main concern for McClintock and other local representatives, but McClintock said in a statement this week that alterations to the bill were significant enough to sway his vote.

President Trump signed the tax overhaul into law this morning. The state and local cap is still in place, as well as more than a handful of other details included in the bill that will directly affect individuals in the Truckee/Tahoe area almost immediately — or as soon as the bill goes into effect on Jan. 1, 2018. Shortly before the bill was signed into law by the president, we spoke with McClintock’s front running challenger, Dem. Jessica Morse, about some of her concerns regarding how this bill will affect California, the fourth district, and the Tahoe/Truckee region.

Railyard on the block

Morse: There are a couple of things that were on the chopping block that I think have been remedied. Probably one of the biggest things that Truckee was on the block for was the repeal of a HUD financing mechanism that could have tanked the Railyard Project. Those got added back in in the last minute in the final bill, but that is something to be watching.

It would have taken out this 4 percent financing mechanism that was allowing private developers to offer workforce housing, and so that was one of the things that the Truckee Railyard Project was taking advantage of, that was allowing it to be built. The Senate put that back in the final version, it was added kind of in the 11th hour because of a lot of public pressure for workforce housing, and so it saved the project.

Sometimes these things that seem very technical or non-direct … really have a direct impact on our community if we’re not paying attention.

Home mortgage interest deductions capped

Morse: What I didn’t like about this bill is that it seems vindictive. You know it really disproportionately targets Californians. Most of our homes in Truckee are an average price of close to $500,000 because of rising home prices, so even people who have been in the community for close to 20 to 30 years, suddenly even if they’re not making big incomes but their property value has gone up; this bill specifically targets them because they can’t claim their home deductions now.

I’ve been talking to members of the community who are reliant on those to be able to get resources back. In California, somebody who owns a property that is worth half a million dollars; that’s not necessarily somebody who’s wealthy.

Editors note: The original tax bill to come through the house capped mortgage interest deductions at $500,000, but the final bill set the cap at $750,000. The regional median home price in Truckee/North Lake Tahoe for November 2017 was $680,000 according to Moonshine Ink’s latest Market Watch column.

State and local deductions

Morse: Four in 10 people in our district claim state deductions off their federal taxes. I was talking to somebody who said the new bar in this bill won’t even cover half of her deductions that she’s been claiming, so it really takes money just directly out of the pocket of Californians.
For communities in a state like ours where taxes are a little bit higher than the average and the country, and where housing prices are significantly higher than most of the country, this was directly designed to hurt us.

Editors note: According to the Los Angeles Times, a third of California taxpayers claim an average state and local tax deduction of $22,000, more than twice what will be capped by the new bill.

A hindrance to fire repairs

Morse: Victims of fire can’t claim a deduction for any of the costs of rebuilding or damages from wildfires if it’s not declared a federal emergency. The Detwiler fire earlier this year that impacted our district a little bit more south, none of those people; we lost 64 homes, plus people had scores of damages, plus every time there’s a fire evacuation, people evacuate and they’re out of work for several weeks and their food goes bad. So, anybody in our community who’s living below the poverty line, or paycheck to paycheck, one evacuation even can push them over the edge. Without being able to claim those deductions too, if you have smoke damage or damage from fire, it really adds up for people.

Editors note: Rep. McClintock and his office responded to Moonshine Ink’s requests for comment by directing us to his website.

 
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Reader comments so far...

tahoehal | Tahoe City
I feel that Rep. McClintock did not vote in the best interests of his constituents or the state of California. I will not vote to reelect him.

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December 13, 2018