5 ways the GOP tax plans could affect your wallet

Almost every aspect of the U.S. tax code could be affected by sweeping tax reform proposals currently making their way through Congress and up for debate when lawmakers return to the Capitol next week.

Here are five ways proposed changes to the federal tax code could affect South Carolinians, from their health care to their beach vacations:

Getting a job could get harder

One program on the chopping block could leave disabled veterans and residents on public assistance with fewer options to find work.

The Work Opportunity Tax Credit gives businesses $1,200 to $9,600 in exchange for hiring from within groups that historically have faced challenges gaining employment.

These groups include unemployed and disabled veterans, recipients of federal social welfare programs like food stamps and residents of economically distressed communities, among others.

The House tax plan, passed by the chamber on Nov. 16, would eliminate this program, while the Senate proposal, expected to be debated next week, currently leaves the tax credit alone.

South Carolinians also could have a stake in whether the credit is maintained. Following the closure of a Fairfield County nuclear power plant that eliminated 5,000 jobs, Gov. Henry McMaster sprang into action, helping organize career fairs and job recruitment events to find jobs for the hundreds suddenly out of work.

The Work Opportunity Tax Credit is likely one tool S.C. businesses can use to hire men and women unemployed as a direct result of the plant closures or otherwise. South Carolina had a 3.9 percent unemployment rate in October, matching the state’s lowest unemployment rate since 2000.

A bust for beach homes?

Hot properties in some parts of South Carolina could start to cool off if one deduction goes away.

Under current tax law, homeowners are eligible for mortgage interest deductions of up to $1 million. The Senate Finance Committee voted to keep this policy intact, while House Republicans opted to lower the ceiling to $500,000.

The proposal by House Republicans also would bar taxpayers from taking advantage of this deduction on newly purchased second homes, while allowing current second homeowners to be grandfathered in.

House and Senate tax negotiators will have to reconcile these differences before President Donald Trump can sign a bill into law. But South Carolina Republicans, such as U.S. Rep. Mark Sanford of Mount Pleasant, have raised concerns about how the House’s position could affect the local real estate market, particularly in the Lowcountry and along the coast where plenty of people want to purchase vacation homes.

U.S. Rep. Tom Rice, a Myrtle Beach Republican who sits on the Ways and Means Committee that helped draft the House bill, agreed that some people would be affected by the policy change, but stressed that sacrifices and compromises were inevitable.

Last-ditch health care overhaul?

It couldn’t pass on its own, but now at least some senators see the tax bill as another chance to repeal a central feature of Obamacare.

Having tried and failed to pass a bill repealing the Affordable Care Act this year, some Republicans hope to use tax reform as a vehicle to change the health care law signed by President Barack Obama.

The Senate’s version of tax reform, up for debate the week after Thanksgiving, would repeal the individual mandate, the requirement that individuals buy health insurance or pay a tax penalty.

Health experts worry that change would lead to a drop in the number of healthy people buying insurance, leaving only sicker – and more expensive – patients on the health market.

“Coverage is expensive already in South Carolina, because we’re not only a poor state, we’re a sick state,” said Shelli Quenga, program director for the nonprofit Palmetto Project.

Other changes to the health program introduced by President Donald Trump already are having an effect. The decision to drop some federal payments to insurance companies led to a spike in premiums on some plans offered by BlueCross BlueShield of South Carolina.

Those changes might be spurring more interest in the health care market. Since enrollment for 2018 opened Nov. 1, 54,506 people in South Carolina have signed up on the health care exchange. During the first three weeks of enrollment last year, only 40,459 signed up, according to the Center for Medicare and Medicaid Services.

Higher costs for college?

Colleges and universities are uneasy about how the tax proposal could affect higher education.

Under the proposal that passed the House, taxpayers no longer would be able to deduct the interest on students loans and would have to pay taxes on tuition waivers as income. The plan also would cut back on student aid.

An analysis by the U.S. House Ways and Means Committee shows the tax proposal could increase the cost of attending college by more than $65 billion over the next decade.

However, some loan holders eventually would come out ahead. An analysis by University of South Carolina professor Donna Bobek Schmitt found that the average student loan holder making between $50,000 and $150,000 a year would see overall taxes drop under the House plan, and potentially more under a Senate plan that leaves loan deductions in place.

A proposed tax on tuition waivers also would take its toll on students who depend on such waivers to make their way through graduate school.

Many grad students depend on stipends between $20,000 to $30,000 currently offered tax-free as part of a financial package. Education professionals worry a tax change that would treat that money as income could pose a financial burden on colleges’ graduate programs.

Less help with preservation?

A tax credit helped create Columbia’s Vista, but future redevelopment projects could be put on hold.

The Historic Preservation Tax Credit, first placed in the U.S. tax code by Republican President Ronald Reagan, allows developers to renovate, reuse and generally preserve historic buildings that might otherwise have to be torn down.

Under the current law, owners then can collect a 20 percent income tax credit upon the project’s completion.

The tax credit has helped countless local developers in South Carolina and contributed directly to the refurbishment of Columbia’s Main Street. It’s now in jeopardy, as House Republicans see repealing the credit as a way to save money.

Senate Republicans sought to compromise by cutting the credit down to 10 percent, but at the eleventh hour, the Senate Finance Committee amended its tax bill to restore it back to the full 20 percent.

Assuming the full Senate can pass a tax overhaul bill out of its chamber, this could become a sticking point when lawmakers in both chambers form a conference committee to hash out differences and negotiate a final package.

This story was originally published November 26, 2017 at 1:44 PM with the headline "5 ways the GOP tax plans could affect your wallet."