NAHB's chief executive, Jerry Howard, had spent months working on this new tax provision with Brady's aides, but House leaders wouldn't allow its inclusion, Howard was told. The next day, Howard and other NAHB officials gathered on a conference call and debated what to do. They agreed unanimously — kill the bill.
"We have members in every district," Howard said. "We are not a partisan organization. We will work to defeat it with our grass roots."
White House officials and Republican leaders have been keeping details of the tax cut plan secret for months, worried about the cascade of lobbying efforts that will try to bend and shape the legislation once it is introduced. However, there are a number of powerful interest groups that Republican lawmakers have worked to court in an effort to blunt any opposition.
The home builders are seen as among the most influential Washington corporate forces, not only because they have members everywhere but are often big fundraisers for politicians and have a close connection to the economy, development, hiring and economic growth.
They are incensed about proposed changes to tax law that, they believe, would eliminate the need for almost all Americans to itemize their tax deductions, an adjustment they think would nullify the need for middle-class Americans to deduct their mortgage interest from their taxes. They are also incensed that the bill would strip away the ability of Americans to deduct their state and local property taxes from their federal taxable income. Both these changes, NAHB argues, would raise the cost of buying and owning a home.
The home builders had worked with Brady to create a homeownership tax credit that would give people a 12 percent credit on the amount of mortgage interest and property taxes paid, capped at a certain level and phased out for upper-income Americans.
After working to design the tax credit, Brady told Howard on Friday that the changes would not be included.
Howard's group believes that the tax bill could have destabilizing effects for the economy, and they are pointing to the impact of the 1986 tax overhaul for precedent. They argue that this law, which the Trump administration often cites as a model for its current effort, led to the savings and loan crisis because it changed the tax benefits for real estate investment. When people started to dump their real estate holdings, real estate prices fell sharply, particularly in Texas and Oklahoma, fueling a collapse of banks and savings and loans.
There were numerous causes of the savings and loan crisis, but the home builders aren't the only ones that think the 1986 tax law is a precipitating factor. During congressional testimony in 1991, then-real estate developer Donald Trump made the same argument. He called the 1986 tax law an "absolute catastrophe."
"It has taken all incentive away from investing in real estate, and real estate really means so many jobs," Trump told the House Budget Committee, saying the country had entered an economic "depression." "Incentive has to be put back into the construction of things that are needed, such as housing of all kinds."
Opposition from home builders could prove hard to overcome, but a key question will be whether other business groups decide to join in to fight the bill. The National Association of Realtors has already expressed opposition. A number of business groups have praised the GOP's push to lower the corporate tax rate from 35 percent to 20 percent, but they are warily eyeing Brady's call to eliminate certain tax breaks.