Tuesday, September 1, 2009
No More Mortgage Interest Deductions!
Here we go again. Every so often this subject rears it's ugly head in Washington and then whoever brings it up, committee, Congress, President, etc., gets a resounding beating in the press and it goes away. Not so much this time. With the exploding deficit and trillions on loan and trillions more needed for health care and economic stimulus, Congress is pressed to raise revenues. I think we heard something during the election about no increased taxes on the middle class and poor.....but then nothing was ever mentioned about taking our deductions away; which is a backwards way of raising our taxes. Very clever! Anyway, the Congressional Budget Office, in August, delivered its latest revenue raising options to the House and Senate. Because there are only so many ways to raise money (taxes), this old option has come up again. Currently you can deduct mortgage interest up to 1 mill. Thankfully the existing IRS code already penalized the rich so we do not have to run through that drill again. This clever group wants to reduce the limit to $500,000. Wait a minute - isn't that home level part of the middle class that was guaranteed no tax hikes? Fully expecting trouble on the horizon the CBO has a second option. Replace current mortgage interest deductions with a flat 15% tax credit for everybody with mortgage amounts below the limits in the first option. This way your deduction would not be tied to your income, just your mortgage; except for those pesky rich people with over 1 mill dollar mortgages - they still would get nothing. Who would benefit? Government of course, with an estimated $13 billion in revenue and of course the poor who do not itemize. I wonder if they remembered that a tax credit means the government gives money back to people and I wonder if they deducted this amount from the $13 billion - gotta wonder after being off 2 trillion on the last official government estimate - remember? Let's non Ivy league educated, non PHD economists, guess what this will do to the already distressed housing market.