That's over twice what they're paying today.
A couple earning $99,920 and spending all of it (a family of four surely would) would pay $17,486 in taxes (@ your 17.5%).
Today, that family of four would get to deduct mortgage payments (say $24,000), property tax (say $8,000), charity (say $2000), four exemptions (12,200), for a taxable income of $53,720.
Going to my 2003 tax tables, they owe $7359.
Bend over, family of four.
That 17.5% figue includes ALL PAYROLL TAXES IN ADDITION TO INCOME TAXES!!!
PAYROLL TAXES ARE 15.3%. This family gets a MASSIVE TAX CUT!
Mortgage payments are made with after payroll tax and after income tax dollars. Only mortgage interest is paid with pretax dollars.
Under the fair tax, mortgage interest is still paid with pretax dollars - but the principal payments get to be paid with pretax dollars too - along with everything else.
I doubt that a family of four making 100k a year could qualify for a monthly house payment of $3100 plus per month..(400,000 loan @6%interest 2400 & $700 taxes) front end ratio of 28% of monthly income of $8,333 = $2,333 per month for principal & interest& taxes & insurance. Also that portion of payment for principal will not be deductible from taxes, so unless they refinance every few years the interest portion of their mortgage payment will be going down with time.Over the life of the loan the amount of interest that can be deducted eventually goes to zero.Of course if they get an interest only loan and make no payments towards the principal it could change things, but what person other than a speculator does such type of financing? Certainly not a real live in homeowner who the deduction was designed for.?
About 40% of homeowners have no mortgage..about 22% of taxpayers claim a mortgage interest deduction.....just one more unfair deduction that does nothing to promote home ownership or fairness...smoke and mirrors...lower tax rates promote home ownership more than tax deductibility...