Posted on 08/30/2009 8:45:34 AM PDT by ProtectOurFreedom
...arlier this month the nonpartisan Congressional Budget Office delivered its latest revenue-raising options for Senate and House consideration as they write this fall's tax and budget legislation.
Tucked away in the report are several incendiary plans that could — if adopted — cost homeowners billions of dollars. Though not formal legislative proposals, the CBO's options represent a handy fiscal menu for legislators to pick and choose from to reduce the deficit — now at unprecedented levels — or to pay for new programs they might want to advance.
Tops on the CBO's hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019.
Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.
Under the CBO's option, that maximum mortgage debt amount would shrink yearly until it hit $500,000.
Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.
The CBO offered up a second option if Congress wants to raise a lot more money: Replace the current mortgage interest deduction with a flat 15 percent tax credit for everybody with mortgage amounts below the declining limits in the first option. Rather than taking write-offs that are tied to your personal income tax bracket, every homeowner would get a credit worth 15 percent of mortgage interest paid.
Who'd benefit? Primarily lower- and moderate-income taxpayers who don't itemize on their returns. Who'd pay more? People with big mortgages and higher-than-average incomes, who are far more likely to itemize under current rules.
(Excerpt) Read more at mercurynews.com ...
Yes! Do it. Preferably before 2012.
Headline: Proposals could cut mortgage deductions
Story: “Though not formal legislative proposals”
This isn’t a proposal. It is just the CBO doing its job of running the numbers on a whole bunch of options.
It isn’t, and shouldn’t be, the CBO’s job to decide which options should be considered.
Really bad headline.
I am in philosophically in favor of getting rid of the home mortgage deduction because it is yet another way the government distorts markets. But to do it now will not be helpful, and will cost everyone money. It will drive down the resale value of houses at a time when they haven’t even stabilized yet. Not only will this hurt the homeowner, this will hurt the various governments even more than any income gained, because property taxes will come down, and the value of the mortgages and houses held by Freddie and Fannie will also go down in value considerably.
Inflate all the housing values by loaning to people you know cannot pay but who nonetheless create a sense that demand is far outstripping supply and will well into the future.
Raise homeowners property taxes based on the inflated home values and never turn down a new loan to an unqualified "buyer" at the inflated price to justify the property values.
Promise your Libprogocrat base you won't increase taxes on average people, only on millionaires. Then, appraise their 250k homes as being worth a cool million in the eyes of Dodd and Fwank, so now the dolts who voted them in are rich!
Dang, an old 900 sq ft walk-up in da hood is worth a million bucks and the Great Society has finally arrived. Everyone a millionaire, everyone taxed like one.
Regards
It is already happening.
If you are upper income, and have no deductions because your children are grown, out of the house, etc.- you reach a point where you cannot take a mortgage deduction.
It is called a “phase out” of itemized deductions.
I spent the last 10 years paying off my mortgage as a result.
This is a declaration of war on the middleclsass
People have to decide if they want the government out of their lives or only out of their lives when it benefits them. The government shouldn’t be in the home ownership incentive business any more than the health care business, cash for clunkers, etc.
I’m against both the mortgage deduction and the home buyers tax credit. Pointless expenditures and giveaways.
I agree 100000%
Look what incentivizing home ownership got us. Lots of people who shouldn’t have been buying buying, lots of people who could afford to buy buying too much.
Let those who can afford to pay pay. There’s nothing wrong with renting.
I agree, though, that it is unfair to takeaway the deduction from those who bought with that in mind. If they want to take away the mortgage deduction, eliminate it completely but only on houses bought after the day the repeal becomes law.
(this might have the added benefit of a crush of last minute home buys to inject some life into the market).
This will deincentivize home ownership. (Reds don't like private property anyway) It will come back to bite school districts. In NY districts justify tax increases with the caveat that the homeowner will get 1/3 back when he files. I can see many school budgets failing to pass. Think of society as a pond. Dumping mortgage interest isn't tossing a pebble in that pond, it's tossing a boulder. Its effects can't be measured beforehand.
When you add up all the Dems’ penalties for earning income it becomes clear that you are better off not doing so.
I understand your point, but do not agree. It undoubtedly went like this.
Dem Congress Critter at behest of Obama and his czars to CBO -- "Find ways to squeeze more taxes out of the sheeple for the trillions of shortfalls facing us"
CBO reply: "We propose you slash the mortgage tax deduction. Here are two ways you can do it that will really screw the middle and upper classes and give to the underclass."
It's a proposal from CBO to Congress, nevertheless. It just hasn't turned into legislation yet.
Wow, $41 billion that will reduce a $14 trillion debt in a NT minute.
“A person paying $10K in mortgage interest will recoup about $3K when he files his 1040. With this plan it will be $1.5K.”
It depends...if you end up with a 15% credit for mortgage, but then can go with the standard deduction, you may not do that bad (providing that the standard deduction is not messed with). It depends, in large part, what your other deductions are.
Overall...I think it’s stupid to be subsidizing people who go into debt and has been a major contributor in the housing crash. We should get rid of this once and for all...but in a way that doesn’t make things worse or government bigger (which is probably not possible).
” That is not $1.1 million of interest, but interest on a $1.1 million loan or loans. Not well worded. “
Give the twerp a break. Math is harrrrrrrrd. That’s why he went into journalism.
It should be possible to form a real estate investment corporation to own a house. The interest would be fully deductible as would all utilities, repairs, and taxes. The corporation can sell the house below-market to the “renter” in the future to take advantage of personal tax free capital gains. Some rich people set up charities on a portion of their mansions to get other tax breaks, for such purposes as “donating” to their children’s private school and getting a tax deduction.
Few people who pay mtg int take the standard deduction. Home ownership means paying property taxes and the combination of deductions for both outweigh the standard deduction, and this does not include other deductions for work, business, medical etc.
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