President Obama has an idea to help reduce the budget – eliminate reduce mortgage interest deductions.
Excerpts form Banker & Tradesman:
The Obama administration proposes to raise $291 billion over the next decade by reducing the amount by which wealthy families can cut their tax bills by claiming itemized deductions for mortgage interest payments and other write-offs.
The Obama administration tried and failed to implement a similar change in last year’s budget, after running into opposition from a range of interests ranging from mortgage lenders to charities that benefit from the taxpayers’ ability to claim such itemized deductions.
Currently, individuals with incomes above $200,000 and families with incomes above $250,000 can lower their taxes by an amount equal to as much as 39.6 percent of their itemized deductions. The Obama administration wants to lower the cap to 28 percent — the level in place at the end of the Reagan administration.
Because families in lower tax brackets don’t benefit as much from itemized deductions, the system in place now provides a disproportionate benefit to the wealthy, the administration said in its proposed budget.
“Currently, if a middle-class family donates a dollar to its favorite charity or spends a dollar on mortgage interest, it gets a 15-cent tax deduction, but a millionaire who does the same enjoys a deduction that is more than twice as generous,” the Obama administration said.
The Mortgage Bankers Association issued a statement claiming the proposed tax increase would have a negative impact on housing markets by increasing the cost of mortgages for many potential homeowners, especially in high-cost states like California and New York
Do you think in 10 years from now we will have mortgage interest deductions, regardless of income?
File Under: Don’t hold your breath
