Home Deduction on the Chopping Block?
Well, this would be a real blow to the economy and home ownership -- and we'd likely have other things for the Federal Reserve to worry about besides inflation. What's up, you ask? Apparently, a Presidential Advisory panel is reviewing the feasibility of removing the home mortgage interest deduction.
Now, don't panic yet. This deduction has been under periodic attack since the Reagan years, but we still have it at our disposal. But the enticement is there: As the President suggests tax cuts to higher-income earners, this little manoeuvre would put money back in the Federal coffers to the tune of some $63 billion in revenues, based on taxpayers claiming some $337 billion in home mortgage interest deductions each year.
Given that the President needs some money to defray costs for many things -- the war, the fallout from hurricane season, and other issues -- it's got to look pretty interesting to him.
The deduction would likely be removed at a certain size of mortgage -- but that size of mortgage (depending on where you live) could impact even middle-income Americans. This is the bad news. The good news is that the Advisory Panel has not yet put forth a final recommendation, and there's still time for your local congressman to make some noise about this. However, the issue has got to get people's attention: up to this point, it's been traveling under the radar, with the news media focusing on the issue of Iraq and the indictment of some key people in the Bush administration.
In the meantime, we can also take some comfort from the fact that the removal of the home mortgage deduction has been proposed before, going back to the 1980s and has always met strong resistance in Congress. And we do have a President who is against tax increase. So, it will be interesting to see if President Bush decides this suggestion is a tax increase or a needed reform.