Bush Panel May Curb Tax Breaks for Homeowners, Health

[Bluebear]

Spread the word...

Oct. 11 (Bloomberg) -- President George W. Bush's tax advisory panel, rejecting a fundamental overhaul, agreed to recommend limiting tax breaks for homeowners and employer-provided health-care benefits to help pay for repealing the alternative minimum tax.

The panel, meeting in Washington today, agreed the current $1 million cap on deductible mortgage interest should be reduced, possibly to about $350,000, and that the deduction should yield no more than a 25 percent tax savings, down from a top savings now of about 35 percent.

http://www.bloomberg.com/apps/news?pid=10000103&sid=aBeBp7PMoft4

[ShortnFiery]

1. Why does Dear Leader hate the Middle Class? n/t

[Vincardog]

4. Because they are necessary for a Democracy to continue

And because Dear LiL Leader is a Fascist thug who hates our freedom.

[Miss Chybil]

17. I pay about $8,000 per year in mortgage interest.

I don't think people who pay a million plus in mortgage interest could really be considered the middle class. I don't know. I'm just guessing.

[Gormy Cuss]

25. IIRC, that figure refers to the debt amount, not annual interest.

That is, in most instances if you have a mortgage for up to 1 million dollars, the interest is fully deductible. Reducing it to 350K would mean that people in high cost housing areas would not realize a full deduction on the annual amount of interest paid.

[NMMNG]

28. A $350K limit?

Most of the houses in my area--even townhomes--would be over that limit. :-(

[Kber]

44. Mine too - a modest town home a commutable distance to NYC

is atleast 400K.

This is going to kill the housing markets on the coasts.

[Miss Chybil]

29. That's not what it says. It says deductible interest.

The amount you owe should really have nothing to do with it. You don't write off what you owe.

[pnwmom]

31. It doesn't matter which interpretation is right.

Because in 30 year mortgages you end up paying back more in interest than in principal. So if your interpretation is correct, then mortgages would need to be BELOW 350,000.

[Miss Chybil]

35. See #33 and know that each year your mortgage company sends

out a tax form showing how much interest you paid that year and how much you paid in property taxes. It also shows if you paid any points, say because you just purchased the home, or you refinanced it. Points are basically up front interest. People pay them to "buy down" the interest rate. You then use this form to prepare your taxes. You can deduct the interest from your income. It would take a lot of mortgage to pay over $350,000 in interest in one year. These would be people making payments of over $3,000.00 per month on their house payment alone. It appears, according to this article, people can deduct up to that much per year, after that, they would no longer get the write off. I don't know too many "middle-class" families who pay over $3000.00 per month on their house payment. Maybe, I have a distorted picture of what "middle-class" means. (Under the current rules, people could deduct up to $8,333.00 per month in interest. This really doesn't seem very middle-class to me.)

Now, do I think Bush's idea is a good one? That's another story. I think it would be more fair, if they must limit the deduction, (which seems quite un-American), to limit it to $500,000.00. That would leave the poor "upper-middle class" people alone.

[Gormy Cuss]

46. I realize that it doesn't say this.

The article is in error by phrasing it as if people can claim deductions on 350K -1M a year in interest and that's not the way current law works. I didn't have time to check last night, but see IRS publication 936 if you're interested in reading more. The law is specifically written in terms of the amount you owe determining the amount of deductible interest.

[papau]

38. It isa debt amount - and the GOP are trying to screw up the income tax so

as to get folks angry.

Leave the $1 million alone - perhaps increase it to $1,500,000 loans (at 5% that is a $75,000 deduction max for home interest paid)

Get those Clinton era tax rates restored for the part of ones income above $250,000 and we take a big chunk out of the deficit. Keep the reduced tax rates for that part of the person's income below $250,000 - which means "no change in tax " covers just about all the folks I know except Wall Street Investment Bankers and Traders - who do not vote Dem - ever.

[pnwmom]

42. Actually, there are people with very high incomes who vote

Democratic. Martha Stewart, George Soros are two names that jump to mind. A lot of the people with computer money are also Democrats.
They're not looking to lower their own taxes. They'd rather live in a more civilized country,with a safety net, that's why they're willing to pay more.

[papau]

47. true - and God bless them - but the vast majority of both those born into

money and those new to wealth really believe luck had nothing to do with it - it was all merit -

and it is now unfair to expect them to share via their taxes funding programs that are mostly benefiting the non-rich,

[FloridaPat]

24. How many middle class people do you know pay $1 million interest

on a home loan? So far they are going after millionaires and corporations. Probably won't happen. They really do want to go after the middle class.

[pnwmom]

26. 1 million refers to the loan amount, not the interest.

A $350,000 limit on mortgages would affect most new mortgages in my high cost city.

[Miss Chybil]

30. I disagree. Read it again. It says "interest."

Principle is not dedcutible, nor is it reported anywhere on your tax form.

[pnwmom]

32. On a 30 year loan, the interest paid ends up being more than

the principal loan amount. So if you are right then the loss to average homeowners in high cost cities is even higher.

[Miss Chybil]

33. You deduct interest per year. Not after 30 years of adding it up. nt

[pnwmom]

34. Doesn't matter. The current $1 million applies to mortgage amount.

The wording in the Forbes article was misleading.

http://www.quicken.com/cms/viewers/article/taxes/53701#istherealimit

"Is There a Limit to the Amount I Can Deduct?

Yes, if all mortgages on your home total either

More than the fair market value of your home, or
More than $1 million ($500,000 if you’re married and filing separately from your spouse),
And yes, if your home equity loans are more than $100,000 ($50,000 if you’re married and filing separately).

In those cases, your deduction may be limited. For details, see IRS Publication 936: Home Mortgage Interest Deduction."


So the proposed reduction to $350,000 would impact millions of average mortgage holders in high cost cities.

[Miss Chybil]

36. If that's the case, you are right. I digress. nt

[ck4829]

2. Limiting tax breaks for the little guy

But not for Corporations or the Wealthy.

Great 'logic' there, Chimpy.

K&R to expose the idiocy.

[Rex]

3. They must help Big Pharma destroy the middle class.

It is part of their covenant with Lucifer.

[Name removed]

5. Deleted message

Message removed by moderator. Click here to review the message board rules.

[mrreowwr_kittty]

18. Because tax breaks are always distributed evenly, right?

Take a hike freeper.

[Justice Is Comin]

6. The alternative minimum tax is another thing they don't disclose

in the deficit.

Adding in the dollars to fix this is going to monumentally explode the deficit. And there is absolutely no question it must be fixed.

[papau]

13. the fix to Alt Min is not that costly - repeal is unfair and a huge cost n

n/t

[Justice Is Comin]

19. It certainly is expensive to fix

because they have to replace that lost revenue and yet they can't keep the AMT because it's sweeping up so much of the middle class now which will be burdened by this whopper tax. The idiots never planned for that.

[papau]

37. They can and should keep the AMT - easy adjustments are possible to

remove the middle class now swept up by having a lot of kids and by the law having a low standard deduction - fix those two - which is not high cost - and we are back to the $250,000 and above crowd with a lot of tax gimmicks being caught up - and these folks only.

And keeping these higher paid folks in Alt Min keeps the cost of the fix down.

[Warpy]

14. They don't want to FIX IT

Now that it's hurt enough middle class folks, they want to END IT so that corporations and the fattest of the fat cats never have to pay any taxes at all, thanks to sweetheart deals from Congress and creative accounting.

The AMT was a good idea, but GOPS refused to put an income floor on it, making sure they'd be able to make a case to stupid people who don't know any better that it's bad for everybody.

If they eliminate it, it'll be a DISASTER.

[papau]

39. I agree n/t

n/t

[nam78_two]

7. Recommended/nt

[Ian David]

8. MOneeEEEee! MoneEEEee!!!! Repukes care so much about MOnEEEEee!!

Please, send our kids to Iraq, but don't let the Democrats raise our taxes!

What??

Bush wants to raise taxes on ordinary folks??

They wanna take our MOnnNNnnEEEEeeee!!!

[cally]

9. If we have a Speakeer Pelosi, this will never pass

Average prices in California are much higher than these proposed caps. This change would hurt almost all California homeowners. I doubt even the Reub Bush enablers in California could support this.

[Warpy]

15. It only has to be hustled through this lame duck GOP Congress

Stupid will sign it.

If Pelosi tries to undo any of Stupid's attacks against the American people to fatten his class, Stupid will veto it all.

And they know it.

[cally]

22. Realtors support Republicans. So do mortgage bankers

They will revolt if this happens. I don't see it happening easily. But these folks are not sane so what do I know.

[gristy]

10. Criminy

Who the heck pays $1M in mortgage interest?? Is that per year?

[satya]

11. Do they still plan to do this? (article is from 2005) nt

[Bluebear]

12. Don't ask me, I never thought habeus corpus would end either. nt

[Thickasabrick]

16. I don't have a problem with this. I think $1 million is too high.

[mrreowwr_kittty]

20. That's not the problem

It's the 25% tax savings cap that will affect everyone. I don't necessarily agree with mortgage deductions in general. To me, they are unfair to people who don't own their homes. But they've been around for awhile and a lot of people depend on the tax break. If they want to do away with the AMT they should roll back the tax cuts on the wealthy.

[Bluebear]

21. The 25 vs 35% cap would be momentous, no matter what the amount.

Plus the GOP bullshit always talks about "the middle class". How about a Californian with a $500K mortgage for instance?

[papau]

41. The GOP game is to get folks pissed at the income tax - Dems should

INCREASE the permitted loan amount to $1,500,000 (at 5% that is a $75,000 deduction for home interest for someone making close to a million a year - not a big deal.

[cally]

23. Except this will crash the economy

In California, there are many areas where the average price of a home is $900,000. This is for a ticky tack basic 3 bedroom, 2 bath, 1700 foot home. People are overextending and getting mortgages for home purchase. I somewhat agree that a mortgage deduction tax break makes no sense, but elimination of it will wreak havoc in California and elsewhere. Maybe some type of phased, slow change would make sense. I think we have much bigger income inequality problems in our tax code than this.

[pnwmom]

27. A $350,000 limit on mortgage loans would affect most new mortgages

in high cost cities.

[upi402]

40. "What, me worry" -Alfred W Newman

Is the Bushler worried? Is Paragauy on his mind? Is he worried about Nancy Pelosi and 'peaches (or sumpin' like that)?

It's hard work looting the treasury. No wonder dadums was too tired to play catch with hims.

[Pachamama]

43. In the area where I live, the median price of a home is over $1MM

It is therefore not unusual for people to all have jumbo mortgages (over $350K) and including over $1MM in loans....We are one of them. I can say that these people don't represent the "wealthy" but rather "the Middle Class" with two working parents and making ends meet - barely. If the Bush Administration changed the current tax law that allows people to deduct their mortgage interest this could be devastating to the vast majority of Californians...It literally would mean that people's tax basis would jump and their housing costs monthly would jump by as much as $1000-$2000 per month!

Note the comment in this report that directly references the disproportionate effect that would happen to California compared to states like Indiana.

Why does Bush hate Californians so much???? :shrug:

[no_hypocrisy]

45. BUSH IS RAISING TAXES ON THE MIDDLE CLASS!!!

I knew it!!! Selective tax breaks for big-ticket donors.