“Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House.”
Eliminating the mortgage interest deduction is the ultimate goal of the Obama administration and this is where he has chosen to start. If you think it will stop with the rich, think again. It won’t be enough money as they continue to grow the government and that income ceiling will go down.
For some other taxes, Obama has already brought the income level down to $200,000 despite his promise not to.
This administration has implemented a number of anti-housing measures while, at the same time, continuing the Fannie-Freddie-Ginnie Mae fiasco that caused the original housing problem.
This latest proposal is being decried by the real estate industry and the National Association of Home Builders as an attack on the middle class. Any cap on the deduction will seriously hurt the already faltering housing market.
Obama thinks it costs the Treasury about $131 billion a year, but he is talking about something that has been in place in one form or another for over a century. Americans love this deduction. Personally, it made a big difference in the type of house I could purchase. It makes houses more affordable for many in the middle class.
In December, Obama’s presidential debt panel recommended turning the itemized deduction in to a 12% non-refundable tax credit available to everyone. It would also cut the size of eligible mortgages in half to up to $500,000. Read more here: The camel’s nose under the tent.