Or so it would seem:
Tax Panel Says Popular Breaks Should Be Cut
By DAVID E. ROSENBAUMWASHINGTON, Oct. 11 - President Bush's tax advisory commission indicated on Tuesday that it would not propose replacing the income tax with a national sales tax or a value-added tax, but would recommend limits in the popular tax deductions for mortgage interest and employer-provided health insurance.
...
That is mainly what led to an examination of ways to modify the deductions for mortgage interest and health insurance, two of the largest tax breaks now available to individuals. Together, the two deductions will cost the treasury about $250 billion this year, with the benefits going disproportionately to the most affluent taxpayers.
My problem with this last statement is one of semantics. When Dwight read it, his interpretation was that the rich get a higher monetary benefit, ergo, the statement is true. I interpreted it, however, as indicating that the "benefit" of the mortgage deduction has some sort of means test skewed for the wealthy, and thus not everyone who pays interest on a mortgage on a primary residence has the ability to claim the deduction. Under this reading, the statement is thus misleading, and is used by the article's author to cushion the fact that lots and lots of poor and middleclass homeowners, particularly those who have gambled on having their interest-only and/or balloon loans offset by the current income tax deduction schedule.
Does the Bush Administration and it's GOP lackeys really want to alienate a group, which in the past, have been fairly reliable in turning out votes for them? Initially, it looks like the answer is "yes", but one of the leading proposals put forth to "revise" the mortgage deduction indicates a possible different agenda:
For mortgage loans up to $1 million, taxpayers can now deduct all the interest. One proposal discussed on Tuesday would cap the deduction at the maximum mortgage the Federal Housing Administration will insure.That level changes each year and varies depending on housing costs in each county, with a maximum loan limit now of $312,895 in communities where housing is most expensive and a national average of $244,000, according to the housing administration.
Another proposal under consideration was to change the interest deduction to a credit, meaning that taxpayers with the same size mortgage payments would get the same tax break regardless of what tax bracket they were in.
The one point left out of all this is that the super-rich are not the only ones who now hold mortgages of more than $300,000. In certain areas, such as the East and West Coasts, very much "middle class" homeowners are forced by skyrocketing housing markets into much higher loans than they should, under "normal" circumstances, even consider. Those families are already being squeezed by large interest payments, which, unless they're fixed rate, are only going to go up if Greenspan or his yet-unnamed-yet-likeminded successor have their way. By reducing the amount of interest they can deduct, the gopher snake becomes an anaconda very fast.
Of course, Republicans should in fact care about these middle class families, right? Oh, that's right, they're predominately in Blue States and weren't voting for them anyway.
Plus, all that squeezing means less extra cash to be handed over to Democratic candidates. There's always a silver lining for the campaign finance-obsessed like Delay.
Posted by MB Williams at October 12, 2005 10:21 AM