In 2007, Rep. John D. Dingell (D-Mich.) unveiled a draft of his "carbon tax" legislative reform package. Part of this draft legislation was a phase-out of the mortgage interest deduction on large homes. The phase-out schedule for the mortgage interest write-off begins with houses of 3,000 square feet, which would lose 15 percent of their deductions. The proposal ends with houses of 4,200 square feet and larger, which would receive no deductions at all. With the housing market stabilization, it seems likely that some type of "green, carbon tax" legislation will be implemented, not necessarily to help the environment, but as a guise for increasing taxes to pay towards our enormous spending deficits.
Now the Obama administration has proposed cuts in the mortgage interest deduction. Obama wants to limit mortgage interest write-offs for upper-income households.
Under the Obama plan, deductions would be capped at a 28 percent tax rate, even if the taxpayer is paying taxes at a 35 percent marginal rate. Plus, if this goes through, how fast would California and other "tax & spend" states be to revise their state tax codes to align with the federal code?
This will be a real body blow for housing appreciation. Mark my words, if passed, this is just the first step towards total elimination of the mortgage interest deduction.
httpv://www.youtube.com/watch?v=Nfwo57YcVOY
Homes will always be unaffordable to the average person in high priced CA as long as government subsidize home owners in the form of mortgage tax deductions, and Fannie Mae bailouts. Remove the interest tax deduction and watch the prices correct 50%. This place a bottom on home prices and increase home ownership than further government meddling. The issue is affordability, not unemployment. Prices are still too high due to government tax policies and bad lending practices.
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As a homeowner, for over 25 years, it didn’t help me when my neighbors were selling their homes at 4x – 5x the original cost. My property taxes went up accordingly, and I cannot afford to buy another home nor do i desire a new mortgage. What is solution?
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If I recall correctly, European countries do not give a tax deduction for mortgage interest. When I was last over there (a year back), interest rates on mortgage in the country in which I found myself were at least a couple points below ours.
Of course you have to take that with a major grain of salt, I do not know enough to know if that is government-controlled or if there are other subsidies or mandates in action there.
Nevertheless, I remember one of a few lessons I learned in my Econ classes in college… when you subsidize something, that drives its cost up because the seller will naturally try to capture some percentage of that subsidy for themselves.
I would submit that mortgage interest rates are higher than they would otherwise be thanks to the mortgage interest deduction. I do not have an issue with phasing it out so long as it is PHASED OUT. I would be greatly upset if I was denied the mortgage interest deduction when I purchased my house in no small part based upon a calculation I made at the time of purchase that I would get some part of it back each year in the form of a reduction of my income taxes.
In other words, even this Democrat is going to be mighty pissed if they just junk it or slash it in one fell swoop.
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To add a further comment, I do not want to see the ‘carbon tax’ become cover for jacking up taxes, though it may well become that to some extent. After all, sooner or later all this deficit spending has to be paid for (too bad the ‘fiscal conservatives’ in the last administration kicked that can down the road like so many other messes they left for their successors to deal with).
Also, regardless of how one feels about taxes we cannot continue indefinitely with the current energy paradigm. There really is human-caused global climate change caused by the greenhouse gas emissions of 6 billion humans on a daily basis, year in and year out. It really should not be disputed any more than the fact of evolution should be disputed. Accordingly something must be done about it and cap-and-trade seems a very sensible way to get the job done. For decades pollution was treated as ‘free’ even though we ended up paying for it in terms of health care costs, decreased quality of life and degradation of resources like water and air.
Only when government began regulating and controlling pollution – you can call it ‘taxation’ if you enjoy the buzz of feeling self-righteous – did anything get done about it.
And even if you don’t believe in anthropomorphic global climate change, surely there are other hard-headed, non-Al-Gore-related reasons to wean ourselves off of our crippling reliance on foreign oil. For instance, it would be quite beneficial to our national security – not to mention our government’s fiscal soundness – if we weren’t required to be so involved in messy Middle Eastern politics.
Such a transformation is not going to happen overnight. We would be wise to begin this transformation now, under this president who has the solid support of Congress and the American people, rather than 10 years down the road when gas prices spike to several dollars a gallon and stay there, perhaps with a president whose actions are constrained to half-measures by the same DC gridlock which we’ve experienced over the course of recent administrations.
And while that transformation happens, I’m counting on a sober, at least semi-responsible opposition party to help keep Congress and the president honest with regards to any new spending or taxes/tax increases. Unfortunately, it seems the GOP is nowhere near to being up to the job these days!
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The issue is affordability, not unemployment.
um, I respectfully disagree. It’s both. I don’t care how affordable housing is, if you don’t have a job or you are frightened you won’t have one soon, then you’re not going to be buying a home unless you trade down your current one or unless we go back to the laughable lending practices of the previous few years.
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