Ann: Removing the mortgage interest deduction isn't going to happen. Not a chance. If it ever came to a vote, I think anyone who voted FOR removing the deduction... could start packing up their office... as that would be their last session in Congress.
In the Nov 12th Wall Street Journal, there was another article about the Deficit Cutting Commission.
The Deficit Cutting Commission, co-chaired by a Republican and a Democrat, was charged with identifying ways to reduce spending from 8% of Gross Domestic Product (GDP) to 3% in 2015. They went further and have proposed ways to get it down to 2.2% of GDP. By doing so, they have shown it is possible to do so and have provided options, some popular as well as unpopular.
Obviously, the mortgage deduction would fit into the unpopular category in this forum. By providing more savings than targeted, the commission has provided a way for the unpopular proposals to be negotiated away.
They have also put all of the proposals in the open - the ability for politicians to hide and not state where they stand is diminished by the commission doing so. There is something to dislike across all political spectrums. That means it actually has a better chance of succeeding in a perverse sort of way - hopefully there will be a collaborative effort to hit the targets rather than a right/left schism.
Focusing only on one of the proposals ignores the bigger effort needed to succeed. Healthcare, defense, social security - all have been targeted. Business taxes are receiving treatment similar to personal taxes - a reduction in the tax rate for ending current deductions and tax credits.
IF, again IF, the mortgage interest deduction was eliminated, it would most likely (have to) have a very long adoption period before actually taking effect. Some sort of transition would be necessary. The trade-off for a lower and simpler tax does have merit. The devil will be in the details of making the transition. Frankly, I do not see it occurring because the political will/backbone to do so is lacking. It is going to take a much more collaborative and cohesive national legislature to make it happen - just don't see it occurring unless there is a unifying national event which brings the country together.
The work of the commission is a good thing - focus on the entire proposal rather than a small part of the overall. Understand the whole proposal, be informed, not reactionary. That does NOT mean I am in favor of eliminating the mortgage deduction. Rather, I am willing to see what is proposed and what the true impact will be before making a decision.
Mel
Elimination of the mortgage interest deduction will remove thousands of dollars from the pockets of homeowners who are already struggling. This will cause more foreclosures which will deepen and prolong the recession.
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