This might get ugly!

[cdog]

Panel urges restrictions on certain tax breaks
By Richard Wolf, USA TODAY
WASHINGTON — Two of the nation's most popular tax breaks — for home mortgage interest and employer-paid health insurance — should be narrowed, a federal panel appointed by President Bush suggested Tuesday.
The panel's recommendations will be made in a report scheduled to go to the Treasury Department by Nov. 1. In addition, the panel will recommend giving all Americans who pay taxes the opportunity to deduct charitable donations, even if they don't itemize their tax returns.
The most far-reaching proposal previously endorsed by the panel is the elimination of the alternative minimum tax, which would affect 20 million taxpayers next year unless changes are made. But the panel is charged with making revenue-neutral changes, so it must propose raising as much money as the AMT repeal would lose.
Because Bush launched the bipartisan panel, its proposals will carry great weight with the White House, Treasury Department and Republican-controlled Congress. But changing tax law is traditionally one of the most difficult things Congress does, and the short time left before Congress adjourns this year makes it unlikely tax overhaul will be taken up before next year. The real estate and health insurance lobbies have consistently fought proposals to trim tax breaks for mortgages and health insurance.
"We're now talking about the deductions and credits that were so sacrosanct 20 years ago that Ronald Reagan wouldn't touch them," said Clint Stretch, tax policy director for Deloitte & Touche.
The nine-member tax panel agreed Tuesday on the outlines of housing, health care and charitable-giving tax breaks. Panel members said the tax breaks would be lost mostly by employees with generous health insurance plans and homeowners with expensive mortgages. But key details remain to be worked out.
"Under present law, the higher-income folks benefit the most" from the mortgage-interest and health-insurance tax breaks, said panel chairman Connie Mack, a former Republican senator from Florida.
The AMT was created in 1969 to target a handful of wealthy Americans who paid no income tax. It expands the amount of income that can be taxed and excludes many tax breaks. Over the years, it has grown into a parallel tax system with its own rates, credits and exemptions.
Wiping out the AMT is a popular move, but cutting popular deductions and exemptions to pay for it is not. Panel members acknowledged that some of their proposals may face trouble at the White House or in Congress.
"We've got to make bold recommendations without regard to the politics of them," said John Breaux, the panel's vice chairman and a former Democratic senator from Louisiana. "The politics will be debated for a long time."
The key recommendations made by the panel Tuesday include:
• Restricting the tax deduction for mortgage interest. In its current form, the mortgage interest deduction will cost the Treasury $76 billion in 2006. The panel's recommendation likely would lead to a tax only above a certain mortgage amount — possibly about $300,000 — with regional differences to reflect for more and less expensive housing markets. Homeowners can now deduct their interest on mortgages up to $1 million.
• Capping the exemption for employer-provided health insurance premiums. In its current form, that tax break will cost the Treasury $141 billion in 2006. The panel said those most heavily affected would be employees of large corporations with generous health plans.
• Letting taxpayers who do not itemize their tax returns deduct charitable donations. Small donations, perhaps up to 1% of wages, would not be included. The expanded deduction would add to the deduction's $32.5 billion annual cost.
The advisory panel spent much of this year studying radical changes to the income tax system. But the panel made clear Tuesday that it has rejected most of those, including replacing the income tax system with a national retail sales tax or combining income taxes with a European-style value-added tax.

[SummitKarl]

well we still have the right to bear arms, maybe we need to start using them :eek:

[DCBob]

well we still have the right to bear arms, maybe we need to start using them :eek:
Bettttter hurry :notam:

[cdog]

Most people justify a more expenisve home because of the tax deduction. Here in OC a 3 bed condo cost's 500k. It would be yet one more hot poker in the butt to those who work hard to have nice things and those who live in expensive areas. Why not cut back on donations to 3rd world countries? Why do they continue to squeeze blood from those who contribute? I know it's because the're fuct! How many people here have more than a 300k mortgage?
Imagine if you will..............If you bought a 750k home and put 20% down. You mortgage 600k........You loose 300k worth of mortgage intrest deduction from this proposal. If you're in a 42% tax bracket that means you'll pay $12,600 more in tax's due to the loss of the other 300k in intrest.

[HCS]

Ya..I herd about the Home Mortgage interest wright off. I can't see that happening. It's a recommendation that should be turned down.
What incentive would there be in buying a home? Financial experts say home prices would drop like a rock if that happens. Which makes sence. That's one way to bring down home prices.
People better hold onto their pocket books though.
Also everyone one out there with credit card debt better finance out of it.
Minimum payments are going to double Jan. 1st. If you have balances with mimimum payments close to 200 bucks the payment will be $400.00 :jawdrop:

[cdog]

This involves my industry and most of the people here. I figure it's better to be informed and know what these A holes are trying to pull.

[Mrs. 4-B]

Panel urges restrictions on certain tax breaks
By Richard Wolf, USA TODAY
• Restricting the tax deduction for mortgage interest. In its current form, the mortgage interest deduction will cost the Treasury $76 billion in 2006. The panel's recommendation likely would lead to a tax only above a certain mortgage amount — possibly about $300,000 — with regional differences to reflect for more and less expensive housing markets. Homeowners can now deduct their interest on mortgages up to $1 million.
IMO - If this were to go through, home prices would tank and take the economy with them. I can't see this going through.

[RandyH]

I guess I never really thought the interest deduction was a big deal. Yes interest can add up, yes you can deduct it from your income. But did I ever buy a home or get a mortage thinking, wow I just saved 5K in taxes. Nope........The first thing I think about is, when can I pay this off and quit paying all this interest.....
The health Insurance will be a big deal. Keep in mind, health benefits when provided by employers are not only benefits to the employee, they are deductions to the corp. If the Feds only let them deduct 50% of the premium, then that will then become how much the benefit is, IMO>
RandyH.....

[boater72]

I guess I never really thought the interest deduction was a big deal. Yes interest can add up, yes you can deduct it from your income. But did I ever buy a home or get a mortage thinking, wow I just saved 5K in taxes. Nope........The first thing I think about is, when can I pay this off and quit paying all this interest.....
The health Insurance will be a big deal. Keep in mind, health benefits when provided by employers are not only benefits to the employee, they are deductions to the corp. If the Feds only let them deduct 50% of the premium, then that will then become how much the benefit is, IMO>
RandyH.....
I feel the same way as I can't stand paying any interest. The only interest I pay is on the home and only have 8 more years on that with very little interest at this stage. But you are correct as I think the health care is the big deal with so many not insured now image what it would be like if this one passes.

[Outnumbered]

I guess I never really thought the interest deduction was a big deal. Yes interest can add up, yes you can deduct it from your income. But did I ever buy a home or get a mortage thinking, wow I just saved 5K in taxes. Nope........The first thing I think about is, when can I pay this off and quit paying all this interest.....
The health Insurance will be a big deal. Keep in mind, health benefits when provided by employers are not only benefits to the employee, they are deductions to the corp. If the Feds only let them deduct 50% of the premium, then that will then become how much the benefit is, IMO>
RandyH.....
No offense, but that is because you live in Iowa. With the cost of housing in the West, it is a big deal. It is one of the primary drivers of housing demand. Take it away and you will see a lot of big ballers who depend on housing, mortgages, and construction loose their asses. This would trickle down to everyone in one way or another. Its a stupid move that should never be considered. Its what GW gets for appointing a "bi-partisan" panel. I think he shot himself in the foot on this one. No doubt, if any of the suggestions come to fruition, it will be ALL HIS FAULT.

[hotlavey]

No offense, but that is because you live in Iowa. With the cost of housing in the West, it is a big deal. It is one of the primary drivers of housing demand. Take it away and you will see a lot of big ballers who depend on housing, mortgages, and construction loose their asses. This would trickle down to everyone in one way or another. Its a stupid move that should never be considered. Its what GW gets for appointing a "bi-partisan" panel. I think he shot himself in the foot on this one. No doubt, if any of the suggestions come to fruition, it will be ALL HIS FAULT.
Geez. already blaming someone for something that hasn't even happened yet. Typical!

[Boozer]

Scary stuff.
All of this information presented is news to me but it's really starting to add up now.
It is no longer a simple process in fact it is now nearly an impossible process for people to file bankruptcy due to the new laws.
Now they are talking about cutting back tax write offs on home ownership and health insurance.
The minimum payments on credit cards is going to double?
This could present big problems for people who have bought homes in California at sky high prices. Especially those who did interest only notes and are hoping to refi in 5 years. If the value of homes depreciates due to these new tax bills no bank is going to refi your mortgage note and you wont be able to file bankruptcy to protect yourself if and when the property is foreclosed on. Even a 5% decrease in the value of a home could be devestating for people who have spent 350+K on their home.
I guess luckily for me my credit card debt is now below 10,000 and at this point I dont own a home and have no plans of buying one for another year or two. If my employer decides to only pay 50% of my health premiums I'll have to change the budget around to accomadate the cost increase because I spent the last year without health insurance and it cost me a lot more then I would have spent had I been paying 100% of the premiums for good health insurance. But for the majority of Americans this could definitely be the straw that brakes the camels back.
With my first child now on the way, Canada and a few other places are looking more and more appealing to me by the day.

[Boatcop]

The panel's recommendation likely would lead to a tax only above a certain mortgage amount — possibly about $300,000 — with regional differences to reflect for more and less expensive housing markets.
This is the key phrase here.
$300,000 would buy a pretty nice home in about 95% of the nation. But in SOCAL, San Fran, New York, South Beach, and other high price areas, it wouldn't buy a 1 bedroom condo.
I'd like to think that they would make a sliding scale for high and low priced areas.
Then watch the politicos try and include their districts in those exceptions.
By all means, let us working stiffs continue to deduct the interest on our primary homes, the main reason it was inacted to begin with.
But if someone can afford a $800,000 home in a $200,000 market or a 2nd vacation home, live-aboard boat, high priced RV, etc, they shouldn't be allowed to deduct them from their taxes.

[Outnumbered]

Geez. already blaming someone for something that hasn't even happened yet. Typical!
You misread my post, I was being sarchastic. (except for the part about appointing the "bi-partisans").

[hotlavey]

[QUOTE=Outnumbered]You misread my post, I was being sarchastic. (except for the part about appointing the "bi-partisans").[/QUOTE
Sorry about that, and I do agree with the "bi-partisan" part.

[ACCEPTENCE]

People better hold onto their pocket books though.
Also everyone one out there with credit card debt better finance out of it.
Minimum payments are going to double Jan. 1st. If you have balances with mimimum payments close to 200 bucks the payment will be $400.00 :jawdrop:
Are you shittin me ???
That's gotta be huge credit card debt balance, people do this???
That's insane!!!
Seems to me if you can't pay cash...you don't take it home :idea:

[Outnumbered]

[QUOTE=Outnumbered]You misread my post, I was being sarchastic. (except for the part about appointing the "bi-partisans").[/QUOTE
Sorry about that, and I do agree with the "bi-partisan" part.
No worries. Thanks.

[cdog]

No offense, but that is because you live in Iowa. With the cost of housing in the West, it is a big deal. It is one of the primary drivers of housing demand. Take it away and you will see a lot of big ballers who depend on housing, mortgages, and construction loose their asses. This would trickle down to everyone in one way or another. Its a stupid move that should never be considered. Its what GW gets for appointing a "bi-partisan" panel. I think he shot himself in the foot on this one. No doubt, if any of the suggestions come to fruition, it will be ALL HIS FAULT.
You beat me to it. I was off earning $$$ to make the house payment. Well said. Some people like to toot their own horn around here too much but the reality is that if this where to fly the shit's gonna hit the fan. I don't think anyone in their right mind would vote for this BS. If you figure in the trickle down affects of this suggestion. For investors in the rental market, where is the reward for the risk? Why would anyone want to own a rental and deal with the BS if there was basicly no benifit. For home owners, just watch you're equity go down as fast as it went up, Only now everything costs more. This would be a major stab in the back to all of the working class hero's trying to better themselfs.

[572Daytona]

It's definitely not good news for one few industries that managed to ride out this last recession pretty well. I guess they want to kill that too. The mortgage deduction is pretty much the only tax break an honest tax payer gets, now they want to reduce that. Even in markets where you can get a decent house for $300,000 it will be a big blow, as it will affect a lot of people that have moved up over the years and are using their house a means to build wealth for retirement so they don't have to rely on social security. And even worse people will lose a lot of their investment overnight since the market for the higher price homes will dry up and drive prices way down. And the local governments will loose a lot of tax revenue that they rely on since housing prices have dropped and fewer luxury houses will be built in the future. The good thing is though I don't see this passing into law as most of the congress and their constituents are benefitting from this. (those that pay taxes that is)

[AzMandella]

Mabey we ought to do away with tax returns completely and go to a flat tax rate for everyone to make it fair.I have never understood why if someone made abetter life for themselves that they should have to pay for their representation in this country.Wasn't this country built on the premiss that you can make of yourself what you want.So why penalize those who worked harder or had a better idea than the next person.Besides if we went to a flat tax nobody could get out of paying taxes.Do you know how many bartenders,waiters and waitresses,strippers,so called landscapers,and every one else who works under the table forces the rest of us to pay more in taxes.Besides even if you made $1,000,000 a year you would be paying more in taxes than someone who made $25,000 a year but would still be fair because we would all be paying the same % as the next guy.

[Outnumbered]

Mabey we ought to do away with tax returns completely and go to a flat tax rate for everyone to make it fair.I have never understood why if someone made abetter life for themselves that they should have to pay for their representation in this country.Wasn't this country built on the premiss that you can make of yourself what you want.So why penalize those who worked harder or had a better idea than the next person.Besides if we went to a flat tax nobody could get out of paying taxes.Do you know how many bartenders,waiters and waitresses,strippers,so called landscapers,and every one else who works under the table forces the rest of us to pay more in taxes.Besides even if you made $1,000,000 a year you would be paying more in taxes than someone who made $25,000 a year but would still be fair because we would all be paying the same % as the next guy.
I always thought this would be a good idea. I just think we are in too deep to ever make it a reality. There would be a tough transition period that nobody wants to take the first step to make happen.

[AzMandella]

I always thought this would be a good idea. I just think we are in too deep to ever make it a reality. There would be a tough transition period that nobody wants to take the first step to make happen.
Your right that it would be a tough transition but they would be collecting more money than they are now and won't be giving it back at the end of the year.They just won't because it puts the IRS out of a job.It's like Social Security.If they were to privatize it the government would not have that big ol slush fund to play with.Personaly I'd rather have my money gaining interest instead of devaluating over the years.But there's noway the liberals are going to give that up they wouldn't have a place to borrow money from,or should I say throw away from.

[Outnumbered]

Your right that it would be a tough transition but they would be collecting more money than they are now and won't be giving it back at the end of the year.They just won't because it puts the IRS out of a job.It's like Social Security.If they were to privatize it the government would not have that big ol slush fund to play with.Personaly I'd rather have my money gaining interest instead of devaluating over the years.But there's noway the liberals are going to give that up they wouldn't have a place to borrow money from,or should I say throw away from.
Good points, the CPAs and Tax Attorneys wouldn't be too happy either. ;)

[HighRoller]

Some of the statements in the panel's recommendations are absolutely igonorant. For starters, you never have to PAY for a tax cut. Tax cuts have been shown to increase treasury revenue EVERY time they are implemented via higher economic activity.
Secondly, while raising taxes creates more revenue in static economic models, they fail every time in the real world, dynamic economy. Saying a tax increase can instantly make you more money is like saying every business can instantly raise their profits simply by raising prices. But we all know what happens when prices(or taxes) go up. Sales(or economic activities) are reduced.
The fact is, as long as the government continues to live beyond its means there will NEVER be enough money for anything. And I'm tired of paying for their irresponsibility with my tax dollars. It doesn't matter if we go to a flat tax, sales tax, cut taxes, raise taxes,remove or increase deductions etc...None of it will do any good until the government does one simple thing...
CUT SPENDING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Outnumbered]

Some of the statements in the panel's recommendations are absolutely igonorant. For starters, you never have to PAY for a tax cut. Tax cuts have been shown to increase treasury revenue EVERY time they are implemented via higher economic activity.
Secondly, while raising taxes creates more revenue in static economic models, they fail every time in the real world, dynamic economy. Saying a tax increase can instantly make you more money is like saying every business can instantly raise their profits simply by raising prices. But we all know what happens when prices(or taxes) go up. Sales(or economic activities) are reduced.
The fact is, as long as the government continues to live beyond its means there will NEVER be enough money for anything. And I'm tired of paying for their irresponsibility with my tax dollars. It doesn't matter if we go to a flat tax, sales tax, cut taxes, raise taxes,remove or increase deductions etc...None of it will do any good until the government does one simple thing...
CUT SPENDING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Amen!