bigq
11-12-2005, 08:11 AM
DEDUCTIONS: If home builders, Realtors and mortgage bankers agree vehemently on a political issue, check your wallet and don your skeptic's cap, because those businesspeople make their living by persuading homeowners to part with their money. That's their primary interest, and don't forget that.
I'm not saying that they're liars, or are always untrustworthy; but when business interests complain that a proposed government policy would harm consumers, you should ask yourself why they're suddenly so interested in your welfare and not their own. Are the national associations of home builders, real estate agents and mortgage bankers selfless? Of course not. So when they say they're fighting on your behalf, be as skeptical as you were when those tobacco executives swore to Congress that cigarettes don't cause cancer.
All of these business groups have complained bitterly about some proposals by the president's tax reform commission that would affect homeowners' tax deductions. The tax panel suggested that Congress should eliminate the tax deductions for mortgage interest and property taxes. The deductions would be replaced with a tax credit of 15 percent on a limited amount of mortgage interest.
This proposal probably would lower the tax bill for a plurality of people. But that's not what you hear from the National Association of Home Builders, the National Association of Realtors and the Mortgage Bankers Association. They argue that the proposal, if enacted, would cause property values to plunge. That's possibly true for McMansions and real mansions, especially in states with high property taxes, because the owners of such homes are able to deduct so much from their federal income taxes. Their after-tax housing expenses would go up.
But most people don't itemize tax deductions. About two-thirds of taxpayers take the standard deduction. Those people aren't affected if you take away the deductions for mortgage interest and property taxes. On the other hand, they are affected if you give them a 15 percent tax credit on mortgage interest that they pay. Their taxes drop.
As Slate points out, "The fraction of typical families (those making $40,000 to $50,000) getting a tax break for their mortgage interest would jump from less than 50 percent under current law to more than 99 percent under the commission proposal. More than 20 million families would get a tax cut from the plan."
More than 20 million families. Would get a tax cut. If the proposal became law. That's the tax reform panel's conclusion.
If you're a typical, middle-class homeowner living in a middle-class house in the middle of America, the proposal might actually increase your home's value, because it would decrease the buyer's costs of paying a mortgage. The proposal probably would increase the homeownership rate -- not a lot, but some.
The proposal has little chance of passing, but the special interests are spinning madly, just in case. The National Association of Home Builders tailored the wording of a poll to get the result they wanted. The National Association of Realtors says the proposal could cause the value of the nation's property to decline 15 percent and will jeopardize consumers' nest eggs. The Mortgage Bankers Association calls it "a tax increase for a lot of working Americans," which might be true -- but it also might decrease taxes on even more working Americans, especially the kind who actually work instead of sitting in meetings all day.
All of these claims -- those from business special interests and those from the tax panel -- need to be analyzed with a healthy dose of doubt
I'm not saying that they're liars, or are always untrustworthy; but when business interests complain that a proposed government policy would harm consumers, you should ask yourself why they're suddenly so interested in your welfare and not their own. Are the national associations of home builders, real estate agents and mortgage bankers selfless? Of course not. So when they say they're fighting on your behalf, be as skeptical as you were when those tobacco executives swore to Congress that cigarettes don't cause cancer.
All of these business groups have complained bitterly about some proposals by the president's tax reform commission that would affect homeowners' tax deductions. The tax panel suggested that Congress should eliminate the tax deductions for mortgage interest and property taxes. The deductions would be replaced with a tax credit of 15 percent on a limited amount of mortgage interest.
This proposal probably would lower the tax bill for a plurality of people. But that's not what you hear from the National Association of Home Builders, the National Association of Realtors and the Mortgage Bankers Association. They argue that the proposal, if enacted, would cause property values to plunge. That's possibly true for McMansions and real mansions, especially in states with high property taxes, because the owners of such homes are able to deduct so much from their federal income taxes. Their after-tax housing expenses would go up.
But most people don't itemize tax deductions. About two-thirds of taxpayers take the standard deduction. Those people aren't affected if you take away the deductions for mortgage interest and property taxes. On the other hand, they are affected if you give them a 15 percent tax credit on mortgage interest that they pay. Their taxes drop.
As Slate points out, "The fraction of typical families (those making $40,000 to $50,000) getting a tax break for their mortgage interest would jump from less than 50 percent under current law to more than 99 percent under the commission proposal. More than 20 million families would get a tax cut from the plan."
More than 20 million families. Would get a tax cut. If the proposal became law. That's the tax reform panel's conclusion.
If you're a typical, middle-class homeowner living in a middle-class house in the middle of America, the proposal might actually increase your home's value, because it would decrease the buyer's costs of paying a mortgage. The proposal probably would increase the homeownership rate -- not a lot, but some.
The proposal has little chance of passing, but the special interests are spinning madly, just in case. The National Association of Home Builders tailored the wording of a poll to get the result they wanted. The National Association of Realtors says the proposal could cause the value of the nation's property to decline 15 percent and will jeopardize consumers' nest eggs. The Mortgage Bankers Association calls it "a tax increase for a lot of working Americans," which might be true -- but it also might decrease taxes on even more working Americans, especially the kind who actually work instead of sitting in meetings all day.
All of these claims -- those from business special interests and those from the tax panel -- need to be analyzed with a healthy dose of doubt