Key Tax Breaks at Risk as Panel Looks at Cuts

[dkf]

Sacrosanct tax breaks, including deductions on mortgage interest, remain on the table just weeks before the deficit commission issues recommendations on policies to pare back with the aim of balancing the budget by 2015.

The tax benefits are hugely popular with the public but they have drawn the panel's focus, in part because the White House has said these and other breaks cost the government about $1 trillion a year.

At stake, in addition to the mortgage-interest deductions, are child tax credits and the ability of employees to pay their portion of their health-insurance tab with pretax dollars. Commission officials are expected to look at preserving these breaks but at a lower level, according to people familiar with the matter.

The officials are also looking at potential cuts to defense spending and a freeze on domestic discretionary spending. It is unclear if the 18-member panel will be able to reach an agreement on any of the items by a Dec. 1 deadline.

http://online.wsj.com/article/SB10001424052702304354104575568643889337142.html?mod=WSJ_hp_MIDDLTopStories#articleTabs_video

[gratuitous]

1. Ah, the Wall Street Journal, always looking out for the little guy

How about we eliminated or reduce the mortgage interest deduction on second and third (and subsequent) homes, instead of altogether? Or is that too "class warfare"? Or how about we raise the marginal rates on folks making more than $250,000 a year? Or treat the salaries paid to wheeler-dealers as income rather than as capital gains?

No; far better to run a fear-mongering headline and watch people go ballistic over something that isn't going to happen as long as our society regards home ownership as a net benefit, to be encouraged by giving a tax break for mortgage interest.

[dkf]

5. Canada has no mortgage tax deduction.

It is considered one part of the reason we had a real estate bubble and they didn't. Other than fraud of course.

[county worker]

6. I don't agree. The bubble was caused by easy credit. We had the interest deduction

well before there was a bubble.

[KILL THE WISE ONE]

7. remember when all interest paid out (including credit cards) was deductable

oops showing my age

[county worker]

11. Yes I remember

[DBoon]

15. and student loans!

Reagan got rid of that one, and lots of other things that someone starting out in the workforce could use to make their tax burden easier for a little while

[dkf]

9. Here you go...

http://www.nytimes.com/2010/03/23/business/23views.html

[county worker]

13. People can't take out big mortgages unless they can afford the payments.

If you remove the interest deduction than there will be less spending since the money has to go to taxes rather than to spending or saving.

It is the only deduction that the middle class has. Basically it will be a tax increase on the middle class.

That is the wrong thing to do.

And it still didn't cause the housing bubble and will not cause another one because loans are hard to get unless you can prove you can pay for them.

What the article suggests is to again push the deficit reduction onto the backs of the middle class and poor.

The idea also is one were we pit each of us against each other for the benefit of the rich. They don't want to raise taxes on the top 1% but it is OK to raise them on the rest of us!

The whole deficit reduction meme is one that hurts people like us. Take away good salaries and pensions, medicare, Medicaid, social security, tax deductions and we work and save nothing yet pay taxes that should be paid by the rich!

[KILL THE WISE ONE]

2. take away my mortgage deduction and the bank will own my "underwater" house

[Earth_First]

4. +1 n/t

[dkf]

10. I imagine they may just bring down the maximum.

[Earth_First]

3. The officials are also looking at potential cuts to defense spending

:rofl:

[county worker]

14. Yeah, they are looking at reducing pensions and health benefits and that's all.

Maybe eliminating the VA also.

[Lord Magus]

8. But not the Bush tax cuts for billionaires.

Nope, can't touch those.

[dkf]

12. I imagine from their point of view those will be expiring.

Right now it will take a new law to keep any of the Bush tax cuts.