Monday, September 26, 2005
Home Mortgage Interest, State/Local Deductions..
Could be under the gun...
A GAO report issued last week highlighted the cost of the mortgage interest deduction and the ability to deduct state and local income taxes from your federal returns as areas that could be cut or curtailed to help balance the budget. That would not be good for Elephant, who lives in a city with a 9% income tax...(DC isn't a state, so my city taxes are essentially my state income tax). Beyond that the mortgage interest deduction is a huge incentive to encourage home ownership, and while it is likely to be preserved (too political to cut this one), it will be interesting to see if this reccomendation will find its way into the long delayed Tax Commission Report that will be issued in October and serve as the basis of the President's Tax Reform effort in 2006.
Will the voting public support repeal of these valuable deductions to fund a permanent repeal of the estate tax? (Most of us don't pay the estate tax) or support the repeal to fund the ever going spendthrift ways of the GOP led Congress? I think not. But as the Social Security surplus dries up over the next ten year (currently being spent through the budget) and then starts eating into general revenue, Congress will have to do something. The $300 or so billion (Pre-Katrina) deficit for the current fiscal year would be far higher if you pulled out the SSI surplus (@$120 billion) as will happen soon.
If there is a silver lining to this whole Hurricane-o-rama, it may be a slap in the face to the GOP's high spending ways, and maybe just maybe they my find religion and get things in order......
A GAO report issued last week highlighted the cost of the mortgage interest deduction and the ability to deduct state and local income taxes from your federal returns as areas that could be cut or curtailed to help balance the budget. That would not be good for Elephant, who lives in a city with a 9% income tax...(DC isn't a state, so my city taxes are essentially my state income tax). Beyond that the mortgage interest deduction is a huge incentive to encourage home ownership, and while it is likely to be preserved (too political to cut this one), it will be interesting to see if this reccomendation will find its way into the long delayed Tax Commission Report that will be issued in October and serve as the basis of the President's Tax Reform effort in 2006.
Will the voting public support repeal of these valuable deductions to fund a permanent repeal of the estate tax? (Most of us don't pay the estate tax) or support the repeal to fund the ever going spendthrift ways of the GOP led Congress? I think not. But as the Social Security surplus dries up over the next ten year (currently being spent through the budget) and then starts eating into general revenue, Congress will have to do something. The $300 or so billion (Pre-Katrina) deficit for the current fiscal year would be far higher if you pulled out the SSI surplus (@$120 billion) as will happen soon.
If there is a silver lining to this whole Hurricane-o-rama, it may be a slap in the face to the GOP's high spending ways, and maybe just maybe they my find religion and get things in order......
