With the April 17 tax-filing deadline right around the corner, according to a recent article from RIS Media, the most important tax deduction for tens of millions of middle-class families could be on the chopping block as early as next year’s tax season if some policymakers get their way.
The mortgage interest deduction primarily helps middle class home owners and is consistent with the principles of a progressive income tax. Two-thirds of the benefits flow to working class American households who earn less than $200,000 annually and nearly all those who own a home of their own will claim the deduction at some point during their tenure as home owners.
The deduction is broadly used across income groups and geographic areas. Data from the Joint Committee on Taxation indicate that more than 33 million families benefitted from the deduction in 2010 and that these households saved a collective $83 billion on their tax bills. “The mortgage interest deduction has been in existence since the inception of the federal tax code nearly 100 years ago and is a cornerstone of U.S. tax and housing policy,” says Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Florida.
“The American people understand that curtailing or getting rid of the deduction to help lower the federal debt would result in a big tax hike on millions of middle-class home owners and that prospective buyers who are counting on its benefits to lower their monthly mortgage payments would remain on the sidelines,” says Rutenberg.
The collateral damage to the economy would be even more devastating, resulting in lower home values, which would leave more home owners underwater, trigger more foreclosures and prolong the housing slump for years to come. Changing the rules now would not only take money out of the pockets of those home buyers who rightfully counted on the deduction being there when they needed it, but also penalize millions of baby boomers nearing retirement and seniors who own their homes outright.
For more information, visit http://www.NAHB.org and don’t forget to comment below.