Joined: Sun Oct 17, 2004 7:19 pm Posts: 39068 Location: Chapel Hill, NC, USA Gender: Male
... on home ownership and health care.
Quote:
Tax panel seeks cap on break for homeowners
By Christopher Swann in Washington Published: October 11 2005 21:45 | Last updated: October 11 2005 21:45
The president's panel on tax reform is pushing for a cap on the mortgage interest tax deduction, long considered one of the country's untouchable tax breaks.
The loophole, which along with other tax breaks for homeownership costs the US Treasury about $100bn (€83bn, £57bn) a year in lost revenue, disproportionately benefits wealthier Americans.
George W. Bush had instructed the panel upon its formation to take account of “the importance of homeownership and charity in American society”, a statement that led some to suggest that tampering with existing generous incentives for property ownership would be taboo.
But in the final weeks of its deliberations it is leaning towards curbing the tax privileges of higher-end homeowners.
The committee, which is to present its final findings by November 1, has been searching for ways to plug a hole in government finances that would be left by the abolition of the Alternative Minimum Tax, a parallel tax system that the panel is recommending be scrapped. This has led them to look at housing and healthcare, the two most costly deductions.
Jim Poterba, an economics professor at MIT and a member of the panel, said there was only shaky evidence that the existing system encouraged homeownership and a strong case that it led to overinvestment in residential property to the detriment of other investments. Under existing tax law, mortgage interest payments on loans of up to $1m are deductible. About a fifth of this benefit goes to the wealthiest 2 per cent of households, since they pay higher marginal tax rates and tend to take larger loans.
Charles Rossotti, senior adviser to the Carlyle Group, the investment firm, and a member of the panel, says the system tends to encourage the construction of bigger houses rather than an increase in the number of people who own their home. The panel is now considering where to recommend capping the tax deduction. Given wide regional variations in US home prices, it said, it would consider caps based at a certain level above local median prices.
However, it warned that any abrupt move to curb tax benefits for housing could be disruptive and unfair. Prof Poterba suggested that it could even consider leaving intact the existing tax structure for the life of existing mortgages.
The panel was almost unanimous in arguing that the existing tax structure for healthcare also needed to be overhauled. Individuals are not currently taxed at all on employer-provided healthcare coverage, which has created the single largest tax loophole in the US code, costing the Treasury $125bn a year. That may have contributed to runaway price rises in the healthcare system, the panel said, with some companies offering employees costly insurance plans in part because of their tax-privileged status.
_________________ "Though some may think there should be a separation between art/music and politics, it should be reinforced that art can be a form of nonviolent protest." - e.v.
Joined: Sun Oct 17, 2004 1:14 am Posts: 37778 Location: OmaGOD!!! Gender: Male
If it weren't for these two particular tax breaks, I wouldn't be able to buy food and clothes. I swear to God. This may disproportionately benefit the wealthy, but if they cut these benefits to all homeowners and people who have health insurance paid by employers, it will disproportionately fuck the middle class.
_________________ Unfortunately, at the Dawning of the Age of Aquarius, the Flower Children jerked off and went back to sleep.
well the really fucked up thing is I could get by and I will get by but what about people that this could cause financial ruin. Oh, BTW on the health care subject, If they want to tax me, they have to make it fair. I am paying for healthcare for my husband and I and its going to be 125.00 a pay check next yr. Thats 3,250 a year. Which kinda sucks becuase its just me and my husband. They do not have coverage for people who are married w/o children. So I could be paying the same health care if I had 5 kids. WTF
Joined: Sun Oct 17, 2004 7:19 pm Posts: 39068 Location: Chapel Hill, NC, USA Gender: Male
At least I won't have to pay the death tax when I pass my legacy onto my children.
_________________ "Though some may think there should be a separation between art/music and politics, it should be reinforced that art can be a form of nonviolent protest." - e.v.
Joined: Wed Oct 20, 2004 3:26 am Posts: 7994 Location: Philadelphia
I don't have a problem with the home owner tax deduction cap because it will likely only touch the rich, the really rich. I doubt it will hurt me and the 12 grand I will deduct this year, and increasingly less each year after. If you have to count on your mortgage interest decuction to live you probably shouldn't have been buying whatever house you own.
I do have a little problem with the healthcare tax but I doubt it would be such a big hit on anyone. I'd need to look at more information to make a real judgement.
_________________ Something tells me that the first mousetrap wasn't designed to catch mice at all, but to protect little cheese "gems" from burglars.
Joined: Sun Oct 17, 2004 7:19 pm Posts: 39068 Location: Chapel Hill, NC, USA Gender: Male
gogol wrote:
B wrote:
At least I won't have to pay the death tax when I pass my legacy onto my children.
what's the legacy, 12000 or so posts on RM?
That, a few Pearl Jam albums, and a notebook full of beer and mixed drink recipes is all expect to have to my name when I die.
_________________ "Though some may think there should be a separation between art/music and politics, it should be reinforced that art can be a form of nonviolent protest." - e.v.
First you kids complain about "tax cuts for the wealthy"(which of course was a half-truth) now you're complaining about raising taxes on the wealthy. Make up your minds.
_________________ For your sake I hope heaven and hell are really there but I wouldn't hold my breath
Joined: Sun Oct 17, 2004 7:19 pm Posts: 39068 Location: Chapel Hill, NC, USA Gender: Male
C4Lukin wrote:
B wrote:
gogol wrote:
B wrote:
At least I won't have to pay the death tax when I pass my legacy onto my children.
what's the legacy, 12000 or so posts on RM?
That, a few Pearl Jam albums, and a notebook full of beer and mixed drink recipes is all expect to have to my name when I die.
I'm fixing to go to the store and get an early start. Give me a mixed drink recipe.
Chocolate Cake Shooter 1 part Absolut Citron
1 part Frangelico
Chill and strain into shot glasses. Serve with a sugared lemon.
_________________ "Though some may think there should be a separation between art/music and politics, it should be reinforced that art can be a form of nonviolent protest." - e.v.
Joined: Sun Oct 17, 2004 1:14 am Posts: 37778 Location: OmaGOD!!! Gender: Male
jimmac24 wrote:
I don't have a problem with the home owner tax deduction cap because it will likely only touch the rich, the really rich. I doubt it will hurt me and the 12 grand I will deduct this year, and increasingly less each year after. If you have to count on your mortgage interest decuction to live you probably shouldn't have been buying whatever house you own.
I do have a little problem with the healthcare tax but I doubt it would be such a big hit on anyone. I'd need to look at more information to make a real judgement.
I can only speak for myself. Obviously, I don't have 1 million dollar mortgage, more like 100k, and my interest will something on the order of $5000-6000 this year. That deduction is a big deal, and I am certainly not "house poor" and living beyong my means. In fact, my house payments, including taxes, are less than I was paying in rent in my last apartment, so this was a good financial move, made better by being able to deduct mortgage interest. If they want to adjust the cap, that's fine, but it better not come down anywhere below $500k, or the middle class will begin to really feel that pain, not just the ultrarich.
Health insurance is the big one for me though. Jacktor, I envy you for only having to pay $3500 per year for your family plan. I'm paying about $11,000 right now on a COBRA, but even if I were still at the job that I have the COBRA through, it would cost me about $4000-5000. That money, if taken out of your paycheck, is usually tax deductible (taken out before taxes). I have made a neat little arrangement with my current employers that they pay my entire COBRA payment each month, and reduced my salary accordingly. The difference between me paying the COBRA myself after taxes or my employer paying for me before taxes is about $200 per month in take home pay. I can't make it without that difference.
So yeah, middle income people are definitely affected by this stuff, especially the health insurance deduction.
_________________ Unfortunately, at the Dawning of the Age of Aquarius, the Flower Children jerked off and went back to sleep.
First you kids complain about "tax cuts for the wealthy"(which of course was a half-truth) now you're complaining about raising taxes on the wealthy. Make up your minds.
Can we just have a flat tax so no one gets screwed?
Joined: Wed Oct 20, 2004 3:26 am Posts: 7994 Location: Philadelphia
Man in Black wrote:
Liberals...
First you kids complain about "tax cuts for the wealthy"(which of course was a half-truth) now you're complaining about raising taxes on the wealthy. Make up your minds.
I HATE Bush and you are exactly right about this.
_________________ Something tells me that the first mousetrap wasn't designed to catch mice at all, but to protect little cheese "gems" from burglars.
Joined: Sun Oct 17, 2004 1:14 am Posts: 37778 Location: OmaGOD!!! Gender: Male
jimmac24 wrote:
Man in Black wrote:
Liberals...
First you kids complain about "tax cuts for the wealthy"(which of course was a half-truth) now you're complaining about raising taxes on the wealthy. Make up your minds.
I HATE Bush and you are exactly right about this.
This isn't raising taxes on the wealthy. Health insurance premiums cost the same for everyone regardless of wealth, and there is already (read the article) a cap at 1 million dollars for the exemption on the mortgage interest. What they're proposing is to LOWER THE CAP, thereby eliminating the tax emption for people with LESS EXPENSIVE HOUSES. We're still talking about the upper middle class, but the only tax increase for the truly wealthy will be the same tax increase I will be paying on my health insurance premiums.
This is a new tax on the middle class, don't let BUsh's bullshit spin on it fool you.
_________________ Unfortunately, at the Dawning of the Age of Aquarius, the Flower Children jerked off and went back to sleep.
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