Nov 04 2005
Bush’s proposed tax code reforms
Most of the news I’ve seen related to Bush’s proposed tax code is about home loan deductions. A recent article from CNN/Money led me to point out some concerns. I’m no tax accountant but here goes.
Spreading the mortage-interest break more evenly is one key reason for the change, the panel said, since currently only homeowners who itemize their deductions get the break. Under the proposed changes, all homeowners could claim the proposed home credit.
In 2002, of the 130 million federal tax returns filed, only 46 million were itemized. Of those, only 37 million taxpayers claimed the mortgage-interest deduction.
In the interest of fairness the Fed is going to make sure every homeowner gets the tax break, regardless if they itemize their tax return.
What??
It’s no secret you can itemize your return and if that many people aren’t itemizing (and effectively giving the government more money) it’s not my problem. They can have H&R Block prepare their tax returns for around $200 a year and the preparation fee is tax deductible as well.
You can also ask for a discount when you buy a car. You can ask for an extra serving of mashed potatos. You can even ask your girlfriend to engage in a three-way. But it’s not the Fed’s job to ensure you do any of those things. Not the least, itemizing your tax return.
And among those who do itemize mortgage interest on primary mortgages, less than 10 percent have mortgages over $300,000, so many homeowners’ loans aren’t likely to exceed the panel’s caps, said David Brunori, vice president of Tax Analysts.
[...]
Lowering the mortgage interest cap, which is the amount of a loan on which homeowners would receive a tax break for interest paid. Currently, that cap is $1 million. It would be lowered to levels on par with regional averages, which today would be in a range between $227,000 for lower priced housing markets to $412,000 for higher priced markets.
Washington D.C. is so very far away from California, isn’t it? You can’t buy a home in western Los Angeles County for $412,000. Not in a neighborhood you’d feel comfortable walking around in. I think you might get a one bedroom condo for $400,000 which isn’t exactly befitting the “traditional American family.”
I’m in support of reforming the tax code. Moreso in support of reforming Federal and local governments, but Bush’s move seems more akin to a Democract, not a Republican. Maybe the Republicans have got so much extra money laying around they don’t need the tax breaks?
Or are metro areas like LA, San Francisco, New York, and Boston grossly bloated beyond what should be when compared to the national average?
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