2005/11/01

Tax Deductions - Another Vehicle for F**king the Blue States

Well, now Bush Co.'s advisory commission on taxes has made their recommendations official, and the result is even worse than we were led to believe. Not only have they proposed the incredibly regressive removal of the mortgage interest deduction but they also want to remove the deductions for state and local income taxes as well as for property taxes.
The commission also said that as a whole, taxpayers at different income levels would bear roughly the same tax burden as they do now. But depending on their circumstances, some people would owe much more in taxes than they do now, and some would pay much less.
Dear readers, focus on that last sentence. Stated differently: If you've bought into the American dream of home ownership, and especially if you did it in a high-opportunity, high-cost blue state, be prepared to be screwed in ways you could not have imagined. This supposedly non-partisan panel is suggesting that, in the interest of simplification, we shift an enormous swath of the federal tax burden from the low-cost, low opportunity red states, straight onto the backs of blue staters (with only a few notable exceptions, such as North Carolina).

Better hope that this upsets the status quo too much to get by congress.

5 Comments:

I own a house in a blue state. I'm not happy with this one bit. Let's here it for getting effed by the conservative base!!! Man, I can't wait for 2006.
I feel your pain man! I own a flat in a very blue region in a very blue state. If this make it past congress, in just about any form, I'll be...wait for it...very blue!

But seriously, this would raise my federal tax bill by about 50%. Need to move to f**king Texas, I guess.
I agree the proposal is quite lacking. Just remember, this is an advisory panel making recommendations. It will likely never see the light of day.

We should just move to a flat or consumption tax without deductions. Period.

Although on the mortgage interest issue, if you look at page XV of the recommendation, they're proposing to replace the mortgage interest deduction with a Home Credit equal to 15% of the mortgage interest paid.
Although on the mortgage interest issue, if you look at page XV of the recommendation, they're proposing to replace the mortgage interest deduction with a Home Credit equal to 15% of the mortgage interest paid.

Except that the Home Credit is capped by the FHA mortgage assumption limits, the highest of which is $312,000 in costal California (at least in the contiguous 48). That means that this sop basically disappears for anyone living in an area where the median home price far exceeds the cap, and where does that happen? Why... yet again, heavily "blue" states: California, Massachusettes, New York, and most major metropolitan areas, the interesting exceptions being Dallas and Houston.
I'm kind of hoping they do try to ram that through. I'm 100% sure it'd go the same way Social Security privatization went, and it'd be fun to watch them flail.

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