Word: deductionism
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Now they want to take it away. A presidential panel last week suggested eliminating the interest deduction on all types of home-equity borrowing and replacing it with a 15% tax credit for a principal residence. Is this lunacy? From the homeowner's perspective, it sure seems like it.
Lawmakers have toyed with curbing the mortgage deduction for 30 years, both for utilitarian reasons (to boost tax revenue) and philosophical ones (to make the tax code less favorable to the wealthy). Yet each time the idea has surfaced it has been swatted away amid public outrage and the battle...
Indeed, mortgage rates rose last week to 6.31% for the average 30-year, fixed-rate deal--the highest level in 16 months. With higher borrowing costs, mortgage applications have been falling and home prices have been leveling off in many markets. Taking away the mortgage deduction would further boost the...
On some levels the mortgage deduction has outlived its usefulness, anyway. Homeownership in the U.S. is among the highest in the world. Deductible mortgage interest appears to be subsidizing vacation homes and McMansions now, not entry-level housing. As a nation we are throwing so many resources at real estate...
But don't worry: the proposal won't get past the blueprints soon. "We all realize the home-mortgage deduction is near and dear to the taxpayer," says James Poterba, an economist at M.I.T. who was on the panel. "But whenever we get to the moment of truth, Congress and...