New Tax Law In Works?

[BTAirsol]

For all you home owners out their, what do you think about congress looking at allowing 15% of your morgage interest to be tax detuctable? Up to homes ranging $225,000 to $415,000. I can see this law starting a revolt in the good ol USA.

[Mickey1992]

My understanding is that the mortgage deduction would be eliminated, and that homeowners would get a 15% "credit" of the amount paid in mortgage interest.

"....two alternative plans for consideration by the Bush administration, both of which would leave 75% of people paying income tax at the lowest rate of 15%."

If I can get into the 15% tax bracket, I don't care if they lower my mortgate deduction because it will most likely even out in the end, or I might come out ahead!

[eagl]

There are other provisions that will balance it all out.  For example, many people owning those houses, $200,000-$400,000 are hit with the AMT rules but don't have enough income to be able to hire the really smart tax accountants/lawyers that could get them out of having to pay out more than they should.  So depending on how they balance out the tax reforms, it could turn out to be a pretty big "win" for almost everyone.  People with really big houses will get nailed, and I think this will spark an inevitable correction in the housing market as all those higher income people who own several investment houses dump them when they don't get the tax benefits they used to provide.  My prediction is that we'll see a correction in housing prices mainly at the top end of the housing market, a few wealthy people will gripe about losing their favorite tax shelters, but the overall consolidation of the tax laws will result in most people paying about the same with half the tax form pain and less risk of penalties from doing your taxes wrong.

I think darn near ANY tax reform is good, even if it costs me a few bucks because I'm too honest.  The tax system is too complex and that rewards only the lawyers, accountants, and those wealthy enough to hire them.

edit - I almost forgot... I blame boosh.

[Sabre]

Everything suggested by the President's tax review board amounts to nothing more than a bandaid on an arterial wound.  Abolish the current tax code (and the IRS) and replace it with the "Fair Tax" law currently in committee in both houses of Congress (HR-25 and SR-25).  See http://www.fairtax.org for more details.

[StarOfAfrica2]

The problem with this is, places like Hawaii are going to get nailed.


Our 2 bedroom condo (small by mainland standards for a Condo) cost us over $200,000.  Back home I could be living in a 4 or 5 bedroom HOUSE for that, with property.  You wont find a decent home here under $500,000 and the prices are just going up.  Heck, I dont even live in the "good" neighborhoods, and it's still outrageous.  It's not unheard of for a good sized family home to cost well over $1 million.  Thats why most locals have several generations of family all living in one house.  Many houses are also designed with what they call an "Ohana apartment" built in (apartment to be rented out), that helps offset the costs.  They pass that kind of "reform" for property taxes, and the market here is going to nosedive.  We pay far too much in property taxes as it is, and now they want to take away our deduction too?  Screw them.

[john9001]

the interest deduction is built into the price of the house, lose that and the price of the house will go down, your taxes on the house will be less and more people will be able to buy a house.

[StarOfAfrica2]

Sure.  And for everyone who already owns a home?  They just take a loss when they have to sell?  OOoooo, that sounds attractive.  Thanks, you really make me enjoy being an American homeowner.  Ok, THIS was the American dream before..........now we change the rules.  You get bent over for the greater good.  Yippeee!  Oh, and no vaseline either?  Wow, what a treat.

No thanks.

[Maverick]

IIRC you are only allowed 2 houses for the morgage deduction, so saying folks with several houses will be hurt is not quite the situation.

[Mickey1992]

Originally posted by Sabre
Everything suggested by the President's tax review board amounts to nothing more than a bandaid on an arterial wound.  Abolish the current tax code (and the IRS) and replace it with the "Fair Tax" law currently in committee in both houses of Congress (HR-25 and SR-25).  See http://www.fairtax.org for more details.

As much as it makes sense, you are never going to get people to agree to a 23%-27% sales tax.

[Holden McGroin]

Being from Oregon, I viscerally hate sales tax.  I have voted against instituting here several times.

I think a modified flat rate income tax with no deductions for any reason is the most fair way for the government to raise money.

The modification would be that the first 40K (or some reasonable amount) would be tax free.  After that a flat rate of say 20% would come in.

Someone making 50K would pay 2K in fed income tax, or a 4% aggregate rate.

Someone making 1,000,000 would pay 20% of 960,000 or 192,000 in tax for an aggregate rate of 19.2%.

Obviously these numbers are just for discussion purposes.

[BigGun]

What about in areas where middle-class homes can run about $1 million...seems like would be very hard to make adjustments from 1 area to the next.

[Wolfala]

Originally posted by StarOfAfrica2
The problem with this is, places like Hawaii are going to get nailed.


Our 2 bedroom condo (small by mainland standards for a Condo) cost us over $200,000.  Back home I could be living in a 4 or 5 bedroom HOUSE for that, with property.  You wont find a decent home here under $500,000 and the prices are just going up.  Heck, I dont even live in the "good" neighborhoods, and it's still outrageous.  It's not unheard of for a good sized family home to cost well over $1 million.  Thats why most locals have several generations of family all living in one house.  Many houses are also designed with what they call an "Ohana apartment" built in (apartment to be rented out), that helps offset the costs.  They pass that kind of "reform" for property taxes, and the market here is going to nosedive.  We pay far too much in property taxes as it is, and now they want to take away our deduction too?  Screw them.

Move to my area. You can't find a piece of **** 2 BR starterhome for less then 800 K that isn't like 1800 SQ ft.

[Sabre]

Originally posted by Mickey1992
As much as it makes sense, you are never going to get people to agree to a 23%-27% sales tax.

That attitude is the result of ignorance of what this bill would do, and it's positive effect on the economy.  The main-stream media consistently reports the facts on this bill wrong.  It's been introduced numerous times before, and each time it has gained increased support, despite this and the propaganda efforts of lobbiests (who's sole reason to exist after all is to manipulate the tax code to benefit their clients).  

I suspect Holden may be unfamiliar with what this bill proposes, as are most who uppose the concept.  It is a replacement for all federal payrole witholding and income taxes, not in addition to it.  Since almost a third of my pay is confiscated by the Federal Government each year, paying only 23% on new goods and services (as opposed to 33% they steal now) would leave me 10% ahead.  Actually, it would likely be more than 10%, since a certain portion of your purchases (essentials) would effectively not be taxed, or rather you would receive a probate check to offset the tax paid on them.  Check out the website, or purchase "The Fairtax Book" by Boortz and Congressman John Linder, to find out more.  The write your congressmen and senators and tell them to support it.

[Reschke]

Where I live the majority of homes are in the 200k-500k range. I just had another appraisal done on my home after being in it 1 year and its increased 45k from initial purchase price of just under 200k. So in effect this change in the tax law will leave no doubt that its the working middle class in the Southern US who will get screwed once again. Especially since I live in a state that decided years ago that we need to pay taxes on our taxes and they leave tax increases for sales tax up to the local county commissioner without putting it to a public vote.

[Hwkeye]

The National Retail Sales Tax is the way to go!  "The Fairtax Book"  is 'must' reading for anyone remotely interested in where their tax dollars go and how they are spent!