Part II: Eliminating The Mortgage Interest Deduction

by Alex Stenback on November 29, 2005

As we recently opined, the chances of the mortgage interest tax deduction being eliminated are nearly nil, but David Smith, at the affordable housing institute, reminds us of this key point: Though it may not be eliminated, exactly who, (and what types of homes) will remain eligible for the mortgage interest deduction might change – and it’s all about the game of political football underway over the repeal of the AMT (Alternative Minimum Tax):

So, if I’m right, The [2006 budget proposal] will propose tax reform (including AMT repeal) — maybe not the full-blown [presidential tax reform] commission report, but several of its more substantial elements….

…Now comes the extremely deft part.  To pay for the AMT repeal, the tax-reform proposal will do the following:

  • Cap mortgage deductibility for millionaires.  (You wanna be against that?)
  • Eliminate mortgage deductibility for second homes.  (Weeping for the fat cats yet?)
  • Eliminate all tax incentives, or as it will be described, "close tax loopholes."(Find anything to oppose yet?)

[Brackets above are ours.]  Fascinating stuff – If you haven’t been reading David’s blog, head right over there.  It is one of our favorite reads, filled with great analysis and peppered with bizarre, obscure (political zugzwang anyone?), yet spot-on analogies.
Political Zugzwang and The OMB Passback [AHI: David Smith]

{ 1 comment… read it below or add one }

Dustin November 29, 2005 at 8:27 pm

Glad to see that I’m not the only one who has been enjoying David’s articles… With his seemingly random (yet appropriate) graphics he really has a unique style that is particularly well suited to blogging.

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