The joy of tax panel politics
So the president asked his tax panel a while ago to blue-sky some recommendations for changing the complex tax code in this country. That panel did so and as we know it presented its recommendations to Treasury Sec. John Snow, who is calling it the basis for extensive changes to the tax regime.
Whether that excites you or makes your stomach queasy depends on the tradeoff between how much you hate going through tax season (which we all do) and how much you really like your deductions, writeoffs, and credits (which is where different groups will have different agendas). In order to adhere to its revenue-neutral mantra, the panel had to come up with more than $1 trillion in savings to offset its removal of the Alternative Minimum Tax (AMT). But that put on the potential cutting block not only the low-income housing tax credit (just at the time when it's being seen as a model for rebuilding the Gulf Coast) but also part of the mortgage interest deduction. That last bit would seem odd, considering the homeownership craze in this country (aided and abetted by administrations of both parties).
According to a report in today's Financial Times (which I think of as the Business Newspaper that Hasn't Drunk the Kool-Aid), the mortgage deduction will become a home credit "equal to 15% of interest paid, limited to mortgages in a range of $227,000-$412,000 based on regional circumstances."
Ah, see, it all comes back to affordability of housing. My "regional circumstances" find me in a decidedly middle-class San Francisco neighborhood -- not ritzy, certainly not trendy or hip. The smallest two-bedroom, single-family homes in this neighborhood list at about $825,000, and they have been selling for well above that (one Realtor told me they typically are getting offers around $150,000 above asking prices).
All of which makes me wonder how these proposals will play when citizens really start crunching the numbers and applying it to their own lives and businesses. The panel would appreciate everyone essentially shutting up and taking their word for it that it's for the better; the panel believes, again according to the FT, that its recommendations should be accepted whole-hog without being picked apart. It told Snow that “The effort to reform the tax code is noble in its purpose, but it requires political willpower. Many stand waiting to defend their breaks, deductions, and loopholes, and to defeat our efforts.”
I think it would be a good time for debate when a high-level panel is proposing something that would make it more difficult for families to buy single-family homes AND would make it more difficult to finance the development of affordable multifamily homes. But then I live on a street of $825,000 bungalows. One could argue, therefore, that I don’t live in the same reality as other people; but does the tax panel?
Whether that excites you or makes your stomach queasy depends on the tradeoff between how much you hate going through tax season (which we all do) and how much you really like your deductions, writeoffs, and credits (which is where different groups will have different agendas). In order to adhere to its revenue-neutral mantra, the panel had to come up with more than $1 trillion in savings to offset its removal of the Alternative Minimum Tax (AMT). But that put on the potential cutting block not only the low-income housing tax credit (just at the time when it's being seen as a model for rebuilding the Gulf Coast) but also part of the mortgage interest deduction. That last bit would seem odd, considering the homeownership craze in this country (aided and abetted by administrations of both parties).
According to a report in today's Financial Times (which I think of as the Business Newspaper that Hasn't Drunk the Kool-Aid), the mortgage deduction will become a home credit "equal to 15% of interest paid, limited to mortgages in a range of $227,000-$412,000 based on regional circumstances."
Ah, see, it all comes back to affordability of housing. My "regional circumstances" find me in a decidedly middle-class San Francisco neighborhood -- not ritzy, certainly not trendy or hip. The smallest two-bedroom, single-family homes in this neighborhood list at about $825,000, and they have been selling for well above that (one Realtor told me they typically are getting offers around $150,000 above asking prices).
All of which makes me wonder how these proposals will play when citizens really start crunching the numbers and applying it to their own lives and businesses. The panel would appreciate everyone essentially shutting up and taking their word for it that it's for the better; the panel believes, again according to the FT, that its recommendations should be accepted whole-hog without being picked apart. It told Snow that “The effort to reform the tax code is noble in its purpose, but it requires political willpower. Many stand waiting to defend their breaks, deductions, and loopholes, and to defeat our efforts.”
I think it would be a good time for debate when a high-level panel is proposing something that would make it more difficult for families to buy single-family homes AND would make it more difficult to finance the development of affordable multifamily homes. But then I live on a street of $825,000 bungalows. One could argue, therefore, that I don’t live in the same reality as other people; but does the tax panel?
posted by John Zipperer at 10:10 AM
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