The Congressional Budget Office has prepared a report that suggests ways for Congress to raise revenues. One key suggestion is that Congress cut deductions for homeowner mortgage interest from the present $1.1 million cap to $500,000, phasing in the reduction by $100,000 annually starting in 2013. Over a 10-year period, the change would increase revenue by an estimated $41 billion.
Alternatively, the CBO proposed replacing mortgage interest deductions with a flat tax credit that is 15 percent of mortgage interest paid. This would potentially increase revenue by nearly $390 billion from 2013 to 2019.
It also proposed eliminating deductions for all state and local taxes, including property taxes, which would cost taxpayers $862 billion by 2019.
What are the odds these ideas will fly? In the past, the mortgage deduction has been sacred. These days, some analysts say it may be vulnerable.
Source: Washington Post Writers Group, Kenneth R. Harney (08/30/2009)