President Obama is targeting the tax deduction for mortgage interest payments and charitable contributions made among high-income earners.
The proposed budget cuts call for taxpayers in the 33 percent and 35 percent tax brackets to be limited in deducting charitable contributions and mortgage interest payments at the 28 percent rate. The deduction would affect households with taxable income of $250,000 or more. The White House says the move would bring in $321 billion within 10 years.
NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest, National Association of REALTORS® President Ron Phipps has said in opposing any MID cuts. (Get the latest news on MID and NAR’s stance at REALTOR.org.)
Other real estate industry and nonprofit sectors are also joining in the resistance, arguing that capping the deduction will hurt an already battered housing market even more.
This is an attack on the middle class, says Jerry Howard, chief executive of the National Association of Home Builders.
At a time when charities continue to struggle with a drop in donations, limiting the charitable deduction will likely cut large donations for the arts, environment, education and other sectors even more, says Tim Delaney, head of the National Council of Nonprofits, a network of charities.
In the past, the Obama administration and several tax deficit commissions have unsuccessfully called for limiting or eliminating MID. MID costs the Treasury Department an estimated $131 billion a year.
Source: “Slash Mortgage Deductions for the Rich? Fat Chance,” CNNMoney.com (Feb. 15, 2011)