Will the Mortgage interest deduction survive?

I think we should just get rid of the personal income tax altogether.

The closest we've seen is in NY the 17.5% abatement was phased out for investor properties. A phase-out of the deduct ability of mortgage interest is unlikely but we could see a change where it no longer applies to investor properties. Of course there are plenty of cases where home owners are limited by the AMT or wind up taking a standard deduction anyway. Probably more than a few home-owners purchase without understanding how the deductions apply.

Matt might be on to something, if we replaced the income tax with a consumption tax, people would save more and there would be less need for the IRS to ferret out tax-cheats.

>Matt might be on to something,

you two deserve each other.

CBPP is a liberal oasis. 100% of the time they advocate Robin Hood actions. They would love to kill the mortgage deduction because only itemizers (= the richer half) use it.

No I don't mean REPLACING the income tax with another tax, I mean ELIMINATING it altogether.

No I don't mean REPLACING the income tax with another tax, I mean ELIMINATING it altogether.

Personal income taxes are 46% of the U.S. budget, Payroll taxes 34% . The Federal Government already spends more than it takes in. I assume you intend to eliminate 50% of Federal spending?

http://nationalpriorities.org/budget-basics/federal-budget-101/revenues/

Yes. I do.

Ron Paul crunched the numbers. If we were to ELIMINATE the personal income tax, yes, the federal government would have to live on a budget 46% smaller than it is today.

To do that, you'd have to dial the clock all the way back to ... 1997.

Can you imagine a federal government shrunk down to the size it was in 1997? Things were pretty darn good then.

I'm all for it.

do those numbers adjust for inflation?

Yes.

NYCMAtt - and how much of the budget from 1997 came from the personal income tax? I assume it wasn't 0%.

That's not his point.

To answer the OP's actual question: Yes, I think the mortgage interest deduction will survive. I suspect it won't be changed at all, other than continuing to cap the amount of eligible mortgage at $1 million and slowly watching the real amount of the cap shrink with inflation (although inflation has been essentially nonexistent since the financial crisis).

Many reasons for this, but mostly the fact that this deduction is viewed as "sacred" by the most important voting constituencies and politicians would be risking political suicide by voting to repeal the deduction.

huntersburg - what is his point?

The pressure for keeping the mortgage interest deduction is not coming from home-owners, who don't have any lobbies that I am aware of, but from real estate brokers and home builders. Let's be honest and understand which interests are lobbying for this and why

well, individuals/home owners don't really have any lobbyists except for senators and reprsentatives who look out for our best interests. LOL! the brokers have lobbyists to look after their interests

http://www.cbpp.org/cms/?fa=view&id=1258

So we're cutting the budget 50%.

Defense,social security & medicare/medicaid are 19% & 22@ & 19% our three biggest categories. If we cut each by half we've only saved 30% of our budget, so I guess we eliminate medicaire/medicaid entirely and chop off another 25% of military spending which get close to where we need to be.

If the tea party had their way, the federal government would be a desk in a subway stop in DC.

The fedeal gov't spends way too much, no doubt. Many programs have dubious value, and there's always waste, fraud and inefficiency, but 50%? no way. How about we aim small and attempt 5%,

"Many programs have dubious value, and there's always waste, fraud and inefficiency, but 50%? no way."

YES WAY.

The numbers have been crunched. It will work.

We shrink the government budget back down to the size of 1997 and do away with income tax altogether.

Every working man and woman immediately sees at least a 20% infusion of cash into their bank accounts.

Sit back and watch the economy take off like a 747.