Thursday, June 10, 2010

Tax Break on Mortgage Interest May Disappear

Came across this doozy as I made my rounds tonight:

"The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget — saying it could save $208 billion over the next decade.

And now that sentiment has turned against all the federal red ink — and cost-cutting is in vogue — Democrats on President Barack Obama’s financial commission are considering the wisdom of permanent tax breaks such as the mortgage deduction and corporate deferral. Calling them “tax entitlements,” senior Democratic lawmakers have argued they should be on the table for reform just like traditional entitlement programs Medicare, Social Security and Medicaid.

The new spotlight on the mortgage deduction and other tax expenditures comes as the Obama administration and Congress consider ways to reduce deficits the Congressional Budget Office (CBO) expects will average nearly $1 trillion over the next decade."

My Take:

If this goes through you can basically kiss housing goodbye. There is no demand for housing as it it. The mortgage write off was one of housing's strongest selling points.

I am happy to see Obama looking at various ways to reduce the budget but OUCH!....This one is gonna hurt if it gets passed.

This type of taxation pain is unavoidable as we sober up after our spending binge and realize that we now have to pay the money back.

Get used to this type of stuff folks. The taxation will be coming at you in waves like you have never seen before moving forward. The VAT's(value added taxes) will be next. These are the type of consequences that you suffer when the you spend so irresponsibly.

Aren't you just thrilled now that you bailed out Wall St? The pigmen were saved on your dime and they left you with the trillion dollar tab. This near meltdown has also left us with the worst economy 80 years.

As a result, millions of Americans are suffering as unemployment and foreclosures soar.

Bbbut Wall St suffered too didn't they?

Yeah riiiiight...With the ability to borrow at practically nothing thanks to a 0 Fed funds rate, Wall St proceeded to have one of its most profitable years in history. So how did Wall St thank us for the bailout after having such a great year in 2009? They paid themselves billions in bonuses.

Ain't Capitalism grand?

7 comments:

flipdippy said...

People are going to be blindsided - this will be a typical election year promise (no, we aren't touching the mort interest deduction) and will be recanted somewhere after elections or in early 2011.

They will do it at a time, IMO, when the markets are rallying somewhere near to the 2007/2008 highs, so people *feel* a bit richer and able to sustain the tax increase.

Still lots of time to swing long the market jeff, you can't have enough nuts stored for winter, and the getting should still be good for a bit longer.

flipdippy said...

Another sign of how weak the economy truly is...

bought a set of appliances at best buy. Got 20% off the set as part of a sale there for buying the whole set. They threw in delivery and installation, free. Manager also took another 20% the price of the set. When I asked why he said sales are slow, this is the only way appliances move.

Then he told me to call BGE for recycling the fridge ($50 credit) and reminded me about the energy efficiency rebate on top of that ($100 additional credit).

They they let me finance it all for 2 years at 0% interest. That seemed like a no brainer, I'll just throw the cash in a savings account for 2 years and make minimum payments until then.

That, my friend, shows there is a problem! But it won't be on their balance sheet next Q, hey, they sold a few thousand in appliances! Party on!

Jeff said...

FLip

Thanks for the anecdotal story.

Yup

The consumer is toast and way too overleveraged. Consumer data was aweful this morning. -1.2% in May.

I think we see chop for the time being when it comes to equities though bud.

We may retrace back a bit over 1100 but I think the trend has changed and is now downward.

I don't see any good entries here unless you are daytrading.

Haven't added any positions. My best guess is something in Europe or China will take place and send us downward.

I think we have seen the highs for the most part.

getyourselfconnected said...

Whoa!

Blinding new color scheme! Its looks like gold though so I like it!

CT-Hilltopper said...

Mine is raindrops since I'm such a downer, LOL.

What does the fact that 40% of all of those that are employed now work in service jobs have to say for our economy, Jeff?

That's what I have up for one of my new posts tonight, rare that they are.

Jeff said...

LOL Get

Gonna try out these disqus comments too if i can set it up right

Jeff said...

CT

I will hop over and check it out!