Therefore, as the government looks for revenues to close the massive trillion dollar annual deficit, this "expense" is seen as ripe for the plucking. Obviously, if it is big ripe plum for the government, it is also a huge benefit to a bunch of taxpayers who are loath to give it up. The Times goes on to suggest some of the options on the table for changing this tax benefit.
A $25,000 cap on itemized deductions, as proposed by Mitt Romney in the second debate, would hit many people in the $50,000 to $200,000 income range, Kolko said. It would take a much bigger bite out of upper-income households beyond $200,000, of course, where the average total for all itemized deductions came to $81,000 in the IRS data from 2009. Romney's plan envisions that the losses in deductions for all categories of taxpayers would be offset by the lower payments they'd be making based on a one-fifth reduction in marginal rates.
President Obama supports a cutback in housing-related and other write-offs for people with incomes above $250,000.
These are certainly not the only options. We have listed others here. However, one that has come to our attention since, is a tax credit similar to the first time homebuyer's tax credit. This could be used to replace the schedule A deduction. Some real estate experts say this would have a much bigger impact on getting home sales going again compared to the current mortgage interest deduction. Existing mortgage holders aren't as enthusiastic about such a change, of course.
- Shocking Unintended Consequences if Mortgage interest Deduction is Eliminated
- Schedule A Cap Another Way to Increase Tax Revenue Through Tax on the Rich
- Options to Change or Replace Mortgage Interest Deduction
- President Obama News Conference: Tax Increase Still On for Rich to Fix Fiscal Cliff
- More on the Fiscal Cliff and Your Mortgage Interest Deduction - Diana Olick of CNBC
- 9 Reasons to Eliminate the Home Mortgage Interest Tax Deduction
- 10 Benefits to Taxpaying Homeowners of Mortgage Interest Deduction
- 7 Social Benefits of Home Ownership and 6 Social Benefits of Renting