Thursday, November 15, 2012

President Obama News Conference: Tax Increase Still On for Rich to Fix Fiscal Cliff

This taxpayer would not be effected with mortgage of $1100.
President Obama today suggested pushing off decisions on tax reform, but immediately increasing taxes on those making over $250,000 through a revised extension of the Bush era tax cuts.  He even appeared to be suggesting that the reduction in employee social security contributions be continued.  Not sure about that, but I don't think either house of congress is likely to approve that extension.

But the hot topic from both pundits and politicians is the schedule A.  The Democrats seem to be embracing Romney's suggestion that the total schedule A deductions be limited to $25,000, meaning that the potential to use mortgage interest and charitable deductions (the big items) would be severely limited.  A $2000 per month mortgage/property tax would cap the category.  This would potentially have a significant impact on homeowners who give generously to charity and have a $600,000 mortgage.  Not exactly the 1%. 

The Democrats may love this idea as revenue generating, and it certainly would be, but they will find that the Republicans will not have forgotten that Romney's plan had a second step.  Reducing overall tax brackets by 10%.  Part A without Part B will never get past the house.  With 46 days to go before we hit the cliff, there are plenty of ideas, but still no leadership.  And it appears that the POTUS is punting most of the issue to another quarter. 

Image thanks to http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/

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