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Old 03-06-2008, 05:16 PM
 
11,715 posts, read 40,446,365 times
Reputation: 7586

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A tax hike by any other name ... - LA Daily News

After years of reckless spending and special-interest pandering, officials in Sacramento now face their comeuppance in the form of a massive budget deficit. So they turn their focus to closing "loopholes."

But there's just one problem: The folks in Sacramento have a very different notion of what constitutes a "loophole" than do the rest of us.

The biggest "loophole" in California, according to state Legislative Analyst Elizabeth Hill and a panel of experts who met last week to discuss ways to bring in more money is ... the home-mortgage deduction.

Yes, that home-mortgage deduction. The one that makes the cost of living bearable for every condo-, bungalow-, or tract-dwelling family in the San Fernando Valley.

For many of us, the home-mortgage deduction is what makes Southern California homeownership affordable at all. But to the savvy minds in Sacramento, it's a giveaway - a crack in the system that you've been allowed to slip through for too long.

And closing that "loophole" would bring in almost $5 billion to Sacramento's coffers, which would go a long way toward fixing that self-inflicted budget deficit, which is (for the moment) pegged at $8 billion.

Sure, it might also drive the middle class clear out of the state, but that doesn't seem to bother the folks up north. They're more interested in balancing their books, not yours.

Some of the other "loopholes" are less controversial, but still problematic.
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One suggestion is to eliminate business-tax credits for research and development - a $919 million savings, but at the potential cost of driving away the very jobs California most desperately needs. Another is to scrap enterprise zones, which cost taxpayers $454 million, but which many argue have done wonders to revitalize poorer communities.

It's fair to ask whether these policies achieve their intended goals, and whether they're worth the cost. But it's absurd for the very politicians who have long promoted them to suddenly suggest they are an unwarranted giveaway.

What's more, eliminating a long-standing tax deduction or credit is nothing less than a tax hike for the person or business that ends up paying a higher tax bill.

Officials in Sacramento should at least be honest. They're not seeking to close loopholes for a few, but to raise taxes on us all.
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Old 03-06-2008, 05:46 PM
 
9,525 posts, read 30,473,115 times
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um, the mortgage interest deduction is a federal tax deduction The day that disappears is the day every congressman loses his job.
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Old 03-06-2008, 05:50 PM
 
11,715 posts, read 40,446,365 times
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Quote:
Originally Posted by Sassberto View Post
um, the mortgage interest deduction is a federal tax deduction The day that disappears is the day every congressman loses his job.
Yes, the interest would still be deductible for Federal purposes, but the state can adjust your income and add back the interest deduction and tax a higher amount than your Federal taxable income.
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Old 03-06-2008, 08:54 PM
 
Location: Las Flores, Orange County, CA
26,329 posts, read 93,748,294 times
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Quote:
Originally Posted by Sassberto View Post
um, the mortgage interest deduction is a federal tax deduction The day that disappears is the day every congressman loses his job.
I understand this....but there are a lot of things that may be changing and perhaps soon. I don't think Canada has mortgage interest deduction (if that means anything). A lot of people are thinking the days of low taxes, low capital gains tax rates, and perhaps the mortgage interest deduction are at risk. Demographic trends (lots of old people), two big expensive wars, energy problems, increasing global competition....who knows? Ten years ago I would have never considered it; Now, five, ten years from now...wouldn't surprise me. For that matter Roth (after tax contributed) IRAs and 401(k)s become more attractive as taxes are paid at today's rates rather than the future's presumably higher tax rates.

They're already talking of tweaking the rules:

Mortgage Interest Deduction and Property Tax Deduction In Danger

mortgage interest rate » Honey, I Eliminated The Mortgage Interest Deduction - Plan 2 (http://mortgageinterestrateqds.blog.lenderratematch.com/2008/02/27/honey-i-eliminated-the-mortgage-interest-deduction-plan-2/ - broken link)

Last edited by Charles; 03-06-2008 at 09:02 PM..
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Old 03-06-2008, 10:10 PM
 
Location: Boise, ID
1,356 posts, read 6,026,080 times
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State Senate President Don Peralta is spearheading the tax hikes. He held a press conference yesterday and said that California "does not have a spending problem."

"We have a revenue problem," he said.

Might make it more enticing to escape California, huh?
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Old 03-06-2008, 10:15 PM
 
11,715 posts, read 40,446,365 times
Reputation: 7586
Quote:
Originally Posted by Niners fan View Post
State Senate President Don Peralta is spearheading the tax hikes. He held a press conference yesterday and said that California "does not have a spending problem."

"We have a revenue problem," he said.

Might make it more enticing to escape California, huh?
Kinda. I just have a white elephant to rid myself of first.

California's spending and politics aren't enough to drive me out on their own, but they don't help.
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Old 03-06-2008, 10:21 PM
 
Location: Boise, ID
1,356 posts, read 6,026,080 times
Reputation: 944
On top of reducing or eliminating the home mortgage interest deduction on the state level there is also talk of reducing the child credit from $294 to $94 and raising the car tax.

I think the clowns in Sacramento have forgotten that the car tax was the last straw before Gray Davis was recalled.
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Old 03-06-2008, 10:51 PM
 
Location: Vancouver, B.C
38 posts, read 140,173 times
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Quote:
Originally Posted by Charles View Post
I don't think Canada has mortgage interest deduction (if that means anything).
Mortgage Interest Deduction and Property Tax Deduction In Danger

mortgage interest rate » Honey, I Eliminated The Mortgage Interest Deduction - Plan 2 (http://mortgageinterestrateqds.blog.lenderratematch.com/2008/02/27/honey-i-eliminated-the-mortgage-interest-deduction-plan-2/ - broken link)
Canada doesn't have a mortgage interest deduction. With the exception of Vancouver most of the cities have a majority homeowners versus renters.
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Old 03-07-2008, 07:25 AM
 
Location: Las Flores, Orange County, CA
26,329 posts, read 93,748,294 times
Reputation: 17831
Quote:
Originally Posted by drowningintherain View Post
Canada doesn't have a mortgage interest deduction. With the exception of Vancouver most of the cities have a majority homeowners versus renters.

Seems counterintuitive.
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Old 03-07-2008, 10:38 AM
 
Location: Vancouver, B.C
38 posts, read 140,173 times
Reputation: 18
Quote:
Originally Posted by Charles View Post
Seems counterintuitive.
A lot of people still want to own. There are certain provinces that have tax breaks for homeowners, however it is not federal. There is a federal tax incentive for homeowners that make their homes more energy efficient.
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