Mortgage Interest Deduction on Cutting Board

[jw2]

I think two things will happen that will effectively eliminate the effectiveness of the mortgage interest deduction

1. They will limit it to reasonable amount. Once they get off their kick about punishing the successful, the limit will not be based on income but simply the deduction amount. As an example, the maximum deduction will be $20,000 per year.

2. They will continue raising the standard deduction.

At one point, they will meet.

[aneftp]

Originally Posted by jw2

I think two things will happen that will effectively eliminate the effectiveness of the mortgage interest deduction

1. They will limit it to reasonable amount. Once they get off their kick about punishing the successful, the limit will not be based on income but simply the deduction amount. As an example, the maximum deduction will be $20,000 per year.

2. They will continue raising the standard deduction.

At one point, they will meet.

The US tax code is very complicated. Unless tax laws are changed with inflation in mind. You play an extremely dangerous game by not indexing mortgage deduction limits with inflation.

The AMT was a gimmick tax back in 1969 by the Dems to punish te super wealthy who games the tax dedcution system. To hit the Amt one would need to make close to $200k in 1969 money. That's close to 800k in 2012 money.

Guess what? It was never indexed for inflation. So the middle class ends up paying the amt these days. People making 80k and up especially those with kids and high state income taxes and property taxes are very likely to get hit with the amt. a tax meant for the super rich.

That's why you can never set a "maximum deduction" tax law unless it's index to inflation. The amt has become such a huge cash cow. It's revenue are now calculated as part of the annual budget. Congress knows this.

So be becareful what you wish for in terms of changing the mortgage interest deduction. It may backfire

[mortimer]

Originally Posted by aneftp

The amt has become such a huge cash cow.

Hey! The AMT is a cash cow and the HMID is a sacred cow.

The tax code is cow sheet. Congress is cow spooge.

Who knew there were so many bovine ways to look at things?

[jw2]

Originally Posted by aneftp

The US tax code is very complicated. Unless tax laws are changed with inflation in mind. You play an extremely dangerous game by not indexing mortgage deduction limits with inflation.

The AMT was a gimmick tax back in 1969 by the Dems to punish te super wealthy who games the tax dedcution system. To hit the Amt one would need to make close to $200k in 1969 money. That's close to 800k in 2012 money.

Guess what? It was never indexed for inflation. So the middle class ends up paying the amt these days. People making 80k and up especially those with kids and high state income taxes and property taxes are very likely to get hit with the amt. a tax meant for the super rich.

That's why you can never set a "maximum deduction" tax law unless it's index to inflation. The amt has become such a huge cash cow. It's revenue are now calculated as part of the annual budget. Congress knows this.

So be becareful what you wish for in terms of changing the mortgage interest deduction. It may backfire

I am not wishing they change the home mortgage interest deduction. Nope. I was just pointing out how the politicians could eliminate it, if they desired, with no political backlash. I assume if they wanted to eliminate the deduction, indexing it to inflation would certainly make that task more difficult.