Mortgage deductions: Wealthy on the losing end
Proposal will increase taxes for high-income homeowners
February 28 2009 - The Obama administration hopes to tap the rich to help pay for its ambitious programs. Specifically, that would include slashing mortgage interest deductions for high-income taxpayers.
The proposal would cap at 28% the tax break for itemized deductions.
That would leave people in higher marginal tax brackets of 33% and 35% - the wealthiest Americans - with a smaller benefit from the deduction of mortgage interest, state and local taxes and other items such as charitable contributions.
The move is projected to raise $318 billion over 10 years and fits nicely with the president’s campaign pledge to increase taxes only for families earning more than $250,000. Few, if any middle-income homeowners are in tax brackets of more than 28%.
Dean Baker, co-director of the Center for Economic and Policy Research, a D.C. think tank, said he was impressed with this part of the budget plan.
“It’s a no-brainer for economists,” he said. “Why have taxpayers been [in effect] subsidizing home payments for the highest income people in the country?”
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