Posted on 11/19/2011 3:30:19 AM PST by Kaslin
There are three "keystone deductions" in the IRS code that matter more than all others to Americans who itemize deductions.
They are keystone deductions because they help the middle and upper middle class and they promote extraordinarily important social policies which have long been at the center of the traditional values held by most Americans.
The first is the deduction for contributions to qualified charities, such as hospitals, high schools and colleges, charities serving everyone from children to the homless to the old and infirm, and of course churches of every denomination.
The second keystone deduction allows homeowners with mortgages to deduct the interest on that mortgage from their income before calculating the ta they owe. This deduction encourages people to buy houses and is in fact a key component of the value of every house in America. The deduction is a valuable part of every home. If it is ended or limited, the value of every house in America falls, even if that home has no mortgage on it. The same downward pressure on home values occurs even if the deduction is only limited for some houses or some owners --say second houses or homes costing more than $500,000. The housing market doesn't distinguish between who owns what, but cares mostly about what buyers are willing to pay, and a lower or eliminated deduction means fewer buyers which means falling house values.
The third deduction allows taxpayers to deduct from their income before calculating their federal tax all the state and local taxes they paid in the previous year. Americans in high tax states, already staggering along under punitive tax regimes, would be smashed by any limit on this deduction. Some would call such a move a last straw, and leave the already reeling states like California, but most would simply be trapped where their jobs and (suddenly less valuable) homes are, paying higher and higher taxes.
Thus a Pennsylvania family of six with two kids in college, with a mortgage that has been refinanced to help pay tuition, but which still makes a tithe to their church is looking at a triple whammy tax hike if these deductions go away or are limited. So would millions of other Americans.
Which is why reaction ranged from shock to anger when two Republicans on the so-called Supercommittee proposed attacking those very deductions this week. Pennsylvania's Senator Pat Toomey and Texas Congressman Jeb Hensarling, both credentialed conservatives, stunned their center-right supporters and Republicans across the country by proposing a plan to raise hundreds of millions of dollars of new revenues financed by the assault on these keystone deductions.
The AP's Stephen Ohlemacher described the Toomey-Hensarling ta hikes this way:
A GOP plan to raise taxes by $290 billion over the next decade would limit deductions for mortgage interest, charitable donations and state and local taxes as part of a deficit-reduction deal. Some workers could also see their employer-provided health benefits taxed for the first time, though aides cautioned that the plan is still fluid....
The top income tax rate would fall from 35 percent to 28 percent, and the bottom rate would drop from 10 percent to 8 percent. The rates in between would be reduced as well. A GOP congressional aide said the plan is designed to raise taxes on households in the top two tax brackets. That would affect individuals making more than $174,400 and married couples making more than $212,300.
The plan has already split the Congressional GOP, but its dire consequences are just beginning to be felt across the country. I have spent much of this week's radio shows talking to experts and callers about the Toomey-Hensarling tax hikes, and while an occasional supporter will speak in favor of all or part of its provisions --former Utah Governor Jon Huntsman for example-- the vast majority assailed the plan as bad policy, horrible politics and, crucially, a breach of faith with voters who sent the GOP back to Congress in November 2010 with a mandate to cut spending, not raise taxes and in the process of raising taxes, changes many of the crucial rules by which the country has operated for decades.
On my show Rick Santorum called the proposed package another "Read my lips" moment, harkening back to the promise which the first President Bush made and then disastrously broke in a "big deal" with Democrats 20 years ago.
Callers were fuming. One retired sheriff living in Calfiornia berated me for leading him to contribute to Pat Toomey's 2010 Senate campaign. Many others simply stated they would lose their house to which they were barely hanging on if the deduction was lost. A wise accountant friend laughed at the idea that slashing the charitable deduction wouldn't dramatically impact high income giver's giving. And when contributions fell, so would the services delivered by those groups and employment within the vast not-for-profit sector.
Where could such a horrific idea have come from? Why, from three economists of course, all from the National Bureau, and beloved by the purists at the Wall Street Journal and the Club for Growth.
Good for them. Let them put their plan before the GOP Convention and have it adopted as a platform.
Let them ask Speaker Boehner to amend, republish and then campaign on a revised Pledge to America, because the 2010 version said nothing about these radical measures.
That is the biggest problem with the plan: The new Congress was sent to D.C. to represent the cut spending/shrink government movement in the country, and it instead has produced a secret committee that is hurtling towards a massive tax hike --authored by Republicans!
Some Republicans argue it is either this or the automatic "sequestration" built into last summer's debt ceiling deal which would hammer defense spending with an unimaginable $600 billion in more cuts on top of the hundreds of billions already unwisely slashed from DoD's funding.
But the sequestration doesn't take effect until 2013, and there is an election between now and then which could empower a new president, with a new GOP majority in the Senate working alongside a the GOP majority in the House, to actually reform entitlements and control spending without raising taxes or slashing defense.
If the GOP that is already inside the Beltway embraces tax hikes, especially this ruinous trio of deeply damaging hikes, the message will be clear to many millions of voters: You cannot trust Republicans who promise to cut spending and keep a lid on taxes.
Not even for one year.
“The Post Office has never lost the U.S. Congress in over 200 years..”
Maybe that explains why they think they’re Santa Claus.
That's why I said to sunset it.
People who already have it, get it.
People who get new mortgages don't get it.
It will depress the price of houses slightly, but that just proves it's a subsidy.
And it has not been the case that houses “plummet” in value like new cars, so that is just a red herring.
Then why are so many people walking away from their mortgages?
Mortgage-interest deduction is a subsidy.
But you aren't honest enough to admit it, just as I predicted.
Here’s where that political science degree from American University comes in handy. It is Marxism 101 that the revolution can’t be successful without the destruction of the petit burgeouise - the middle class. And it proceeding right now.
Look, I don’t deny that it is a subsidy, clearly it is.
The drop in housing prices is a very recent turn of events, but people are not walking away from their houses because the houses have lost value. They are walking away because they can’t pay their mortgages, or at least most are doing it for this reason.
That is part of what is causing the value of the homes to drop, too much supply, not the other way around.
Take away the interest deduction and see what happens to mortgage payments at that point.
You say it will depress the price “slightly” but I think it will bring the market completely to a halt.
But maybe like Obama you want to put “fairness” ahead of everything else.
I don’t want to pay any more taxes. I think I pay enough taxes right now. And I’ve been paying them for a long damn time and I anticipate continuing to pay them for several decades. But I’m exceedingly tired of having my money spent to provide for overpaid gov’t workers and ne’re do wells. Now we are expected to provide 3 meals a day to school children in addtion to the foodstamps their families already get in addition to the sec. 8 housing SUBSIDY their families get in addition to the free cells phones their families get, etc. etc. etc.
Call me greedy, stupid, a racist, anti-military, un-American, I don’t really care. I’ve had it. I don’t want to give the gov’t any more money under any scheme or plan. I don’t want to SUBSIDIZE them any further. Not one penny more.
Come up with whatever plan you like, if it’s going to cost me more money, I’m against it.
Anybody who wants to give the Feds more money, send them a check, they’ll be happy to get it.
When one faces a Obama/Pelosi/Reid Death Panel, anyone wonder if their political affiliation will have any bearing on whether or not they get medical care? Anyone out there think it was designed that way?
We on Free Republic are on such a list, I’m sure.
The fact of the matter is, we got here with special-interest subsidies, and "here" is the complete and total collapse of the financial system. The longer we put it off, the worse it is going to be.
I certainly wouldn't want to take away any of your favorite special-interest subsidies, and I am sure you wouldn't want to take away anybody else's in the interest of "fairness," so lets just wait for the bleeding SOB to explode in our faces.
I am certain you deserve it.
I'm willing to make whatever sacrifices of free government stuff required, so I'm not so sure about me.
I think I’ve stated pretty clearly some things I’d be willing to take away from people. Let’s start with the school dinner program, NPR funding, sec. 8 housing, “wage” based COLAs for soc. sec. recipients, “disability” payments for drunks, drug addicts and probably a whole bunch of other people, medicare for the wealthy and the current system of medicare.
I’ve never been on unemployment and my income has always been way too high to qualify for any kind of aid. I managed to feed my kid 3 meals a day. I pay the taxes that are required of me. I give to charity.
I’m tired of being told I haven’t done/paid/given enough.
Come next summer, we all start reaping the fruits of "gimme gimme gimme."
Got'cher "fundamental change" coming right up.
Count on it and know that they’re reading every comment 24/7.
Count on it and know that they’re reading every comment 24/7.
They can kizz my azz.
FUBO!!!!
” Even RINOs like Hewitt are upset.”
Or at least he’s feigning anger like he did when he pretended to be upset over illegal immigration awhile back.
Hugh Hewitt is one of the more accomplished frauds trying to appeal to conservatives in order to manipulate them. His pal Michael Medved is cut out of the same cloth.
“A RINO is someone that votes mostly with the rats. You don’t know how Hewitt votes, so you can not call him a RINO”
Yes, EV should have said CINO, conservative in name only, instead. That fits Hewitt far more closely.
Hewitt is without a doubt a Republican. Years of Hewitt-watching have taught me that Hewitt’s one lone principle, if it can be called one, is fealty to the Republican Party.
Right now Hugh is dragging out copies of his book “A Mormon in the White House” in preparation for Willard’s triumphal procession down Pennsylvania Avenue. Hugh will, of course, humbly accept Romney’s invitation to join his administration.
” Sound familiar?”
Uh....Germany ?
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