Bipartisan tax plan trims mortgage deduction (转载)# Living
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发信人: frankfu (Frank-湾区房贷俱乐部), 信区: BayAreaHomeLoan
标 题: Bipartisan tax plan trims mortgage deduction
发信站: BBS 未名空间站 (Fri Jul 22 00:28:48 2011, 美东)
For example, current law allows homeowners to deduct the interest they pay on home mortgages of up to $1 million. One proposal would lower the limit to $500,000 and exclude mortgage interest on second homes.
全文
WASHINGTON (AP) — A new bipartisan plan to reduce government borrowing
would target some of the most cherished tax breaks enjoyed by millions of
families — those promoting health insurance, home ownership, charitable
giving and retirement savings — in exchange for lowering overall tax rates
for everyone.
Many taxpayers would face higher taxes — a total of at least $1.2 trillion
over the next decade, and perhaps more.
The details and impact of the plan, released this week by the bipartisan "
Gang of Six" senators, emerged as President Barack Obama called
congressional leaders to the White House on Wednesday to determine, in
separate meetings, their bottom line for extending the nation's debt limit
while also cutting spending at the greatest amount possible. The role of
additional tax revenue remained a sticking point.
With the default deadline of Aug. 2 approaching, the White House signaled
for the first time that Obama would be willing to sign off on a short-term
extension of the debt limit if a grander deal were in the works and needed
only a few days' worth of extra time to wind its way through the legislative
process.
For its part, the Gang of Six plan punts on many of the most difficult
issues, leaving it to congressional committees to fill in the details later.
But supporters say it provides a framework to simplify the tax code, making
it easier for businesses and individuals to comply while eliminating
incentives to game the system.
"I think this is an attempt to find a middle ground on taxes that emphasizes
keeping rates low and broadening the base as much as possible, and I think
that's a very positive aspect of it," said Eugene Steuerle, a former
Treasury official who worked on the last tax reform package that passed
Congress, in 1986.
Coupled with spending cuts, the plan would reduce deficits by nearly $4
trillion over the next decade. While Obama and senators from both parties
lauded the plan as a possible breakthrough in their negotiations, some
congressional leaders said the plan lacks details and could produce much
bigger tax increases than advertised.
The Republican staff of the House Budget Committee issued a critique saying
the revenue increase could exceed $2 trillion over the next decade, when
compared with current tax policy.
"A tax increase is the wrong policy to pursue with so many Americans out of
work," said House Majority Leader Eric Cantor, R-Va.
The plan would simplify the tax code by reducing the number of tax brackets
from six to three, lowering the top rate from 35 percent to somewhere
between 23 percent and 29 percent. That could provide a windfall for wealthy
taxpayers because the 35 percent tax bracket currently applies to taxable
income above $379,150.
To help pay for lower rates, the plan would reduce popular tax breaks for
mortgage interest, health insurance, charitable giving and retirement
savings. Other tax breaks would be spared, including the $1,000-per-child
tax credit and the earned income tax credit, which helps the working poor
stay out of poverty.
The alternative minimum tax, which was enacted in 1969 to make sure that
high-income families pay at least some income tax, would be repealed. The
tax was never indexed for inflation, so Congress routinely patches it each
year — at an annual cost of about $70 billion — to prevent it from hitting
more than 20 million middle-income families.
About 35 million households claimed the mortgage interest deduction in 2009,
and about 36 million households claimed deductions for charitable
contributions, according to the Joint Committee on Taxation, the
congressional scorekeeper on taxes.
The Gang of Six plan does not specify how the tax breaks would be trimmed.
Democrats have several proposals that would restrict wealthy families' use
of the breaks, while preserving them for most low- and middle-income
taxpayers. Such a plan would offset rate cuts for high-income families by
limiting their ability to take advantage of various tax breaks.
For example, current law allows homeowners to deduct the interest they pay
on home mortgages of up to $1 million. One proposal would lower the limit to
$500,000 and exclude mortgage interest on second homes.
Starting in 2018, the new health care law would tax high-priced health
insurance plans. There are several proposals to adjust the tax to include
more health plans while sparing lower-income families with more modest
coverage.
The Gang of Six plan is silent about taxes on capital gains and dividends,
but tax experts said it would be difficult to generate more than $1 trillion
in additional revenue without increasing taxes on investments. The current
top rate on capital gains and dividends is 15 percent — well below the top
rate for ordinary income.
"No matter what they do on the revenue side, by some measure they are going
to be taking something away from somebody," Steuerle said. "The whole budget
package is about asking a lot of people to give up something they think
they have."
On the business side, the plan would lower the corporate income tax rate
from 35 percent to somewhere between 23 percent and 29 percent, all of which
would be funded by eliminating unspecified tax breaks for businesses.
Under current law, the U.S. taxes overseas profits of American corporations
but only after they return those profits to the U.S. The proposal calls for
a territorial tax system, which would tax only profits made in the U.S. The
proposal could be a huge windfall for U.S.-based multinational corporations,
though it would supposedly be financed by eliminating many of the tax
breaks those same companies enjoy.
Business groups have already been lobbying Congress to keep their tax breaks
and to create new ones, an effort that will only intensify if lawmakers
dive into the details of overhauling the tax code.
"The bookshelves of policy analysts in Washington are loaded with statements
of principle on tax reform that all sound good," said William Gale, an
adviser to President George H. W. Bush's Council of Economic Advisers and
now co-director of the Tax Policy Center. "And then they all die when you
try to specify the details."
The Gang of Six senators is made up of Republicans Tom Coburn of Oklahoma,
Mike Crapo of Idaho and Saxby Chambliss of Georgia and Democrats Kent Conrad
of North Dakota, Mark Warner of Virginia and Dick Durbin of Illinois.
http://news.yahoo.com/bipartisan-tax-plan-trims-mortgage-deduct
发信人: frankfu (Frank-湾区房贷俱乐部), 信区: BayAreaHomeLoan
标 题: Bipartisan tax plan trims mortgage deduction
发信站: BBS 未名空间站 (Fri Jul 22 00:28:48 2011, 美东)
For example, current law allows homeowners to deduct the interest they pay on home mortgages of up to $1 million. One proposal would lower the limit to $500,000 and exclude mortgage interest on second homes.
全文
WASHINGTON (AP) — A new bipartisan plan to reduce government borrowing
would target some of the most cherished tax breaks enjoyed by millions of
families — those promoting health insurance, home ownership, charitable
giving and retirement savings — in exchange for lowering overall tax rates
for everyone.
Many taxpayers would face higher taxes — a total of at least $1.2 trillion
over the next decade, and perhaps more.
The details and impact of the plan, released this week by the bipartisan "
Gang of Six" senators, emerged as President Barack Obama called
congressional leaders to the White House on Wednesday to determine, in
separate meetings, their bottom line for extending the nation's debt limit
while also cutting spending at the greatest amount possible. The role of
additional tax revenue remained a sticking point.
With the default deadline of Aug. 2 approaching, the White House signaled
for the first time that Obama would be willing to sign off on a short-term
extension of the debt limit if a grander deal were in the works and needed
only a few days' worth of extra time to wind its way through the legislative
process.
For its part, the Gang of Six plan punts on many of the most difficult
issues, leaving it to congressional committees to fill in the details later.
But supporters say it provides a framework to simplify the tax code, making
it easier for businesses and individuals to comply while eliminating
incentives to game the system.
"I think this is an attempt to find a middle ground on taxes that emphasizes
keeping rates low and broadening the base as much as possible, and I think
that's a very positive aspect of it," said Eugene Steuerle, a former
Treasury official who worked on the last tax reform package that passed
Congress, in 1986.
Coupled with spending cuts, the plan would reduce deficits by nearly $4
trillion over the next decade. While Obama and senators from both parties
lauded the plan as a possible breakthrough in their negotiations, some
congressional leaders said the plan lacks details and could produce much
bigger tax increases than advertised.
The Republican staff of the House Budget Committee issued a critique saying
the revenue increase could exceed $2 trillion over the next decade, when
compared with current tax policy.
"A tax increase is the wrong policy to pursue with so many Americans out of
work," said House Majority Leader Eric Cantor, R-Va.
The plan would simplify the tax code by reducing the number of tax brackets
from six to three, lowering the top rate from 35 percent to somewhere
between 23 percent and 29 percent. That could provide a windfall for wealthy
taxpayers because the 35 percent tax bracket currently applies to taxable
income above $379,150.
To help pay for lower rates, the plan would reduce popular tax breaks for
mortgage interest, health insurance, charitable giving and retirement
savings. Other tax breaks would be spared, including the $1,000-per-child
tax credit and the earned income tax credit, which helps the working poor
stay out of poverty.
The alternative minimum tax, which was enacted in 1969 to make sure that
high-income families pay at least some income tax, would be repealed. The
tax was never indexed for inflation, so Congress routinely patches it each
year — at an annual cost of about $70 billion — to prevent it from hitting
more than 20 million middle-income families.
About 35 million households claimed the mortgage interest deduction in 2009,
and about 36 million households claimed deductions for charitable
contributions, according to the Joint Committee on Taxation, the
congressional scorekeeper on taxes.
The Gang of Six plan does not specify how the tax breaks would be trimmed.
Democrats have several proposals that would restrict wealthy families' use
of the breaks, while preserving them for most low- and middle-income
taxpayers. Such a plan would offset rate cuts for high-income families by
limiting their ability to take advantage of various tax breaks.
For example, current law allows homeowners to deduct the interest they pay
on home mortgages of up to $1 million. One proposal would lower the limit to
$500,000 and exclude mortgage interest on second homes.
Starting in 2018, the new health care law would tax high-priced health
insurance plans. There are several proposals to adjust the tax to include
more health plans while sparing lower-income families with more modest
coverage.
The Gang of Six plan is silent about taxes on capital gains and dividends,
but tax experts said it would be difficult to generate more than $1 trillion
in additional revenue without increasing taxes on investments. The current
top rate on capital gains and dividends is 15 percent — well below the top
rate for ordinary income.
"No matter what they do on the revenue side, by some measure they are going
to be taking something away from somebody," Steuerle said. "The whole budget
package is about asking a lot of people to give up something they think
they have."
On the business side, the plan would lower the corporate income tax rate
from 35 percent to somewhere between 23 percent and 29 percent, all of which
would be funded by eliminating unspecified tax breaks for businesses.
Under current law, the U.S. taxes overseas profits of American corporations
but only after they return those profits to the U.S. The proposal calls for
a territorial tax system, which would tax only profits made in the U.S. The
proposal could be a huge windfall for U.S.-based multinational corporations,
though it would supposedly be financed by eliminating many of the tax
breaks those same companies enjoy.
Business groups have already been lobbying Congress to keep their tax breaks
and to create new ones, an effort that will only intensify if lawmakers
dive into the details of overhauling the tax code.
"The bookshelves of policy analysts in Washington are loaded with statements
of principle on tax reform that all sound good," said William Gale, an
adviser to President George H. W. Bush's Council of Economic Advisers and
now co-director of the Tax Policy Center. "And then they all die when you
try to specify the details."
The Gang of Six senators is made up of Republicans Tom Coburn of Oklahoma,
Mike Crapo of Idaho and Saxby Chambliss of Georgia and Democrats Kent Conrad
of North Dakota, Mark Warner of Virginia and Dick Durbin of Illinois.
http://news.yahoo.com/bipartisan-tax-plan-trims-mortgage-deduct
