You crank up Turbo Tax and you begin doing your taxes. About half way through, the sweat is beginning to form on your upper lip. You wonder, after all that’s been withheld during the year, how you could owe what TT says you owe at the top of the screen.
Then you get to the deduction phase and you plug in your mortgage interest deduction. Suddenly your angst disappears. The amount owed tumbles, in fact, it might even go in a positive direction. Thanks goodness.
Well, Bunky, if the President’s commission on have their way, that sweaty upper lip will be a permanent fixture for your tax preparation work day. They don’t like it, they’d rather eliminate it than any spending, and they’re talking about doing away with it:
And now that sentiment has turned against all the federal red ink — and cost-cutting is in vogue — Democrats on President Barack Obama’s financial commission are considering the wisdom of permanent tax breaks such as the mortgage deduction and corporate deferral. Calling them “tax entitlements,” senior Democratic lawmakers have argued they should be on the table for reform just like traditional entitlement programs Medicare, Social Security and Medicaid.
I can’t imagine a more unpopular thing to do for a citizenry and electorate that already feels hard pressed when it comes to taxes. And comparisons with the taxation levels in other countries really has no bearing, since it is the level of taxation the citizens of this country are willing to bear that matters. And they’ve made it plain that they feel they pay plenty in that department.
Others will argue that government has no business subsidizing home ownership. Valid argument to a point. Government has no business in the pension for life (Social Security) or provision of health care (Medicare and Medicaid) either. So, while some may call it a tax entitlement and even a subsidy, some might see it as a method of recovering some of their tax dollars from a greedy, wasteful, intrusive and out of control government. They might be willing to give it up with commensurate spending cuts, superflous agencies and departments being closed, and government slimmed down dramatically.
But until they actually see that happen – no promises, no smoke and mirrors, no bureaucratic sleight of hand – no sale. Government gets to go first. And when the public sees their total income taxes go down to a level that would make giving up that deduction “revenue neutral”, then they’ll be more inclined to end it.
Instead, what we expect to see is a familiar pattern. Government will pretend to plan for “cuts” in spending (which will never materialize) and pretend to take a stab at trillion dollar future deficits. History says they plan on doing what Congress always does – promise but never accomplish the actual hard work of cutting back spending and government. What Congress always manages to accomplish, however, is taking the money promised by the elimination of this deduction and spending it.
The citizenry should say “no”, not until government goes first and only we see commensurate deep cuts in spending enacted – permanent cuts – is this on the table.
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