Bush's Tax Panel Has a Crazy Idea. Let's Go For It; Why This Reform Should Begin at Home
Pity the poor McMansion owner. If the President's Advisory Panel on Federal Tax Reform gets its way, those folks with the three-car garages, grand entryways, mega-kitchens and spacious bedrooms will lose the tax break they get for any portion of their mortgage over $312,000. In a place like Potomac, where the median sales price for a house is more than twice that amount, that could tear a hole in some fancy pocketbooks, depending on how much their owners have borrowed for their dream houses.</br></br>Oh, and that little summer cottage at the beach in Rehoboth or the lakefront place at Deep Creek or Lake Anna? That might cost a bit extra too. The panel wants to eliminate the mortgage deduction for vacation homes.</br></br>Planning on a home equity loan to consolidate credit card debt or cover your kid's college tuition? Think it through again. The president's advisory panel is expected to propose taking away the federal tax deduction for payments on that loan, too.</br></br>These are still just proposals cooked up by a bipartisan panel, and who can count how many similar proposals have gone nowhere? But it is a panel established by President Bush and charged with making the tax code simpler, fairer and more conducive to economic growth. For it to even consider going after the home mortgage deduction is a gutsy move -- even if the president recoils at the very idea.</br></br>The home mortgage interest deduction is known as the third rail of tax politics for good reason. It's loved by the people and criticized mostly by academics. It is credited with creating a nation of homeowners, spawning social stability and entire industries designed to cater to everything from financing to construction to furnishing knickknacks and beyond. Tens of millions of Americans have come to rely on the generous tax benefit -- and with home prices soaring, they aren't all McMansion owners either. In the District last year, the average house cost $415,178, according to the city's figures.