Tax Reform Proposals
November 12, 2005 8:53 PM Subscribe
The new tax reform proposals: what will happen next? The tax reform committee recommendations that were just announced are potentially a big problem for my family....
Reducing the mortgage deduction limit (and eliminating the 2nd home completely) would cost us about $20k per year....even if AMT doesn't get us!
Spare a thought for the middle class Californian and tell me how to figure out what will happen next!
Reducing the mortgage deduction limit (and eliminating the 2nd home completely) would cost us about $20k per year....even if AMT doesn't get us!
Spare a thought for the middle class Californian and tell me how to figure out what will happen next!
I ran some calculations: if your family has a $1 million of mortage loans (the current limit for deductability) at 6% interest, you'd probably pay about $15K more in taxes (assuming that you're in the 33% bracket, making between $162K and $319K).
But it seems that if you're not already paying the AMT, you soon would be: by 2010 the AMT threatens to catch more than 30 million taxpayers, mostly from middle-income households. The proposal calls for eliminating the AMT.
Finally, you don't mention that the proposal also calls for eliminating deductibility of state income taxes; that would be some thousands of dollars more in federal incomes taxes for you, I'd guess.
For what it's worth, I agree with ilsa: this is probably dead on arrival. Among other things, the Republican majority in the House is sufficiently small that they can't afford to have California Republican representatives oppose a bill, and California Republican representatives would never vote for a bill that would hurt a lot of middle and upper-class voters in California (not if they wanted to be reelected).
posted by WestCoaster at 10:02 PM on November 12, 2005
But it seems that if you're not already paying the AMT, you soon would be: by 2010 the AMT threatens to catch more than 30 million taxpayers, mostly from middle-income households. The proposal calls for eliminating the AMT.
Finally, you don't mention that the proposal also calls for eliminating deductibility of state income taxes; that would be some thousands of dollars more in federal incomes taxes for you, I'd guess.
For what it's worth, I agree with ilsa: this is probably dead on arrival. Among other things, the Republican majority in the House is sufficiently small that they can't afford to have California Republican representatives oppose a bill, and California Republican representatives would never vote for a bill that would hurt a lot of middle and upper-class voters in California (not if they wanted to be reelected).
posted by WestCoaster at 10:02 PM on November 12, 2005
yeah: a rather conservative republican co-worker of mine has already written to california GOP headquarters informing them that he will no longer be a republican if they ram this through.
just a single data point, and an anecdote, but i think it speaks volumes about the viability of this plan.
posted by joeblough at 12:22 AM on November 13, 2005
just a single data point, and an anecdote, but i think it speaks volumes about the viability of this plan.
posted by joeblough at 12:22 AM on November 13, 2005
I sound like a broken reacord, but I really do think that the Tax Policy Center is a good place to get even-handed analysis of these things.
posted by terrapin at 7:36 AM on November 13, 2005
posted by terrapin at 7:36 AM on November 13, 2005
Remember, these are proposals, and they don't need to be made into law exactly as proposed.
I suggest you read up on the proposals and then if you find that there is a part of the proposal that could be a problem, suggest a change while writing your congressman.
For instance, I have read somewhere that it was being considered that old mortgages could be grandfathered. Only if you refinanced or obtained a new mortgage would it fall under the new rules.
Maybe you could suggest that yourself, but you should explain why the proposal will cause you problems and why you think the change will be fair.
It sounds like there are some parts of the plan that you do like, such as removing the AMT system. Make sure you emphasize in your letter the portions of the plans you do like.
Remember, constructive criticism is better than just plain criticism.
posted by johannes at 9:50 AM on November 13, 2005
I suggest you read up on the proposals and then if you find that there is a part of the proposal that could be a problem, suggest a change while writing your congressman.
For instance, I have read somewhere that it was being considered that old mortgages could be grandfathered. Only if you refinanced or obtained a new mortgage would it fall under the new rules.
Maybe you could suggest that yourself, but you should explain why the proposal will cause you problems and why you think the change will be fair.
It sounds like there are some parts of the plan that you do like, such as removing the AMT system. Make sure you emphasize in your letter the portions of the plans you do like.
Remember, constructive criticism is better than just plain criticism.
posted by johannes at 9:50 AM on November 13, 2005
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Don't borrow trouble from tomorrow.
posted by ilsa at 9:33 PM on November 12, 2005