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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Dec. 3, 2010 / 26 Kislev, 5771

Scandalous Suggestion from Debt Commission

By Linda Chavez



http://www.JewishWorldReview.com | As if the collapse in the housing market had not done enough damage to the U.S. economy, the president's debt commission is now proposing changes that could take the industry off life support. Among the recommendations in the commission's 65-page report is one to eliminate the tax deduction for mortgage interest on homes over $500,000 (the current limit is $1 million) and restrict it to primary residence only. The recommendation would also eliminate interest deductibility for home equity loans (which are currently capped at $100,000). The effect of these changes would be to immediately reduce the value of all homes by as much as 15 percent. Here's why.

Homeowners currently are allowed to take an itemized deduction for the interest they pay on their home mortgages. With conventional loans, most of the payments in early years go to pay interest on the loan, with only a tiny fraction going to principal. Although most home purchasers may not think of it this way, when they buy the house under our current tax system, they've invested not only in a place to live but also in buying an asset. The value of that asset will be determined by its future appreciation — or in recent years, its depreciation — but also in the value of the tax deduction they receive on the mortgage interest.

Under the current tax code, homeowners get a large tax break. A family that pays a $3,000 mortgage payment each month will likely get at least a $2,300 per month deduction in the early years of owning the home. Depending on the individual's tax bracket, the deduction can result in a significant savings in taxes owed. Of course, this is why the debt commission wants to take away this benefit. But to do so would have unintended consequences, namely, lowering the current value of home real estate.

As Carlos Bonilla wrote recently for the American Action Forum, a center-right policy group, "Absent the deduction we can expect that housing prices will fall by the present value of that stream of tax savings that is in force today." Homebuyers don't get the tax deduction for nothing — they've actually paid for it in the cost of the house they purchased. It has simply been capitalized over the years they will be paying their mortgage. He estimates the present value of those deductions on a $625,000 home to be worth more than $72,000 in today's dollars. Take away the deduction, and the house is now worth only $553,000. In other words, we've reduced its value by almost 12 percent.

This would result in an enormous blow to the 60 percent of Americans who presently own their homes. We've already experienced double-digit home value declines in the past few years; do we really want to see them drop another 10-15 percent instantly because of a change in tax policy?

There is also a fundamental question of fairness. Individuals who purchased homes under the assumption that they could deduct interest up to $1 million should not now be told that because the government can't control its own spending, the rules have changed. What would we think if a bank decided it should retroactively change interest rates or increase the principal on a loan because it wasn't making enough money on its investment?

Proposals to eliminate the deductibility of home mortgage interest have been floating for years — the idea was considered and dropped during President Reagan's 1985 tax overhaul and has been brought up periodically ever since. But the only conditions that would make any such proposal feasible would be a low, flat tax in which all deductions were eliminated — and even then, it would only make sense when the real estate market had fully recovered.

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JWR contributor Linda Chavez is President of the Center for Equal Opportunity. Her latest book is "Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics". (Click HERE to purchase. Sales help fund JWR.)

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