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Thursday, July 28, 2011

Mortgage tax break eyed to help cut debt

"It's a confluence of several factors. First, it's such a large tax break," said Donald Marron, director of the Urban-Brookings Tax Policy Center. "And the tax treatment of housing is much more favorable than we provide for most other investments people undertake."
A bipartisan group of U.S. senators, known as the "Gang of Six," pushed a debt plan last week that embraced changing the deduction to help achieve $1 trillion in revenues and reduce deficits by nearly $4 trillion over the next decade.
And what will happen to the deduction?
A presidential budget commission last year proposed turning the deduction into a 12 percent tax credit for buyers. The plan, which languished after being presented to Congress in December, would have capped the credit at $500,000 in mortgage debt and limited it to primary residences.
Gardner said Congress was more likely to revive that proposal than wipe out tax-related support for housing altogether.
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