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Fed Budget Committee Digs Hole; Home Owners Get Buried

The result? Just under a quarter of all homes sold in San Mateo County will not qualify for a mortgage interest deduction (MID).

So President Barack Obama and congressional leaders traded blame for the failure of the Congressional "Super Committee" to forge a deficit reduction deal, but they also called for Congress to work out an agreement before painful automatic budget cuts take place in 2013. Huh?

What exactly has been going on since the Super Committee's first meeting on September 8? It’s not as if the deficit just popped up and shouted, “Surprise!”

The co-chairs of the bipartisan special joint committee said in a statement that "after months of hard work and intense deliberations, we have come to the conclusion…that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline."

Bottom line: the 12-member Super Committee (six Republicans and six Democrats) failed to reduce the nation’s deficit by $1.2 trillion over 10 years by the November 23 deadline.

If you listen to , they say all that’s needed is to place more tariffs on the rich, end Bush-era tax cuts and simply slash the defense budget by 40%. One almost expects Mr. Rourke (obscure pop culture reference) to step out from behind these doofusses (doofi?) and proclaim, “Welcome to Fantasy Island.”

Point: They claim that more tax brackets are needed as the rich and ‘super-rich’ (must be some sliver of the 1% the OWS savants talk about) have been capturing more than their fair share of our nation's economic growth. Sort of like the Pelosi IPO deal with VISA, right?

Of course if you listen to the other side, they claim there isn’t a social program (and a few federal agencies) that can’t be axed or trimmed and that any tax increase will end Western civilization as we know it.

Point: The estate tax would stay at 35 percent, but with the first $10 million of a married couple's estate exempt (I’m sure the vast bulk of Americans can breathe a sigh of relief over that $10M exemption.)

So who got, and in all likelihood, will keep getting buried by all the busted budget bluster?

Home owners. The home mortgage interest deduction (MID) has been part of the discussion since the Super Committee was created via the debt ceiling accord. And now it’s back to the same Congress to save the MID who supposedly were to be bailed out by the Super Committee on the MID, but weren’t (got that?)

The MID is something home owners have enjoyed for over a century and has always been not only a major benefit to home ownership, but often the largest tax deduction for the average American family.

Unfortunately, the latest budget rumor is that the allowable home price for you to claim the MID will be dropped to a $500,000. With the median price of a home in San Mateo County at $725,000, is it any wonder why pundits say The American Dream is in cavernous guano.  

And here’s the irony: One of the primary misconceptions is that only the wealthy benefit from the MID, when in reality it benefits primarily middle- and lower income families. Almost two-thirds of those who claim the MID are middle-income earners and 91% of people claiming the MID earn less (much less) than $200,000 per year. Reducing or eliminating the MID is nothing more than a de facto tax increase on home owners and on the middle class, who already pay 80 to 90 percent of U.S. federal income tax.

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Annette S December 03, 2011 at 04:35 PM
Steve, that is a great point! I have been in real estate and construction for over 30 years and I can tell you that is a huge factor! To get something built is a nightmare in many cities! That guy probably likes being able to take his dog for a walk through that empty lot and doesn't want to loose the free park like setting, haha. As a Realtor the MID is a huge selling point to buyers. Also Buyers drive the market in a big way, they are a major force behind the whole bubble of inflated values- they were the bidders in the late 90's that drove the prices through the roof so to speak, and when they tire of the high prices they don't buy, they don't realize what power they truly have as consumers to effect a market. Other factors are at play of course supply and demand and other economic issues, but for the most part in a normal credit abundant atmosphere, buyers drive the prices too. Lack of development and difficulties contribute in a big way too. ...
Mike Swire December 05, 2011 at 04:57 AM
A house is a home, not an investment.
Annette S December 05, 2011 at 05:08 AM
fair enough Mike, but a good majority of buyer's look at it as an investment, to each his own..I respect your sentiment.
Doug Radtke January 20, 2012 at 09:09 PM
Mike, anything that requires a 30+ year commitment to pay off sounds like an investment in my book. That is, unless you're the type that likes to burn cash with reckless abandon. If that's your thing, be my guest.
Mike Swire June 06, 2012 at 02:44 PM
Story on NPR this morning: http://www.npr.org/blogs/money/2012/06/06/154344781/why-does-the-mortgage-interest-tax-deduction-still-exist

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