Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 12, 1995 TAG: 9506130019
SECTION: EDITORIALS PAGE: A-6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Let's hope it does. It's a good idea.
Notwithstanding sky-is-falling alarms sounded by lobbyists and other interested parties, no one was talking about eliminating mortgage-interest deductions. Packwood merely proposed to limit them, to loans of $250,000 or less.
Is the mortgage on your house (or homes) more than $250,000? Then you'd have something to worry about.
As it is, Americans who own $500,000 residences and $500,000 vacation homes are enjoying annual tax deductions of $80,000 a year. That's revenue the government has to get from somewhere else.
In fact, 97 percent of home loans are for less than $250,000, and would fall under Packwood's limit. Indeed, three-fifths of homeowners do not even make use of the deduction. Yet, of the $60 billion in tax benefits that do result every year from the deduction, fully $10 billion goes to the 3 percent of people who have taken out mortgage loans of more than $250,000.
If you cap the deduction at $250,000, some of these people might buy smaller homes and vacation villas. But they'll hardly be forced into public housing. And it's hardly a given that, as the president of the Roanoke Valley Association of Realtors warned in these pages Sunday, "The American dream of home ownership [would] vanish in the face of an inevitable housing recession."
The construction and finance lobbies have succeeded this time in blocking Packwood's proposal, which would have produced $52 billion in deficit-reduction over the next five years. These interests remain influential, in part because they give a lot of money to the political parties and members of Congress.
Even so, it's hard to imagine so sensible a proposal not being revived sooner or later.
by CNB