Bush Tax Panel Plan Hurts California Homeowners
WASHINGTON “ Congressman Brad Sherman said Tuesday that Californians would bear the brunt of higher taxes on middle-class homeowners under a White House panels plan to severely curb mortgage interest deductions.
œIt is not fair to pile a bigger tax load on the backs of middle-class homeowners in the San Fernando Valley in order to preserve tax breaks President Bush has given to the wealthiest Americans, said Sherman, cosponsor of a House resolution that denounces changing the mortgage deduction.
The President's Advisory Panel on Federal Tax Reform recommended limiting the mortgage deduction as part of a proposal to streamline the current income tax code.
In another sharp blow to California taxpayers, the panel urged repealing the federal deduction for state and local taxes. That proposal would cost Californians $13 billion more a year in federal taxes, California Treasurer Phil Angelides has estimated. œTaking away the federal deduction would be a bitter pill for Californians whose state income tax rate is one of the highest in the country, Sherman said. œIt would cost Californians more than taxpayers from just about anywhere else.
Under the home mortgage proposal, the deduction would be turned into a credit equal to 15 percent of the mortgage interest paid. The current $1 million limit on mortgages eligible for the tax break would shrink to the average regional price of housing, ranging from $227,000 to $412,000.
In the San Fernando Valley, the median price of a previously-owned home sold in September was $590,000, according to the Southland Regional Association of Realtors. œWe have a lot at stake in preserving the deduction for home mortgage expenses, Sherman said.
A tax overhaul package that preserves tax cuts for the top 2 percent of Americans is expected to top the agenda of congressional Republicans next year as they search for issues to bolster their reelection chances. œThe White House and Republicans on Capitol Hill want a tax hike on people who work so they can preserve tax cuts for people with real wealth, Sherman said. œThis hog wont fly.