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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Elroy Jetson who wrote (40511)11/2/2005 11:11:19 PM
From: mishedlo  Read Replies (1) of 116555
 
The biggest "Revenue Neutral" mechanism behind Sen. Connie Mack's tax changes is the removal of the Federal subsidy of State taxes. State taxes would no longer be deductible from your Federal Taxes. While most people don't itemize deductions, those who do itemize, pay most of the State taxes.

Its similar to the way that Reagan pushed more of the cost for Medicare onto the States.

The easiest way to "cut spending" is to shift those costs onto someone else's budget.

The individual home mortgage deduction is capped, and changed into a credit - that part is neutral.

But the limitation on mortgage deductions hits large real estate owners quite heavily.

Thanks
Is state income tax that big a deal?
It would seem like that would hit the upper income brackets the most. If so it is probably more fair than other things. OTOH dividend cuts seem to benefit upper income players the most. I would find this one more tolerable if they capped that as well.

as for But the limitation on mortgage deductions hits large real estate owners quite heavily, I assume you mean in terms of "mortgage size" as opposed to real estate wealth. In that regard how is someone with a $2 Million property owing only $200,000 on it affected? No change? A benefit? A loss?

Mish

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