Senators Float Mortgage Interest Deduction Proposal

*_CORRECTION: The article previously projected that homeowners could see $1.2 million in tax hikes over the next 10 years. It has been changed to $1.2 trillion. A NAR statement has also been added._*

Mortgage interest rate deductions, treasured by homeowners for their help with ownership and health insurance, may soon get the axe, as lawmakers struggle to raise revenue and gain the upper hand on the multi-trillion-dollar deficit. If a Senate budget plan works its way to the House, homeowners may see their taxes spike over 10 years, according to news reports.

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The so-called ├â┬ó├óÔÇÜ┬¼├àÔÇ£Gang of Six,├â┬ó├óÔÇÜ┬¼├é┬Ø an informal group comprised by three Democrats and three Republicans, moved forward with a ""proposal"":http://www.kaiserhealthnews.org/~/media/Files/2011/A%20BIPARTISAN%20PLAN%20TO%20REDUCE%20OUR%20NATIONS%20DEFICITS.PDF that would slash mortgage interest rate deductions.

The proposal projects savings by as much as $1 trillion in revenues and deficit cuts by some $4 trillion over the next decade. According to the ""_Associated Press_"":http://www.kansascity.com/2011/07/20/3025945/bipartisan-tax-plan-trims-mortgage.html, the nation's homeowners could see tax hikes by up to $1.2 trillion overall over the next 10 years.

The proposal incorporated elements from the Bowles-Simpson fiscal commission.

It now awaits action from congressional committees, which would need to incorporate the proposal in legislation.

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In a ""statement"":http://www.realtor.org/press_room/news_releases/2011/07/tax_benefits, Lawrence Yun, chief economist at the ""National Association of Realtors"":http://www.realtor.org/, said that homeowners, already on the federal income tax hook to the tune of 80 to 90 percent, may see their taxes rise to 95 percent over the next decade if the proposal moves forward.

""One thing that is indisputable is that eliminating the MID will lower the homeownership rate in the U.S.,├â┬ó├óÔÇÜ┬¼├é┬Ø Yun said.

├â┬ó├óÔÇÜ┬¼├àÔÇ£While we must ensure that the conditions that led to the artificially inflated home ownership rate of the bubble years do not resurface, we also need to create the conditions for sustainable home ownership, which has been shown to provide myriad social benefits for families and communities,"" the NAR economist added.

According to the ""_Washington Post_"":http://www.washingtonpost.com/politics/federal-government/bipartisan-tax-plan-targets-breaks-for-mortgage-interest-health-insurance-charitable-gifts/2011/07/20/gIQAkjsOQI_story.html, Donald Marron, director of the ""Urban-Brookings Tax Policy Center"":http://taxpolicycenter.org/, called the proposal ├â┬ó├óÔÇÜ┬¼├àÔÇ£a confluence of several factors. First, it's such a large tax break. And the tax treatment of housing is much more favorable than we provide for most other investments people undertake.""

Speaking to _MReport_, he says that it is uncertain whether the proposal, as is, will make it into legislation before either house of Congress.

├â┬ó├óÔÇÜ┬¼├àÔÇ£You never know what happens in the backrooms of Congress,├â┬ó├óÔÇÜ┬¼├é┬Ø he says.

├â┬ó├óÔÇÜ┬¼├àÔÇ£I think this is an attempt to find a middle ground on taxes that emphasizes keeping rates low and broadening the base as much as possible, and I think that├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós a very positive aspect of it,├â┬ó├óÔÇÜ┬¼├é┬Ø said Eugene Steuerle, a former ""Treasury Department"":http://www.treasury.gov/Pages/default.aspx deputy assistant secretary, also with the Urban Institute, according to the _Post_.

Not many Americans would agree with the reductions, according to a ""_New York Times_/CBS poll"":http://www.nytimes.com/2011/06/30/business/30poll.html?_r=1&scp=1&sq=homeownership&st=cse.

The poll, released three weeks ago, held some 90 percent of Americans opposed deductions in mortgage interest rates, alongside other numbers reflecting that most of the nation├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós homebuyers valued homeownership as an important asset.

Marron says lawmakers will likely leave mortgage interest rate deductions out of any legislation going before Congress next week.