The President’s National Commission on Fiscal Responsibility and Reform voted 11-7 in support of the groups official report on Friday. While supported by Democrats and Republicans, it’s three votes short of the 14 vote mark required to send the report to Congress.
The commission recommended scaling back the mortgage deduction which currently stands at $1 million for principal and secondary residences, plus an additional $100,000 for home equity. The new proposal would make a 12% non-refundable tax credit available to all taxpayers and cap it at $500,000 on their primary residence.
The proposal was met with resistance from real estate and mortgage trade groups like the Mortgage Bankers Association, National Association of Realtors, and the National Association of Home Builders (NAHB).
“While we commend the hard work of the President’s deficit commission to improve the nation’s fiscal situation, this is simply the wrong approach to the problem. It would put a huge tax increase on millions of middle-class home owners by eliminating or devaluing the mortgage interest deduction,” said Bob Jones, Chairman of the NAHB. “The consequences would be devastating for housing and the economy. This would further depress home prices, putting countless more home owners underwater and triggering a new wave of foreclosures.”
The NAHB even launched a new website SaveMyMortgageInterestDeduction.com to provide the latest information on the threat to the mortgage interest deduction.
The President praised the work of the commission and vowed to study its recommendations closely as he puts together his 2012 budget proposal. He also urged Democrats and Republicans to work together to solve the country’s deficits and debt.
“Jobs and growth are our most urgent need,” Obama said, on a day when the Labor Department reported a rising unemployment rate. “But if we want an America that can compete for the jobs of tomorrow, we simply cannot allow our nation to be dragged down by our debt. We must correct our fiscal course.
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