President Bush’s Advisory Panel on Federal Tax Reform next week is likely to propose a change in the deduction for home-mortgage interest that, if adopted by Congress, would have a drastic impact on regions with high housing prices, media reports said.
In a meeting Tuesday, the panel agreed to recommend lowering the limit, perhaps to the maximum mortgage that can be guaranteed by the Federal Housing Administration, according to reports.
Such a plan is not likely to pass Congress, reports said, but it could spark interest in changing the mortgage-interest deduction.
The nine-member advisory panel, appointed by President Bush, has been meeting since February to discuss ways to reform and simplify the nation’s tax laws.
The panel has been directed to submit to the Secretary of the Treasury a report containing revenue neutral policy options for reforming the Federal Internal Revenue Code not later than Nov. 1, 2005.
Bush asked the panel to recommend ways to simplify federal tax laws to reduce the costs and administrative burdens of compliance with such laws, share the burdens and benefits of the Federal tax structure in an appropriately progressive manner while recognizing the importance of home ownership and charity in American society, and promote long-run economic growth and job creation.
Next Tuesday, it will meet one last time and prepare a formal proposal, of which the mortgage-interest deduction is one part.
Real estate and mortgage experts give the panel’s mortgage-interest proposal, as discussed on Tuesday, little chance of passing, reports said.
“It’s a trial balloon,” said Doug Duncan, chief economist of the Mortgage Bankers Association.
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