How to Pay for the Obama Jobs Bill? Answer: Cut the MID
To pay for the President's $450 billion jobs bill, the White House budget office is proposing to reduce the amount of mortgage interest that homeowners can deduct from their income taxes.
A married couple making more than $250,000 a year who paid $10,000 in mortgage interest, and deducted $3,300 from their taxes in 2010, would only be able to deduct $2,800 starting in 2013 under the pay-for proposals President Obama has sent to Congress.
An Office of Management and Budget summary shows the revenue raising proposals includes similar haircuts on deductions for property taxes, state and local taxes and charitable donations.
"There's a limit on itemized deductions and certain exemptions for individuals who earn over $200,000, and families earning over $250,000. That limitation raises roughly $400 billion over 10 years," OMB director Jack Lew told reporters this week.
The haircut on the mortgage interest deduction "falls disproportionately on middle class families that live in high cost areas," according to National Association of Home Builders economist Robert Dietz. NAHB opposes limiting the deduction.
Dietz noted that these tax proposals are not new and that Congress has ignored them in the past.