MBA Opposes White House Effort on Deductions

The Mortgage Bankers Association said it will oppose a White House budgetary proposal to reduce itemized deductions, a measure that includes caps on write-offs for mortgage interest paid by high wage earners. In a new statement, the trade group said such a measure "would have a negative impact on the housing market, particularly in high cost states like California and New York." The White House is proposing a cap on mortgage interest deductions for taxpayers reporting income above $250,000 (joint) and $200,000 (single). In years past other administrations — usually Republicans — have tried to scale back the mortgage interest deduction but with little luck. "Reducing the federal deficit is vital to the long-term health of the U.S. economy and our industry," said MBA chairman Robert Story. "However, we believe it can and should be done without negatively impacting the already-fragile housing market. Limiting the mortgage interest deduction and imposing additional taxes on lenders will only make economic recovery more difficult." The trade group also opposes a proposal to tax "carried interest" at ordinary tax rates (as opposed to the capital gains rate, as it is taxed now), because it thinks the measure would discourage capital formation for lending.