Tax Reform Panel Delivers a Harsh Blow

A presidential commission report proposing a radical overhaul of the nation’s tax code was blasted by NAHB as “the biggest tax hike for homeowners ever proposed” after it was presented on Nov. 1 to Treasury Secretary John Snow.

Developed by the President’s Advisory Panel on Federal Tax Reform over the past 10 months, the tax overhaul would collapse six income brackets into four, eliminate the Alternative Minimum Tax and replace the popular mortgage interest deduction with a considerably more limited 15 percent tax credit. Also gone would be deductions for state and local taxes and interest deductions for home equity loans and second homes. The panel recommended eliminating the Low Income Housing Tax Credit as well.

The panel’s recommendations will now be reviewed by the Administration, and if embraced by President Bush could be included in his State of the Union address in January.

Several parameters governed the panel’s final recommendation. The proposal had to be revenue-neutral, promote homeownership and charitable giving, and repeal the Alternative Minimum Tax, which will cost approximately $1.2 trillion over the next 10 years.

Though President Bush explicitly stated that one of the objectives was to devise a plan that would promote homeownership, NAHB believes the panel’s recommendations would do just the opposite by wiping out several major housing tax incentives in the current code.

The White House is under no obligation to follow the panel’s findings.
For analysis from NAHB's economists on how the new plan would increase the federal tax liabilities of homeowners, housing-related provisions of the tax panel’s proposal and related resources, visit www.nahb.org/taxreform or read the Nov. 7 issue of NBN Online.

For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8252. [ return to top ]