WASHINGTON – May 16, 2013 – In 1986, a tax reform battle
started slow but eventually caught fire and led to major income tax code
changes, according to Jeffrey Birnbaum, a long-time Washington journalist who
wrote about the 1986 tax reform battle in an award-winning book, “Showdown at
Gucci Gulch.”
Birnbaum talked about threats to the mortgage interest deduction at the National Association of Realtors® (NAR) 2013 Midyear Legislative Meetings & Trade Expo. He said it’s a mistake to assume a partisan Congress won’t take on tax reform later this year; and if they do, the mortgage interest deduction and other tax incentives important to real estate could come into play.
“Don’t count out the chances of tax reform,” Birnbaum told hundreds of Realtors. “It could start out slow and could gain momentum.”
Birnbaum noted that both Democrats – including President Obama – and Republicans have said they would like to overhaul the tax code, and although partisan differences have become a stumbling block to members’ ability to reach consensus on many issues, there’s an unusual dynamic at work in the two tax-writing committees that could end up being a game-changer. That dynamic is the retirements of Rep. Dave Camp (R-Mich.), chair of the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.), his counterpart on the Senate Finance Committee.
Both legislators have said they want to move forward with tax reform before they go, and the fight over raising the federal debt ceiling, which is expected this fall, provides a possible trigger event for them and other lawmakers to come to an agreement on big tax changes, according to Birnbaum.
What’s more, the federal budget deficit is coming down more quickly than lawmakers expected, thanks to the improving economy and the across-the-board spending cuts under the “sequester” that took effect at the beginning of this year. It’s possible the government could go from a $1.1 trillion deficit this fiscal year to a surplus by fiscal year 2015, which would ease the give-and-take on tax and other issues, making it easier for lawmakers to agree on reform.
Birnbaum said that the sheer size of the mortgage interest deduction’s cost makes it a high profile issue. He says lawmakers will see the MID as a big place to find money that can offset tax cuts.
And while all homeowners could be impacted, those in higher-income households and those with second homes face the greatest risk.
“No one should take (the mortgage interest deduction) for granted,” he said.
In addition, the capital gains tax rate applied to the carried interest of general partners in investment partnerships will also be on the table, as will deductions for charitable contributions and employer-sponsored health plans.
Birnbaum said it’s important for Realtors to stay engaged in the discussion, because “you don’t want to be caught flat-footed if Congress overreacts,” which it often does.
Source: Robert Freedman, Realtor® Magazine
Birnbaum talked about threats to the mortgage interest deduction at the National Association of Realtors® (NAR) 2013 Midyear Legislative Meetings & Trade Expo. He said it’s a mistake to assume a partisan Congress won’t take on tax reform later this year; and if they do, the mortgage interest deduction and other tax incentives important to real estate could come into play.
“Don’t count out the chances of tax reform,” Birnbaum told hundreds of Realtors. “It could start out slow and could gain momentum.”
Birnbaum noted that both Democrats – including President Obama – and Republicans have said they would like to overhaul the tax code, and although partisan differences have become a stumbling block to members’ ability to reach consensus on many issues, there’s an unusual dynamic at work in the two tax-writing committees that could end up being a game-changer. That dynamic is the retirements of Rep. Dave Camp (R-Mich.), chair of the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.), his counterpart on the Senate Finance Committee.
Both legislators have said they want to move forward with tax reform before they go, and the fight over raising the federal debt ceiling, which is expected this fall, provides a possible trigger event for them and other lawmakers to come to an agreement on big tax changes, according to Birnbaum.
What’s more, the federal budget deficit is coming down more quickly than lawmakers expected, thanks to the improving economy and the across-the-board spending cuts under the “sequester” that took effect at the beginning of this year. It’s possible the government could go from a $1.1 trillion deficit this fiscal year to a surplus by fiscal year 2015, which would ease the give-and-take on tax and other issues, making it easier for lawmakers to agree on reform.
Birnbaum said that the sheer size of the mortgage interest deduction’s cost makes it a high profile issue. He says lawmakers will see the MID as a big place to find money that can offset tax cuts.
And while all homeowners could be impacted, those in higher-income households and those with second homes face the greatest risk.
“No one should take (the mortgage interest deduction) for granted,” he said.
In addition, the capital gains tax rate applied to the carried interest of general partners in investment partnerships will also be on the table, as will deductions for charitable contributions and employer-sponsored health plans.
Birnbaum said it’s important for Realtors to stay engaged in the discussion, because “you don’t want to be caught flat-footed if Congress overreacts,” which it often does.
Source: Robert Freedman, Realtor® Magazine
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