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  3. There may be nothing more American than the home-mortgage deduction which ca

There may be nothing more American than the home-mortgage deduction which ca

游客2023-12-22  21
问题     There may be nothing more American than the home-mortgage deduction which came into being in 1913— two years before the New York Yankees wore pinstripes. This deduction has helped make the American Dream affordable and has contributed to a run-up in the homeownership rate to 69% from 44% during World War II. In recent years, the mortgage deduction hasn’t just helped folks get into a house, it has given them the most valuable tool for managing their finances since the piggy bank: tax-deductible home-equity loans and lines of credit. Just try to find a rate on a credit card or construction loan that, after adjusting for taxes, comes to around 4%, as it does with home-equity borrowing. People have been tapping into this low-cost source of funds for college tuition, vacations and other spending that bailed us out of the last recession.
    Now they want to take it away. A presidential panel last week suggested eliminating the interest deduction on all types of home-equity borrowing and replacing it with a 15% tax credit for a principal residence. Is this lunacy? From the homeowner’s perspective, it sure seems like it.
    Lawmakers have toyed with curbing the mortgage deduction for 30 years, both for utilitarian reasons (to boost tax revenue) and philosophical ones (to make the tax code less favorable to the wealthy). Yet each time the idea has surfaced it has been swatted away amid public outrage and the battle cries of every real estate lobbyist not sunning at his second home on Fiji. This time the outrage may be even more shrill, given the fears of a real estate bubble about to burst. "We are raising the loudest possible alarms," said Tom Stevens, president of the National Association of Realtor, which along with the Mortgage Bankers Association and other industry players concludes that losing the deduction would drive home prices as much as 15% lower, sap consumer confidence and imperil the economy. "You could not pick a worse time to bring this up," says Edward Yingling, president of the American Bankers Association. "The housing market is already testy."
    Indeed, mortgage rates rose last week to 6.31% for the average 30-year, fixed-rate deal—the highest level in 16 months. With higher borrowing costs, mortgage applications have been falling and home prices have been leveling off in many markets. Taking away the mortgage deduction would further boost the cost of buying even proponents of scrapping the deduction concede that home prices would take a hit, though they say the brunt would be taken at the high end of the market-homes at $1 million and up.
    Yet from a broader economic perspective, dropping mortgage interest deductions has a certain appeal. For starters, it’s only one part of a program that would reform the tax code without changing the burden on the average American. It would raise some taxes only as much as it cuts others. The real target is the alternative minimum tax (AMT), designed years ago to prevent millionaires from avoiding tax, but now increasingly encroaching upon the middle class. Next year the AMT will raise the burden of 21 million taxpayers earning as little as $75,000. But to replace the $12 trillion that the tax would bring in over the next 10 years, something sacred had to go, and that’s where mortgage deductions come in. Of course, not extending the recent tax cut due to expire by 2010 (capital gains, estate, child credit) would do the same trick, economists say. But under the President’s orders, that option was off-limits.
    On some levels the mortgage deduction has outlived its usefulness, anyway. Homeownership in the US is among the highest in the world. Deductible mortgage interest appears to be subsidizing vacation homes and McMansions now, not entry-level housing. As a nation we are throwing so many resources at real estate that we may be under investing in other critical parts of the economy. While spending on homes in at a record 18% of GDP, our savings rate is nil and the stock market is going nowhere.
    But don’t worry: the proposal won’t get past the blueprints soon. "We all realize the home mortgage deduction is near and dear to the taxpayer," says James Poterba, an economist at MIT. who was on the panel. "But whenever we get to the moment of truth, Congress and the President are going to have to look at it. We believe we’ve provided important guidelines." In fact, the debate may have another, hidden benefit. If it stirs concern, maybe we’ll start to rethink our move-up plans, put our money someplace more productive—and gently let air out of the housing bubble before it’s too late. [br] Who among the following are against the presidential panel’s proposal to drop the interest deduction on home-equity?
选项 A、Congress and President.
B、Tom Stevens.
C、The author.
D、New York Yankees.
答案 B
解析
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