The Marketplace Report: Bush Tax Reform Proposals
MADELEINE BRAND, host:
Back now with DAY TO DAY. I'm Madeleine Brand.
This week a presidential advisory commission proposed eliminating or reducing many tax deductions, and it didn't take long for politicians and special interest groups to come to the defense of their favorite tax breaks. Some influential business groups are especially critical of the commission's recommendations. Bob Moon joins us now from the "Marketplace" news bureau in New York.
And, Bob, what are the chances these recommendations will see any congressional action?
BOB MOON ("Marketplace"): Well, you know, Madeleine, the president suggested earlier this year that he wanted some bold and far-reaching recommendations, and that's what he got, but he's been conspicuously quiet on this report. His spokesman told reporters only that the president would be outlining initiatives with members of Congress sometime later.
This report was delivered to Treasury Secretary John Snow yesterday, and he said that this was just a starting place. He was taking the ball and that it was now the administration's turn to run with it. But the advisory panel clearly did anticipate a lot of the criticism that their work is already getting. The commission members wrote that reforming a tax code is a noble effort but--and I'm quoting here--"it requires political willpower." And, indeed, among the groups that are already attacking the various proposals: mortgage bankers, home builders, the life insurance industry, some retail groups. Some political observers are predicting that this is going to really need the full engagement of President Bush to make any progress.
BRAND: And what are some of the ideas that are receiving so much criticism?
MOON: One of the biggest is the recommendation to limit the deduction of interest payments on larger mortgages. That idea would work this way. One of the first--only the first $227,000 of a mortgage would be deductible, and you could classify that limit as the cheaper housing markets. The pricier locations, the cap would be around $412,000. That's aimed at limiting the deduction for the highest-income taxpayers. The way the law stands now you can write off interest paid on mortgages up to $1.1 million. Well, already the National Association of Home Builders is calling this idea the biggest tax hike for homeowners ever considered, and the idea also faces opposition from the National Association of Realtors, which is a very influential group in Washington.
BRAND: And what about the proposal to eliminate the deduction for state and local taxes?
MOON: Well, that could, indeed, be another flash point in this debate. The commission is suggesting abolishing the deduction for state and local taxes, and it might not mean much in states that have low taxes, but it would be very painful for taxpayers in such high tax areas as here in New York, for example, and in California. That very same idea came up last time there was a big revision in the tax code back in 1986, and it ended up being dropped under pressure from lawmakers from some of the higher-taxed areas.
Today in the "Marketplace" newsroom, we're revisiting some of the people we heard from in Katrina's immediate aftermath. How are they doing now two months out?
BRAND: Bob Moon of public radio's daily business show "Marketplace," and "Marketplace" is produced by American Public Media.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.