Mortgage Industry Trends

Will Tax Reform Affect the Housing Market?

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Will we see any meaningful tax reform any time soon? Maybe, but what impact might it have on the housing market and our economy? Everybody seems to have their opinions. What’s yours?

The problem as I see it is that the Republicans are working on tax reform to provide corporations and the so-called ‘middle class’ with some tax breaks. As this may decrease the current tax income, they are looking for offsets by eliminating certain current tax breaks.

That means that somebody needs to pay more taxes to offset the reductions that others get. Some will win, some will lose, and some will sing the blues.

Proposals include the potential to cut some current deductions like the mortgage interest deduction, state and local taxes, and student loan interest. Of course, those now using these deductions scream “no fair!”

Those in States charging higher real estate and income taxes will lose a larger federal tax deduction. Should they? Should the federal government, and all other taxpayers, pay to subsidize those states that choose to charge their residents these higher taxes? Shouldn’t those states be accountable for what they charge and spend?

What about the mortgage interest deduction? With the doubling of the standard deduction, will most homeowners still realize any major benefit from a mortgage interest deduction?

 

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The cry is that the rich and the big corporations will get the big breaks. By percentage, these entities may pay a lower percentage in federal taxes but a much higher dollar amount. To get some of the deductions that reduce their taxes, they need to spend or invest money somewhere.

That’s money that goes back into the economy. The more the wealthy and corporations pay in federal taxes, the less they put back into the economy. Is that good for the economy and personal taxpayers? Who benefits?

Maybe the issue is not to increase some taxes to offset cuts for others but to reduce spending. Now there’s a novel idea. I haven’t seen that in any of the proposals, from either Republicans or Democrats.

They can tinker with the current system all they want, but to truly reduce taxes, we need to reduce government spending. Neither business, nor the rich, nor the middle class can continue to carry the Country. Just look at the deficit as it continues to grow.

Government spending is out of control and a tax increase hidden in a tax cut ain’t gonna help in the long run.

It’s time for drastic action. Maybe it’s time for the flat tax. Everyone, including businesses, pays their fair share based on income. Taxpayers, States and the Federal government need to budget and operate accordingly.

Can it be done? Anything is possible once you put your mind to it.

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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