Home > 2011 > Mortgages > With Debt Concerns Looming, Some Advocates Axing Mortgage Tax Break

With Debt Concerns Looming, Some Advocates Axing Mortgage Tax Break

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Republicans and Democrats are firmly entrenched in their positions on the debt ceiling debate that’s currently raging in Washington, but a group of economists say one way to save a lot of money is to eliminate a tax deduction for mortgage interest payments, according to a report from Miller-McCune. The savings for the government would be considerable, as this break saved American consumers $470 billion on their annual federal tax bills in 2008.

Experts say that deduction will reduce the government’s income by about $100 billion this year, the report said.

[Related: If the Debt Ceiling Isn’t Raised, Your Credit Card’s Interest Rate Will Be]

“That’s about twice the size of the budget request for the Department of Housing and Urban Development,” Seth Hanlon, director of fiscal policy at the Center for American Progress. “In a sense, it’s twice as big as all of our other housing programs combined.”

However, it may not simply be that easy, the report said. Many would view the move as increasing taxes, an untenable change to meet the goals of altering the debt ceiling, and lawmakers may be fearful of the resultant backlash from their constituents.

Despite the concerns, Republican lawmakers are confident that they’ll be able to get the required number of votes to pass a GOP-sponsored bill, according to a Reuters report.

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Image: Todd Baker, via Flickr.com

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