Proposal To Eliminate Deduction For Property Taxes Under Consideration In D.C.
If skyrocketing property taxes on Long Island weren't enough to give you nightmares, just wait. A government panel, appointed by President Bush, is expected to issue a report next month recommending changes to the Internal Revenue Code, including the ELIMINATION of the tax deduction for PROPERTY TAXES, and a limit on the home mortgage amount for which a deduction may be claimed.
Yes, take another look at that School Property Tax bill you recently received in the mail. As the law stands today, you can take the full amount of that tax, as well as County, Town and Village property taxes, as itemized deductions, somewhat easing the blow, and the tax burden. If the President and the GOP-controlled Congress have their way, that deduction will be gone, the tax bill being the bitter pill for homeowners alone to swallow, without corresponding relief.
"It is a dagger to the heart of the people on New York," Senator Charles Schumer told Newsday. [Tax reform proposal eliminates deduction of property taxes and limits size of interest on mortgage deducted.] "We will do everything in our power to defeat this pernicious proposal."
The panel's conclusions come as no surprise to the informed and enlightened, President Bush having made this draconian proposal before the 2004 election. The measure, if adopted, would impact most severely upon middle-class homeowners whose income is generated mainly by their pay checks. The well-to-do, yielding the bulk of their income through investments, would likely benefit owing to a proposed decrease in the Capital Gains tax. [Phew. For a minute there we thought "W" might have to sell the ranchette. Thankfully, the income generated by Dick Cheney's sale of all that Haliburton stock will be protected!]
Even if the panel's proposal is modified, there are likely to be changes to the tax Code that limit deductions on property taxes, at least partially, causing still further financial hardship to already hard-strapped Long Islanders.
Just think - $10,000+ in property taxes, and NO TAX DEDUCTION to show for it. Still have qualms about replacing the school portion of the Property Tax (accounting for some 60% of the property taxes you pay, based on the value of your house without regard to income) with a nominal local income tax ( based on your ability to pay, and still a direct deduction from the tax due on your federal tax return)? Perhaps you'd do well to think again!