Another "ding-bat" idea from DC. Penalize owners of 3,000 sq ft houses

We now are being told of another brilliant idea coming from those with too much time on their hands serving in our federal government. We started with ethanol for vehicles when there is only one service station in CA that sells the E-85 fuel.

Our most recent “brilliant” idea comes from Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee. He plans to introduce a Bill to end the mortgage tax deduction on homes measuring over 3,000 square feet. Some are calling this the “McMansion” Bill which will hopefully reduce greenhouse gas emissions.

In a discussion about the real estate market in Orange County with Supervisor John Moorlach yesterday he called it “a train wreck in slow motion coming up.” We have all read that developers are slowing down plans for their high rise buildings in Anaheim and Irvine. John said “they (the developers) don’t know who is going to buy them.” He told us that “assessment appeals are up 50 percent from last year” and that “foreclosures have quadrupled in the past year.” Stated differently John said that “one out of every 359 O.C. homes are in foreclosure.”

So while “30 percent of the County economy is dependent on real estate” Representative Dingle is proposing a solution that will drive the market further down a very slippery slope.
While builders try to unload their current inventory of unsold homes we want to help them out by removing a buyer tax credit on larger homes. I find this to be very amusing and timely when President Bush just proposed a bail out for 80,000 subprime mortgage holders.
So for all those who purchased 3,000 square feet plus homes over the past 30 years, for which they are still paying off a mortgage, will they be grandfather protected?

The Washington Post recently reported that: “The interest deduction is one of the biggest tax benefits in the federal budget, according to the congressional Joint Tax Committee. Between fiscal 2006 and 2010, according to a committee study, federal revenue losses attributable to the mortgage-interest deductions are expected to total $402.7 billion.

Other federal studies have documented that the benefits of the write-off are heavily skewed toward higher-income taxpayers who have larger-than-average mortgages. “

The Post article reads that “home builders insist that they have “gone green” in recent years, and that houses constructed within the past decade are the tightest, most energy-efficient in history.'” My sense it that these larger new homes generate less greenhouse gas emissions that older 2,000 square foot homes but who am I to lower the bar as to who is to be punished.

So I guess this “ding-bat” idea is really to punish the wealthy while claiming it will reduce greenhouse emissions. All of those Hollywood moguls, producers, leading actors and sports stars living in these McMansions will really be hurt by losing this tax deduction? However, will it impact the greenhouse fix?
I’m betting it will not fly. What do you think?

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