Wednesday, June 25, 2008

CBPP Criticizes New Legislation

The Center on Budget and Policy Priorities recently criticized legislation that the United States Senate is currently considering. Below is a snippet from the article, you can read the full text at

Legislation that the Senate is considering in response to the ongoing foreclosure crisis (H.R. 3221) includes a provision that would allow non-itemizers to deduct property taxes up to an amount of $500 for an individual and $1,000 for a couple. It would deny the deduction, however, to residents of any locality that raises its property tax rate between the time of the enactment of the legislation and December 31 of this year. An exemption from this denial is granted to residents of some — but not all — localities that raise property tax rates, depending on how and why the rates are raised.

By preventing localities from raising tax rates to help compensate for shrinking property tax revenues resulting from declining home values, the provision could force many localities to cut police, schools, and other vital public services. It also would improperly interfere with local taxing powers and set a precedent of discriminating among localities on the basis of their method of enacting local property tax changes. Finally, it likely would be impossible for IRS to administer this complex provision.

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