Although there have been effectors recently in congress to reduce the tax deduction for mortgage interest, the cause is finding little support in Congress. President Obama’s newest budget proposal aimed to shrink deductions for mortgage interest, property taxes, charitable contributions for married couples earning more than $250,000, or individual taxpayers earning more than $200,000 per year.
But the proposal has gained no traction in Congress so far. Members from both parties are concerned about how it would affect both the housing market and charitable contributions, says Matthew Beck, a spokesman for the Democratic majority on the House Ways and Means Committee.
The administration believes the proposal would reduce the deficit and "distribute the cost of government more fairly among taxpayers of various income levels," says a Treasury spokeswoman.
But lobbyists for the real-estate industry say scaling back the deduction would hurt demand for housing at a time when the market remains fragile. "It seems very counterintuitive to impose this kind of pain on an industry that's already suffering more than any industry in America," says Jerry Howard, chief executive of the National Association of Home Builders.
