Monday, August 27, 2007
WaPo: Carbon Tax Bill Would Eliminate Mortgage Interest Deduction for "McMansions" -- Homes Over 3,000 Square Feet
Tax Deduction Under Fire for "McMansions," by Kenneth R. Harney:
To add to the mortgage meltdown miseries, the credit panic, the plunging home sales and the rising foreclosures, here's a new worry: a proposed cutoff of mortgage-interest tax deductions for houses with more than 3,000 square feet.
One of Capitol Hill's most experienced and most powerful legislators is drafting a "carbon tax" bill that would do precisely that. The chairman of the House Energy and Commerce Committee, John D. Dingell (D-Mich.), expects to introduce comprehensive climate-change legislation when Congress returns next month. Besides imposing hefty new federal taxes on gasoline, the forthcoming bill would, in Dingell's words, seek to "remove the mortgage interest deduction on McMansions -- homes over 3,000 square feet."
Dingell said he recognizes that such a proposal will spark much criticism, but he also said it is essential to reducing carbon emissions by 60% to 80% by 2050. "In order to address the issue of climate change, we must address the issue of consumption," Dingell said in talking points prepared for town-hall discussions of the legislation. "We do that by making consumption more expensive." ...
[R]eal estate and building groups were quick to offer critiques. Lawrence Yun, senior economist for the National Association of Realtors, produced preliminary estimates that ending mortgage-interest tax deductions for all single-family dwellings larger than 3,000 square feet would result in a national median-house-price decline of 4 percent on all homes, not just large houses. Yun said there are at least 10.4 million single-family houses with interior areas of 3,000 square feet or more, about 15% of the nation's owner-occupied housing stock. Dingell's plan could also push up foreclosures because every 1% decline in median price leads to an additional 70,000 foreclosures.