One of Obama’s proposals is to alter the mortgage interest deduction so that no matter the tax bracket, the deduction hits at the 28% bracket. Previously, if you were in the 33% or 35% brackets, you could deduct interest at that bracket.
The change is not enormous – the deduction is capped on the principal amount of $1mm, so change is at most $4,000 or so for a family earning over $210,000/year – but, as mentioned previously, it scares the pants off the realtors and house builders.
They know they cannot just come out and say “we really like the subsidy.” They need to couch it in terms of fighting for the common man – which is the last thing they really want to do. So check out this press release from the National Association of Home Builders:
At this critical point in the recession, we should be doing everything we can to stimulate demand in housing and avoid proposals that would reduce housing affordability and further destabilize prices.
Quick question: if you want to make something more “affordable,” do you raise or lower its price?