Republicans look to eliminate mortgage tax break

Republicans are set to officially oppose the mortgage-interest tax deduction, Bloomberg News reported, a policy seen as crucial to the health of the housing market. Party platform drafters, working to prepare the platform ahead of next Monday’s Republican National Convention, are eliminating the measure as part of what party leaders say is an effort to make the tax code “simple, flat and fair.”

The elimination of the mortgage tax policy allows presidential candidate Mitt Romney to follow through on his plan to lower corporate tax rate to 25 percent from 35 percent and to cut individual income taxes by 20 percent. To ensure those reductions don’t diminish U.S. tax revenue Romney must eliminate $320 billion worth of tax breaks, according to Tax Policy Center data. In 2009, mortgage-interest deductions cost the U.S. $80 billion, a study by the Congressional Budget Office showed.

“What we have now on tax reform and tax relief is a very powerful statement of principle” that is “in favor of a tax system that is simple, transparent, flat and fair,” Jim Talent, a former senator of Missouri and a Romney campaign adviser, told Bloomberg.

However, some platform drafters noted that the elimination of the mortgage-interest tax deduction would be a blow to the housing market, the middle class and those aspiring to become middle-class Americans.

Meanwhile, the platform also calls for a constitutional amendment to outlaw all abortions, institutional audits of the Federal Reserve, no recognition of civil unions for gay couples and a two-state solution in the Middle East. [Bloomberg] — Adam Fusfeld