A Presidential Advisory panel recently recommended reducing deductions for mortgage interest and eliminating those for state and local taxes. The tax overhaul is at the top of President George Bush’s second term agenda.

"The proposal is a classic example of shifting wealth from the middle class to the wealthy by funding tax cuts for the wealthy through elimination of tax breaks for the middle class,” said Legislator Abrahams. “The rich have capital gains tax cuts and the AMT cut, and the middle class loses its greatest tax breaks -- the local real estate tax and mortgage interest write offs.”

LIBOR President Marian Fraker-Gutin said, “The housing industry, which has driven and sustained the economy for the last five years, could be seriously impacted by the proposed tax reforms. By reducing the deduction on mortgage interest and property taxes, as well as state and local taxes, the financial stability of many Long Island families could be grossly compromised. Moreover, consumers’ nest eggs will be jeopardized because much of investment for retirement is tied to the equity consumers have in their homes.”  

In letters to U.S. Senator Hillary Clinton, U.S. Senator Charles Schumer, Congressman Gary Ackerman, Congressman Tim Bishop, Congresswoman Carolyn McCarthy and Congressman Steve Israel, the Nassau Majority Legislators commended the federal representatives for the tough stance they have already taken against the President’s proposed tax reforms.

“Limiting the mortgage interest deduction for homes under $300,000 when the average house in Nassau County is worth $500,000 puts the dream of homeownership that much farther out of reach for Long Island families,” Abrahams added.  

Currently, an interest payment on up to one million of first mortgage debt is deductible. According to published reports, the panel is considering recommending that the figure be lowered to $300,000. The median price of homes is $500,000 in Nassau County and in Suffolk County it is $400,000.