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Tags: Republican | Mortgage | Tax | Deduction

Republican Platform Won’t Spare Mortgage Tax Deduction Cut

Tuesday, 21 August 2012 12:06 PM EDT

Republican platform drafters refused to put their party on record for preserving the mortgage-interest deduction, giving Mitt Romney more flexibility to promote his plan to lower tax rates paid by corporations and the wealthiest Americans without increasing the federal debt.

The platform committee, meeting in Tampa, Florida, in advance of the Aug. 27 Republican National Convention, Monday defeated an amendment on the mortgage deduction issue by a show of hands as it moved toward Tuesday’s scheduled completion of the draft statement of positions the party will offer voters in the November election.

The document, which was also amended to include a call for Federal Reserve audits, will be submitted next week for approval by the full convention.

The mortgage interest vote was a shift in Republican policy from four years ago, when the party platform said that “because affordable housing is in the national interest, any simplified tax system should continue to encourage homeownership, recognizing the tremendous social value that the home mortgage interest deduction has had for decades.”

Romney, the presumptive Republican presidential nominee, has proposed lowering corporate and individual income-tax rates and eliminating some tax breaks, without specifying which ones. A Romney campaign adviser, former Senator Jim Talent of Missouri, urged delegates to reject the mortgage-interest plank to avoid muddying the call for a simpler tax system.

Powerful Statement

“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,” Talent said. Platform drafters should “avoid getting into specific areas of the code” because “that would take away from the power” of the existing statement, he said.

Others debating the platform disagreed, saying an endorsement of the mortgage-interest tax deduction would send a helpful signal to a housing market still trying to recover from the recession.

“The mortgage-interest deduction is high on the list for all Realtors,” said April Newland, a convention delegate from the Virgin Islands. She termed it “the last vestige of why people would be interested in buying a home.”

Important Statement

John Sigler, a delegate from Delaware, said platform backing for the mortgage-interest deduction would be “a very important policy statement” of the party’s commitment to “supporting the middle class” and “the uplifting of those that would like to enter the middle class” through homeownership.

Kevin Erickson, a delegate from Minnesota, countered that exempting the deduction would undermine the party’s push for a rewrite of the tax code.

“Comprehensive tax reform means the entire thing,” Erickson said “If it’s a fair, flat tax, we don’t need the deduction.”

In another departure from past Republican policy, the platform panel’s economy subcommittee included a provision calling for an annual audit of the Fed, which regulates banks and sets interest rates.

Romney said yesterday that “the Federal Reserve should be accountable” so he “would like to see the Fed audited” in a way that preserves its independence. He hasn’t endorsed legislation the House passed last month to have the Government Accountability Office, a watchdog of Congress, audit the Fed, including monetary policy deliberations.

Appropriate Flexibility

Virginia Governor Robert McDonnell, the panel’s chairman, told reporters the passage is drafted to ensure that the annual audit would be conducted “with the appropriate flexibility that it does not impair the independence of the Federal Reserve.” McDonnell said that “many of us believe” that, when “there is more sunshine and more accountability, it is a good idea.”

The Romney campaign today persuaded delegates to reject proposals to remove references to a Palestinian state from the party’s plank on Israel.

The plank says Republicans “envision two democratic states — Israel with Jerusalem as its capital and Palestine — living in peace and security.”

Altering that wording would amount to “removing the language that states the policy” that the Israeli government of Prime Minister Benjamin Netanyahu “has committed himself to over and over again,” said Talent.

Gays in Military

The platform doesn’t advocate reviving the “Don’t Ask, Don’t Tell” policy abandoned after almost two decades by President Barack Obama, said Abbott James, an Oakton, Virginia, gay Republican who attended the session. The 2008 platform referred to “the incompatibility of homosexuality with military service.”

The platform committee today rejected a motion to recognize civil unions for gay couples.

The Democratic Party’s 2012 proposed platform was amended on Aug. 11 to include a plank supporting same-sex marriage.

To overhaul the tax code, Romney has proposed lowering the corporate tax rate to 25 percent from 35 percent and reducing individual income-tax rates by 20 percent. He has said that eliminating tax breaks for the highest-income Americans would help pay for the lower rates. He would also eliminate the estate tax and the alternative minimum tax. The former Massachusetts governor hasn’t specified which tax breaks he would eliminate.

Ending Tax Breaks

To keep his proposed tax-rate cuts revenue neutral, Romney would have to eliminate $320 million worth of tax breaks, about 30 percent of the total, the nonpartisan Tax Policy Center said in a study released in Washington last month.

The nonpartisan, Washington-based Congressional Budget Office said that the mortgage-income tax deduction cost $80 billion in 2009.

The vote on the mortgage-interest issue came after the platform panel approved an amendment calling for the preservation of deductions for charitable contributions.

Talent said advocating for the charitable deduction contradicted the principle of a simpler tax code. “I felt that was an exception that we could make without getting into other specifics,” Talent said in an interview.

Tax simplification is also a stated goal of House Republicans, who last month passed a measure setting up procedures to debate and adopt overhaul legislation.

U.S. Representative Marsha Blackburn of Tennessee, a co-chairwoman of the platform committee, said she anticipates that Romney will offer soon a more specific tax-overhaul proposal, possibly during the convention.

The panel, formally known as the Committee on Resolutions, is scheduled to vote tomorrow on the entire platform to be submitted to the full convention.

© Copyright 2023 Bloomberg News. All rights reserved.

Tuesday, 21 August 2012 12:06 PM
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