Bush Could Postpone Push for Tax Overhaul

By: Richard Keil; Ryan J. Donmoyer: REALTOR® Magazine Online
With a weak reaction from the public and lawmakers preoccupied with other priorities, including Katrina cleanup and the war in Iraq, President George W. Bush could postpone efforts to implement tax code changes, analysts say.

Bush might try to drum up support for the changes in the coming year, with an eye toward implementation in 2007 or 2008, some analysts say.

The most controversial provision would change the mortgage-interest deduction into a tax credit, potentially costing homeowners thousands of dollars in lost tax benefits.

According to Clinton Stretch, Deloitte & Touche LLP tax policy director, the delay would better position Republicans looking to be re-elected next year by allowing them to campaign for a tax overhaul that focuses on simplification and fairness.

[Editor's note: The political implication of changing MID and other key tax provisions will be a consideration in whether the U.S. Department of Treasury recommends President Bush adopt the tax reform recommendations, analysts say. Treasury Secretary John Snow, responding to questions about the reform recommendations in the President's Federal Tax Reform Advisory Panel report, said that while the panel did not assess the political viability of its recommendations, his agency will do so when it makes its recommendations on the provisions to President Bush.

Analysts view Snow's remarks as an indirect acknowledgement of the hurdles created by the proposed changes to MID and elimination of the deduction for state and local taxes. The NATIONAL ASSOCIATION OF REALTORS® strongly opposes changes that could hurt property values and home sales, including changing MID to a tax credit. More from NAR on the proposed changes is available online.]