The Joint Select Committee on Deficit Reduction—better known as the Super Committee—has begun to consider options for raising revenue and reforming the U.S. tax code to address the nation’s structural debt crisis. At a September 22 hearing, Co-Chair Representative Jeb Hensarling (R-TX) said the Committee could take many actions but cautioned that its success is dependent on “saving and reforming social safety net programs that are beginning to fail.”
Co-Chair Senator Patty Murray (D-WA) urged her colleagues to include revenues in its deliberations because “spending cuts alone aren’t going to put Americans back to work or put our budget back in balance.” She said Congress has left untouched many corporate and individual tax issues raised by the hearing’s sole witness, Thomas Barthold, chief of staff of the Congressional Joint Committee on Taxation.
The nation’s second largest tax expenditure, the mortgage interest deduction for owner-occupied homes, is expected to cost $484 billion from 2010 through 2014. Noting the committee has not discussed this expenditure in-depth, Senator Murray questioned the sense in continuing mortgage interest tax breaks on yachts and other types of second homes.
To offset spending contained in his American Jobs Act, President Obama has proposed reducing the value of itemized deductions and other tax preferences to 28% for families with incomes of more than $250,000; this provision could impact the mortgage interest deduction benefit to wealthy households. He also has proposed letting the 2001 and 2003 tax cuts expire and increasing the fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee new mortgage loan repayment.
To view a webcast of the September 22 hearing and read related materials, go to: http://deficitreduction.senate.gov/public/index.cfm/hearings?ID=c286522b-744a-4d5f-8500-679aa10b1ff5