Yesterday, President Obama proposed $634 billion in new taxes on ‘wealthy’ Americans as well as cuts in government spending to pay for an expansion of the healthcare system. Among the tax increases will be a reduction in both the value of mortgage interest deduction and charitable contributions for folks in the highest tax brackets. Currently, households in the 33% and 35% tax brackets can claim deductions at those rates; however under Obama’s plan those deductions will be capped at 28%. If a household in the 35% bracket pays $10,000 in mortgage interest or makes a $10,000 contribution to charity, $3,500 in tax savings results. Under the new plan, tax savings would be capped at $2,800 effectively raising taxes without raising the tax rate.
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This week, President Obama unveiled his plan to help struggling homeowners stay in their homes. The plan, dubbed the “Mortgage Modification Plan”, offers incentives to borrowers and lenders to keep mortgages current.
Speaking this past week in Mesa, Arizona, Obama said the plan could help as many as 9 million homeowners stay in their homes by modifying loans or refinancing them into new mortgages. Obama also stated he would support rewriting bankruptcy laws to allow judges to reduce mortgage balances on outstanding mortgages to fair market value provided the debt is paid in accordance with a court ordered plan. Read more »
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Last week, after posting my long term prediction that the S&P 500 would go to 500, I received some feedback telling me what I could do with that crystal ball – although some were nicer and simply questioned my reasoning ability. Read more »
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