Senator Hutchison's Response to my Mortgage Interest Deduction Query.

Dear Friend:

Thank you for contacting me regarding the home mortgage loan interest deduction. I welcome your thoughts and comments.

Since 1913, households have been able to deduct the interest paid on home mortgage loans on their income tax returns. Homeownership is an essential part of the American Dream, and the mortgage interest deduction is very important to many Americans on the path to homeownership.

However, out-of-control spending has put the United States in a tenuous economic position. Over the past two years, the federal government has posted deficits of $1.4 trillion and $1.3 trillion, respectively. This increase in spending has put our nation’s debt on an upward trajectory. Our nation’s debt surpassed a historical $14 trillion benchmark in December 2010, and it continues to grow by more than $4 billion per day, on average.

With this long-term budget crisis looming, it is imperative that we address our nation’s fiscal situation in the near future and that we achieve fiscal sustainability over the long run. A number of ideas have been been proposed to address our nation's dire fiscal situation, and some have included scaling back the mortgage interest deduction.

One idea was submitted by President Barack Obama in his fiscal year (FY) 2011 budget proposal. Under the President's budget, Americans paying taxes in the two highest tax brackets would be limited to deducting their home mortgage interest at the 28% rate.

Another idea was suggested by the National Commission on Fiscal Responsibility and Reform in its final report of recommendations aimed at addressing our nation's fiscal challenges. The fiscal commission's proposal would reform the tax code, lowering all tax rates but also removing a number of key deductions such as the mortgage interest deduction. In its place, households would be able to claim a non-refundable tax credit accounting for charitable giving and mortgage interest.

I believe that Congress must continue to strive to improve access to affordable housing, support community development, and increase homeownership, while not imposing an undue tax burden on Americans. However, we also need to get our nation’s financial house in order and have fiscal sustainability going forward.

I will continue to review recommendations aimed at addressing our nation's mounting debt, and, in particular, study the ramifications that such proposals will have on all Americans. You may be certain that I will continue to work toward spending cuts. I will also keep pushing for smaller government, a balanced federal budget, and lower taxes on families and small businesses.

I appreciate hearing from you. I hope that you will not hesitate to contact me on any issue that is important to you.

Sincerely,
Kay Bailey Hutchison
United States Senator

284 Russell Senate Office Building
Washington, DC 20510
202-224-5922 (tel)
202-224-0776 (fax)
http://hutchison.senate.gov