Let’s get right to the point: It is the opinion of the editorial board of Home Channel News that the mortgage interest deduction, or MID, should be left alone, thank you.
Why are we talking about this now? Because the National Commission on Fiscal Responsibility and Reform released its first round of proposals—ideas to get the nation on better financial footing. As part of the comprehensive tax reform, the commission produced an option called “Wyden-Gregg style reform.” Included therein is this bullet point: “Limit mortgage deduction to exclude 2nd residences, home equity loans and mortgages over $500,000.”
On the nightly news, the possibility of MID reform received top billing—and that was on a busy newsday that included the sighting of a mysterious missile shot over California. Since then, it seems that momentum has grown for softening, limiting or outright eliminating the deduction.
Still, every reasonable, educated and thoughtful person inside and outside the industry responds identically when asked for his or her opinion on the MID question. They say four words: “It will never happen.”
I’m not so sure. The question before the nation today isn’t, “Should it stay, or should it go?” Rather, the question is, “Should it be modified, adjusted or phased out slowly?” Questions to which the HCN editorial board answers: “No,” “No,” and “No.”
Note: In the spirit of full disclosure, Home Channel News editors benefit from the MID. But discussions herein are governed by objectivity, not self-interest.
Here’s what supporters of the MID like about it: It encourages home-ownership and home renovation, both of which provide indirect benefits to communities. And at a time of record-low residential construction and spooked buyers, the housing industry and those whose livelihoods depend on it deserve better than the removal of this time-proven support.
To these points I add: If you like the mortgage deduction in tough times, what’s not to like about it for all times?
There was a rallying cry of the home industry brought forth last year: “Fix housing first.” Removing the mortgage deduction would go a long way to fix housing, all right. If by fixing you mean strangling it in its crib.
Currently, the MID doesn’t apply to homes of $1.1 million or more. That seems fair. What seems unfair is the idea of changing the rules in the middle of the game. American citizens with mortgages bought their houses with the understanding that their mortgage interest would be tax deductible.
The builders are making their case loud and clear. Tampering with MID would disrupt the plans of young households about to buy, said Bob Jones of the NAHB. “And it would impose a substantial tax burden on existing-home buyers, many of whom continue to stay current with their mortgage payments even as they struggle to make ends meet,” he said.
The MID effectively encourages home-ownership. HCN encourages home-ownership. We don’t think this is a radical position.
If you believe in the MID, too, let peopel know. Let us know, too.
Kleer Lumber gains distribution through iLevel
iLevel by Weyerhaeuser is now distributing Kleer Cellular PVC Trimboard, sheet goods and other Kleer cellular PVC building products from its Baltimore, Md., and Easton, Pa., distribution centers.
iLevel is a new partner for Kleer as the company serves the key building markets of New Jersey, metropolitan New York and other Mid-Atlantic regions including Eastern Pennsylvania, Northern Virginia, Maryland and Delaware.
“iLevel is an ideal partner for Kleer Lumber because of its strong brand name, the products it represents in the marketplace and its commitment to outstanding service,” said Walt Valentine, president of Westfield, Mass.-based Kleer Lumber. “iLevel’s renewed commitment to focus on specialty product groups aligns perfectly with the core product development strategy at Kleer Lumber.”
Construction industry loses more jobs
The construction unemployment rate rose to 18.8% in November as the sector lost another 5,000 jobs since October, according to the Associated General Contractors of America, which just released an analysis of new federal employment data. The analysis indicates that the construction sector has been the hardest hit of any industry during the economic downturn, association officials said.
The industry’s 18.8% unemployment rate, not seasonally adjusted, was the highest of any industry and roughly double the overall unemployment rate. The construction industry has lost 2.1 million jobs since employment in the sector peaked in August 2006, according to the association. Since November 2009, the industry has lost 117,000 jobs, while the private sector added 1,088,000 jobs.
“The unemployment report shows construction still has not broken free of the recession that has gripped the industry since 2006,” said Ken Simonson, the association’s chief economist. “Other than the stimulus and other temporary federal programs, it has been a pretty bleak four yours for the industry.”
The only construction segment to add jobs in the past years has been heavy and civil engineering construction, which has benefited from federal stimulus, military base realignment and Gulf Coast hurricane-prevention projects, Simonson observed. Meanwhile, residential construction has lost 79,000 jobs over the past 12 months, while nonresidential specialty trade contractors and nonresidential building — the other two segments in the nonresidential category — have lost 62,000 jobs.
Association officials cautioned that the stimulus and other temporary federal programs would begin winding down in 2011, most likely before private, state or local demand for construction picks up. They urged Congress and the Obama Administration to act on a series of long-delayed legislative bills for water, transportation and other infrastructure programs.