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Villain emerges at Builders’ Show: MID reform

BY Ken Clark

Orlando — The National Association of Home Builders (NAHB) made it very clear during the International Builders’ Show that it’s prepared to fight for the mortgage interest deduction. 

In fact, the fight has already begun. On a web site hosted by the NAHB called savemymortgageinterestdeduction.com, policy and research reports make the case to save the deduction — including research that shows the beneficiaries of the MID aren’t the wealthy, but rather a cross-section of taxpayers in the $40,000 to $200,000 bracket.

During the NAHB’s residential construction forecast presentation at the show, NAHB’s chief economist David Crowe was asked if the removal of the MID would change his forecast of 710,000 starts in 2011. After joking that it was upsetting even to consider the subject, he answered: "That would be awful for housing."

But overhauling the MID has its supporters. This research paper from the Urban Institute and Tax Policy Center points out the MID will cost the Federal Treasury about $131 billion in 2012. "Eliminating the mortgage interest deduction would increase calendar year tax liability by $108 billion in 2012, relative to current law, and by about $1.26 trillion over 10 years," it estimated.

And the National Commission on Fiscal Responsibility and Reform’s chapter on "Tax Reform," recommends a 12% non-refundable tax credit for all taxpayers, not just those who itemize their deductions. The commission also recommends applying the credit only to mortgages under $500,000 — currently the cap is $1 million. 

A key part of the NAHB’s gameplan is to debunk the alleged myth that the deduction is only for the wealthy.

Robert Dietz, assistant VP for tax and policy issues for NAHB, said it’s difficult to quantify the impact of tax reform, but one can deduce, he said, that young home owners would suffer the most from MID reform. The first years of a mortgage have heftier interest payments, and therefore heftier interest deductions.

The average mortgage interest deduction peaks for taxpayers in the 35 to under-45 age group, followed by the 18-to 34-aged taxpayers, and declines as the taxpayer gets older, according to the NAHB.

Dietz added that arguments for the  elimination of the MID as a way to simplify an overly complex tax code are a poor excuse to wallop young home owners. There are some areas of tax law that are indeed complicated, he said, pointing to the process of figuring depreciation. However, the MID deduction is a simple matter of plugging in a number, usually on TurboTax, he said. 

"The MID has always been identified as a sacred cow, and politicians who challenge it do so at their own peril," said J.P Delmore, senior federal legislative director for the NAHB. 

"If the Administration doesn’t embrace this as a key priority, it’s going to whither and die," Delmore said. "I expect to see it highlighted." He further expects the hearing process to begin in late January. 

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New campaign for Artistic Finishes

BY HBSDEALER Staff

Hardwood moldings manufacturer Artistic Finishes launched a new marketing theme that brings a "new consumer-focused element" to the company’s marketing program. The theme of its "Beginnings" campaign is "The finish is just the beginning."

“We’ve added a lifestyle component to our marketing efforts to make an emotional connection with the end user and which elevates the Artistic brand to be requested by name,” said Tom Leach, President of Artistic Finishes. In addition to incentives and rewards for distributor partners, the program includes an update of its website and related marketing materials.

Artistic Finishes manufactures hardwood moldings, stair treads & risers, and vents in its U.S. manufacturing facility located in St. Paul, Minn.

 

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Behr, Home Depot announce Pro paint program

BY HBSDEALER Staff

Behr Paint and Home Depot will attempt to reach further into the pro market with the launch of the Kilz Pro-X line made by MasterChem Industries. Both Behr and Kilz are part of Masco Corp. The announcement was made at the International Builders’ Show on Jan. 12.

Initially the Kilz Pro-X line will offer 1,300 colors. Designed as part of Behr’s “Direct to Pros” program, the company hopes to begin with a February rollout and finish in May or June of 2011, when all 2,000 Home Depots will have the program.

“Professionals have been buying our DIY paint and watering it down so it works with their equipment,” Gordon Erickson, senior VP merchandising for Home Depot, told Home Channel News. With paint better formulated to their equipment, and specialized services to the paint pro customer, Home Depot and its paint suppliers hope to take a bigger bite out of the professional painter category.

Behr already has an in-store sales team of 450 people dedicated to Home Depot, Erickson said, and many of these work at the pro desk. But the retailer knows that Joe the painter doesn’t want to wait in line behind Susan the faux wall finisher to have his paint mixed. So the company is testing how to utilize dedicated pro personnel in approximately 100 pilot stores in the West, North and South regions right now, Erickson said.  

One possibility, according to Erickson, is outside reps and technicians who accompany paint deliveries to job sites. Behr is also offering factory tinting and volume discounts.

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