Issue link: https://read.dmtmag.com/i/107993
should ideally not be more than 30% of gross income, which means qualifying requires having an annual income of roughly $260,000; comfortably below the income level at which deductions start phasing out. That being said, how much will a house valued at $2,000,000 decline? By very little! In theory it will fall by the one-time lump-sum amount necessary to compensate buyers for the new income taxes they will pay due to their being at or above the phaseout threshold. With interest rates currently at 4%, this means, and trust me on this, every $1,000 in added income taxes reduces the house price by ($1,000/4% or) $25,000. However, in reality, these impacts will be dramatically mitigated by tax avoidance strategies available to the very wealthy including systematically larger down-payments, cash purchases, corporate purchases and so on. households with incomes below $300,000, there are no impacts stemming from this change and for those with higher incomes, the impacts will largely be mitigated by tax avoidance behavior. At worst, only homes worth well over a million dollars will be adversely affected. With huge deficits as far as the eye can see, the tax treatment of deductions is sure to continue to change and evolve. Enjoy the debate, but be aware that next time you may be on the menu. Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70 word economics and policy blog can be seen at www. econ70.com. In short, few homeowners will be impacted by the new tax treatment of deductions including the MID. For Providing environment al services that exceed our client s' expect ations. TA N K C L O S U R E S C O N TA M I N AT I O N A S S E S S M E N T S PROPERTY TRANSFER ASSESSMENTS SOIL AND G R O U N D WAT E R R E M E D I AT I O N SPILL PREVENTION CONTROL & COUNTERMEASURE PLANS PPM Mobile, AL 30704 Sergeant E.I. Boots Thomas Drive Boots S panish Fort, AL 36527 251-990-9000 800-761-8673 PPM Birmingham, AL 5555 Bankhead Highway Birmingham, AL 35210 205-836-5650 800-761-8674 PPM CONSULTANTS Environmental Science and Engineering www.ppmco.com WINTER 2013 OIL PROPHETS 25