Stuck In The Middle With You

Not that I want to be a gossip or anything, but I've got to talk a little bit about the people next door. Nice people, really, with a Mom and a Dad, two high school aged daughters , a high school aged son, a dog, a boat, and...

five cars parked in the driveway and out in the street.

Yep, you heard me right - five people and five different cars. Let's see, there's the one daughter's Scion TC (I think that's what it is), there's the other daughters little Toyota something or other (can you tell I'm not a car guy), and the son's sporty little Lexus thingy (the one with the mega stereo that he's so keen to show off at 2:00 in the morning), the Mom's fancy-dancy Lexus LS something or other ( I think), and of course Dad's Supersized Lexus SUV which sits so proundly in their driveway and casts long shadows over the sun-starved yards of his neighbors. Yep, 5 cars in all, and that doesn't include the Toyota Avalon which shows up every now and then. I'm not sure who that belongs to - it might be the dog's.

So why do I bring all this up? What do you care what kind of cars my neighbors drive or if they park them all over the street? Hmmm, come to think of it you probably don't care so let me change the subject.

Have you heard about these new tax reform proposals that are making their way towards our nation's capital? You must of heard about them. After many months of hard work, a bipartisan group of former Senators, Congressmen, lawyers, professors, economists and financial professionals known collectively as the President's Advisory Panel on Federal Tax Reform has issued a report outlining a set of revenue neutral options for reforming the nation's complex tax code. Among it's many recommendations it calls for a general reduction in tax rates, the elimination of certain deductions, and new incentives for savings and investment.

So far, so good, right? What's not to like? Everyone agrees our tax codes need simplification so this should be a slam dunk, right? Of course, and that's why it will sail through Congress with nary a word of dissent, right? Sure, no problem.

Which brings me to that sacredest of all American cows - the mortgage interest write off. For those of you who don't itemize I should probably explain. According to the Panel, about 30% of American taxpayers currently deduct their mortgage interest payments from their taxes, which means the other 70% don't. Now what the Panel is proposing is a cap on the amount of mortgage interest that can be deducted, a cap that the Panel estimates would affect just 5% of taxpayers, which means it would not affect the other 95%. Of course the media, thumbing through 300 or so pages of the report was quick to pick up on this little detail, and to their credit they all listened patiently as the Panel explained that the proposals were meant to be revenue neutral and that taxpayers would see tax reductions in other areas, including the elimination of the Alternative Minium Tax. And so the media, with great thoroughness and careful weighing of the facts, not wanting to appear reactionary or alarmist, reported these proposals in their usual fair and balanced fashion.

PRESIDENT WANTS TO SLASH INTEREST RATE DEDUCTION FOR MIDDLE CLASS HOMEOWNERS!!!



(Washington D.C) In a move designed to leave millions of middle class Americans destitute and homeless, the President's Advisory Panel submitted drastic recommendations today that would add new burdens to families already suffering under the weight of record high energy prices. "This is a cruel, heartless proposal that will pull the crutches out from under people already crippled by debt and high prices" said Congressman...

(and so on, and so on, blah, blah, blah)

So I'm bringing this all up is because of a story that ran in the local paper today. Now remember, I live in Northern California and I know things are a little bit different out here, but still when I read this even I had to do a doubletake. It was a story about tax reform and how the mortgage intererst will affect homeowners here in the Santa Clara Valley. The reporter, wanting to get the reaction from the man in the street, went out to interview a typical Santa Clara Valley homeowner and document his suffering and pain. Nothing unusual in that, so let me just quote the article for you (it's from the November 2, 2005 edition of the San Jose Murky News)

"We may have to downsize,'' said Anthony Dominguez, 35, a program coordinator with the Santa Clara County Probation Department, who bought a $1.2 million house with a $960,000 mortgage in June in Gilroy. ``I don't think it's fair.''

Geez, times are tough, aren't they? Especially for us middle class Americans. Do you think the panel considered this guy's pain when they drew up the proposal? Nah, of course not. Do you think they considered the plight of we Northern Californians, living paycheck to paycheck and struggling to make the payments on our $960,000.00 mortgages. Hah, they don't care about the working man.

Yes, I was deeply saddened by this news, but if I one word of advice to offer Mr. Dominguez, one word of solace and comfort, it would be this: Don't worry, Mr. Dominguez, we Americans are a just and proud people, and believe me, this mortgage interest rate cap hasn't got a snowball's chance in hell of making it through Congress. Because you see, Mr. Dominguez, Americans, and by that I mean real Americans, would rather see innocent babies thrown from planes than lose their tax deductions. Trust me on this - there will be a happy ending.

In fact I can almost see it in my mind. Let's see...yes, that's it...slowly the picture comes into focus ... It's my neighbors, standing out in front of their house. There's mom and dad and the three kids all gathered around and dad's holding a newspaper with a headline that reads "TAX REFORM PROPOSALS REJECTED BY SENTATE". Dad is smiling, mom has a look of heartfelt relief on her face, and the son, with a tear of joy running down his cheek turns and asks

"Dad, does this mean I can keep the Lexus?"

"Yes, son, we can all keep our Lexus' ."

And then everyone starts to laugh and the camera zooms out and we see the sun shining and the birds singing, we see lawns being watered and a paperboy on his route, and all is right in Northern California. It's a new day and no one can take away our tax deductions ever again.