Homebuilders and electric car producers were hit hard today by GOP tax reform proposals.
Earlier today I posted the tax plan details: Tax Code Overhaul Details: Homebuilders, Tesla, and Those With Lots of Kids Come Out Worse.
Mortgage Interest Deduction Reduced
The bill preserves the mortgage deduction for existing mortgages. But going forward you can only claim a deduction for interest on mortgage debt up to $500,000, down from $1 million today.
The Tax Policy Center estimates the percent of filers who claim the mortgage interest deduction would fall to 4% from 21% because of the higher standard deduction.
Energy Tax Credits
The bill will repeal electric car credits. Shares of Tesla were hit with the biggest decline ever.
Bloomberg reports Tesla plunged as much as 8.9 percent to $292.63, the lowest intraday since May 4. Mike Bishop, a Michigan Republican on the House Ways and Means Committee, told reporters his assumption was that the credits would be phased out immediately.
Those tax credits amount to as much as $7,500 per vehicle.
The tax overhaul is a step in the right direction. It would be better yet if the mortgage deduction vanished instead of being reduced.
I favor a small flat tax coupled with a consumption tax (not a VAT) on everything excluding food and medicine, and possibly cleaning supplies and clothing articles below a certain cost.
Everyone would be treated the same, and my proposal protects lower wage earners who tend to spend every penny on food and essential items.
Mike "Mish" Shedlock