WHAT EFFECT WILL A TAX LAW CHANGE HAVE?
The idea of making a major change to the tax system structure we have all learned to live with, and make decisions based upon, comes with a danger. Congress has been wanting to turn a nation of “spenders” into “savers” for some time. They have also wanted to make taxes fair and simple. The problem comes because, for a long time, tax laws have been used to encourage certain desired behavior. Congress wanted people to own homes, so they created a deduction for mortgage interest. They wanted people to have families, so they created exemptions. They didn’t want taxpayers to know how much their taxes were, so they created wage withholding. In 1986, as part of Congress’ desire to change “spenders” into “savers,” they decided to phase out the deduction for interest. The premise was that people who borrowed money in order to make purchases were rewarded by the tax laws. By doing away with the deduction, Congress could get these people to spend less. It seems that no one remembered that when co
