Housing lobbyists began rolling out their heavy artillery on Capitol Hill last week, determined to blast the Obama administration's plan to cut home mortgage interest and property tax deductions for high-income individuals and couples.

The National Association of Realtors sent blunt letters to the chairmen of the House and Senate tax-writing committees calling on them to derail the Obama proposal at their earliest opportunity,

In nearly-identical letters to House Ways and Means Committee chairman Charles Rangel and Senate Finance Committee chairman Max Baucus, the association's president, Vicki Cox Golder, warned that reducing tax system support for housing - even at the upper margins - would be bad for the entire real estate market.

Golder, a Realtor from Arizona, said "today's housing market, while improving, cannot absorb any negative signals, no matter what the income level of the taxpayer, and no matter what market segment would be affected."

She added that her 1.1 million member group "rejects in the strongest possible terms ANY proposal that would limit the deductions for mortgage interest and real estate taxes."

The Obama plan would limit the effective value of mortgage interest and local property tax writeoffs to a maximum 28 percent for high income taxpayers -- even though under current law they can write off up to 35 percent.

The plan would apply to all single taxpayers with more than $200,000 in adjusted gross income and tofo married couples earning more than $250,000 filing jointly.

The White House estimates its plan would raise nearly $300 billion in federal revenues during the coming ten years.

Obama also wants to raise maximum tax brackets back to 39.6 percent, up from the current 35 percent ceiling, and raise the capital gains tax for high-income taxpayers back to 20 percent, from the current 15 percent.

Both of these changes would fulfill Obama campaign promises to allow tax cuts enacted during the Bush administration to expire at the end of this year. The changes would bring in close to $700 billion in revenues over ten years.

Though Golder's requests to the tax committee chairmen did not specifically address the tax bracket or capital gains changes, her association is expected to push for an extension of the Bush tax cuts later this year.

In a separate communication to members last week, the National Association of Realtors revealed that it intends shortly to "launch a multi-phase plan of action to eliminate" the mortgage interest and property tax proposals.

Other groups, including the National Association of Home Builders, the Mortgage Bankers Association and other financial industry lobbies are expected to take part in the lobbying effort.

Published: February 16, 2010

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.