State budget deficit could be solved by closing tax loopholes
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Nevertheless, Legislative Analyst Elizabeth Hill's recommendations on tax breaks, which she says mostly benefit the rich and corporations, are drawing attention. She even addressed the largest, seemingly most untouchable tax break: allowing homeowners to deduct mortgage interest off their state personal income taxes.
Hill said in a report that the deduction, which exceeds $5 billion a year, no longer serves its intended purpose of encouraging home ownership. She believes there are more targeted, less costly ways to aid those who need the assistance, without subsidizing wealthy homeowners.
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According to sales tax receipts, the CA economy is contracting or is currently stalling.
Californian lawmakers will need to dig deep to fix the deficit. They can't look towards Washington. After all, the federal budget has doubled since 2000. What happened to fiscal responsibility?
Repealing the mortgage interest deduction, however unlikely, would be devastating to California's housing market. It would be like sprinkling salt on a
snowman.
