House Leadership Embraces Space's Tax Cut Proposal

Press Release

HOUSE LEADERSHIP EMBRACES SPACE'S TAX CUT PROPOSAL

Mortgage Foreclosure Bill Advances

The House Ways and Means Committee today passed legislative language introduced previously by Congressman Zack Space that would severely cut the foreclosure tax being leveled on families already devastated by a mortgage crisis that has devastated working families across the country.

Currently, the IRS creates "phantom income" for families going through foreclosure by counting forgiven debt as actual income and then taxing them on it. For example, a family takes out a mortgage on a home for, say, $200,000. They lose the home to foreclosure, and the bank sells the property for $170,000. The remaining $30,000 counts as "phantom income" on which the family must pay taxes.

In September, Space introduced the Foreclosure Tax Relief Act to address this issue.

In a written response to Space's efforts, House Ways and Means Committee Chairman Charles Rangel (NY-15) said, "I would like to applaud your leadership on this important issue, especially given that foreclosure rates in Ohio have risen 138% since August of 2006. Your state is just one example of the tremendous reach of the housing crisis, and its impact on working Americans. I join your constituents in strong support of your efforts."

"I am very pleased that the ideals set out in my Foreclosure Tax Relief Act are being incorporated into our legislative agenda," Space responded. "The IRS should stop adding insult to injury when these families are obviously in financial trouble. This is great news for Ohio's working families."

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