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Stealth Tax on Homeowners in Trump Budget

Monday, February 12, 2018

In 2011, when Congress and the Obama Administration wanted to give taxpayers a temporary 2.0 percentage point reduction in payroll (FICA and Medicare) taxes, it funded the cut in part by increasing the g-fees charged by Freddie Mac and Fannie Mae (the GSEs) for their mortgage guarantees by 0.1 percentage point.  The payroll tax break is long over, but the g-fee increase doesn't expire until 2021. The proposed budget released by the Trump Administration today wants to extend and add to it.

Little of the proposed $4.4 trillion budget is expected to survive Congress, which already adopted a two-year budget plan last week under threat of the second shutdown so far in 2018. However, the proposal to extend the earlier increase through 2023 and add another 0.1 percent to it is projected to bring in $25.7 billion over the next 10 years.

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