This is a partial transcript from "Your World with Neil Cavuto," October 12, 2005, that was edited for clarity.
NEIL CAVUTO, HOST: Attention, homeowners. Don't look now, but some of your favorite tax breaks could be in jeopardy. Did you hear about this? There's a presidential commission that's looking at scaling back some deductions.
My next guest is here to tell us which ones could be on the table.
From Washington is Jeffrey Kupfer. He's the executive director of that commission.
Jeffrey, good to have you.
JEFFREY KUPFER, EXECUTIVE DIRECTOR, PRESIDENT'S COMMISSION ON FEDERAL TAX REFORM: Good to be here, Neil. Thanks.
CAVUTO: The mortgage deduction, it's not eliminated, but it could be downsized. What are you guys talking about?
KUPFER: Well, we had a meeting Wednesday where the panel members discussed the mortgage interest deduction.
And one of the panel members presented a analysis of the current deduction, with the conclusion that, right now, the current deduction only goes to about 30 percent of all taxpayers in America, only the people who itemize. So, that's 70 percent of American taxpayers and homeowners who don't get the deduction.
Also, because of the tax status of the deductions, it's a very favored investment. A lot of money flows into the housing sector. Maybe it could be used for more productive purposes. So, what the panel determined was that we should take a look at this provision. We should seek ways to make it available to more Americans and we should seek ways to make sure that it encourages homeownership and it doesn't just encourage really big luxury homes.
CAVUTO: All right.
Well, let's cut to the chase here. What you're talking about is, there's a million-dollar mortgage deduction allowed now. You guys were kick around something like $350,000. Is that right?
KUPFER: That was one of the numbers that was thrown out yesterday. It was based on what the median home values is in different places around the country.
CAVUTO: Right. All right.
So, let's say you have a $355,000 mortgage. You can't write that off?
KUPFER: Well, you'd be able to write off up to that limit. If $350,000 is the number — and that hasn't been agreed on.
KUPFER: The panel will have further discussion on it. But you would be able to write off up to that $350,000 limit, whatever that limit would be.
CAVUTO: How the heck would Americans be able to figure that out?
KUPFER: Well, from a simplicity standpoint, right now, one gets a statement in the mail from the mortgage company that says how much interest one receives. That statement would simply read what the cap would be and what the applicable amount would be. So, it wouldn't be any more complex...
CAVUTO: Jeffrey, I know what you're saying, but, you know, I'm not a rocket scientist here. But I'm telling you, when you have something that says $350,000 is the cap and a lot of Americans, particularly in highly expensive areas — the Northeast comes to mind — Southern Florida comes to mind — the West Coast comes to mind — the Chicago area comes to mind — and you're telling them to parse things out at $350,000 to $400,000 or something like that, most of them don't have their statements broken down that way.
So, a lot of them are going to have to hire accountants just to figure out what the heck you guys are doing.
KUPFER: Well, I mean, first of all, nothing has been decided right now.
And what we had talked about was having a range that would vary in different places around the country. That was one of the ideas that was kicked around.
CAVUTO: But, the bottom line, the mortgage deduction, as we know it, is likely on life supply, right?
KUPFER: Well, no.
I mean, as currently structured, I think the panel will come up with a different option for it. What that option will be is still open for discussion.
Jeffrey, thank you very much in Washington. Appreciate it.
KUPFER: Thanks, Neil.
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