Here’s an almost completely unremarked-upon side effect of the foreclosure fraud settlement: the tax implications. If you are one of the lucky few eligible to receive a principal reduction from the settlement, when the banks aren’t paying off their penalty bulldozing homes and waiving deficiency judgments, you have to reckon with this: because of the expiration of a Congressional law, every dollar you receive in principal reduction would be viewed for tax purposes as income, and thusly taxed. Most of the people needing a principal reduction are in dire financial straits; they wouldn’t need a write-down otherwise. So now, we’re going to hit them with a big tax bill that they can pay for with money they don’t have.
|By: David Dayen Thursday March 29, 2012 6:00 pm|
|By: David Dayen Friday August 19, 2011 5:00 pm|
This is the ultimate “train has left the station” proposal. If this were happening before the debt limit deal, maybe it had a shot. But that’s not where we are. There were reportedly some extensions of things like the payroll tax cut and unemployment insurance in the Obama/Boehner grand bargain, but Boehner rejected that, as surely as he would reject this.