Make the money, make the laws: Congress has more millionaires than ever - report

The most unproductive and least popular US Congress in history can count on another distinction: For the first time ever, most members of the Legislative Branch are millionaires. At least 268 of the 534 current members of the 113th US Congress have an average net worth of US$1 million or more, according to personal financial disclosure data members registered last year on 2012 net worth, the Center for Responsive Politics reported Thursday. In 2011, only 48 percent of members had a median net worth of at least $1 million. That number is just over 50 percent for 2012. The median net worth in 2012 for the 530 current congressional members who were in Congress as of the May 2013 filing deadline was $1,008,767, up from $966,000 in 2011. The totals represent a 5.8 percent net-worth increase for all members. Let's take an example of a consumer with a $100,000 mortgage at a 4 percent annual interest rate, who also is in the 30 percent marginal tax bracket (combined federal and state). She could invest in high-quality bonds or a five-year CD, both yielding about 2.45 percent annually. By doing so, she would earn $2,450 before taxes and $1,715 after taxes. If instead of buying the CD, she pays off her mortgage, she would save roughly $4,000 in interest payments. Under the old law, she would likely have received a tax deduction worth $1,200 (30 percent of the mortgage interest), so she would have saved $2,800 after taxes. This consumer would have been better off by $1,085 a year by paying down the mortgage, because saving $2,800 is better than earning $1,715.

For all members of the House of Representatives, net worth increased 4.6 percent, from $896,000 to $856,000. House Democrats and Republicans both saw increases, at $929,000 and $884,000, respectively. In the Senate, there was a 10.8 percent increase in net worth overall. Median net worth for all senators went up to $2.794 million from $2.5 million. For Senate Republicans, the median net worth went up to $2.9 million from $2.5 million. Senate Democrats, on the other hand, saw a decline, at $1.7 million from $2.4 million. That decrease can be explained in part by wealthy senators no longer in the upper chamber. John Kerry, now Secretary of State, was the wealthiest member of the Senate in 2011, with a net worth of $248 million. Sen. Frank Lautenberg was worth $87.5 million before his death last year. Republican Darrell Issa, chairman of the House Oversight Committee, is the richest member of Congress, with a net worth of $464 million in 2012.

Under the new law, you are far less likely to itemize because a very large mortgage deduction may now be gone, combined with the fact that you likely will need more itemized deductions in total just to reach the higher standard deduction. According to the New York Times, the D.C.-based Tax Policy Center estimates that only 20 million Americans will itemize in 2018, compared with 46 million, had the tax law not changed. Using the example above, where one does not get a deduction for mortgage interest, one would save $4,000 after taxes — which is a heck of a lot better than earning the $1,175 after taxes from the CD or bond fund. Now even if you do itemize in 2018, you may only be getting a deduction for part of your mortgage interest. As an example, if you are married filing jointly and have $22,500 of itemized deductions before the mortgage interest, only $2,500 of interest benefits you, as the first $1,500 only gets you to that new $24,000 standard deduction amount. Check with your tax adviser to see if you will receive a tax benefit from all of your mortgage interest paid. Under the new law, you are far less likely to itemize because a very large mortgage deduction may now be gone, combined with the fact that you likely will need more itemized deductions in total just to reach the higher standard deduction. According to the New York Times, the D.C.-based Tax Policy Center estimates that only 20 million Americans will itemize in 2018, compared with 46 million, had the tax law not changed. Using the example above, where one does not get a deduction for mortgage interest, one would save $4,000 after taxes — which is a heck of a lot better than earning the $1,175 after taxes from the CD or bond fund. Now even if you do itemize in 2018, you may only be getting a deduction for part of your mortgage interest. As an example, if you are married filing jointly and have $22,500 of itemized deductions before the mortgage interest, only $2,500 of interest benefits you, as the first $1,500 only gets you to that new $24,000 standard deduction amount. Check with your tax adviser to see if you will receive a tax benefit from all of your mortgage interest paid.