The tax increase is a new proposal from Mr. Obama, and would limit deductions for filers in the 33% and 35% tax brackets.
Under current law, taxpayers itemize their deductions based on their income tax bracket. A taxpayer who pays a 35% rate on his income may deduct 35% of various expenses -- such as mortgage interest or charitable contributions -- from his taxable income.
Under the Obama proposal, these deductions would be limited to a maximum of 28%, even for taxpayers paying higher tax rates.
So Obama wants to stop the housing market from tanking, but wants to reduce the mortgage reduction, therefore putting downward pressure on the housing market.