Forum Index
»
Political Discussion
Okay, I'm not a single issue voter...but if they take away the mortgage interest deduction I will be
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
|
The Simpson-Bowles piece is just a draft, the final report from the Fiscal Commission is due out in a few weeks. Simpson is a right-winger (he's the one who called Social Security the "cow with 350M teats), in case you're wondering.
In economic terms, the mortgage interest deduction really is a handout to the middle class. The poor don't own homes. And is there any justifiable reason for giving a mortgage deduction for a second home like a beach house? A sensible proposal would phase out the deduction gradually, (1) only for homes bought after 2010, and (2) phasing out the deduction in partial steps, so there is no "cliff" between $499K and $501K. I don't think we know enough about the proposal to know what the authors had in mind here. Taxing incomes over $250K makes sense too when you consider that they are talking about the Social Security payroll tax. Currently only the first $106,800 of anybody's income is subject to the SS payroll tax. Even Bill Gates only pays on the first $106,800 of his income. This is a really regressive tax. But politically, the mortgage interest deduction will never be eliminated now, especially not in a property bust. Just like Congress won't eliminate the 15% capital gains tax like Simpson-Bowles also suggested. The whole draft package is pretty much DOA. |
Anonymous
|
There was a time when interest on credit cards, bank loans, and mortgage loans were all deductibles then tax law was changed so that only interest on mortgages was deducible and those who do not have mortgages lost some of their tax deductions. That wasn't fair and it isn't fair that mortgage interest is a tax deduction now.
For 11:20, yes it is reasonable because the proposed cutoff is $500,000. |
Anonymous
How is it reasonable not to pro-rate the deduction? You are giving someone with a $499,999 m ortgage $24K back, and you're not giving a dime to someone who has a $500,000 mortgage. If you have a problem with deductions for the rich, fine. But in this situation, the only thing you're doing is further distorting the housing and other markets. Obviously, people will take out other types of loans to ensure their mortgages hit exactly $499K so they get money back. And there is no distinguishable difference between someone with a $499K mortgage and a $500K mortgage. |
Anonymous
Many, many things have arbitrary cutoff dates. If a child's birthday doesn't fall within a certain time frame then child can't enter 1st grade until next year. Our tax code is not fair and, unless and until, an across-the-board tax rate for everyone making over $100,000 a year is enacted it will continue to be unfair. Frankly, I think a family (combined income) or individual making less than $100,000 should be exempt from paying both Fed ands state taxes, particularly in areas with high cost of living. Over that amount up to $1,000,000 should pay 10% across the board, 20% over $1,000,000, ad so on. This ain't gonna happen and I know it but it would more equitable. |
Anonymous
|
One of the reasons for it, or at least for continuing it, that I have heard from friends at the IRS is that it is really the only way that we account for differences in cost of living across the country. Someone making 180K in, say, Peoria is at the very, very high end of the scale for their area, but then still gets to have the lower rates, more of the other deductions, etc. By contrast, us East Coasters generally take it in the teeth when it comes to taxes. The fact that we also generally get bigger mortgage deductions because our housing is much more expensive is entirely fair to me, unless we start indexing rates to cost of living.
Reducing our deficits is hugely important, but I would think this proposal would outrage most of the people on this board. |
Anonymous
Well, to be fair, Milton Friedman - the great free market economist - believed that monetary policy should be about adjusting the money supply to maintain stable prices / low inflation. Since we are experiencing anything but inflation, I'm not sure that "current policy" is to blame for anything. A good monetarist would probably be targeting the same inflation rate and getting there the same way. |
Anonymous
The way I expect it would work is that everyone would get to take the deduction on mortgage debt up to 500k. |
Anonymous
|
OP,
As I understand it, they're not proposing to take it away, they're just reducing it for people who have higher mortgages. Let's get to the essence of the matter. Why should the government subsidize your home purchase? It's a handout. You can build wealth without it. It should not be for high earners like you. |
Anonymous
Ditto. |
Anonymous
| Any and all tax deductions are government hand outs. Do you really want MORE hand outs? What are you, a welfare queen? |
Anonymous
|
From a public policy perspective the deduction is a disaster. It is a huge tax cut for the wealthy, it encourages over-investment in McMansions at the expense of other assets, it reduces the mobility of the labor force and thus leads to higher unemployment, it encourages housing booms and the resultant busts.
But there is no chance they will succeed in getting rid of it. Ill-considered opinions like OPs will always trump rational policy making in this country. |
Anonymous
OP here. I wouldn't mind something like that, but something that decides $500K is the pure and simple cut off is ridiculous. I don't know why someone thinks I'm irrational. I bought a house I can afford, understanding that I get a mortgage interest deduction. That's called planning. If you think it's a handout to me, you should at least feel comforted to know that your public schools are less overcrowded by my sending my kids to private. I'm sure on balance the government is doing great by me. As I said, with the deduction I carry $65k in taxes as a single mom. THere's nothing irrational about not wanting a house value to collapse. You can take your undirected anger elsewhere. |
Anonymous
| LEACH! Stop stealing my tax dollars with your entitlement packages. |
Anonymous
|
Despite the past 3 years, I do think there are public policy benefits to encouraging home ownership. Encouraging (and, to an extent, subsidizing) home ownership doesn't have to equate to suburban sprawl and mcmansions. It can mean stabilizing neighborhoods, promoting community and a great method for the middle class to build wealth over their lifetimes. I don't know what the percentage of homeowners should be, but it appears we went higher than we should have and now are back to a more manageable number. Something around 60% now?
But that said, we are broke and all need to pay the piper a bit more - so I think a number around $500K to $700K is ok. Hopefully it would be indexed to inflation. Assuming you put 20% down (which hopefully is getting back to the norm), then a $500K mortgage = $625K house. I don't consider that a house just for the "wealthy" in areas like DC, NYC and the major markets in California. A $600K mortgage at 20% down would be a $750K house, which is starting to get a bit more than a starter home but still hardly a Taj Mahal ... But if I had to predict, I'd guess they would only lower the number to $750K. The realtor, construction and banking lobbies are going to have a fit. |
Anonymous
|
OP,
The tax code changes all the time. Look at estate taxes, capital gains taxes, income tax rates. We're all subject to these changes, we can only plan up to a certain point. You're ducking the main question. Your HHI is in the top 3%. Again, you are not going to lose the full deduction. If your mortgage is under $500,000, you can deduct all of it. You are only going to lose part of the deduction! Guess what: If that doesn't fly, they'll raise your income taxes. Something's got to give! |