We're doing a mortgage refi at 3.75% -- someone tell me why that interest should be deductible?

[Anonymous]

http://www.studentloanconsolidation.pro/42-writing-off-your-college-expenses.html


I could do home equity loans and use it to pay tuition. Perhaps I would be better off if we no longer provide ANY financial support to our kids--no more tuition payments.

Our return is above any breaks. Used to like Obama but now realize he regards people like us who came from nothing as simply checkbooks.

I guess there never will be removal of 2nd home write offs since Biden is from Delaware and he has vacation areas ...

[Anonymous]

Anonymous wrote:http://www.studentloanconsolidation.pro/42-writing-off-your-college-expenses.html


I could do home equity loans and use it to pay tuition. Perhaps I would be better off if we no longer provide ANY financial support to our kids--no more tuition payments.

Our return is above any breaks. Used to like Obama but now realize he regards people like us who came from nothing as simply checkbooks.

I guess there never will be removal of 2nd home write offs since Biden is from Delaware and he has vacation areas ...

Oh yeah go ahead and blame that on Biden, like there are no other rich and powerful people who have second homes. Biden, that evil genius!

[Anonymous]

Anonymous wrote:

Anonymous wrote:http://www.studentloanconsolidation.pro/42-writing-off-your-college-expenses.html


I could do home equity loans and use it to pay tuition. Perhaps I would be better off if we no longer provide ANY financial support to our kids--no more tuition payments.

Our return is above any breaks. Used to like Obama but now realize he regards people like us who came from nothing as simply checkbooks.

I guess there never will be removal of 2nd home write offs since Biden is from Delaware and he has vacation areas ...

Oh yeah go ahead and blame that on Biden, like there are no other rich and powerful people who have second homes. Biden, that evil genius!

including the entire delegations of, gee, i don't know, North Carolina, South Carolina, Georgia, Florida, and California.

[Anonymous]

I think a more specific question is why allow a refi to be deductible. After all, it won't encourage u to buy a home. U already own it.

[Anonymous]

PP - Mortgage interest is tax deductible, whether or not that interest is arrived at by purchase or refinance.

[Anonymous]

Anonymous wrote:I think a more specific question is why allow a refi to be deductible. After all, it won't encourage u to buy a home. U already own it.

If you accept one, you would be a fool not to accept the other. If there was a tax penalty for refinancing, then the original mortgage is less attractive because you have stripped a valuable option from it. So for some people, that would cause them to forego a home purchase in the first place. And if interest rates were ever high, it would shut down home purchasing because buyers would be forced by logic to hold off until interest rates decreased. Lastly, it would make the ARM practically unusable.

So really as a matter of tax policy, the option to refinance is baked into the decision of an original home purchase.

[Anonymous]

Anonymous wrote:
As we fuss about who pays more and whether rates or absolute dollars are more important, we risk losing sight of the looming crisis. We are borrowing massive amounts of money from foreigners to pay our bills, and what do we do about that? There's no 1 answer.

I think the looming crisis is jobs. Why don't we take this free money and invest in infrastructure so we can create employed people who also pay taxes. Let's invest in our great country, not let become downtrodden. If we are worried about the debt, then tax the wealthy. I favor progressive taxation because I think the wealthy get more value out of the social welfare, property rights, etc. maintained by the government. There also is an economic concept called economic rent. This is another way of sawing income earned above the cost of labor and the cost of capital. In theory, by taxing this income you are not hurting production because it is income in excess of labor and capital. Higher income earners generally have more income above labor and capital costs. That is one economic theory behind progressive taxation.

Anonymous wrote:
Frankly, I don't care what percent Romney paid last year. I do care that one person paid vastly more tax than most of us--in my view he's paying his share. But---I fully accept differing opinions here so higher marginal rates are ok with me as long as a smart economist advises us on the tipping point at which it results in more harm than good.

You don't care what Romney paid, but you seem to care what homeowners pay. Again, I could accept the elimination of this deduction, but it has to be done in a broad context of having others pay there fair share. It also should be done well after the housing crisis and done in a gradual way so as not to penalize homeowners who made a large financial decisions based on the deduction. But let's focus on the big picture of fair taxation. Also, you seem to support a flat head tax not tied to any percentage. How would that work? If you divided up the debt by the number of people, would we each owe a head tax? What if you owed more in taxes than you earn? Would you take them out of the economy and put them in Jail?

Anonymous wrote:
Bottom line--whether in Greece, Argentina, or US--we get the govt we deserve. As long as we peck at the other guy and whine about fairness we'll hire politicians to parrot those views for us and we'll get nothing done----until---

I agree that we get what we deserve. As best I can tell, one side of this debate was willing to compromise and the other side was not. I think most people want compromise, but as long as we elect the Tea Party, we won't get there. I think it is very credible to think that one side sabotaged the economy to make the President look bad.

Anonymous wrote:
A huge crisis forces our hand. Such as "dear america: we don't want your bonds anymore. signed--china" Then rates spike 4 points, our interest on interest cost doubles or triples, and we are truly in the crapper. At that point I don't think we'll have a lot of hand-wringing about what rate my neighbor is paying.
...

This is such a fantasy. First of all, interest rates are practically 0. I think the 10 yr Treasury is about 1 percent. People are begging the US to take their money at almost no cost. Second, if China started dumping bonds, where would they put all this cash, Europe? What would do with those dollars? Third, if they dump bonds, the value of their currency will rise, the value of the dollar would likely decline, and they would not have the US to buy their products. They would be shooting themselves in the foot. It might even be good for the US to have a cheaper dollar so then we can start exporting (and putting people to work). Finally, keep in mind that the Fed is the largest owner of US treasuries, not China. China only owns about 10% and all foreign governments own about 50%, I think. Google this if you want to check my numbers.

Anonymous wrote:
I picked on the mtg deduction because I was struck by my upcoming refi--no more no less. While the stats may have been off, I agree that out % of homeownership (which I believe peaked near 60%) affords us no special community building characteristics. Canada seems to do fine w/o a deduction, and are we to say countries w/o high home ownership lack our sense of community? To the contrary, one of our economic strengths over 200 years has been our flexible labor market---the euro experiment was in part an attempt to replicate. Someone needs to show me data to support that thesis.

Please--can we remember that correlation and causation are very different?

Your solution I guess is to raise taxes on the middle class by dumping the mortgage deduction. My solution would be raise the top rate and eliminate the capital gains tax. If you want, I will include the mortgage deduction elimination as part of my solution. I just think the wealthy need to pay more. Sure we can raise taxes on the 50% who don't pay taxes, but is like squeezing blood from a turn-up. Also, these in the bottom 50% spend all their money, so you are just taking this money right out of the economy. Many of them are retired senior citizens, so if we tax them too much be prepared for soup lines. I really just want to tax the wealthy and high income folks who are not really using their money for any productive purposes. Where are the jobs these folks are supposed to be creating with all this money? Isn't that what has been promised for every tax cut?

Personally, I think the jobs crisis is our number one problem. Not the debt. People seem more than willing to lend money to the US judging by the interest rates. You also don't see any inflation around either.

[Anonymous]

Oops - I meant to say eliminate the difference between capital gains and income, not eliminate the capital gains tax.

[Anonymous]

Tldr, fyi we tried stimulus and infrastructure and green , it basically prolonged the inevitable without resulting in any real future investments. where are the green jobs (failed ) where are all the roads and schools that were supposed to built from the first stimulus? The stimulus was a gift to the union construction companies that sucked up the money and built minimal infrastructure to line their pockets from losses incurred during the recession.

[Anonymous]

Anonymous wrote:Tldr, fyi we tried stimulus and infrastructure and green , it basically prolonged the inevitable without resulting in any real future investments. where are the green jobs (failed ) where are all the roads and schools that were supposed to built from the first stimulus? The stimulus was a gift to the union construction companies that sucked up the money and built minimal infrastructure to line their pockets from losses incurred during the recession.

A little off topic, but . . . so you cry where are the roads, schools and infrastructure that the stmulus was supposed to provide? Those things are important to economic growth? They assist in the creation of jobs? I see.

You agree, then, with the President when he says that people who built small businesses didn't do it on their own, and had help? I assume you are outraged by the Romney campaign's blatant lies about the President's speech in its "You ddidn;t build that" negative ad campaign?

No? Care to explain?

[Anonymous]

The only green job is the colors of my morning stool after eating a lot of spinach the night before. The whole thing was a scam.

[Anonymous]

what are you prattling on about 8:31?

there are 2.7 million green jobs in the USA, according to the Brookings Institution with a growth rate of 3.4% per year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:
As we fuss about who pays more and whether rates or absolute dollars are more important, we risk losing sight of the looming crisis. We are borrowing massive amounts of money from foreigners to pay our bills, and what do we do about that? There's no 1 answer.

I think the looming crisis is jobs. Why don't we take this free money and invest in infrastructure so we can create employed people who also pay taxes. Let's invest in our great country, not let become downtrodden. If we are worried about the debt, then tax the wealthy. I favor progressive taxation because I think the wealthy get more value out of the social welfare, property rights, etc. maintained by the government. There also is an economic concept called economic rent. This is another way of sawing income earned above the cost of labor and the cost of capital. In theory, by taxing this income you are not hurting production because it is income in excess of labor and capital. Higher income earners generally have more income above labor and capital costs. That is one economic theory behind progressive taxation.

OP here--nicely written post, mostly wrong. I'll jot a few notes here, but seriously if you're going to opine on an economics thread you need a bit of a primer--beyond the scope of this thread. Nonetheless--

Progressive taxation is a lovely concept which, taken too far, collapses under its own weight as capital is portable and fluid in this world. Overtax and it just disappears. Recent example--MD put in a millionaire tax a couple of years ago. No surprise--2 years later MD somehow had fewer millionaires and the expect revenue wasn't there. As I've said before the sentiment that just taxing the rich is really code for " i want someone else to solve this for me." There's a law of diminishing returns at work as you push up marginal rates--it's simply a stubborn fact, inarguable.Look at Europe now putting in wealth taxes along w higher marginal rates. It will not work, and you'll see a migration to other countries (UK has already opened its door and said "overtaxed Europeans welcome here."

Sure, infrastructure spend is alovely concept. But why hasn't it happened? Why does the society of civil engineers estimate about a trillion dollars of needed capex? I suspect because bridges don't vote.

Anonymous wrote:
Frankly, I don't care what percent Romney paid last year. I do care that one person paid vastly more tax than most of us--in my view he's paying his share. But---I fully accept differing opinions here so higher marginal rates are ok with me as long as a smart economist advises us on the tipping point at which it results in more harm than good.

You don't care what Romney paid, but you seem to care what homeowners pay. Again, I could accept the elimination of this deduction, but it has to be done in a broad context of having others pay there fair share. It also should be done well after the housing crisis and done in a gradual way so as not to penalize homeowners who made a large financial decisions based on the deduction. But let's focus on the big picture of fair taxation. Also, you seem to support a flat head tax not tied to any percentage. How would that work? If you divided up the debt by the number of people, would we each owe a head tax? What if you owed more in taxes than you earn? Would you take them out of the economy and put them in Jail?

Above is a typical game of playing "gotcha." Don't you tire of it? My thread was simply saying because of these artificially low rates I get to do a subsidized refi at a stupidly low rate and why is this a good thing? Fed policy has, essentially, screwed savers while trying to kick start housing and other parts of the economy. It's hard to know what would have happened otherwise, but clearly millions of hard working and diligently saving americans have been hurt by the low yields on their careful savings--which is essentially a pay cut.

re fair share--geez, can't we just agree to disagree? I think a single individual paying $500k or more in tax is paying a fair share but I accept differing opinions--isn't that what (gasp) compromise is about?

Anonymous wrote:
Bottom line--whether in Greece, Argentina, or US--we get the govt we deserve. As long as we peck at the other guy and whine about fairness we'll hire politicians to parrot those views for us and we'll get nothing done----until---

I agree that we get what we deserve. As best I can tell, one side of this debate was willing to compromise and the other side was not. I think most people want compromise, but as long as we elect the Tea Party, we won't get there. I think it is very credible to think that one side sabotaged the economy to make the President look bad.

Sorry--i was trying to elevate the conversation. Not going to deal with this silliness.

Anonymous wrote:
A huge crisis forces our hand. Such as "dear america: we don't want your bonds anymore. signed--china" Then rates spike 4 points, our interest on interest cost doubles or triples, and we are truly in the crapper. At that point I don't think we'll have a lot of hand-wringing about what rate my neighbor is paying.
...

This is such a fantasy. First of all, interest rates are practically 0. I think the 10 yr Treasury is about 1 percent. People are begging the US to take their money at almost no cost. Second, if China started dumping bonds, where would they put all this cash, Europe? What would do with those dollars? Third, if they dump bonds, the value of their currency will rise, the value of the dollar would likely decline, and they would not have the US to buy their products. They would be shooting themselves in the foot. It might even be good for the US to have a cheaper dollar so then we can start exporting (and putting people to work). Finally, keep in mind that the Fed is the largest owner of US treasuries, not China. China only owns about 10% and all foreign governments own about 50%, I think. Google this if you want to check my numbers.

Econ primer time. Law of economics--prices are set at the margins. China is already redirecting its treasury purchases to currency baskets, gold, and resource bases around the world--very smart of them. There has never been a country in history that has depreciated its way to prosperity. You can look it up.

Anonymous wrote:
I picked on the mtg deduction because I was struck by my upcoming refi--no more no less. While the stats may have been off, I agree that out % of homeownership (which I believe peaked near 60%) affords us no special community building characteristics. Canada seems to do fine w/o a deduction, and are we to say countries w/o high home ownership lack our sense of community? To the contrary, one of our economic strengths over 200 years has been our flexible labor market---the euro experiment was in part an attempt to replicate. Someone needs to show me data to support that thesis.

Please--can we remember that correlation and causation are very different?

Your solution I guess is to raise taxes on the middle class by dumping the mortgage deduction. My solution would be raise the top rate and eliminate the capital gains tax. If you want, I will include the mortgage deduction elimination as part of my solution. I just think the wealthy need to pay more. Sure we can raise taxes on the 50% who don't pay taxes, but is like squeezing blood from a turn-up. Also, these in the bottom 50% spend all their money, so you are just taking this money right out of the economy. Many of them are retired senior citizens, so if we tax them too much be prepared for soup lines. I really just want to tax the wealthy and high income folks who are not really using their money for any productive purposes. Where are the jobs these folks are supposed to be creating with all this money? Isn't that what has been promised for every tax cut?

Personally, I think the jobs crisis is our number one problem. Not the debt. People seem more than willing to lend money to the US judging by the interest rates. You also don't see any inflation around either.

You again take my point much further than I intended set up a straw man so you could knock it down. the rest of this paragraph is so misguided I don't have the energy to reply. But think about eliminating cap gains, jacking up income tax rates, and then asking who creates the jobs? This is tough stuff--don't try to oversimplify.

[Anonymous]

You tell the op not to oversimplify but you don't have the energy to explain yourself.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:
As we fuss about who pays more and whether rates or absolute dollars are more important, we risk losing sight of the looming crisis. We are borrowing massive amounts of money from foreigners to pay our bills, and what do we do about that? There's no 1 answer.

I think the looming crisis is jobs. Why don't we take this free money and invest in infrastructure so we can create employed people who also pay taxes. Let's invest in our great country, not let become downtrodden. If we are worried about the debt, then tax the wealthy. I favor progressive taxation because I think the wealthy get more value out of the social welfare, property rights, etc. maintained by the government. There also is an economic concept called economic rent. This is another way of sawing income earned above the cost of labor and the cost of capital. In theory, by taxing this income you are not hurting production because it is income in excess of labor and capital. Higher income earners generally have more income above labor and capital costs. That is one economic theory behind progressive taxation.

OP here--nicely written post, mostly wrong. I'll jot a few notes here, but seriously if you're going to opine on an economics thread you need a bit of a primer--beyond the scope of this thread. Nonetheless--

Progressive taxation is a lovely concept which, taken too far, collapses under its own weight as capital is portable and fluid in this world. Overtax and it just disappears. Recent example--MD put in a millionaire tax a couple of years ago. No surprise--2 years later MD somehow had fewer millionaires and the expect revenue wasn't there. As I've said before the sentiment that just taxing the rich is really code for " i want someone else to solve this for me." There's a law of diminishing returns at work as you push up marginal rates--it's simply a stubborn fact, inarguable.Look at Europe now putting in wealth taxes along w higher marginal rates. It will not work, and you'll see a migration to other countries (UK has already opened its door and said "overtaxed Europeans welcome here."

Sure, infrastructure spend is alovely concept. But why hasn't it happened? Why does the society of civil engineers estimate about a trillion dollars of needed capex? I suspect because bridges don't vote.

Anonymous wrote:
Frankly, I don't care what percent Romney paid last year. I do care that one person paid vastly more tax than most of us--in my view he's paying his share. But---I fully accept differing opinions here so higher marginal rates are ok with me as long as a smart economist advises us on the tipping point at which it results in more harm than good.

You don't care what Romney paid, but you seem to care what homeowners pay. Again, I could accept the elimination of this deduction, but it has to be done in a broad context of having others pay there fair share. It also should be done well after the housing crisis and done in a gradual way so as not to penalize homeowners who made a large financial decisions based on the deduction. But let's focus on the big picture of fair taxation. Also, you seem to support a flat head tax not tied to any percentage. How would that work? If you divided up the debt by the number of people, would we each owe a head tax? What if you owed more in taxes than you earn? Would you take them out of the economy and put them in Jail?

Above is a typical game of playing "gotcha." Don't you tire of it? My thread was simply saying because of these artificially low rates I get to do a subsidized refi at a stupidly low rate and why is this a good thing? Fed policy has, essentially, screwed savers while trying to kick start housing and other parts of the economy. It's hard to know what would have happened otherwise, but clearly millions of hard working and diligently saving americans have been hurt by the low yields on their careful savings--which is essentially a pay cut.

re fair share--geez, can't we just agree to disagree? I think a single individual paying $500k or more in tax is paying a fair share but I accept differing opinions--isn't that what (gasp) compromise is about?

Anonymous wrote:
Bottom line--whether in Greece, Argentina, or US--we get the govt we deserve. As long as we peck at the other guy and whine about fairness we'll hire politicians to parrot those views for us and we'll get nothing done----until---

I agree that we get what we deserve. As best I can tell, one side of this debate was willing to compromise and the other side was not. I think most people want compromise, but as long as we elect the Tea Party, we won't get there. I think it is very credible to think that one side sabotaged the economy to make the President look bad.

Sorry--i was trying to elevate the conversation. Not going to deal with this silliness.

Anonymous wrote:
A huge crisis forces our hand. Such as "dear america: we don't want your bonds anymore. signed--china" Then rates spike 4 points, our interest on interest cost doubles or triples, and we are truly in the crapper. At that point I don't think we'll have a lot of hand-wringing about what rate my neighbor is paying.
...

This is such a fantasy. First of all, interest rates are practically 0. I think the 10 yr Treasury is about 1 percent. People are begging the US to take their money at almost no cost. Second, if China started dumping bonds, where would they put all this cash, Europe? What would do with those dollars? Third, if they dump bonds, the value of their currency will rise, the value of the dollar would likely decline, and they would not have the US to buy their products. They would be shooting themselves in the foot. It might even be good for the US to have a cheaper dollar so then we can start exporting (and putting people to work). Finally, keep in mind that the Fed is the largest owner of US treasuries, not China. China only owns about 10% and all foreign governments own about 50%, I think. Google this if you want to check my numbers.

Econ primer time. Law of economics--prices are set at the margins. China is already redirecting its treasury purchases to currency baskets, gold, and resource bases around the world--very smart of them. There has never been a country in history that has depreciated its way to prosperity. You can look it up.

Anonymous wrote:
I picked on the mtg deduction because I was struck by my upcoming refi--no more no less. While the stats may have been off, I agree that out % of homeownership (which I believe peaked near 60%) affords us no special community building characteristics. Canada seems to do fine w/o a deduction, and are we to say countries w/o high home ownership lack our sense of community? To the contrary, one of our economic strengths over 200 years has been our flexible labor market---the euro experiment was in part an attempt to replicate. Someone needs to show me data to support that thesis.

Please--can we remember that correlation and causation are very different?

Your solution I guess is to raise taxes on the middle class by dumping the mortgage deduction. My solution would be raise the top rate and eliminate the capital gains tax. If you want, I will include the mortgage deduction elimination as part of my solution. I just think the wealthy need to pay more. Sure we can raise taxes on the 50% who don't pay taxes, but is like squeezing blood from a turn-up. Also, these in the bottom 50% spend all their money, so you are just taking this money right out of the economy. Many of them are retired senior citizens, so if we tax them too much be prepared for soup lines. I really just want to tax the wealthy and high income folks who are not really using their money for any productive purposes. Where are the jobs these folks are supposed to be creating with all this money? Isn't that what has been promised for every tax cut?

Personally, I think the jobs crisis is our number one problem. Not the debt. People seem more than willing to lend money to the US judging by the interest rates. You also don't see any inflation around either.

You again take my point much further than I intended set up a straw man so you could knock it down. the rest of this paragraph is so misguided I don't have the energy to reply. But think about eliminating cap gains, jacking up income tax rates, and then asking who creates the jobs? This is tough stuff--don't try to oversimplify.

PP: My biggest problem with your response and your original post is that it is lazy. You say I am reading too much into your post, but I am reading this stuff thinking that these casual comments are nuts. Don't say stuff like 'what happens if China dumps our treasuries?" and "looming crisis" when it won't happen and when we actually want them to sell some treasuries so their currency can appreciate. Don't say "Romney pays enough". What kind of tax plan is that? Think through your comments and then defend them.