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

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]OP, in theory I have no problem getting rid of the mortgage tax deduction but in practice it would hurt a lot in the short run. If we could phase it in I would be willing to do it.

It really is such a free ride for homeowners. I love how people moan about the poor getting handouts when the mortgage tax deduction allows me to deduct business trips, my internet connection and computer gear and even books I buy related to work. [/quote]

Why do you say it is a 'free ride'?  You don't think the interest deduction is embedded into the house price.   If you got rid of it today, house prices will go down even more.   Homeowners would pay more taxes and they would find their house value has dropped again. This is not a good time to get rid of it.

Again, I ask, why pick on this deduction and not the many other deductions and tools people use to shield wealth.  Why not tax investment the same as labor?

There is not a chance I would support removal of this deduction unless the tax code was made more fair for the middle class relative to the 1%.  Again, Romney paid 13% in taxes last year, which is less than what I pay with my interest deduction.[/quote]

In the past 12 hours I've read today's WP editorial by the Pimco guy as well as this transcript: http://www.cnbc.com/id/48166800/CNBC_Transcript_Warren_Buffett_Alan_Simpson_Erskine_Bowles_On_Fixing_the_Debt_Problem

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.

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.

But while we do that, can someone explain to me why we have more firemen that we did 20 years ago but we have fewer fires?

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---

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.

OP here.  We've got a nice lively discussion here--and no one's been insulted or cursed yet!  Maybe we can "all get along."

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?

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