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re: End Mortgage Interest Deduction and Charity Deduction in exchange for much lower rates
Posted on 8/27/17 at 6:20 pm to I B Freeman
Posted on 8/27/17 at 6:20 pm to I B Freeman
quote:No. No.
Oh BS.
Don't make that mistake.
I don't BS.
Not my style.
As an inflation hedge, we've secured low interest loans on each of our homes. There are limits to mortgage tax deductions, as you may know. Beyond that, we maintain any nonprimary residence as an asset within an investment portfolio, just as I've laid out. If mortgage deductions go away, transferring what's left of any primary residence liability to a portfolio would be very easy . . .
This post was edited on 8/27/17 at 6:28 pm
1
Posted on 8/27/17 at 7:04 pm to Raylan70
quote:
Mortgage interest deductions are basically welfare for the middle class.
Once you give someone an entitlement it is nearly impossible to take it away.
Nonsense, How is using a tax deduction to keep more of your own money that was earned as wages a entitlement?
Posted on 8/27/17 at 7:10 pm to NC_Tigah
So what??? How does that prove your BS about the middle class being screwed?
Posted on 8/27/17 at 7:25 pm to I B Freeman
quote:Given your proposal, I'd do better.
How does that prove your BS about the middle class being screwed?
Not the same.
Not worse.
Better.
What I'd suggest is you consider how the middle class will do?
Posted on 8/27/17 at 7:27 pm to EA6B
quote:It isn't.
How is using a tax deduction to keep more of your own money that was earned as wages a entitlement?
Posted on 8/27/17 at 7:31 pm to NC_Tigah
quote:
What I'd suggest is you consider how the middle class will do?
I have. All of us including those of us that in the middle class will do better with lower taxes. Only in your convoluted mind does this become complicated.
Posted on 8/27/17 at 9:58 pm to I B Freeman
quote:
(Why should government care if people buy housing or rent???)
From a political talking point, it's The American Dream. Agree with it or not, that idea has been around for decades now, and it is politicized to both parties' advantages. The Dems have "affordable housing," and the Republicans have mortgage interest rate deductions, HELOC interest deductions, etc.
From another economic standpoint that has been largely ignored so far in this thread, the idea of ownership versus obligation, whether it be debt or rent, can have an impact on consumer confidence, which can directly affect the consumer spending portion of GDP. The wealthier people feel, the more they're inclined to spend.
Government would do well to promote high GDP so it can maintain a more favorable debt-to-GDP ratio, otherwise you have another political talking point come up about "spending us into oblivion."
So take a step back from the tax code and think of the larger economic and political picture.
Posted on 8/27/17 at 10:25 pm to TerryDawg03
quote:
So take a step back from the tax code and think of the larger economic and political picture
I have and there is no need for special deductions for housing. Lower tax rates are much more important to the economy. Not even close.
Posted on 8/27/17 at 10:35 pm to I B Freeman
End all deductions except charity, lower rates by a ton.
Won't happen b/c way too many people are accustomed to paying zero or negative in taxes. The welfare state is entrenched.
Won't happen b/c way too many people are accustomed to paying zero or negative in taxes. The welfare state is entrenched.
Posted on 8/28/17 at 12:26 am to I B Freeman
quote:
I have and there is no need for special deductions for housing. Lower tax rates are much more important to the economy. Not even close.
There might not be a "need," but the behavioral economics behind it supports its existence.
Posted on 8/28/17 at 3:50 am to TerryDawg03
quote:
There might not be a "need," but the behavioral economics behind it supports its existence.
Only in a perverse manner.
Posted on 8/28/17 at 4:54 am to I B Freeman
Many don't have enough itemized deductions to itemize instead take standard deduction so lowering rate would benefit more people
Posted on 8/28/17 at 6:08 am to I B Freeman
quote:
End Mortgage Interest Deduction and Charity Deduction in exchange for much lower rates
Sounds good to me, but the complexity of the tax code = political power, they won't vote to simplify it.
Posted on 8/28/17 at 7:21 am to I B Freeman
quote:I don't get all the petty name-calling and conniptions, IBF.
Only in your convoluted mind does this become complicated.
If you believe the middle class would do better, okay.
I don't. We simply disagree.
My concern is middle class wealth is largely a measure of home ownership.
Practically speaking in most of these cases, home ownership is a leveraged investment.
E.g. Without getting into maintenance costs and mortgage payment offsets vs rental of the same property, in simple terms here's the issue:
Someone purchases a home for $300K in a standard 20% down 30yr FRM arrangement. 7yrs later they sell the home for $330K. It would seem they made 10% or $30K. Subtract reality fees of ~5% or ~$15K and homeowner makes ~$15K, pocketing $75K ($15K + his original $60K equity). Right?
But that $15K profit is not actually 5% as measured against the cost of the home. Rather it is measured based on the amount of initial investment/downpayment ($60K / 20% downpayment). So the ROI is actually 25%! So homeownership can be a great investment tool for middle class families.
Unfortunately though, the reverse is true as well. If after 7 yrs, that $300K home only sells for $270, the homeowner loses about 3/4th of his original $60K investment.
So declining home prices are a devastating wealth trap for middle class Americans. We saw exactly that, manifested in post 2008 wealth differential stats.
My concern relates to how a phase-out of mortgage deductions would impact home prices for the middle class.
If you think that's ""convoluted"", so be it.
Posted on 8/28/17 at 8:07 am to NC_Tigah
Maybe we should ask the food people of Houston how they feel about axing that charity deduction. All of those relief agencies moving in to help feed and clean up are funded by charitable giving. Would you prefer the federal government foot the bill for what the Red Cross does?
Posted on 8/28/17 at 8:13 am to beebefootballfan
Why do you think contributions to charities would decline if taxpayers had more money in their pockets???
I have never given one cent to a charity because I wanted a tax deduction. I have given to the charities because I support their causes and organizations.
I have never given one cent to a charity because I wanted a tax deduction. I have given to the charities because I support their causes and organizations.
Posted on 8/28/17 at 8:17 am to NC_Tigah
It not name calling to say you have a very convoluted view of this subject. Nothing illustrates that more than your last post.
Does anyone seriously believe that the level of home ownership in the USA will significantly change if the mortgage interest deduction is eliminated and overall tax rates are dramatically reduced???
Surely not. No one is buying a house to garner the tax deductibility on their interest payments---no one.
Everyday people are paying down or paying off houses and are paying more taxes as a result.
Does anyone seriously believe that the level of home ownership in the USA will significantly change if the mortgage interest deduction is eliminated and overall tax rates are dramatically reduced???
Surely not. No one is buying a house to garner the tax deductibility on their interest payments---no one.
Everyday people are paying down or paying off houses and are paying more taxes as a result.
Posted on 8/28/17 at 11:51 am to I B Freeman
quote:Yes.
Does anyone seriously believe that the level of home ownership in the USA will significantly change if the mortgage interest deduction is eliminated
The vast majority of economists, homebuilders, and real estate analysts do. That is the point. It is a not infrequently discussed topic in investment forums, and on CNBC, FBN, etc.
Folks will seek lower monthly cost options, either renting or downsizing in that effort.
Posted on 8/28/17 at 12:38 pm to germandawg
quote:
Owning a home is a HUGE burden. Given the mobile nature of our nation today renting is more and more attractive. You get a tiny tax break but if you own a pile of bricks for more than 10 years you are likely to experience some major repairs (roof, HVAC etc) which eats up ALL of the value appreciation IF you are lucky enough to own a home where existing homes aren't seeing devaluation due to new construction. If you are going to live in the same area for more than 5 years buying can work but given the nature of employment in this nation living in the same place for 20 years is difficult if you have any ambition. I've owned dozens of homes and bought my first one at 19. I've made some money over the years with them but had I put the same amount of money in a secure retirement account I'd be just as well off with less risk and favorable tax advantages. I despise owning a home!
I too have thought the same with regards to home ownership. Add in insurance and real estate taxes it's very easy to make a strong argument that renting/leasing may be the way to go for a lot of people.
Which may be the reason there's a mortgage tax deduction, to keep the residential real estate market an attractive option versus renting.
Posted on 8/28/17 at 12:53 pm to Bass Tiger
Again, lots of economic evidence shows that the mortgage interest deduction has no impact on home ownership. In other words, it does not affect the rent vs own decision. Most people at this margin do not take excess itemized deductions, so the mortgage interest deduction would not benefit them.
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