The Tax Bill: Placing a Dagger in the American Dream of Home Ownership

Huffington Post ^ | 11 Nov 17 | Miles Zaremski

[SkyPilot]

As we now know, both chambers of Congress have introduced their versions of legislation to overhaul our tax system, or, rather, the tax code. Some say it is reform, others more properly say it is merely a tax cut for the wealthiest and most powerful of American persons and corporations at the hands of those less fortunate, the middle class. But to give the rich their largesse, the middle class is being looked to as the sacrificial lamb by having certain deductions stripped away from them. Among the most critical of these deductions are the ones that make home ownership——the American “dream”—-more impossible to achieve. They are state and local taxes and property taxes (”SALT”) which promises to become a real lightening rod in passing any tax legislation in the weeks and months ahead (Senate Tax Plan Diverges From House Version, Highlighting Political Pressures). Lessening the mortgage interest deduction, as House Republicans are wanting to do, is also a problem (How The Republican Tax Plan Could Change Mortgage Interest and Property Tax Deductions).

In recent days, Congressman Peter King (R-NY) said he will not vote for the removal of any such deductions since it will mean his constituents in NY (Long Island) will find their federal income taxes going up. He espouses a view in microcosm held by millions across the nation in middle class suburbia that pay high state and local taxes. Besides New York, other states like Connecticut, Illinois and California readily come to mind. But, who cares, so says Republicans in states that do not have high SALT; what is important is to “feed” the pocketbooks of the “uber” class——Republican donors and fatcats. This is the Robin Hood scenario but in reverse-take from the poor and give to the rich.

[kearnyirish2]

Sorry, I mean intended for “I want the USA back”.

It’s too early...

[Raycpa]

I see nothing in house bill that changes self employed health insurance deductions, except for eliminating MSAs, HSA is still available and would likely pick up slack on medical deduction by being used more often and possibly expanded when health reform takes place.

[ilovesarah2012]

What is the difference between the standard deduction and the personal exemption?

[kearnyirish2]

When this country was created, the Founding Fathers had the presence of mind to limit voting to landowners (as there was no income or sales tax yet) - they were the only taxpayers, and there was no reason to let others who could simply pick up & leave (those not taxed anyway) determine how those taxes should be spent.

The relationship between taxation and representation has become so skewed that while there are other means by which people are forced to contribute (income and sales taxes, for instance), we DO allow people who pay NONE of those to vote. People who pay their own rent indirectly pay property taxes, so it makes no sense to limit the voting to actual property owners (I am a homeowner but concede these people are taxed indirectly). The problem is people who have “the government” (meaning us, the taxpayers) pay for their rent and groceries are paying NOTHING in terms of property or sales taxes - and to qualify often have to be exempt from income tax as well (if they even bother working). This situation creates a caste of parasites that will always vote Democrat; if they were prevented from voting the party itself would disappear. The remaining parasite caste (government employees) simply isn’t large enough (yet) to carry elections on their own.

[kearnyirish2]

The personal exemption is an amount allotted for each person - based solely on their existence and age/dependency status. The standard deduction is an amount offered as a minimum to be free from taxation; if a taxpayer has more deductible amounts than the standard offered (due to medical bills, property/income taxes, mortgage interest, etc.) then they would opt to “itemize” these - and enjoy a higher deduction from their taxable income than offered by the standard deduction.

[Raycpa]

I have strong memories about the changes brought on by Reagan’s 1986 act. It initially devastated the investment real estate market and hurt countless investor’s by eliminating deductions that they were counting on. Many bankruptcies, foreclosures followed. Even today I have clients dealing with the fallout.

However, I see that in the long-term it has created a healthier environment for real estate. The old environment was based on artificial values created by tax benefits and one that has no real economic value.

The same analogy is true for residential real estate when people are buying and valuing based on tax benefits rather than true economics.

[kearnyirish2]

In my area nobody wants a more expensive home for federal tax purposes; a more expensive home here in the NYC metro area means your local property tax bill would more than erase any federal tax benefit. The property tax bill is an amount directly paid from your pocket, while the federal income tax deduction is just a reduction in your taxable income - it isn’t a direct dollar for dollar credit.

[ncalburt]

The billionaire tax scam break will cause the GOP to lose both houses .
the GOP are so utter corrupt and clueless .
THE MOST BOUGHT LEADERSHIP IN MY LIFETIME .
Removing middle class tax deductions so Apple gets more tax breaks
Is a Great way to create a 2018 election tornado with the crazy Dems doing nothing .

[Ambrosia]

I agree! And who has property taxes over $10,000. per year? Must be one helluva house or expensive area to live in! I have a friend with a house over 8000 sq ft next to the most expensive golf course in my area....not even close to $10,000 in taxes per year?

[raybbr]

“”These taxes are as high as they are partly because the federal tax system gives a break for having paid them.””

Utter BS. Taxes are high because governments spend too much - across the board.

The amount of federal taxes reduced by my deduction of property taxes is almost nothing.

[Ambrosia]

Young people haven’t been able to own homes since 2008 crash, this is first year many have been able to purchase a home....pushing up prices in my area 30% since last year!

President Trump has brought the jobs up, and the economy. So yes, now some people have a way to pay for a home. However, as a real estate investor...you buy when people are selling low and sell when property is high! That is how you make a profit! Only home owners who live in their homes get to deduct their property taxes, unless those properties are rentals, which is whole other ballgame w taxes and costs.

This is about simplifying the Income Tax process to prevent a lot of false deductions that must be audited to find! While allowing people to do a standard deduction that is higher, and not have to pay out so much to have their taxes done elsewhere.

ES: If you are paying $300. (for example) to get your taxes done and you can eliminate that with Turbo Tax or some other easily used online process....that costs less than $100. You may have gained the loss of that personal deduction process....that gives you back $200.

The only tax issue I would be concerned about is ‘Do you still get your deduction ($500,000 for married, and $250,000 for single) if lived in 2 years... for capital gains on a house you sell that you live in?

How are taxes used by government is another question... The democrats used taxpayer dollars to support immigrants; Medicaid, welfare, food stamps. Hopefully, with new jobs some of that expense is gone.

[kearnyirish2]

Many homes in NJ have property taxes over $10K - and they aren’t only in rich/exclusive areas (their taxes are over $20K). 75% of our property taxes go to local schools (read: public school teachers); as the economy collapsed here (and never recovered) there was no downsizing of these costs (in fact, they increased), so McJobs are expected to pay these whopping tax bills - and they can’t. As a result, the area is being abandoned by the next generation of Americans (who are unable to live here), and the government traffics foreigners here to “keep the lights on” (keeping housing, and more importantly, CLASSROOMS, filled). Taxpayers here in NJ have finally figured out they were tenting their homes from the teachers’ unions, and now nobody wants them.

[spokeshave]

I don't see anything about reducing gobmint spending...firing non essential "workers"..cutting out departments...

Trump should veto the bills as proposed.

[CincyRichieRich]

They put the removal of home interest deduction so it would purposely fail.

They don’t want this under Trump’s watch.

[Chgogal]

The _uckers think we are stupid when it comes to the elimination of the personal exemption. I find it insulting that they think we are so stupid.

Regarding SALT, living in Illinois, my recommendation to those who pay too much in other blue states; MOVE or change the politics.

My guess, it's easier to move.

[SkyPilot]

The billionaire tax scam break will cause the GOP to lose both houses . the GOP are so utter corrupt and clueless . THE MOST BOUGHT LEADERSHIP IN MY LIFETIME . Removing middle class tax deductions so Apple gets more tax breaks

And what is so infuriating is that so many Freepers are drinking Paul Ryan's, Kevin Brady's, and Mitch McConnell's Kool-Aid.

I guess the collective IQ of this place went down about 30 points recently. Why, I am not sure. Perhaps blind devotion that anything that Trump contemplates is magically pure gold.

Trump asked for a cut in the corporate taxes on the campaign. He never, ever asked for a tax raise on the middle class to "pay for it."

Right now, I think Trump needs a win so badly that he is willing to go along with this abortion of a bill. I don't think DJT is out to hurt us, but I believe Paul Ryan and Mitch McConnell are. And it looks like they are going to jam this thing through.

https://www.cnbc.com/2017/11/11/larry-kudlow-pro-growth-gop-tax-cut-is-on-the-way--this-year.html

[kearnyirish2]

Trust me, there has been no recovery here in NJ; you live in a state with plenty of refugees from NJ/NY. The only way most Americans can buy homes in NJ is if they forego children - which means they’ll be worked to death paying high property taxes (primarily school taxes for other peoples’ children) until they die, or are forced to sell the home upon retirement.

I don’t doubt Trump has helped the economy, but I’m sure the recovery is taking place in areas without the massive tax burden overhead that is strangling businesses here in the northeast.

[alloysteel]

There is a surprisingly small sliver of the tax-paying public that is actually affected by this provision. Because the personal exemption has been made SO large (and I recall a time when the “personal exemption” was only $600 per person), that for the vast majority of people it makes no sense to itemize your return.

State and local taxes, including property taxes, are really a much more responsive way to tax people than through a Federal income tax system that REWARDS rapacious tax collection by the state and local governments. If taxes are too high, that only feeds applying more and more largesse upon those who pay NO taxes.

Taxes do not have to support a military force for the individual states, not even through the state militia, which is largely funded by the Department of Defense, as an auxiliary army reserve to be called up in times of crisis. State militia, of course, have other purposes not restricted simply to the military defense of the nation, as they also have rescue and restoration functions at the state level.

Local and state law enforcement actually take up a relatively small part of the state budget. Much if not most of the budgets are consumed by social service programs including welfare programs in which there is little or no incentive to return ANY of the clients, many of which are potentially competent wage earners, to productive employment. There is a small minority for which the state services are justified, but most of the rest are simply collectors of income flow in no way relating to the overall productivity of the population of the state.

[P.O.E.]

They are written to appease the donor class and lobbyists who want pay back.

What else is new. Sad, really.

[Alberta's Child]

Best post on the thread.