Posted on 06/18/2012 9:48:44 AM PDT by Shout Bits
Shout Bits has argued that the Mortgage Interest Deduction is not so helpful to regular Americans, but with interest rates at historic lows, now is the time to eliminate this market distortion. Not only does the MID encourage buying unaffordable homes and promote market bubbles, the primary beneficiaries are wealthy individuals as large banks. Eliminating this deduction would actually help most ordinary homeowners.
For 2012, a couple filing jointly can claim an $11,900 standard deduction, even if they have no otherwise deductible expenses like mortgage interest. Therefore, the first $11,900 in mortgage interest paid by such a couple generates no tax savings for them. Today's national average 30 year fixed mortgage coupon rate is 3.8%, which means that a mortgage smaller than $313k (11900/.038) generates no tax savings for a couple filing jointly. Now, a $300k mortgage is not unheard of, but it is clearly not for the struggling working class.
Since the first $313k of a mortgage balance is not deductible, the tax incentive is to borrow as much as possible. After all, Uncle Sam is kicking in about a third of the interest expense above $11,900. Further, the tax code discourages paying down mortgage balances, since as interest payments fall, so does that tax benefit. This perverse incentive leads to speculative bubbles which burst when incomes fall below the point where an income tax deduction is available. The MID certainly contributed to the real estate crash of 2008.
Worse still, a recent study by Andrew Hanson at Georgia State University concludes that the tax code's reach into the mortgage market increases mortgage rates for modest homeowners. Mortgage lenders siphon off 9 to 17% of the government's subsidy intended for homeowners (as much as $1.7bln per year) in the form of higher rates. Not only does the MID not benefit smaller borrowers at all, according to Prof. Hanson's study, it costs them hundreds of dollars extra, even if they cannot take an interest deduction.
It is always wrong, corrupt, and perverting for the government to manipulate markets as it does with the MID, but now is the perfect storm of minimal benefits and maximum harm. Mortgage rates cannot fall much further due to structural cost limits, so the interest deduction benefit is nearly as small as it ever can be. Likewise, with tighter lending criteria, only the well-off can qualify for loans big enough to earn an interest deduction above $11,900.
With the Federal Government looking for ways to raise taxes, the very worst choice would be raise marginal rates. Instead, a flatter and broader based tax code is the answer that is more just and stable. Eliminating a deduction that only benefits the well-off, while harming modest borrowers and enriching big banks, is an obvious choice. The time is now.
Shout Bits is available on Facebook: http://www.facebook.com/#!/ShoutBits
Again, this is nutso ~ you pull one tax of hundreds out of the woodwork ~ the federal personal income tax ~ and you use the statistics there to beat people on the head for not paying taxes.
Does not compute.
Sean Hannity keeps telling us he's not a Republican. Let me say this about him ~ he's a fascist apparatchik and not really a Conservative.
Anyone who wants to expand a tax that was designed to be a very narrowly applied tax IS NOT AN HONEST PERSON either. That's what got us to this problem.
Starve the Beast first!
tax the busninessman for every trip he takes using those miles...
while we're at it, tax every benefit that the richys get to "claim"...every stadium seat paid for by corporate and every lunch, every drink, every prostitute, etc....
they love going after the very few thinks that regular people can deduct...
The deductibility of expenses is exceedingly limited under personal income tax rules ~ and simply treating personal income under the same rules as corporate income or capital gains would probably almost eliminate personal income taxes for the vast overwhelming majority of the population.
I gather that was the original design!
For your info the USSC has ruled that the Money collected by the SS tax is just revenue no different than any other money collect by the government. You are under the false assumption that there is a Social Security debt there is not.
The proceeds of both (the employee and the employer) taxes are to be paid into the treasury like other internal revenue generally, and are NOT earmarked in any way." Helvering v. Davis, U.S. 619, 635 (1937)]
People participating in Social Security payroll deductions do NOT acquire property rights or contractual rights through their payments, as they would if they were paying on an insurance policy or contributing to an annuity plan. Simply put, there are no guarantees! The Congress does have power to deny benefits to citizens even, though they had paid S.S. taxes. Also, the amounts of benefits granted are at the option of Congress. Flemming v. Nestor, 363 U.S. 603, 610 (1960).
The Fifth Amendment has nothing to do with social security.
Just step back away from The Treasury and go on about your business and it will be OK.
(That's called Real Politik)
http://www.freerepublic.com/focus/f-news/2897011/posts ~ whatever you think those cases you cited say take a good look at today’s news. The meaning has changed ~
Just step back away from The Treasury booze and drugs and go on about your business and it will be OK.
BTW, some of these cases from 70 years ago are RIPE for modernization. I really don’t think you can get away with stealing Social Security funds.
Social Security is not a contract it is a tax.
Are you serious, they are stealing the future of everyone. It is all just going to collapse just like any other Ponzi scheme.
Yeah, imagine me trying to talk about the most discussed and controversial tax. Who cares about the income tax or that 50% of the population does not pay it?
How dare I have the audacity to point out that the people who do NOT pay it are the loudest screechers against reducing it and for raising it? Those who do not pay their fair share must be punished after all.
Now why don’t you tell me how much of that tax the top 5% of income earners pay for surely I must be mis-informed?
Nice red herring wrt GE too.
The income tax is currently paid by the TOP 50% of income earners and is still disproportionately leveled up a “narrow” segment of tax payers, GE notwithstanding.
All real Americans oppose taxes of any kind and accept them only due to dire necessity.
The federal personal income tax has failed.
Really doesn’t matter now does it. You steal it you’ll pay for your crimes one way or the other. So don’t even think about it.
Please restrict the discussion to the topic your side selected ~ to wit, the federal personal income tax.
While I understand you think you have to slander Hannity at every opportunity even when totally inappropriate, you can save your venom since I don’t listen to or watch the boy. I also don’t know what polls you believe I referred to.
Yeah, we can see how opposed Americans have been to taxes particularly after watching them elect Democrat after Democrat for decades.
Don’t even TRY to tell me that they elected them because they believed they would do anything other than raise taxes on “the rich”. If Americans hated taxes as much as you claim the Democrat Party would not even exist.
Make sure you ping me when the federal government is cut down to such an extent that the income tax can be eliminated for that 50% which actually pays it.
Why not? The tax code is so convoluted anyway, think of all of the non-productive man-hours expended in this country, just because of the complicated tax code.
What the hell are you talking about? The federal income tax is ALL I have talked about. It was you who objected to me talking about it.
BTW when you speak of corporations’ taxes you are really speaking about taxes on individuals as well. Those taxes are passed on to the consumer so all taxes are from the individual consumers.
Arguments to the contrary are never persuasive.
BTW, tax individuals the same as corporations. It'll all come out in the wash.
Or, you could tax corporations the same way you do individuals ~ with no reference whatsoever to profit or loss ~ just a GROSS INCOME TAX.
Anything to make more people pay Income Tax to have skin in the game.
Which tax?
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