Posted on 06/09/2010 7:33:20 PM PDT by SeekAndFind
Screw the workers, let them carry the couch potatoes, tax the producers to help the poor renters, etc.. When will we ever get our liberty back? It looks like never.
“What the heck is so special about interest payments that they should ever have been tax deductible in the first place?”
Well, nothing...and everything.
It depends on what the borrowed money (that generates the interest) is used for. And it depends if the taxing authorities wish to encourage or discourage some types of behavior. In other words, favoritism, at some level.
If the taxing authority = government wishes to encourage home ownership, then mortgage int becomes deductible = favored. In some ways (other than it being a tradition) this makes sense. It encourages families to settle into stable neighborhoods, it encourages builders to build and plumbers to plumb, and these folks get stable jobs and become nice little consumers who, ultimately, spend their tax savings elsewhere. So the gov’t really only defers, it doesn’t forego those taxes. And stable neighborhoods result, with stable people able to work stable jobs and on and on.
If the govt wishes to encourage the update and replacement of aging machinery, then it can offer deductibility on the interest paid on funds used to buy or build the updated gear.
If the gov’t wishes to encourage debauchery, then the gov’t can allow the deductibility of liquor, hookers, and limousines.
It’s no different than saying that “if you tax something, you get less of it”. If you un-tax something, you theoretically get *more* of it. It’s just a matter of what behaviors the gov’t wishes to encourage/discourage today, tomorrow, over time.
Does anybody here seriously believe that democrats have those things "on the table" for cuts?
Sorry, just another tax break that should be dropped! I really should say another Government subsidy...
Sorry, that is not a problem for Government! That does seem to be a problem these days...
They'll never drop it. They'll only take it away from "the rich" via means-testing. We have to make it pay to be a loser in this country.
Of course not! Just another way to rob the rich to pay the poor... (Today’s Robin Hood)...
“I’ve long said that the mortgage interest deduction makes no sense at all. Not only does it drive up the prices of homes, but it gives an incentive for homeowners to stay deep in debt. “
You’re right, but that probably won’t save you from the wrath of angry mortgage-owners.
” Getting rid of it would drive prices down, “
There’s your answer. If the deduction were neutral removing it would have no effect on prices.
“No tax provision is inviolate. I can recall when: all interest, including credit card and installment interest, was deductible; when all medical expenses, without the 7.5% threshold, was deductible; when State sales taxes in addition to other state taxes, were deductible; when business expenses were all deductible without the 2% threshold.”
“I don’t remember when all those things were tax deductible, “
They were deductible prior to 1986.
Fanny and Freddy didn’t ‘bankrupt the mortgage industry’ despite a lot of the nonsense that gets repeated around here.
I prefer to live free of debt.
I, as does everyone, need to live somewhere.
My landlord is actually very happy that I choose to “rent”
my housing needs, as he/she/the corporation needs people like me to provide the funds to pay for the property taxes, so they can continue to “own” the property.
Think about it.
My my...aren’t we judgemental..
I have worked 16 hour days for alot of years. Everytime I think I might get ahead they use the tax code to club me.
Until we get a Fair tax, we will always be slaves to this do gooder tax code. Wouldn’t you really rather be free?
This is all part of the government’s attempt to destroy families. Cap and trade bill has a tax for selling your home. It also has a provision that sellers must, at their cost, have energy compliant window, doors, roofs and appliances. Take away the interest provision and the housing market will be the final nail in the housing market’s coffin. Real estate will become just another part of the nationalization process.
People love their mortgage interest deduction. It’s probably the only reason most taxpayers get a refund. If this is taken away, it will be the last straw.
when inflation comes, $250,000 will be squat, and we will have all these taxes tied to “the rich” that will really be tied to everyone. More AMT for all.
“You’re right, but that probably won’t save you from the wrath of angry mortgage-owners.”
No one likes having the rules changed in the middle of the game - esp not after having made the largest investment of their lives (for most buyers).
Imagine if Bush had proposed such action - the media would have been in a hate-frenzy. But now, "economic experts" see this as a viable way to close huge deficits. Huge deficits, I may add, that are caused by enormously excessive government spending.
It went back to the original tax legislation establishing the income tax.
Way back then, most loans were associated with business. It took until the late 20’s before there were more mortgages on homes/residences than there were on farms. Many farmers had lines of credit with dealers of all sorts, so the tax code allowed deduction of the interest paid on operating loans and other types of credit.
Well, the tax code stayed pretty much the same as America changed; the deductibility of interest paid stayed in the code, even as most interest paid became mortgage debt, auto loan debt, revolving unsecured debt (eg, credit cards). In the Tax Reform Act of 1986, interest for business loans was kept in, but for personal debt, everything but mortgage interest was pulled out.
The bargain that Reagan’s advisors were making back in those days was “Yes, we’re eliminating a LOT of deductions, but we’re lowering your tax rates overall.”
That's a good point, though I'm not sure it helps "the wealthy" all that much. Under the Alternative Minimum Tax (AMT) most of these deductions disappear and are replaced by a large, fixed personal exemption -- so above a certain income the deductibility of home mortgage interest has no bearing at all.
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