Obama to Seek Reversal of Tax Break(Note homeowners: He is coming after your mortgage tax deduction)

wsj ^ | 2/14/11 | MARTIN VAUGHAN

[Jonty30]

Bestintxas, I’m in agreement on one point with Obama, because it is a point that I support, because it gets the government out of the way.

One point of supoort does not make me an Obamamite.

He’s doing it raise tax revenue to pay for his, and congress’s spendthrift ways. What I want is for the government to have the lowest taxes possible. Quit giving tax deductions and quit favouring the market in anyway.

You can’t have it in all ways, to have the government provide social welfare, social benefits and low taxes. That is why your debt has headed into the stratosphere. It is also why you guys are going to lose everything as a country, because both Republicans and Democrats aren’t dealing with the situation.

Get the government out of the way of social spending and everything else. Unless you reduce the taxation to no more than 19 percent (the historic maximum for tax revenue generation of your country) and set constitutional limits on getting the debt repaid, the US is finished as a country and God help us all.

I’m may be Canadian, but I know where your country is headed.

[sickoflibs]

RE :”The Egyptian Government shut down.....think about how much money they’re saving. Shuting down the Government, however briefly, is like NOT “raising the Debt ceiling”.....much to do about not much”

Funny, that is that what Republican voters assumed when Newt took credit for the shutdown in 2005. But when it was found out it cost MORE to shut down the government than to keep it open, voters were p—ed. (Federal employees get paid during a shutdown when they dont have to work.) And Republicans caved and ran for cover.... and Clinton was re-elected easily.

Republicans later claimed it was Clinton that shutdown the government, but they had already gone on record saying they would do it, thinking it would be popular.

Hopefully this time they will have a real plan.

[4Speed]

“Clinton was re-elected easily” ?

Right, with less than 50% of the vote Clinton was elected, and I dont’ call that “easily”....you would have us believe that Shutting down the Government was why ?

Sorry, I don’t go for that propaganda. Shutting down the government is good, IF they are NOT LISTENING to the People’s representatives, and Spending MORE money than we have for the next 10 years.

[agrarianlady]

I don’t think it necessarily follows that since welfare beneficiaries are getting the fruits of our labor, that we are equally entitled to something else.

First of all, I don’t think able-bodied welfare beneficiaries are entitled to the fruits of our labor. But I absolutely believe in some social welfare at the state and local levels. If a person is born with a severe handicap, for example, and his parents die or abandon him, someone has to care. The church is the best place for welfare programs, and they already do help a lot in local communities, if people cared to notice. But I do think there’s a place for helping the most helpless.

The mortgage interest deduction encourages people to buy houses. You think that can only be a good thing. But it isn’t necessarily. In this current crisis, people were greatly encouraged to buy homes that they couldn’t maintain our keep up with. It bankrupted them, because the costs of homeownership were higher than renting! They also were completely trapped upside-down in a mortgage and when they lost their jobs, they couldn’t easily move, as a renter could do.

There can be great economic benefits to renting! A person can move immediately for a better job opportunity. Times have changed — we’re not an agrarian society any longer where staying put is the only way to live. Heck, I’ve lived in many neighborhoods here in Northern VA where there’s people moving in and out all the time - we’re only so lucky that we’ve been able to get in an out of houses with our shirts on our backs for the most part.

Homeownership can be a great way to save, but isn’t that benefit enough??? Why add the extra perk of the mortgage interest deduction?

[Wuli]

“Continuing to destroy incentive to help the housing market won’t really help it will it?”

Most economists and most economic studies have shown it has a very negligible affect on “incentives” to buy houses and where it has the most “incentives” is where those incentives are needed the least - among house’s priced where those buying them could afford them anyway.

In other words, its biggest “incentive” helps build McMansions and not houses most Americans can afford to buy. Its a SOP to the builders, not most homeowners and taxpayers. It helps create churning - greater volume in “home buying” and not particularly greater volume of “home buyers”; as the longer the house is owned the less interest is being paid with each mortgage payment, which means less of a tax deduction each year; which makes some think they should sell their house just because their mortgage interest deduction has declined, not because they necessarily need to sell.

Canada has as high of a rate of home ownership as the U.S. and no mortgage interest deduction and not big national home buying subsidies either.

There is a lot of economic myths about a lot of the U.S. housing market.

[Wuli]

“The housing market needs all the help it can get.”

The legitimate needs of the “housing market” does not need mortgage interest tax deductions.

It needs:

(1) for previously over-priced homes to come down in price, or foreclosed on and come down in price, so that someone who is working feels they can afford to buy,

(2) and more people working, so they feel they can afford to buy,

which will, over time, end major further declines in home prices and provide incentives for builders to build again.

As far as I know Canada has neither tax deductions for mortgage interest or major home-building subsidies (no Freddie/Fannie or FHA) and they have a home ownership rate equal to the U.S.

[Flag_This]

"This is one area, where I agree with Obama. The government should not be involved in the marketplace, outside of ensuring that regulations are minimal and necessary."

For some reason, I don't believe this is obama's first step towards a market-based economy.

[SierraWasp]

"Is the constitution actually allowing this?"

That old parchment under glass and the judges that interpret it have no real inate enforcement power of their own.

It's up to the people's representatives to demand the executive enforce with whatever means necessary, or up to the people... themselves if their representatives won't, by doing what we started in the fall of '08 and '09 with our marches on Washington and our elective action last November.

Government is not our friend and is pure force when all is said and done. We've tried to limit that force with a constitution, but it's a weak force when citizens won't drive the executive to comply, or the executive won't comply with anyones efforts.

The old three legged milkstool concept started out with the executive leg being somewhat equal to the judical and congressional, but the executive leg has the biggest potential for abusing the people and needs the strongest oversite by the people.

Congress all too often just looks the other way since they've feathered their nests to the max!!!

[sickoflibs]

RE :”Right, with less than 50% of the vote Clinton was elected, and I dont’ call that “easily”....you would have us believe that Shutting down the Government was why ?Sorry, I don’t go for that propaganda. Shutting down the government is good, IF they are NOT LISTENING to the People’s representatives, and Spending MORE money than we have for the next 10 years.”

It actually cost more to shut it down because the Federal workers all got paid, and many got paid overtime to make up for it. The Republicans wet their pants and caved after seeing public opinion polls. Then shortly afterward the Federal workers got ANOTHER two weeks of paid time off when the government shut down due to a blizzard, January 1996 I recall. It was a disaster. You dont recall ANY of that?? You remember Republicans doing victory laps, Democrats weeping and Clinton losing in 1996?

This time Republicans better have a plan. I suspect they wont even have the guts. But you never know.

[taildragger]

In 1994-95ish, when Steve Forbes was looking like the next President, the likes of Bob Brinker were certain the Flat Tax was reality.

Money Magazine even did a spread where they pontificated yes, it would be hard on real estate with an 18 month correction timeframe.

That was then and this is now, given the debt and all the crisis we have seen, even if we went full blown Forbes-ian Flat Tax mania, I am not sure how the real estate market would react or ever recover...

[Jonty30]

I agree with you on Obama’s intent. However, you have to start somewhere. You guys are in deep and I don’t think it is appreciated how deep. :(.

I am very much a free market guy, but you need a plan to get out. I honestly don’t believe that you guys have more than 5 years to fix it and then it is all going to shiats.

[Flag_This]

"You guys are in deep and I don’t think it is appreciated how deep. :(."

I'm not worried. We have John Boehner and his merry band of eunuchs to save us.

[Jonty30]

Oh Gawd,

We are finished. Granny, go get your gun.

[from occupied ga]

I don’t think it necessarily follows that since welfare beneficiaries are getting the fruits of our labor, that we are equally entitled to something else.

I don't recall saying this. Please don't paraphrase what I said an then proceed to argue against your misquoted restatement of what I said. Your restatement is not really what I meant.

However, to make it easier for you, I'll do my own paraphrasing. To clarify my position let ME rephrase my comment regarding the mortgage interest deduction. Here it is:

You cannot question the social engineering of a benefit to one group of citizens without equally questioning the social engineering benefits to all groups of citizens. In short I'd say there is more right to a mortgage interest deduction than there is to a welfare transfer payment because in the former case you're at least interfereing less with the acutal person who did the work that earned the money.

And yet another way of saying it, I see a fundamental difference in the mechanism between allowing people to keep more of what they earned, and giving more of what other people earned to people who didn't earn it

But I absolutely believe in some social welfare at the state and local levels.

Then we have nothing to discuss on this topic, because I absolutely believe that someone else's misfortune or personal poor decision making does not give them a legal right to my resources nor do I believe that the government has the right to transfer the hard earned wealth of one citizen to another - based on the total lack of any constitutional authority to do this.

Now if you're talking charity I'd agree we should VOLUNTARILY contribute (OR NOT) simply to follow the christian practice of charitable works.

people were greatly encouraged to buy homes that they couldn’t maintain our keep up with. It bankrupted them.

OK Here again we disagree on the details. What encouraged people to buy homes they couldn't afford? I think we both agree that it was government meddling in the marketplace, but as stated above, I see a fundamental difference between allowing people to keep more of what they earned, and giving more of what other people earned to people who didn't earn it. The mortgage crisis was brought about primarily by two factors

1. the government forcing lending institutions to make risky loans to people who were never qualified to receive those loans. AND
2. peoples' OWN POOR JUDGEMENT in taking easy loan money not accepting that a LOAN is not the same as a GIFT, and that a LOAN has to be REPAID. A concept that many people have a real problem comprehending at a visceral level.

In short the exact sort of irresponsible attitude that keeps people on the welfare rolls.

...renting...

I agree - Not everyone should own a home. Home ownership requires a certain minimum level of fiscal responsibility and some people simple do not want to be fiscally responsible. Those with transient jobs should probably rent too.

Some people SHOULD rent. Different issue altogether though.

Why add the extra perk of the mortgage interest deduction?

I don't consider allowing people who actually EARN the money to keep a bit more of it a "perk." (Oh and BTW the home OWNER is hit annually with property taxes. Staggeringly high in some cases. I hope you don't consider this a "perk.")

[agrarianlady]

The mortgage crisis was contributed to by the Fed's monetary policy, a relatively new system of securitizing mortgages which passed the risk on, incredibly mind-boggling loose lending standards, and ramped up speculation due to the above factors. Fannie and Freddie were distinct contributors. The government did make banks lend to high-risk groups, sure. It's a huge talking point of Rush Limbaugh, etcetera. But it's not entirely factual that it was a major cause of our financial crisis. There was also a housing bubble that crashed in Ireland and Spain, and a banking crisis in other parts of Europe. Our laws about "forcing banks to lend" did not cause a global contagion. There were other factors.

I don't consider allowing people who actually EARN the money to keep a bit more of it a "perk." (Oh and BTW the home OWNER is hit annually with property taxes. Staggeringly high in some cases. I hope you don't consider this a "perk."

I consider the mortgage interest deduction to be a perk, sure. You wouldn't get it unless you were spending money on interest. Your choice. The mortgage interest deduction discriminates against renters. Did you know that Dick Armey's Freedomworks set up a website called "Angry Renter?" It's nice that a few people who pay mortgage interest and who itemize get this benefit, but it's not necessarily fair to those who rent.

It's also perfectly constitutional to allow local governments to set up some sort of social welfare programs. I can't imagine that everyone here is 100% against a safety net for the most helpless? Local governments have been doing so for centuries in the western world. The Roman Empire had a system, and the English had poor laws. The able-bodied who refused to work were imprisoned, but there were allowances made for the sick and helpless who had no family. The church was more cohesive in the middle ages - it's more fragmented now in the U.S. to allow for a solid system of social welfare.

What would you do if someone left an orphan on your doorstep? I imagine you'd call the local government authorities. We need some sort of system to deal with these issues, don't we? It doesn't need to cost very much if it's run well and run locally so that fraud doesn't occur, which is does now with the federal government trying to run it.

[bestintxas]

“I consider the mortgage interest deduction to be a perk, sure. You wouldn’t get it unless you were spending money on interest. Your choice. The mortgage interest deduction discriminates against renters.”

You seem to think that renting is not a choice yet owning a house with a mortgage is. Do you know anybody who deliberately rents? I do, they don’t want the hassle of owning and paying taxes, insurance, interest, mowing, etc.

The logic is the same falsehood of the Obamacare crowd when it spouts so many uninsured in this country. there are plenty who do not want to pay the insurance. they also have a choice.

How much in real estate taxes does a renter pay anyway? ZERO. Means they do not fund the local school districts in at least the areas where I live.

Home owner encouragement is what should be sought after, not discouragement.

[agrarianlady]

How much in real estate taxes does a renter pay anyway? ZERO. Means they do not fund the local school districts in at least the areas where I live. Home owner encouragement is what should be sought after, not discouragement.

Renters contribute just as much to the local school coffers as the owner of the house. The owner wouldn't be able to pay the taxes without the rents. The business relationship also gives more to the state in terms of taxes.

A person does choose how much interest he or she would like to pay. About 30% of Americans own their home outright, so they don't benefit from the interest deduction. Other Americans don't reap huge rewards from the deduction -- it just depends on whether or not they itemize their deductions. Only 30% of Americans itemize.

I would just prefer a simpler tax code, if that's possible. I dislike it with a passion.

[AbolishCSEU]

And that’s based on the assumption that tenants are actually PAYING their rent. If you ever get to the 7th circle of Hell in which you become an inner city landlord, you’ll find out that the tenants soon stop paying rent or their nanny state subsidizers soon find a REASON to stop paying their rental subsidy (i.e. tenant’s unauthorized BOYFRIEND breaks down the door; immediate CODE violation and the rent stops)usually a month after they move in.

And for those of you who say “well put him on the lease!” HA! I say you’ve never been an innercity landlord!!