Posted on 02/14/2011 2:49:47 PM PST by fightinJAG
Earlier today, the White House released a budget proposal that included trimming the mortgage interest deduction for taxpayers in the top income tax brackets.
This is the first step in eliminating what many economists view as an expensive and inefficient housing subsidy.
Unfortunately, many of the critics of the mortgage interest deduction focus on its immediate costs. If it were eliminated, it might bring in more than $2 trillion of new revenue for the government or—as I proposed this morning—allow up to $2 trillion of new tax cuts for the American people.
Actually, I think getting rid of the housing subsidy could be an even better deal than that—providing it is done by expanding the deduction into a general tax cut instead of closing the “loophole” and raising taxes.
(Excerpt) Read more at cnbc.com ...
the flat tax would do the same.
These commies don’t deserve an extra nickel in revenue. Better to starve the beast; at least the private sector will have something left.
Screw the mortgage interest deduction, it’s just a big giveaway to the mortgage industry and Freddie and Fannie.
If you want to help the home buyers, make the principle deductible.
These utter morons will twist and turn and writhe like serpents, but will consider EVERYTHING except curbing their out-of-control spending!
Here’s a thought: why not just demand all Americans simply sign over their entire paychecks to the government and then go find an empty packing crate in which to live.
Agree... a tax hike by any other name...
These knotheads STILL don’t get it.
They seem to labor under some notion that if only taxes can be raised to some previous level of confiscatory nirvana, everything will be OK.
It’s over, folks. The corpse has been long ago raped and gutted. They’ve moved on to greener pastures, if you haven’t noticed, leaving the rubes holding the bag.
The US can’t grow its’ way out of this, the US can’t tax its’ way out of this, etc. For all that, the notions of taking money from one to give to another is only theft, but everyone seems to think that’s fine, as long as congress votes on it.
Whatever.
It would appear that you missed my point. Please allow me to try and discribe in more detail.
Our homeowner currently has a tax break for the interest on the mortgage. We then change the laws so that they no longer get the tax break. The homeowner then responds by creating a holding company and transfers the ownership of the home to the holding company. The holding company then rents the home back to the home owner for the cost of the mortgage, HOA, taxes and insurance.
This then allows the homeowner to have the company take the cost of the house via depreciation, plus the cost of interest, plus the cost of the HOA and insurance as an operational expense under the business. This in effect becomes a deduction.
So instead of just allowing the interest to be a tax deduction, you now have a lot more that can be deducted. The law of unintended consequences and the law of adaptation of the market will cause the revenue to be far short of the anticipated $2 Trillion. It might even create an environment where there is even less revenue because so many of the targeted tax group adopts tax mitigation strategies.
You’re an idiot if you believe that handing thousands of dollars of additional tax to the feds via elimination of the mortgage interest deduction is a good idea.
This one tax increase would gut the housing market, force down property values and force folks already on the brink due to tax increases (and de facto increases via inflation) into foreclosure.
Dumbest idea in a long time.
On the cigarettes, beer, and "sugary soft drinks," they're not even doing their song and dance about health anymore. They're finally honestly saying, "we need the money to feed the beast."
Bears repeating!
The government must stop spending.
There does seem to be a general lack of attention to the fact that if a house costs a buyer more per month (as in, if there is no mortgage interest deduction), then the price of the house has to go down to meet the buyer's per month budget.
Yep.
Doubt it would make a nickels worth of difference.
If Congress taxes more, they will just spend twice as more!!
People have to live somewhere. I don't consider a tax break on interest on home ownership when the alternative is rent much of a subsidy.
I don't think we have too much housing. What we have is too little industry, so that some of the housing has been abandoned in areas in the most economic pain. Fix the unemployment, and you'll see the housing fill up again. Right now you have families that are having to squat with Mom and Dad because of the economy.
One only has to look at European and other countries to realize that it is entirely possible to be a bankrupt government and yet still tax everything and everyone far beyond what is sane or rational. Approx. 6 (six) of the 10 (ten) dollars a gallon they pay for gasoline is tax.
There is no way out of this mess that doesn’t include a lot of pain. We knew this 30 or 40 years ago. When it goes, it’s going to be quick as lightning.
In wanting to remove this subsidy, this administration's primary interest is NOT increased tax revenues. Instead, their aim is to eliminate the incentive to own one's home. And, thus, force people into government-funded housing and apartments in the cities.
This is all about the socialization and forced urbanization of America.
>>You’re an idiot if you believe that handing thousands of dollars of additional tax to the feds via elimination of the mortgage interest deduction is a good idea.<<
I agree, I would be. ;)
I believe in eliminating deductions AND lowering the tax rate at the same time. Seems to me Reagan did that. And tax revenues actually increased.
[ “When the Government Subsidizes something you end up with more of it, and people wonder why there was a housing bubble.....”
People have to live somewhere. I don’t consider a tax break on interest on home ownership when the alternative is rent much of a subsidy.
I don’t think we have too much housing. What we have is too little industry, so that some of the housing has been abandoned in areas in the most economic pain. Fix the unemployment, and you’ll see the housing fill up again. Right now you have families that are having to squat with Mom and Dad because of the economy. ]
I disagree, when the government started subsidizing houses (both through the tax break and freddie and fanny)it caused the price of housing to rise. This created a false bubble where housing costs in some places twice as much as it should if the regular market forces were left alone.
My point was, Creating a holding company, yada, yada
is beyond the paygrade of your typical homeowner. However, that's no reason your typical homeowner should therefore be denied (most of) the benefits of that particular tax avoidance strategy. All that's needed are some smart (and hopefully honest, LOL) entrepreneurs to offer to buy and rent-back and take a cut of the savings, to the detriment of the government. Yet another creative financial service! Brought to you by people who could be searching for the cure for cancer but instead are finding ways to screw the government as expressed by the majority of sheeple leeches! The sheeple having only themselves to blame!
Whenever the pundit class brings up the Law of Unintended Consequences, one should hope for its vigorous enforcement!
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