Posted on 11/02/2005 5:57:15 AM PST by austinite
Buy, buy, buy!!!!!!!!
I have long wondered why the US taxpayer has to subsidize the person with a million dollar mortgage. Sorry, but I don't think most would call that person middle class.
Nor do I think somebody making $200K is middle class. If somebody making $60K has a million dollar mortgage, they are in deep trouble and won't have the place for long regardless of any tax subsidies.
We're from the government and we're here to help.
oh boy, the class warfare is about to begin
That was the proximate cause of the S&L crackup.
Now they want to do it again.
I saw this report on the tax recommendations and was VERY UNIMPRESSED. There is no way it will ever get passed. It's either a flat tax or forget it.... As usual, it's too bad they just wasted time and money coming up with this crap.
So many industries benefit from the housing boom. Appliances, lumber, shingles, cement, etc. We should be very careful when we trim this back or we could see so really bad results.
so thulldud, should i max out all my mortgages, conserve the cash, then buy for pennies on the dollar when washtingtoon crashes the economy? hey, this tax reform might just work for me after all, lol.
Gee, here's a radical idea - Why don't they subsidize the repeal of the AMT by cutting spending instead of punishing homeowners? I mean, WTF are these people thinking?
The problem is that this penalizes first time homebuyers out of the gate. Even those of us who live in modest homes will have their deduction reduced from 27% to 15%. For those of us in the early years of a 30-yr mortgage, only a sliver goes to paying down principle, and the tax refund goes a long way to cushioning the blow.
So how exactly does removing the $1M limit on eligible mortgages, and replacing it with "average regional price of housing" limits simplify anything?
If this thing gets to be law it should be called the Elect Democratrs Act of 2006.
Maybe because interest INCOME is taxed?
The single most important thing we could do to reduce the deficit and national debt is to encourage people to save. Taxing interest and capital gainst discourages savings, big time. That's why the average economic idiot like you has $7,000 in credit card debt at 21% per annum. Stupid is as stupid does.
Plus, the person with the million dollar mortgage employed a lot of people in building the house that mortgage is attached to. When Congress passed a "luxury tax" on yachts, rich people quit buying yachts and thousands of blue collar workers in the yacht building industry became unemployed.
But go on hating rich people because they have more than you. Act like Karl Marx told you to. Go ahead and destroy the goose that laid the golden egg,
OTOH, they long ago eliminated all other interest expenses as deductions so now everyone uses a H/E line, and takes deducts the interest. The rules on what H/E interest is deductible is very clesar, and I'd estimatethat 90% of people are violating the law..
This provision, providing a 15% credit on reduced mortgage interest amounts, is bull---- and is effectively a tax increase. My wife and I bust our rear ends, working on average 60 to 70 hours a week each, to make 200K.
With private school tuition of 25K per year, which we get NO tax credits for, while at the same time saving the public school system $ by not having our two children in their system, one of the few breaks we get for being in an effective 50% tax bracket (state and federal) is to take a mortgage deduction on our office, home, and vacation home.
For years we have been subsidizing other folks by paying at the top end scale of the graduated tax rates, BUT we haven't been making HUGE amounts of money. I consider ourselves, given the amount of time that we bust our tails, "upper middle class"
This proposal would appear to be a tax HIKE to us. Our real estate has been our chosen retirement plan. We are self-employed and by the time we were planning on slowing down (i.e. 40 hour weeks) we were hoping to have it all paid off.
Our investment decisions were made on the basis of getting this one, time honored, tax break.
Why they don't just simply go to a national sales tax (ala Bortz) is beyond me. I have not done a final number crunching, and I don't want to sound anti-rich, but this proposal seems to favor both the lower and higher income brackets but unfortunately, squeezes once again the middle class.
And yes, 200K per year in combined income for a professional couple in this day and age is middle class, albeit upper-middle class. People have to remember, many individuals make this income later in life because they spent years in graduate school foregoing income in their twenties, and racking up student loans.
Actually, that was only a small part of the story. The primary cause of the S&L crisis was the steep decline in interest rates in the 1980s, coupled with Federal mortgage regulations that prohibit banks from charging fees to customers who wish to refinance their mortgages.
Back when interest rates were high in the early 1980s, you had lots of people locking in long-term rates of 12% or more on things like 5-year CDs. This was not a problem because banks were charging 16% or more on their mortgages. But when interest rates declined dramatically after that, everyone with a fixed-rate mortgage went out and refinanced for a much lower rate. So banks were basically screwed, because they were getting rates of around 8% on their loans but still had to pay out 12% on their long-term certificates of deposit. There's no way anyone could stay in business for long under those conditions.
The problem corrected itself as those long-term CDs reached maturity and the long-term interest rates paid out to customers were more in line with the lower long-term rates the banks were charging on their loans.
I know it's hard to have any sympathy for banks, but they basically operate under one very onerous condition in which every mortgage they underwrite is a fixed-rate mortgage when rates are rising (since customers will not refinance a mortgage to pay a higher rate) but a variable-rate mortgage when rates are falling (since customers can't be penalized for refinancing).
good post. i find it amazing that so many conservatives will play the class warfare thing. people are just dying to kill the golden goose, not to just kill it, but to murder it with extreme prejudice. when they get what they want, then the shrill cries will be heard constantly.
May I suggest that income taxes should have never been used for social engineering. A tax deduction for doing something the government APPROVES of is insidious.
Yes, I own my house, and yes I have used the deduction because that is the way the game is played. It does not have to played that way nor, IMO, should it.
Tax for the legitimate functions of the government (as the Founding Fathers instructed) and leave the social engineering to the Church.
I agree, it is way too complicated for average Americans which is why the tax code needs to be simplified so that the form is no bigger than a post card.
Rhett Butler, Gone With the Wind. (Quote probably inaccurate, since I don't have the book handy.)
This idea that mortgage interest should be tax-deductible because interest income is taxed is quite silly, since it only reinforces the notion that the mortgage interest deduction is nothing more than a government subsidy. It is inherently unfair to provide a homeowner with an interest deduction that is not available to someone who pays other forms of interest on loans (auto loans, student loans, etc.).
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