Posted on 11/02/2005 5:57:15 AM PST by austinite
You'd get to do that anyway even in the absence of the deduction, because your mortgage would cost less in the first place.
Great news. They get rid of one injustice and add another. This is like ending slavery on the condition that everyone becomes an indentured servant instead.
Bottom line, everything is real estate. Everybody needs a place to live, everybody needs a building to work in. If you are not working in a building, then you are outside harvesting the natural resources to build that house or building. It's amazing when you look at it that way.
There are plenty of ways to encourage homeowners other than subsidizing their mortgages and inflating the costs of homes.
The mortgage interest deduction wasn't included in the tax code because the government thinks home ownership is a good idea. It was included in the tax code because the real estate and banking industries successfully lobbied for it and continue to do so.
You and I may debate the "societal case" for home ownership and would probably end up on the same side. As for the auto industry, well it contributes more to the economy from multiple industries than housing ever will (at least until al gorey kills it).
However, my point remains the same it is NOT THE FUNCTION of the tax code to give the peons a little kick back if they do the RIGHT thing.
If you look at all the threads on tax issues you can see how the lure of a tax break has woven a huge web that keeps more in government employed at the expense of the private sector.
If anyone on the FR had the misfortune to live in Western New York the last few years you would know how excessive taxes and "loop holes" have killed the area. This is coming to a community near you.
Erie County wanted to raise the sales tax (you know the one without any deductions) a measly penny (or 12.5% increase). FINALLY THE PEOPLE WOKE UP FROM THEIR BUFFALO BILLS induced stupor. When it hit everyone equally, well that just won't do, and they revolted. WNY is just on the cutting edge of a tax induced melt down. (of course the fricken unions have not helped)
Possibly another WNY Freeper can supply a more recent figure but the last one I had was 73% of the citizens in Buffalo, NY received some form of government check. They may either work for the government or suck off the taxpayers tit. All the tax breaks in the world will not fix WNY. All levels of government need to be stripped down to the bare bones and in some (many) cases eliminated.
It is a subsidy if some people are allowed to keep their money but others are not.
If taxpayers are permitted to deduct the interest on car loans for Ford vehicles but not for GM vehicles, you bet your @ss this is a subsidy.
If the tax only affects people who don't have the sense to structure their finances to avoid it . . .
If I have zero debt and don't own a home, how can I "structure my finances" to take advantage of a mortgage interest tax deduction?
The difference between a mortgage interest deduction on a rental property and one on a personal residence is that the rental property is used to generate income that is reported to the IRS. The mortgage interest is nothing more than one line item on a balance sheet that includes a bunch of costs associated with doing business.
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Name some.
This is very true. As a result I'm expecting support for the idea from the Libs. They would support anything that would hurt the economy if it would help them return to power. This would do the trick.
The Real Estate "bubble" is built in part on the deductibility of home mortgage interest. It's been the law for a long time and people have made their budget calculations based on the tax subsidy. You can remove it. You can argue that it would yield a tax system that is more fair. But if you do be prepared for the recession that will follow as real estate values fall, loan defaults increase and ultimately banks begin to fail. The last time this happened the American Tax Payer came to the rescue.
I don't think it's worth it. Stick to the system we've got. It works. Real Estate investments pulled us out of the most recent recession and things are rolling along pretty good right now. I wouldn't mess with it.
I don't smoke, and I rarely consume alcohol -- and I hate excise taxes on tobacco and alcohol, too.
What's wrong with that you ask? If you don't know, then no amount of explanation will suffice. Just where the hell did you see any class envy from my post. Apologize NOW.
My premise, fully supported by the skewered cow syndrome on this thread is and remains: "The tax code should be used for legal functions of the government and not social engineering."
If anyone believes otherwise then my point has been proved even further. Once these deductions become part of the fabric of how we do business, then our decisions are based upon tax code and not what is right.
I see this everyday in business. There are many decision made that are not really the best thing for the company but because of the tax implications, we do it anyways.
2. Provide a uniform annual tax exemption of $25,000 or so for all homeowners (regardless of the value of their homes) to cover the cost of insurance, maintenance, and local taxes.
Dude, trust me, I'm middle class in the Bay Area. I drive an 12 year old car, my wife drives an 8 year old car, my wife stays home to take care of our three kids and we're expecting a 4th early next year. My ugly ranch house but in a safe neighborhood that's just over 2k square feet cost me 829k in 2003.
And I can't move due to my profession, my love of California and the presence of both sets of grandparents in the area.
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These are your ideas? The first would be diminished in its usefulness since there would be fewer buyers if the mtge tax exemption goes away.
The second is just plain silly...you suggest that the owner of a $60k pre-fab house on a slab in a county with a tax structure that would impose a tax of maybe a grand a year should be gifted with $25k every year by the rest of us? Incredible.
I agree with you--the RE industry and related industries will collapse and trigger a recession.
I know your intentions are good here Alberta's Child but even if this was the ONLY exemption it would be wrong. While I own my own house and have for 35+ years, I know the people who rent are paying taxes that are buried in their monthly rent bill.
If you look at all the "what about me, or what about this deduction, or what about this loop hole" on just this one taxed based thread you can see how wrong this social engineering via the tax code has become. It will never be just one or two or two hundred deductions if you allow the tax code to be a vehicle for social engineering.
I am surprised to see such support for the government awarding special favors to some of us that do the RIGHT thing in the Master's mind.
Remember there can always be another bill clinton in the Whitehouse and do we want that scum to determine what is good for us?
I doubt it'll pass, but I wish it would. The whole plan is a simplification--and losing that deduction would make it worthwhile. Have you looked at your Alt min tax? It phases in, every year you pay more. It really hits hard at investment income, too.
I don't think people realize how much the mortgage tax deduction has neutered itself and become a burden on the tax system. Yes, it makes houses more affordable, so what this means is that houses have become much more expensive than they would have been otherwise. The deduction is priced into sale prices. The mortgage deduction feeds housing price inflation without making houses easier to buy or contributing to faster growth.
It's like heroin and we need to wean ourselves off of it, slowly enough to prevent a total economic meltdown, but deliberately and completely.
Well, of course I believe the tax code is absurd...but taking away this ONE only would be crazy. If you change the tax code, change it all...not just pick one that would hurt more than it would help. And I apologize...my comment wasn't specifically aimed at your post, it was a general comment about some of the posts I was reading...I happened to hit reply to yours. Forgive me.
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