Posted on 11/02/2005 5:57:15 AM PST by austinite
Yet you're a closet socialist because you believe that the purpose of the tax code is to punish success and reward failure.
They can make the transition gradual.
Britain went through this ten years ago and the effects of the reduction of the mortgage deduction were nothing compared to the normal boom-and-bust of the housing industry. House prices are in for a fall in many parts of the country anyway if we expect people to be able to afford to buy them. Why not add a change of absolute good to the process?
You stated it perfectly HostileTerritory.
A subsidy always makes things more expensive if ALL the cost factors are included. However, we know the government figures (correctly) that most of us never look that deep into the entire picture.
""Even those of us who live in modest homes will have their deduction reduced from 27% to 15%.""
This is the problem and what people knee-jerk react to without understanding. This is NOT 27% to 15%. It is eliminating the ability to recude your income by the amount of mortgage interest and adding the ability to reduce the amount of tax you owe by 15% of your interest paid. The 15% is a CREDIT. People will never get this. This is what will doom the effort. You must run your own numbers to see if you will pay more or less.....
If it's good enough for the socialist paradise of Great Britain, it's certainly good enough for the US. </sarcasm>
You are absolutely right Hildy! That would be the only fair way to do it.
To be practical, such a quantum change would have to be phased in to take into account all those investments that had been made based upon a tax code fudge factor. The phase in process must be applied, as you suggest, to the entire tax code.
typing error corrected:
""Even those of us who live in modest homes will have their deduction reduced from 27% to 15%.""
This is the problem and what people knee-jerk react to without understanding. This is NOT 27% to 15%. It is eliminating the ability to reduce your income by the amount of mortgage interest and adding the ability to reduce the amount of tax you owe by 15% of your interest paid. The 15% is a CREDIT. People will never get this. This is what will doom the effort. You must run your own numbers to see if you will pay more or less.....
A refund is the return of money to you that the government held in anticipation of your tax obligation for a year.
Part II: Most people take the tax impact into account when deciding whether to take on a particular mortgage. If the government changes the rules, then it has to do it carefully.
You are exactly correct!
I've seen my credit score tumble nearly 100 points in a year because I flipped a couple of balances to a "Zero-interest" deal.
BTW, I've NEVER been late on a payment.
Another reason they hate you. You don't give them the opportunity to heap on penalties and jack up your interest rate.
You can credit the Thatcherites for that change in British policy. And I wouldn't call the Iron Lady a socialist to her face if I were you.
Agree. And we've seen what happens to societies that do not emphasize home ownership and property rights. Since no one owns anything, values get trashed; the Tragedy of the Commons.
Repeal of Mortgage Deduction = Depression (not recession).
Guess it depends on if you're buying or selling.
A gradual change implemented over several years would be reasonable.
I live in NYC. 200k is middle class if you are just getting into the game. One can't buy a matchbox house for less than 500K.
I live in NYC and am in the process of trying to relocate my business down south. The writing is on the wall. Both parties have declared war on the taxpayer.
Ah yes, property taxes. The ripple effect of this proposal will deflate real estate values, whereby an informed property owner has no recourse but to challange the current assessed valuation of property.The assessor will be hard pressed to maintain the current level of valuation. Local government is going to suffer.Their budgets have kept pace with the inflated housing market.We should expect employee layoffs and a marked reduction in services if this ridiculous proposal is adopted. No politician who wants to remain in office will support such madness.
Probably not. I suspect there would be just as many buyers, but the prices of homes would be substantially lower. Since these homes are basically subsidized today, the removal of the subsidy will result in a decline in prices.
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.
No more silly than providing a similar subsidy to an owner of a $500,000 home just because he carries a mortgage on his house, while his next-door neighbor in an identical home paid cash for his.
I don't think Point #2 was a good idea, either. The other poster asked me to name some examples, so I posted a couple that immediately came to mind. LOL.
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