If you assume that one only buys things that are subject to sales tax once, and then stops consuming thereafter, then that is true. But in reality, we continue to consume "ad infinitum".
Under this proposal, if my property taxes were to go away, I would still be paying the same -- if not more -- in taxes, but in the form of sales taxes that are not tax deductible starting next year. So my state taxes stay the same or go up. My federal taxes go up because I lose a deduction. I have less to spend on the things I would choose to consume. But if I "do the math" I'll like this proposal?
Please address the automatically allowed 10% increase to your taxes every year based on the appraisal being raised. I guarantee you in the last 3 years, most people have seen their actual property taxes increase by a larger amount than the income tax deduction would have provided.
Apparently you have an issue with math.
We will assume the following, which is ridiculously conservative.
15% Sales Tax Rate
10% Interest Rate
2% Property tax rate
Your home appraises for $100k every year and never increases (riiiiight)
$100k Home
If you do not finance the tax up front and do not consider the time value of money, you are ahead after 8 years. (8 years * 2% = 16% > 15%). 2%*$100k = $2000 in property tax per year.
If you include the tax in your mortgage, you will pay about $1600 in tax per year, assuming the 10% interest rate.
Now, I’m pretty sure your deduction doesn’t equal $400 per year, but remember that you get a deduction for interest on your mortgage.
The down side is that, assuming my home did not increase in value even with inflation, if I sell my home, I’ll still be on the hook for the full tax amount.
As soon as you put in home improvements, the whole thing changes and you lose marginally less, but still pay less in tax. Sure, it’s better not to have mortgage interest to pay, *but it’s also better to not have the tax to pay.*
Your logic for the tax deduction would require me to believe you want to have an income tax in Texas, since you would get a deduction for it. Heck, why not have 100% state income tax, the feds would have nothing left to tax and you could be a *big* winner!