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Refinancing to mine equity is wealth destroying too. Giving people a bigger tax deduction for being stupid is not productive of more wealth. Just phase the mortgage interest deduction out over 10 or 15 years and nobody would get stuck with an unexpected bill.
Anyone who can refinance at a rate of at least 1% below the rate on an existing mortgage should do so. You will end up with either the cash-flow advantages of a lower monthly payment or the obvious benefits of having the same monthly payment but with a sudden bunch of cash in hand. Take your pick. The only bad play here is to sit by and do nothing.
Liberals think that the money you earn belongs to everybody, except for the portion the government let's you keep.
More likely they understand that taxes are a necessity in any sort of civil society, and that paying your taxes is hence a form of patriotic obligation.
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Originally Posted by AnesthesiaMD
Conservatives think that the money you earn belongs to you, but the government takes your hard earned money away, to give to other people that didn't work for it.
A lot of home sales these days are CASH sales - the numbers I've seen suggest that between one-third and one-half of home sales these days are CASH sales.
Obviously, having a boatload of cash allows bidders to bid up prices, like when two or more cash bidders are competing for a property. It's not just about bidders with financing.
Ok but I'm asking you to explain how Mortgage Interest Deductions allow people to bid higher prices.
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Originally Posted by Pub-911
Anyone who can refinance at a rate of at least 1% below the rate on an existing mortgage should do so. You will end up with either the cash-flow advantages of a lower monthly mortgage payment or the obvious benefits of keeping the same monthly payment but with a sudden bunch of cash in hand. Take your pick. The only bad play here is to sit by and do nothing.
You're right. Taking the savings year over year throughout the length of the loan you're saving. How much depends how much the refi costs and what you do with the money "saved" . How many people actually put away the difference when they refi?
You are missing something very important in the conservative mindset and that is that there is absolutely nothing fair about the income tax system. Fair, would be that everybody pays the exact same nominal amount.
That would be a very, very, very long way from any reasonable concept of fairness. What most tax policy professionals hope to accomplish is to protect a system of work and related incentives while seeking to make the burden of a dollar's worth of taxation fall more equally across society. Even so, taxes have very little meaningful impact on the lifestyles of the wealthy while serving as an albatross of sorts in the lives of many low-income folks.
You are missing something very important in the conservative mindset and that is that there is absolutely nothing fair about the income tax system. Fair, would be that everybody pays the exact same nominal amount. An ice cream cone costs $3.50. The owner of the ice cream store doesn't care whether you make $50K or $500K, the ice cream cone is still $3.50. If person "A" pays "X" income tax, then person "B" should pay "X", and family of 5 should pay 5X.
That would be complete fairness, but I think most conservatives understand you cannot run the government that way. Revenue would be too low to do just about anything, and you can't get blood from a stone.
The next level of fairness would be to charge everyone the same percentage of their income. Everybody pays 18%. No deductions or loopholes. That is feasible, and I think it is supported by most conservatives. They think that this, while not perfect, is fair enough. Many also think that usage taxes are the fairest form of taxation, while many liberals consider that to be regressive.
So with that said, let's go back to our current system. If person "A" is paying $200k in income tax, but he gets $15k back from his mortgage deduction, more power to him, because he is still paying $185K, which is a lot more than person "B" who is only paying $5K. Or even worse, person "C" who pays nothing, and even gets some of the money that person "A" and person "B" put in.
So yes, the word "fairness" is not something most conservatives apply to the tax code, so when someone takes advantage of a deduction or a loophole, most conservatives do not get upset about it. After all, they are just making a system of extreme imbalance, just a little bit more balanced.
What conservatives are missing is that a "flat nominal tax" system cannot be fair unless property rights are equal for all, which can happen only under absolute property rights. A flat nominal tax cannot be fair under a government which infringes the right to acquire property.
Note that the Framers carefully protected the property of property owners, while NOT protecting the right of the landless to ACQUIRE property. AND the Framers imposed their unfair Constitution on landless citizens without their advice or consent. What we have is a government of property owners, by property owners, and for property owners. When government infringes my right to acquire property, I must pay some property owner a premium for temporary, impaired use of the owner's property. That amounts to an effective tax on those whose right to acquire property is infringed.
You are just saying nonsensical words to me. You are combatting what you perceive to be right wing cliches with left wing cliches. You know that liberals do a great job of bamboozling their own when they are able to convince them that their money is not "hard earned". Personally, I work anywhere between 80 and 100 hours a week in some of the most stressful situations you could imagine. There is nothing you could possibly say that would convince me that my money is NOT hard earned. Maybe you live on passive income. Maybe you work some 40 hour a week, mundane job. I don't know what it is that you do that makes it so easy to fool you into believing people's money is not hard earned, but if you think others are not entitled to that view, you are sorely mistaken.
Ok but I'm asking you to explain how Mortgage Interest Deductions allow people to bid higher prices.
Two home seekers look at homes for sale, pull out calculators, say "if I pay $N for this house, the mortgage interest deduction will being my effective monthly payment to $X. But I can afford a monthly payment of $2X. Since I am competing with another bidder for this home, I need to outbid my opponent, so I'll offer $1.5N.
The mortgage interest deduction enabled the successful buyer to offer $1.5N rather than $N.
Just as so many consumers make poor personal finance decisions on the basis of EFFECTIVE MONTHLY payments, many homebuyers use the same thinking when buying a home.
Ok but I'm asking you to explain how Mortgage Interest Deductions allow people to bid higher prices.
It's not rocket science. If you can reap thousands upon thousands of actual dollars worth of actual tax reductions from your home purchase, you are going to be able to bid more for the place than you could without those extra thousands behind you.
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Originally Posted by Electrician4you
You're right. Taking the savings year over year throughout the length of the loan you're saving. How much depends how much the refi costs and what you do with the money "saved" . How many people actually put away the difference when they refi?
What makes so holy the notion of "putting away" the difference? Do you hold some sort of ascetic beliefs of other? No matter how they are taken, the cash benefits of a refi simply float into the same pot as your paycheck and other sources of revenue. How those accumulated balances are ultimately spent or not is and presumably should be a matter of some personal discretion.
You are just saying nonsensical words to me. You are combatting what you perceive to be right wing cliches with left wing cliches. You know that liberals do a great job of bamboozling their own when they are able to convince them that their money is not "hard earned". Personally, I work anywhere between 80 and 100 hours a week in some of the most stressful situations you could imagine. There is nothing you could possibly say that would convince me that my money is NOT hard earned. Maybe you live on passive income. Maybe you work some 40 hour a week, mundane job. I don't know what it is that you do that makes it so easy to fool you into believing people's money is not hard earned, but if you think others are not entitled to that view, you are sorely mistaken.
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