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I'd be all for a flat sales tax or consumption tax. This would put a lot of freeloaders back on the map including Illegal Aliens working under the table for cash. A great idea.
There are some that propose to eliminate the income tax in favor of a national sales tax. I think they calculated it to be 23% (on top of sales tax) for the federal gov't to "break even". This new tax structure would eliminate income tax, Social Security, and Medicare employment taxes, and transfer taxes (ex. gift tax) and would apply to all goods and services including food, meds, housing.
You make a bigger pie, they not only take a piece, but they take a bigger piece.
If you are self employed and pay taxes quarterly, then your first quarter payment (for jan, feb, mar) is due April 15. your second qt. payment (for april may june) is due JUNE 15.
anyone notice that the 2nd qt. payment is due before the second quarter is even finished! They are not even letting you finish making the money before they want their share.
They want their piece of the pie before it is even done cooking!!!!
So I have had it with taxes.
Plus, I just realized that I think today is the due date for the 3rd Qtr payment and I don't have it ready. I have just realized how I will spend my evening.
anyone notice that the 2nd qt. payment is due before the second quarter is even finished! They are not even letting you finish making the money before they want their share.
Self-employed or employee, we all pay are taxes "in advance". It's the way our tax system is structured. The difference is you have to write the check out every quarter whereas I have it taken out of my paycheck every other week but we are both paying in advance.
I hate paying taxes as much as the next person but this is the price we pay for living in this society. If you lived in another country, you would be paying their taxes.
Rolling Stones canceled a Great Britain tour when they realized they were gonna pay too much in taxes.
U2 moved part of their media company from Ireland to the Netherlands to avoid paying Irelands high royalty tax rate.
Self-employed or employee, we all pay are taxes "in advance". It's the way our tax system is structured. The difference is you have to write the check out every quarter whereas I have it taken out of my paycheck every other week but we are both paying in advance.
The big difference is that when it's taken out of your paycheck, you never actually HAVE the money, but when you write the check, you have to be sure you SAVE the money.
The big difference is that when it's taken out of your paycheck, you never actually HAVE the money, but when you write the check, you have to be sure you SAVE the money.
I disagree. Both situations you have earned the money and it is the same difference to me having to save the money then writing a check versus seeing the amount taken out ever 2 weeks and seeing it on my paycheck stub.
I disagree. Both situations you have earned the money and it is the same difference to me having to save the money then writing a check versus seeing the amount taken out ever 2 weeks and seeing it on my paycheck stub.
I agree with this.
However, when you have it taken out every week, you have actually made the money THAT week and the tax is taken out THAT week. This way, you don't actually "pay" the tax, until you are "paid"
Whereas for example, my husband when he paid the taxes for April, May, and June, had only been paid for April, and half of May.
Imagine if you got paid cash at the end of each day, but Wednesday at noon you had to hand over your tax money for the week. That is tough.
So basically he only made 50% of the money at the time, and we still had to pay out almost 30% in tax. So basically what it amounted to was we had to pay 60% of what he made in that month and a half for taxes.
That is def. not the same as getting paid weekly and paying your taxes weekly. How would you like to pay 60% of your pay for 6 weeks and then pay no taxes for 6 weeks? Not so great, huh? And very different than paying the tax when you get paid.
However, when you have it taken out every week, you have actually made the money THAT week and the tax is taken out THAT week. This way, you don't actually "pay" the tax, until you are "paid"
Whereas for example, my husband when he paid the taxes for April, May, and June, had only been paid for April, and half of May.
Imagine if you got paid cash at the end of each day, but Wednesday at noon you had to hand over your tax money for the week. That is tough.
So basically he only made 50% of the money at the time, and we still had to pay out almost 30% in tax. So basically what it amounted to was we had to pay 60% of what he made in that month and a half for taxes.
That is def. not the same as getting paid weekly and paying your taxes weekly. How would you like to pay 60% of your pay for 6 weeks and then pay no taxes for 6 weeks? Not so great, huh? And very different than paying the tax when you get paid.
Renters in apartment complexes more or less pay a lesser proportion of these fees (because of pooling), but get the same benefit as owners.
Renters in apartments certainly pay less than someone who owns a single family residences, but so what? Apartments should be compared to Condos not SFR. Additionally, I don't know why you are just talking about apartments. My comment was that an investor pays just as much property tax as a private owner. The only reason why what you said would be true is if for some reason a higher ownership rate resulted in a higher number of homes. But why would that happen?
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Generally speaking though... home ownership creates more economic growth than if everybody lived in apartments or rented.
Removing the tax deduction would not dramatically change the ownership rate. Rather it would discourage people from taking out large mortgages over ridiculous periods of time. The values of home ownership don't change if you remove the tax deduction, it only changes things for debt junkies. Just as states with higher property taxes tend to have lower house prices, removing the tax deduction will simply lower the cost of houses. As a result houses will stand in the same relationship to renting as they currently do. You are just creating a slippery slope.
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don't think they will... there is far more benefits streaming from an ownership society vs. a lord/serf society.
We are talking about the removal of a tax deduction not the benefits of "ownership society vs a lord/serf society". Although, removing the deduction may lower the ownership rate a bit it will hardly turn the US into a "lord/serf society". Just as high interest rates, higher property taxes etc effect house prices so would the removal of the deduction. The only reason it would change the ownership rate is psychological.
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Please cite the source and who came up with these numbers.
Its an estimate of the raw savings, for 2008 its about 90 billion:
Of course it does not include your slippery slope...of everyone becoming a serf and a great transformation in the ownership rate. Of course that is just outlandish speculation....but junkies always come up with old ideas = )
Anyhow, I would like to see the IRS reduce the deduction over a 10 year period both for current and future owners while both reducing the income tax rate and raising the standard deduction. Alternatively, they could give a deduction to renters for around 50% of their rent and raise personal income tax.
Renters in apartments certainly pay less than someone who owns a single family residences, but so what? Apartments should be compared to Condos not SFR. Additionally, I don't know why you are just talking about apartments. My comment was that an investor pays just as much property tax as a private owner. The only reason why what you said would be true is if for some reason a higher ownership rate resulted in a higher number of homes. But why would that happen?
I already explained this. Landlords/Investors are better managers of housing needs than home owners (efficiency). They wouldn't buy an extra unit unless they can fill the vacancy. On the other hand, a policy that gives the extra nudge toward ownership may encourage someone to purchase who wouldn't have.
Also, it encourages the wealthy to purchase an extra home which also gets the deduction. This translates into more homes built and an increase in property tax revenues. More homes = more property tax and economic growth (which increases income tax and corporate tax).
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Removing the tax deduction would not dramatically change the ownership rate. Rather it would discourage people from taking out large mortgages over ridiculous periods of time. The values of home ownership don't change if you remove the tax deduction, it only changes things for debt junkies. Just as states with higher property taxes tend to have lower house prices, removing the tax deduction will simply lower the cost of houses. As a result houses will stand in the same relationship to renting as they currently do. You are just creating a slippery slope.
Actually I've looked into the subject and have seen the argument. Basically the argument is that it mostly benefits the wealthy, and that without it home prices would be lower. Isn't price based on Supply AND Demand. The policy artificially increases demand... but if builders act on this demand and make more houses... then wouldn't that keep the home prices at the same level (but increase economic activity)?
The argument that it doesn't have an effect on ownership rates is tenuous at best. From what I've seen they linked the ownership rates in Canada and other Countries that don't have the policy with the ownership rate of the States.
This doesn't really mean much to me since there could be numerous factors besides tax policy that resulted in similar ownership rates. They may be highly correlated, but it doesn't explain causation. Since the idea of a mortgage deduction is highly ingrained into RE and society, I would think its' effect on the desire/demand for ownership would be fairly high - the policy has always been around from what I've read.
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Anyhow, I would like to see the IRS reduce the deduction over a 10 year period both for current and future owners while both reducing the income tax rate and raising the standard deduction. Alternatively, they could give a deduction to renters for around 50% of their rent and raise personal income tax.
Overall though, I'm not totally against the deduction being eliminated. If it were to be elimnated, I think they should keep the deduction for current owners... since in essence we had to absorb the "false" uptick in prices... but can eliminate the deduction for new owners at some point forward. If they eliminate the deduction, then renters shouldn't get a deduction either. A tax deduction for renters wouldn't stimulate any economic activity.
The effects on federal tax revenues and degree of ownership is debateable. If eliminating the deduction reduces prices and keeps the desire of ownership the same (same number of homes) ... then overall property taxes will be reduced for the local governments. As a result... some jobs and economic growth from cities would also be reduced (reducing income/corporate taxes). So, overall I think it's a wash. The markets have found an equilibrium with the current policy... without it... the market would adjust... but, it won't necessarily guarantee higher Net federal tax revenues (maybe in the short-run, but in the long run it'll probably end up the same - with a reduction in city spending and likewise, the resulting tax incomes associated with it).
On the other hand, a policy that gives the extra nudge toward ownership may encourage someone to purchase who wouldn't have.
So they are going to purchase a home and not rent it or live in it? People buy houses either because they are 1.) going to live in it, 2.) because they are going to rent it out, 3.) Vacation home. Only 3 would increase the number of homes, see below.
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Also, it encourages the wealthy to purchase an extra home which also gets the deduction.
Is this serious? Yes because the wealthy are very interested in giving a bank a $1.00 for $.30 of tax deductions in return. The wealthy purchase with cash. Furthermore, in what sense is a vacation home a productive use of capital? If the money was used for something more productive the economy would be better off.
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The policy artificially increases demand... but if builders act on this demand and make more houses...
This isn't my reasoning per se, rather people purchase homes based on monthly payment and the tax deduction effectively reduces it at least in the shortish term. By removing the deduction you'll reduce the amount buyers can afford therefore pushing house prices down.
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The argument that it doesn't have an effect on ownership rates is tenuous at best.
My point isn't that it doesn't have an effect, rather the effect is not going to be dramatic as you seem to be suggesting. You are creating a false dilemma. Either we have the deduction and have a high ownership rate or we get rid of it and everyone becomes a renter. Your entire argument is just a slippery slope.
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