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I can support the elimination of the mortgage interest deduction, under the condition that state and local property taxes paid are allowed as a tax credit on federal income tax.
Agree.
Quote:
Also, eliminate the "earned income tax credit", tax day should not be a welfare payment to a large number of people.
I disagree. It incentivizes home ownership. While people don't just say "Let's buy a house so we can write the interest off our taxes," it is an incentive to help offset the costs of owning a home. Said costs include property taxes, hazard insurance, home repairs, HOA fees, not to mention the actual mortgage itself (P&I) and PMI if you're at less than 80% LTV.
If people, regardless of class, want this write-off, they can save up a down payment, keep their credit good and purchase a home that is affordable for them. In many cases, a mortgage payment is about what a rent payment would be for a comparable home. The caveat is that you're responsible for upkeep.
I don't see any reason why the mortgage interest deduction should go away, and I doubt it will go away anytime soon.
Yes we've seen how great it is to incentivize home ownership. We just had the biggest real estate bubble in our nation’s history pop because banks, mortgage brokers, and the government incentivized home ownership.
A home is a purchase you make to have a place to live. Most of middle class America drunk the kool-aid that a home is an investment without taking into consideration that an investment has a risk of lose of asset value. Because we had homes being brought based on belief that it was an asset that never lost value many brought homes they could not afford. Many made home equity loans they hope they could simply refinance based on a higher valuation of their home.
So now we have people walking away from homes they are perfectly capable of paying on simply due to the fact it's lost some value.
I'm perfectly willing to give up the home mortgage deduction if will stop at least some stupid Americans from making a decision that they are not mentally or financially equipped to handle. If you buy a damn house buy it to live in not as an investment. Be smart enough not to be in a frenzied market and be smart enough to buy a damn house you can afford with or without a home mortgage deduction.
I'm all for it if eliminating mortgage interest will give a simpler tax. But it is not the case. By eliminating mortgage-interest will do nothing except hurting home owner. There is only a handful of tax deductible individual get, now they want to take it away?
Why is every time when someone want to take/give a benefit, there is always a rich vs poor debate? It has nothing to do with money. For all those who support, why don't you ask yourself this question. If they can give and take this benefit from another person, how do I benefit? The answer most like is, you don't get any benefit. Government get all the benefit. If this is the case, why do you even support it?
No question it will impact homeowners but why should renters and others fund home ownership. I have a mortgage but isn't there an unfairness that I can deduct mortgage interest and real estate taxes while a renter can't deduct anything.
Why should the government decide that home ownership is an entitlement that needs to be subsidized, why is that important. The reality is that it has inflated home values and benefited mortgage companies and the home building industry.
I recall when credit card interest and sales tax on automobiles could be deducted, this is no different.
It's not going to save THAT much money. In reality, only people owning over a million dollars in a mortgage will see their taxes go up. The net result of a 10% break on your income taxes yet the elimination of mortgage interest deduction will be a wash for most homeowners. Only homeowners who make around $250K and can afford a million dollar house will have a net loss. Their interest payments that are no longer tax deductible will be greater than their 10% tax break reduction.
The other purpose of this is to allow non home owners who seemingly have less money to have more to spend on the economy (from the lower taxes). Rationale being the $250K and above earners can already spend what they want within reason. Like I said it's a wash for a homeowner making less than $250K.
If you eliminate the tax deduction, then you force consumers to at least attempt to act somewhat responsibly.
One of the things that will happen here is that people will be forced to make a down-payment in the 35%+ range just like their grandparents and great-grandparents and great-great-grandparents voluntarily did because they were much smarter and knew it was the right thing to do.
And no, I don't see why I should be forced to subsidize someone else's life-style by granting them a tax exemption.
I agree you need to take away incentives to borrow money that put us in this situation in the first place. It helps to promote borrowing, pushes up home prices making it more difficult to afford a home. At least one of the realtors actually stated in the article that the mortgage interest deduction interferes with the free market.
Also from the article :
"He said the mortgage interest deduction artificially pushes up U.S. housing prices because people are willing to buy more home than they normally would without the deduction.
That's why real estate agents and homebuilders love the deduction, he said. Higher home prices are more profitable for the entire real estate industry.'
It's not going to save THAT much money. In reality, only people owning over a million dollars in a mortgage will see their taxes go up. The net result of a 10% break on your income taxes yet the elimination of mortgage interest deduction will be a wash for most homeowners. Only homeowners who make around $250K and can afford a million dollar house will have a net loss. Their interest payments that are no longer tax deductible will be greater than their 10% tax break reduction.
The other purpose of this is to allow non home owners who seemingly have less money to have more to spend on the economy (from the lower taxes). Rationale being the $250K and above earners can already spend what they want within reason. Like I said it's a wash for a homeowner making less than $250K.
Limiting the home mortgage deduction is expected to save around
$400 Billion but not sure where the threshold starts.
Also there are some that are not millionaires that deduct the interest on a second home.
He should go farther than just freezing federal wages. I like Rep. Jason Chaffetz's suggestion to cut federal wages by 10%. They should also follow the private sector by moving towards privatizing retirement accounts and away from pension based retirement accounts for employees.
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