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Put a cap on allowable deductable interest some where around the 80th to 90th percentile on a national basis. (Maybe? I'll have to think about that.) Any mortage or proportion of mortage below that percentile is deductable from federal income tax. anything over is not.
i never used the words "rich" or "poor", and it is tiresome to have a discussion with someone who cannot understand your argument.
So you're tired of having a discussion with yourself? LOL
So, what is the point you're failing to make here? That "non-wealthy" people aren't benefiting from a tax deduction because they don't pay taxes to begin with? That makes sense. Let's eliminate the deduction because non-wealthy people aren't benefiting (nor are they paying), keeping in mind that 80% of those earning $100K/year per the article are benefiting from the deduction.
You want to eliminate the deduction for those earning just $100K/year? Because I certainly don't consider that wealthy. Maybe your bar is set a little lower than mine?
The actual proposals put forth by two current deficit cutting commissions would balance the taking away of tax breaks for special interest groups with large reductions in marginal income tax rates.
The tax code as it exists today has over $1 trillion in tax breaks and subsidies for special favored groups.
In effect, what the govt is doing is saying that certain economic activities are better than others. It's choosing where people should spend their money by making it cheaper to do some things rather than others.
By subsidizing mortgage debt, and taxing interest income as regular income, the govt is telling you that it would be better for you to get in debt than to save money. Strange, right?
Not to get too far into the economic theory of taxation but simply put, if we got rid of all the special breaks for certain groups, we level the playing field for everyone. Yes, the lobbyists are gonna hate this, they'll probably fight it for free, because they'll be less need of them. The resulting tax system would be simpler and more fair for everyone, and the govt wouldn't be choosing what economic activity is better than another. Private citizens and businesses would be making those choices, as is proper in a capitalist system.
A simpler, fairer, broader tax system would be good for the fiscal situation of our federal govt and good for the economy.
So, what is the point you're failing to make here? That "non-wealthy" people aren't benefiting from a tax deduction because they don't pay taxes to begin with?
renters pay taxes, they are just a less wealthy cohort. you are saying that renters are ALL poor people who earn less than $20,000 a year, and that is just stupidity, plain and simple.
The actual proposals put forth by two current deficit cutting commissions would balance the taking away of tax breaks for special interest groups with large reductions in marginal income tax rates.
The tax code as it exists today has over $1 trillion in tax breaks and subsidies for special favored groups.
In effect, what the govt is doing is saying that certain economic activities are better than others. It's choosing where people should spend their money by making it cheaper to do some things rather than others.
By subsidizing mortgage debt, and taxing interest income as regular income, the govt is telling you that it would be better for you to get in debt than to save money. Strange, right?
Not to get too far into the economic theory of taxation but simply put, if we got rid of all the special breaks for certain groups, we level the playing field for everyone. Yes, the lobbyists are gonna hate this, they'll probably fight it for free, because they'll be less need of them. The resulting tax system would be simpler and more fair for everyone, and the govt wouldn't be choosing what economic activity is better than another. Private citizens and businesses would be making those choices, as is proper in a capitalist system.
A simpler, fairer, broader tax system would be good for the fiscal situation of our federal govt and good for the economy.
I really am behind going to a flat tax or fair tax system. Just so much easier and would help eliminate this class envy issue. One thing to note. Yes, the gov't and society at large wants you in debt and bases many components of society upon it. Recall that credit score is used in multiple ways. Credit score is nothing more than a measure of your debt and how you manage said debt. If you have absolutely zero debt, never have had debt, then you are looking at higher insurance rates, lack of job opportunity, etc, etc. The whole system is questionable.
One of theproposals in the committee is to Limit mortgage deduction to exclude 2nd residences, home equity loans, and mortgages over $500,000.
That certainly sounds like a fair start. Why should a second home or consumer purchases like a car or flat screen TV be subsidized by the government and other tax payers. Someone renting an apartment gets nothing in return.
Additionally the top 20% of wage earners get around 70% of the funding mostly because they own multiple/expensive homes. Seems like those subsidies could be put to better use in other ways.
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Take away the deduction and see your "rates" increase accordingly.
It is calculated differently for corporations. I am not sure of the specifics, but this was for individual home owners.
Let's just assume that it did also apply to real estate holders of apartments. Rents would increase, but not enough to cancel out the 10% rate reduction.
Suppose I make $50,000 a year. That means I probably pay around $6,000 in federal taxes. A 10% rate reduction means instead of being at the 25% margin, I will be at the 15%. That saves probably $3,000 a year after deductions.
If I rent an apartment for $1000 a month, it is hard to see rents going up $300 a month (an increase of 33%), particularly with the oversupply of apartments everywhere but Manhattan and DC.
Anyway, the tax rate would apply to the owners as well.
"Brookings Institution senior fellow Alan Mallach stirred the controversy during an October lecture at University of Nevada, Las Vegas, when he supported the commission's plan to reduce, or even eliminate, the tax deduction for homeowners.
He said lower-income households typically aren't able to take advantage of mortgage deductions and end up subsidizing wealthier people who have larger, more expensive homes. It's also a myth that the tax deduction encourages renters to buy homes."
I personally bought a house, and my sister-in-law bought a house because of the tax deduction.
Having said that, by eliminating the tax deduction, the gov't would likely bring in more tax revenue.
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LOL
Let's eliminate the deduction because non-wealthy people aren't benefiting (nor are they paying), keeping in mind that 80% of those earning $100K/year per the article are benefiting from the deduction.
