We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Our Recent Essays Behind the Front Page
Thursday, December 13. 2012
Peaceable Kingdom: Cart pulled by lion, two sheep, and a bear. More cart pics here.
The Stark Geographic Inequality of the Home Mortgage Interest Deduction
Count me as opposed to the mortgage interest deduction
What art has come to: Bryan Saunders: portrait of the artist on crystal meth
Sippican Cottage Deeply Regrets The Use Of Forced Labor In His Factory
Pelosi Accuses GOP Of Lack Of Concern For Kwanzaa
A new play: Exposing Joseph Stalin’s Media Apologist
It's okay to be rich if liberal because it means you care
Michigan Stuns Labor as Blue Model Continues to Unravel:
Union rioters: Fat old white men
Medical device tax hypocrites
President Obama's tenure as president will have as one of its benchmarks one of the worst and longest-running unemployment records in recent history -- and he will own it all by himself.
Prescott and Ohanian: Taxes Are Much Higher Than You Think - The combined levies on labor income and consumer spending have seriously reduced the hours that Europeans work. The U.S. isn't too far behind:
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That Mr. Sippi is a horrible, horrible man, the way he treats his worker!
Bryan Saunders: Yup, he's badly messed up.
Medical device taxes: What fools these Dems be, to tax and over-regulate industries in their own states...
The Danes. Once feared Vikings, now unwilling to protect people living in Denmark.
"Count me as opposed to the mortgage interest deduction"
Well, it is no better or worse than any other deduction. If you make something cheaper, you get more of it. The chart in the article shows that poor people get little or no deduction. That would be because tax rates are progressive, not that someone is stiffing poor people.
I suspect the deduction will never be done away with because it is capitalized in the cost of the house. People buy monthly payments not house prices. If you take away their deduction and the net monthly payment goes up, then the price of the house will go down to compensate. That would be taking away a large chunk of "equity" from owners and in the case of a new homeowner it may be enough to wipe out what they just spent on their down payment. Even if the Congressman wants more money for himself, can you convince him to lower all property values everywhere?
Colorado is correct. The mortgage deduction is part of a progressive tax. There is no discrimination here. There is no great windfall if that deduction is eliminated.
Remember, poor folks get more than deductions. They get discounted or free housing, discounted fare on some transit systems, free cell phones, free food, free booze and smokes. These freebies are proportionally more than any mortgage interest deduction that rich folks get.
So if we argue to get rid of the mortgage interest deduction we should also argue to get rid of the free benefits for the poor.
I'll offer my counter-arguments:
Along with other itemized dedns, the mtge int dedn diminshes in value as income increases anyway
It distorts markets by artificially inflating housing prices and valuations
It idscriminates against renters
Ultimately, it's just a subsidy to the construction industry
Yes, yes, yes, and yes.
And like all things that are meant to be helpful, how do you reverse it without causing harm?
There are three intersecting memes with report the mortgage interest deduction:
The first is that the progressive press and commentariat has been working hard to equate tax deductions with subsidy. They say something like: "we didn't take as much of your income as we could have taken, so therefore we are subsidizing you. Because your income is great, the subsidy was great, so therefore it is unfair to poor people who don't get that subsidy"
The second is that the "Rich 1% need to pay their fair share", and the desire to sock it to people with incomes above $250,000. This is coupled with agitation against people who have incomes from investments and capital gains, because that income is taxed at a lower rate than employment income.
The third is that the revenue lost from this "subsidy" is vastly lost from people living in the richest US zip-codes:
So eliminating the deduction is a threefer -- it makes already progressive taxes even more progressive, and disproportionately falls on those with greater non-employment income, and has only a small effect on the middle class with a very large effect on the top quintile of taxpayers.
As an extra bonus for political partisans, the vast majority of the people who would lose many thousands of dollars as a consequence are people who live in areas that don't elect Republicans anyway
Now, the IRS is going to look at anyone who has paid off mortgage, or inherited a property that has not been "rented" as having "imputed" income equal to what they determine the rental value of the property or what the owner "should be paying" to rent a home. In other words this fair/unfair proposal to end the mortgage deduction has as its' ultimate goal, the abolition of private property. Except, of course, for the "Top Politicians" in the Government. Soviet Union here we come.
This was a new one on me. It looks like the jurisdictions abroad that have use market-rate imputed-income on your residence have all abandoned that because of the difficulty in equitably valuing every dwelling. Some, such as Sweden, still have what they call an "imputed income" tax but more as "reverse deduction", a nominal extra tax based upon a fraction of the prevailing rents, that is payable by home-owners but not by renters. It is intentionally set low to encourage people to move from renting to owning -- with the same justifications as our current mortgage interest deduction.
It would be a tough sell in the US -- taxing people out of their family homes when their retirement savings dwindle...
This "imputed " income is from an article on the Big Gov site written by Mike Flynn, on 12/08/12. A commenter claims he"talked to his congressman" and his rep. had "no idea what this IRS list (loopholes) was". I certainly would not be surprised if it were true that the IRS considers a paid mortgage a "loophole" for the rich and at the top of their list to "get closed'.
The worst deduction is for charity. If a person wanted to be charitable they should do so with their own money not pretax money. Worse, many "charities" that qualify for the deduction are little more then the pet projects of rich people who use these 501c3's as their private organizations to do their bidding and pay for their expenses. Many of these 501's have been hi-jacked by blatant political organizations that use the money to work against the best interest of Americans. Let's eliminate the deduction entirely.