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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.
You reduce taxes to incentivise something and create more of it, you increase taxes on something to discourage it, and to create less of it.
It's a deduction available to anyone who has a mortgage, not just wealthy people with expensive mortgages in high ownership locations whatever that means.
Read the freakin article. It states very clearly who the mortgage interest deduction benefits the most, and who benefits the least. It is the people with the biggest mortgages and largest incomes who benefit the most. Obviously your typical $50,000/year earner living in a $150,000 house in middle america isn't seeing a huge windfall from this.
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.
it just encourages people to take on more debt, which is a poor public policy.
it causes home prices to go up. now, i realize that many homeowners persist under their delusion that high home prices are a good thing for our nation, but they are not. They are only good for people with home equity, which just happens to be the wealthiest group of Americans.
High home prices do not create a strong economy. High home prices within a free market are a signal of a strong economy. However, having to artificially "juice" home prices via government incentives creates distortions. Distortions create malinvestment, like the millions of vacant homes we have built in this nation that nobody can afford.
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I don't see any reason why the mortgage interest deduction should go away, and I doubt it will go away anytime soon.
because it disproportionately subsidizes the wealthy. that is a fact, not an arguable point.
its also a fact that the interest deduction does not encourage homeownership, it actually makes it more expensive at the bottom end of the market.
I know plenty of "no-so-rich" people that take advantage of the mortgage deduction.
Yep - that would be me and my wife.
We're retired, we have a reasonable mortgage (i.e., one we can afford without difficulty), and we absolutely take advantage of the mortgage interest deduction. Take it away, and our ability to stay in this house will be compromised.
At some point in the future we'd want to sell this house, and either downsize to another, smaller house w/mortgage, or downsize into a rental w/o a mortgage. Taking away the mortgage interest deduction would hasten the decision, and would likely result in our going the rental route. There's nothing wrong with that - we rented for many years before we could afford to buy a house. I would just prefer to choose the time and the option rather than having the decision made for me.
I understand why they are looking at this option, but I hope the powers-that-be understand that it isn't just rich people who use the mortgage interest deduction, and a lot of middle class families will be squeezed (once again) if the deduction is taken away.
On the other hand, if the total package of "reforms" would make up for the elimination of this deduction ... well, it will be an interesting process to follow, won't it?
it just encourages people to take on more debt, which is a poor public policy.
it causes home prices to go up. now, i realize that many homeowners persist under their delusion that high home prices cause a strong economy... but most people have that backwards. High home prices within a free market are a signal of a strong economy. Having to artificially "juice" home prices via government incentives creates distortions at various points in the market.
because it disproportionately subsidizes the wealthy. that is a fact, not an arguable point.
How is it subsidizing people when you let them keep their own money?
Read the freakin article. It states very clearly who the mortgage interest deduction benefits the most, and who benefits the least. It is the wealthiest who benefit the most.
Is this what you're referring to?:
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Mallach said people in the lower end of the housing market seldom take the deduction. Only 4 percent of homeowners earning less than $20,000 a year claim the deduction, while nearly 80 percent of those making over $100,000 take the deduction, he said. Homeowners must file IRS Form 1040 with itemized deductions on Schedule A to claim the deduction.
"What it says is lower-income homeowners don't take the deduction, but they're getting hit with higher home prices because the deduction exists," Mallach said.
Question, do people earning less than $20K/year even pay federal income taxes? Doubtful. So maybe that's why this deduction isn't "benefiting" them. They have to actually pay taxes to get a deduction on those taxes. And since when is earning $100K/year considered "wealthy"?
And I flat out disagree that lower income homeowners are getting hit with higher home prices because the deduction exists. That is a crock of crap. People don't base purchase prices of home on the amount of mortgage deduction they'll get back.
Would any additional revenue from any source by applied to the deficit?
It's a stupid question asked by those who oppose raising taxes.
You can lower spending or you can raise taxes or you can do a combination of both.
Balancing the budget is a whole different question from deciding how and where the revenue is going to come from to pay the bills.
It's not a stupid question when you consider it in the context "that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending."
It's not a stupid question when you consider it in the context "that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending."
I don't care. And neither do most Americans. The rate of taxation doesn't even register in surveys ranking national priorities.
Clinton balanced the budget until the biggest moron ever came along and decided to cut tax in the middle of a needless war you supported and he started.
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