Posted on 01/10/2009 11:19:21 AM PST by curiosity
Ask most people in America today whether buying a home is better than renting one, and you’ll likely get a response that equates renting with stuffing money down a garbage disposal. The idea of homeownership today is not one that simply evokes the comfort or pride of living in a place of one’s own. Instead, it’s become part of a common investment philosophy.
But if you ask Edmund Phelps, the Nobel Prize-winning economist from Columbia University, he’ll proudly declare that he doesn’t own a home. And to him, that’s not a bad thing. “It used to be that the business of America was business,” said Phelps in August 2008 to Bloomberg News. “Now the business of America is homeownership.” In fact, many economists will tell you that the American love affair with homeownership has some consequences that you won’t normally hear discussed.
(Excerpt) Read more at richmondfed.org ...
Homeowners have more than fair tax treatment since they do not pay taxes on the money they save in rent, which is a form of income ignored by the IRS. Real estate investment capital has to pay taxes on all its rental income. So even if you eliminate the mortgage interest deduction, home owners come out ahead.
My husband and I have a dentist friend. Once a year or so he hands his employees all their earnings in a big wad of cash. This includes the employers contribution to social security.
He lays out trays labeled:
Federal income tax withholding.
Sate income tax withholding
Social security PLUS the employers contribution
Workman’s compensation.
Medicare.
Unemployment insurance.
His employees nearly go into shock as they pay these various taxes and expenses from their own cash.
All employers should do this on the pay day before election.
Everyone pays property taxes on everything they buy, use, and consume.
Renters pay property tax because their rent covers the cost of the tax plus a profit for the landlord.
Your Mc Donals hamburger is priced high enough to pay for the property tax costs of the building and equipment.
So?....I suppose you could say that businesses do not pay property tax because ultimately the tax is passed to the consumer who pays the tax in the form of higher prices.
Taxing businesses is a **really** SNEAKY way to ultimately tax the people. It is so hidden by the extra money the consumer has to pay out is very real.
... which is also considered in calculating rents, by any sane owner of rental properties. Cost is cost. Net is what is remains afterwards.
I agree. What's your point?
Beardsley Ruml: This man that no one knows has had more impact on tax policy, federal spending and wage earners than any other man in American History.
http://www.timesgazette.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=137314
Taxpayers should know Beardsley Ruml
Incorrect. Property owners, because they receive a property tax bill in the mail, pay property taxes. Renters don't pay property taxes, because they don't receive a property tax bill.
Renters indirectly pay associated costs of home ownership, and renters benefit indirectly from associated tax benefits of home ownership. The purpose of owning rental properties is to profit. Anything that increases the cost of owning rental properties is going to affect rents. Anything that decreases the cost of rental properties is going to affect rents. Renters pay for the privilege of being unencumbered, or pay a penalty for being unable to qualify. Remove the interest deduction, and the direct cost of shelter will increase, for everyone, renter and owner alike.
That is my point.
thank you for the link.
ML/NJ
One of the tactics of Organized Government (as is seen here on this thread) is to get us taxpayers fighting amongst ourselves over what should and shouldn’t be taxed at at what rates. It diverts us from what should be our main goal:
Reduction of ALL taxes at ALL levels of government, which will reduce the size of government and limit its power.
ML/NJ
Landlords would still be able to deduct their mortgage interest because it is a business expense.
As a result, the cost of renting would not change, and the subsidy for homeownership would be removed.
So, you're in favor of removing tax favorable treatment for individual, primary residences, but continuing with deduction for rental properties?
Why would a government want to do that? It's destabilizing.
Many renters benefit from the interest deduction as well. I agree with you, though.
The fewer deductions you allow, the lower the rates can be.
That is why anyone who defends the personal mortgage interest deduction (or any other personal income tax deduction) is no fiscal conservative.
Yes, because in the case of rental properties, interest is a business expense that is netted out against rental income. In the case of an owner-occupied residence, it is not.
Why would a government want to do that? It's destabilizing.
You've got it exactly backwards. The current regime subsidizes owner-occupied residency over rental residency. Removing it would elminate this distortion.
How so?
If you advocate creating a nation consisting largely of landless renters, and want to increase taxes to do it, you are no conservative. I personally think only property owners should be allowed to vote, especially regarding bond issues that increase property tax assessments.
To the extent that the total tax take from the citizens to Organized Government should be reduced, I agree with you. In other words, if Organized Government gives up other taxes seized, I would agree the mortgage deduction might be scrapped. But I'm not in favor of unilateral disarmament.
The total amount of taxes seized from productive citizens should be reduced. Period.
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