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Why Ending the Mortgage Interest Deduction Would Save the Economy
CNBC ^ | Feb. 14, 2011 | John Carney

Posted on 02/14/2011 2:49:47 PM PST by fightinJAG

Earlier today, the White House released a budget proposal that included trimming the mortgage interest deduction for taxpayers in the top income tax brackets.

This is the first step in eliminating what many economists view as an expensive and inefficient housing subsidy.

Unfortunately, many of the critics of the mortgage interest deduction focus on its immediate costs. If it were eliminated, it might bring in more than $2 trillion of new revenue for the government or—as I proposed this morning—allow up to $2 trillion of new tax cuts for the American people.

Actually, I think getting rid of the housing subsidy could be an even better deal than that—providing it is done by expanding the deduction into a general tax cut instead of closing the “loophole” and raising taxes.

(Excerpt) Read more at cnbc.com ...


TOPICS: News/Current Events
KEYWORDS: boa; chase; corruption; elections; finreg; flattax; foreclosures; fraud; gloomboomdoom; goldmansachs; govtabuse; housing; jpmorgan; mers; mortgages; porkulus; qe1; qe2; qe3; qe4; qe5; qe6; qe7; qe8; toobigtofail; wellsfargo
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1 posted on 02/14/2011 2:49:50 PM PST by fightinJAG
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To: fightinJAG

WTF....Just STOP all the STUPID SPENDING NOW.


2 posted on 02/14/2011 2:52:19 PM PST by spokeshave (WTF....the only thing 0bambi's investments will get us is a bullet train to bankruptcy.)
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To: fightinJAG

Please note: when I post something written by John Carney, a staffer at CNBC, some posters confuse him with JAY Carney, the new WH press secretary.

Two very different guys!

Enjoy.


3 posted on 02/14/2011 2:53:09 PM PST by fightinJAG (Americans: the only people in the world protesting AGAINST government spending.)
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To: fightinJAG

Why not save all the time and Money on all this crap and just send in your Pay check and line up for the Cheese


4 posted on 02/14/2011 2:53:43 PM PST by ballplayer
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To: fightinJAG

Give me a flat tax, where everyone has ‘skin in the game’, and I’ll consider it.


5 posted on 02/14/2011 2:54:01 PM PST by fhayek
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To: fightinJAG

Two words:

Flat. Tax.


6 posted on 02/14/2011 2:54:15 PM PST by bigbob
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To: fightinJAG
This is the first step in eliminating what many economists view as an expensive and inefficient housing subsidy.

Cool. As long as I can eliminate the expensive and inefficient subsidy I provide the county called 'property tax'.

Otherwise, the administration can shove it.

7 posted on 02/14/2011 2:54:48 PM PST by skeeter
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To: fightinJAG
Better suggestion: apply GAAP principles to the US Government's budgeting/accounting, and criminal prosecutions faced by commercial enterprises to those in DC who haven't bothered to follow them.
8 posted on 02/14/2011 2:55:25 PM PST by DTogo (High time to bring back the Sons of Liberty !!)
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To: fightinJAG

Canada survives without the deduction. For decades I’ve felt it needs to be eliminated. And not on the rich, but across the board. I hate this “just on the rich” nonsense.

‘Couse, if I had my way, the income tax would be the same rate for everyone, even if you made only a dollar a years. We’ll take a dime please.


9 posted on 02/14/2011 2:56:06 PM PST by RobRoy (The US Today: Revelation 18:4)
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To: fhayek

Exactly.

The time for a flat tax is NOW.


10 posted on 02/14/2011 2:56:46 PM PST by fightinJAG (Americans: the only people in the world protesting AGAINST government spending.)
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To: spokeshave

I’m learn’n to speak chi com


11 posted on 02/14/2011 2:57:16 PM PST by timetostand (Ya say ya wanna revolution -- OK!)
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To: fightinJAG

Carney practiced corporate law at firms such as Skadden, Arps, Slate, Meagher & Flom and Latham & Watkins, primarily representing banks, hedge funds and private equity firms.


12 posted on 02/14/2011 2:58:02 PM PST by kcvl
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To: fightinJAG
"...or—as I proposed this morning—allow up to $2 trillion of new tax cuts for the American people."

As if anyone here didn't know, this is the core of this idea. This is just a transfer of wealth collected from the mortgage payers, i.e., the productive people, to the indolent, i.e., Obama freeloaders. [BTW, Carney, they're not "tax cuts" if you didn't pay the tax in the first place.]

13 posted on 02/14/2011 2:58:02 PM PST by Paine in the Neck (Napolean fries the idea powder.)
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To: fightinJAG
If it were eliminated, it might ... allow up to $2 trillion of new tax cuts for the American people.

Shell games don't get any more obvious than that.

14 posted on 02/14/2011 3:00:06 PM PST by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: fightinJAG
The mortgage deduction is the biggest of the "social engineering through the tax code" list of deductions and credits. Dump them all and go to a flat tax or a national sales tax. (Or even a national salsa tax as my spell checker helpfully suggested when I mistyped sales).

But that's easy for me to say since it only saves me about $350 per year now.

15 posted on 02/14/2011 3:00:10 PM PST by KarlInOhio (Washington is finally rid of the Kennedies. Free at last, thank God almighty we are free at last.)
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To: fightinJAG

Take away the mortgage deduction and lose the votes of the handful of productive people who still support you, idiot.

This guy seems determined to commit political suicide.


16 posted on 02/14/2011 3:01:05 PM PST by IronJack (=)
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To: fightinJAG

The Wall Streeter derivatives boy who wrote this article is dishonest.

Not only will the taxpaying homeowner have to pay thousands more in taxes every year, the value of his/her home will plummet another 20% or so, wiping out a lot of equity.

You don’t abolish a tax exemption that people made a 30-year investment decision on and on which they have much if not most of their accumulated wealth.

HORRIBLE idea. Next.


17 posted on 02/14/2011 3:03:41 PM PST by LowTaxesEqualsProsperity
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To: fightinJAG

If it were eliminated, it might bring in more than $2 trillion of new revenue for the government or—as I proposed this morning—allow up to $2 trillion of new tax cuts for the American people.

Hahahaha LOL Only a democrat could say that ending a tax, thereby increasing your taxes, could spur a big tax cut


18 posted on 02/14/2011 3:03:49 PM PST by bill1952 (Choice is an illusion created between those with power - and those without)
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To: bill1952

The author is an ass clown, like most of the idiots working at CNBC, owned by NBC.


19 posted on 02/14/2011 3:05:42 PM PST by LowTaxesEqualsProsperity
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To: bigbob

If you ‘re talking flat tax with no deductions OK, otherwise we’re back to the subsidy shell game with the deductions. Get rid of ALL federal taxes and institute a federal sales tax and then the Commiecrats will have a reason to make the economy grow.


20 posted on 02/14/2011 3:07:17 PM PST by chickenlips (Karl Rove- the RINO ruminator, striking fear in donuts everywhere)
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To: fightinJAG
Seems a lot of people don't really think too deeply about how things get the way they are.

The "mortgage deduction" is merely the only major surviving deduction of a general class that used to be across the board: deduction of interest paid from your income taxes, since someone else is going to pay interest income tax on that interest paid to them by you.

25 years ago our very own "republican" BobDole pushed through a lovely little bill that wiped out such a deduction for all other interest payments; prior to 1985, the interest paid on any loan - cars, credit cards, whatever - was deductible.

It's called the principle of no double taxation. No difficult to understand: why should the government tax the same money twice?

On the contrary, Mr. Carney. Not only should the mortgage deduction be preserved, but the same deduction for all other interest paid should be reinstated, and BobDole's name be struck from the Republican party rolls for ever.

If not, then how 'bout we cancel those taxes I gotta pay on that "interest income" stated on them 1099's?

Better yet, just kill the Marxist inspired income tax. It was never meant to do anything except collateralize the Fed anyway.

21 posted on 02/14/2011 3:07:54 PM PST by Regulator (Watch Out! Americans are on the March! America Forever, Mexico Never!)
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To: bill1952
Of course the democrats would happily cut our taxes by an amount commensurate with that 'saved' by eliminating the deduction.

Of course they would.

22 posted on 02/14/2011 3:08:03 PM PST by skeeter
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To: Paine in the Neck

Next it will be free housing for the nonworking class, to go with free medical. Share the wealth reparations.


23 posted on 02/14/2011 3:08:41 PM PST by The_Media_never_lie
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To: fightinJAG

Top income level my ass. They’ll have a go at all of us.

They do this and I no longer make any payments on my place. They can shove the thing right square up their asses.


24 posted on 02/14/2011 3:09:54 PM PST by crz
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To: fhayek

[ Give me a flat tax, where everyone has ‘skin in the game’, and I’ll consider it. ]

Not requiring the same percentage rate of taxes across all citizens allows politicians to play the “class warfare” game in a way that helps them stay and get into power.


25 posted on 02/14/2011 3:09:54 PM PST by GraceG
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To: DTogo

I second that whole-heartedly.


26 posted on 02/14/2011 3:10:03 PM PST by darkangel82 (I don't have a superiority complex, I'm just better than you.)
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To: fightinJAG
If it were eliminated, it might bring in more than $2 trillion of new revenue for the government

Incorrect assumption. The wealthy would move their holdings to corporations and then rent the property back to themselves. This would allow them to deduct the mortgage interest as an expense and then depreciate the realestate. In other words, there would be unintended consequences and the $2 trillion would not materialize.

27 posted on 02/14/2011 3:10:46 PM PST by taxcontrol
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To: fightinJAG
Why isn't the earned income tax credit on anyone's list?
28 posted on 02/14/2011 3:11:21 PM PST by Glenn (iamtheresistance.org)
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To: Regulator

“Not only should the mortgage deduction be preserved, but the same deduction for all other interest paid should be reinstated, and BobDole’s name be struck from the Republican party rolls for ever.”

HERE HERE!!!


29 posted on 02/14/2011 3:11:38 PM PST by crz
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To: bigbob

They can take away my mortgage interest deduction when they pass the Fair Tax Act implementing a national sales tax.


30 posted on 02/14/2011 3:12:07 PM PST by The Unknown Republican
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To: fightinJAG
This is an incredibly bad idea.

Housing, home furnishings and home utilities, are a major section of our economy. This would be like dropping a bomb on yet another major sector of the economy.

The timing couldn't be worse. This would drive even more home buyers from the housing market making the dip even worse.

Unless you grandfather existing mortgages, it's a fundamentally unfair tax. The government provided an incentive to incur debt to buy homes, and to dramatically end that incentive after they have bought a home is just not right. The additional $2000-$4000 tax that will result on average homeowners from removing that incentive may well push even more homeowners into bankruptcy.

31 posted on 02/14/2011 3:14:46 PM PST by DannyTN
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To: fightinJAG
Why Ending the Mortgage Interest Deduction Would Save the Economy

By compelling millions of Americans to abandon upside down homes out of protest by depriving them of faith in the economic future of the nation?

Ah, I get it, I have to think like a G*D* socialist, which is to say, not at all.

32 posted on 02/14/2011 3:15:30 PM PST by Caipirabob ( Communists... Socialists... Democrats...Traitors... Who can tell the difference?)
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To: fightinJAG

1. Flat Tax all forms of income at 5%.

2. Enforce the Tax code, especially on those making over 1 million a year who try to evade taxes by sending their money offshore.

3. Make any future loopholes illegal without a freeking constitutional amendment.

At 5% it won’t be worth anyone’s time to try to cheat on their taxes. Plus you could make the penalty for tax fraud being a fine of 10X the amount you cheated taxes. (That way the IRS has reason to hit up the tax cheats at the high end of the bracket and if someone ont he low end mis paid their taxes by a few buck it isn’t going to bankrupt them).

If you are going to tax all forms of income the rate must be low (at the most 5%), if it is too high you end up changing the behavior on investments etc... so that people will try to “legally evade” their taxes by using something not covered in tax code.

If the government cannot live on 5% of the GDP they are too damned big to begin with.


33 posted on 02/14/2011 3:16:31 PM PST by GraceG
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To: fightinJAG

Let’s really screw the Government and just start living in our vehicles......oh wait, then they will raise the vehicle tag tax, CRAP!


34 posted on 02/14/2011 3:17:08 PM PST by Normal4me
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To: fightinJAG
We are already at past the maximum revenue number. Raising the rates (which is what this does) will only have further negative effects.

If I can't deduct the interest, then I must pay higher tax that then never circulates in the economy. Not to mention that the price of the house was artificially inflated by having the deduction to begin with, so now I'm hosed twice.

Talk about kicking the housing market when its down though... this does however further the Leftist goal of sticking 95% of the population into government tenement projects.

35 posted on 02/14/2011 3:17:49 PM PST by SampleMan (If all of the people currently oppressed shared a common geography, bullets would already be flying.)
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To: jiggyboy
Shell games don't get any more obvious than that

LOL! Yep! They're not even trying to hide it anymore......

36 posted on 02/14/2011 3:18:37 PM PST by Thermalseeker (The theft being perpetrated by Congress and the Fed makes Bernie Maddoff look like a pickpocket.)
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To: DannyTN

[ Unless you grandfather existing mortgages, it’s a fundamentally unfair tax. The government provided an incentive to incur debt to buy homes, and to dramatically end that incentive after they have bought a home is just not right. The additional $2000-$4000 tax that will result on average homeowners from removing that incentive may well push even more homeowners into bankruptcy. ]

When the Government Subsidizes something you end up with more of it, and people wonder why there was a housing bubble.....


37 posted on 02/14/2011 3:18:41 PM PST by GraceG
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To: The Unknown Republican

[ They can take away my mortgage interest deduction when they pass the Fair Tax Act implementing a national sales tax. ]

Amen to that!


38 posted on 02/14/2011 3:19:15 PM PST by GraceG
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To: Normal4me

[ Let’s really screw the Government and just start living in our vehicles......oh wait, then they will raise the vehicle tag tax, CRAP! ]

How about this, talk to the government about BUYING LOCK STOCK AND BARREL, some land from the federal government. Kinda like the “Gadsden Purchase” only we call it the “Galt Purchase” for obvious reasons of course.


39 posted on 02/14/2011 3:22:18 PM PST by GraceG
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To: taxcontrol
Incorrect assumption. The wealthy would move their holdings to corporations and then rent the property back to themselves. This would allow them to deduct the mortgage interest as an expense and then depreciate the realestate. In other words, there would be unintended consequences and the $2 trillion would not materialize.

Renting in general would be a relatively more attractive way to be housed. Most renters wouldn't bother to rent to themselves and would end up sharing the savings with landlords in a competitive market. The housing market would be more rational without the distortion of the tax break.

40 posted on 02/14/2011 3:23:00 PM PST by cynwoody
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To: Regulator

Excellent point on double taxation!


41 posted on 02/14/2011 3:24:06 PM PST by safeasthebanks ("The most rewarding part, was when he gave me my money!" - Dr. Nick)
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To: fightinJAG
Oh, please let this happen. I want to see my boss, a little liberal snotnose, start HOWLING! He says it is Ryan (R) who is pushing this one. I don't care who it is. We paid our mortgage off.

The little "left as possible" democrat is a first-time home buyer, and received, quote, unquote, $8,000 from Obama.

Hahaha!! Pretty please?????

42 posted on 02/14/2011 3:24:55 PM PST by EnquiringMind
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To: fightinJAG

No amount of taxation will “save the economy” when Obastard proposes budges that are nearly 100% more than the estimated revenue and when government handouts comprise WAY over half the budget.


43 posted on 02/14/2011 3:25:16 PM PST by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: RobRoy
Canada survives without the deduction.

Are you seriously suggesting that Canada has a better tax model than the US?

44 posted on 02/14/2011 3:26:18 PM PST by Jean S
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To: Jean S

>>Are you seriously suggesting that Canada has a better tax model than the US?<<

Actually, I was being tongue in cheek. I forgot the sarcasm tag.

That said, I really hate tax deductions. It is how the government controls people.


45 posted on 02/14/2011 3:29:13 PM PST by RobRoy (The US Today: Revelation 18:4)
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To: EnquiringMind

[ The little “left as possible” democrat is a first-time home buyer, and received, quote, unquote, $8,000 from Obama. ]

Ask the little fool, “Just how much of the GDP does the government need?” and “What is the limit as a percentage of the GDP should the government be allowed to take?”

I bet they will stare at you like a deer about to be ran over by an 18 wheeler.


46 posted on 02/14/2011 3:30:48 PM PST by GraceG
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To: fhayek
Give me a flat tax, where everyone has ‘skin in the game’, and I’ll consider it.

Now that's a proposal that actually would save the economy!

Buying votes wouldn't work so well if everyone had to pay the price of their vote. Then there would be a chance the politicians would get spending under control.

At the same time, wealthy people would invest it far more efficiently than the government could, thereby creating more jobs and more wealthy people.

47 posted on 02/14/2011 3:31:11 PM PST by cynwoody
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To: RobRoy

lol, sorry, it’s often hard to see sarcasm in words only.


48 posted on 02/14/2011 3:31:44 PM PST by Jean S
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To: fightinJAG

Elimination of the housing mortgage deduction would be the straw that finally sent the U.S. plunging into a full blown depression, as it would shatter the fragile market for housing by making housing purchases that much more unaffordable, thereby triggering a new death spiral of foreclosed and repossessed housing as even more folks are forced out of, or are forced to walk away from, homes that are now even more underwater relative to their mortgages.


49 posted on 02/14/2011 3:33:44 PM PST by catnipman (Cat Nipman: Made from the right stuff!)
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To: RobRoy
That said, I really hate tax deductions. It is how the government controls people.

I agree but when you plan your financial life around the deductions and then they pull the rug from under you, well you're often screwed.

50 posted on 02/14/2011 3:34:50 PM PST by Jean S
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