Posted on 09/04/2011 9:07:32 AM PDT by SmithL
I agree with you on this. The government has distorted the markets for quite some time by using the tax code to buy votes from people with their own money. A good first step would be to eliminate the deduction for second mortgages. Of course, this is something that the pols really enjoy having so it won't be so easy to get rid of it.
If they are going to eliminate this deduction though, it should be revenue neutral, as noted by one of the earlier posters. Any time actual taxpayers get to keep more of their own hard-earned money out of the clutches of the criminals in Washington, it's a good thing IMO. This proposal is only being floated because the criminal class in DC want more of our money. If they were to increase the personal exemption amount by a few grand along with the elimination of the mortgage deduction, I'd be for it 100% as it would remove the market distorting effects, and yet still allow Americans to keep more of their money as well.
Taxes are what distorts a market, not the other way around.
The deduction grossly distorts the market and our country’s fundamental investments, thus productivity. There’s got to be an offsetting drop in tax rate to right the problem, however.
Huh? Most renters see the deduction as a tax and a scam. It needs to be eliminated.
The'll quit thinking it's a scam once it's eliminated and the 'tax increase' gets added to their rent.
exactly
Or do renters think that property owners, like “corporations”, are so rolling in money that they will (or can be forced by govt) to absorb extra costs without passing them along?
Eliminating deductions increases costs.
Who pays?
But as an investor, I don't understand it
As a homeowner since 1974 I've always had a mortgage deduction. That let me keep more of my own money to spend on housing. In this case, home ownership.
It was always thought that the “cost to govt” of encouraging home ownership strengthened communities and our society and gave everyone a goal they could reach on the first step of the ladder of owning their own family home.
Not to mention the jobs that are created by a strong real estate market.
So please explain to me how choosing to live in a rental property owned by someone else, or a smaller house, will really be “cheaper” and this will lead to ordinary working folks having extra money to put into “productive” investment?
In what? Stocks? Govt bonds? Corporate bonds? Interest earning savings accounts? CD’s? How's that working out for folks these days? What kind of jobs will that produce for an “investment” economy, to replace the model of property ownership invested in by tens of millions of individuals?
Just look north to Canada—they’ve virtually the same level of home ownership that we have.
Also, a lower tax rate could enable you to keep your own money just as much—unless you are being subsidized by others who are funding your deduction. They sure could use keeping more of their funds to invest locally.
What you subsidize you get more of, and the more we subsidize mortgages over investment in business, the more we get granite kitchens and marble baths—but less national productivity.
If you’re an investor, you should understand that.
I still don't get it! What does that mean?
We (the govt) should subsidize “business”?
People with extra income after basic needs will invest it in “business” instead of housing?
Banks will have more money to lend and will lend it to “business” instead of real estate?
What does that mean, really?
First, you assume a lower tax rate would be part of the package and offset financially the loss of the deduction?
I do not agree this will happen. I do not trust our government to do that
The purpose of the unelected, appointed “super committee” in eliminating deductions is to raise revenue....to milk the middle class and upper middle class taxpayer
It is not in business to re-direct investment, or to create jobs, or to make taxes simpler or more “fair”. That talk is a feel-good smokescreen. Their goal is to get more REVENUE for the government. To milk more taxes from people in an effort to “reduce the deficit”.
Which given the overall poor inferior qualities of people running our govt, we also have reason to be cynical about.
And as for “productive investment”- the businesses here (mostly small) that design kitchens, sell and install granite counters, design and plumb-in marble baths and upgraded kitchens, sell real estate, businesses that make real estate loans, home improvement/equity loans - all the businesses that create and sell home design products and services - local contractors that install and service them - I think would beg to disagree with you.
No we are not yet a few more years unless it changes we probably will be.
chris, I’m going to ask around and I’ll ping you back if I find out anything interesting.
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