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Thread: Key Tax Breaks at Risk as Panel Looks at Cuts

  1. #71
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by MaggieD View Post
    TClinton's and W's insistence that owning a home was almost akin to an inalienable right.
    Yes, very much so, though it's hardly just them. I hear quite a few people refer to what was once the American DREAM as though it's an entitlement.
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by MaggieD View Post
    The Feds have no stake in the fight of home mortgage interest deductions? The Feds are the very jakes who caused the housing bubble by both Clinton's and W's insistence that owning a home was almost akin to an inalienable right.
    Wrong, this was not the cause of the housing bubble or the recession. Aggressive preditory lending by greedy lenders and financed by Wall Street was.


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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by Goobieman View Post
    To promote the general welfare is one of the basic purposes of the Federal government, as noted in the Preamble.
    This does exactly that - and it doesn'y have anything to do with the "General welfare clause"
    Fair enough. Just don't let me ever catch you ranting that the federal government doesn't have the constitutional authority to tax for the purpose of social engineering, or anything similar.

    Quote Originally Posted by Goobieman
    - nor does it create an expense of any sort..
    I know you'll say that tax deductions aren't expenses, but that's really just a matter of semantics since you could just as easily look at it from the perspective of renters being burdened by an ADDITIONAL tax to which homeowners are not subjected. Whether you call it an expense or not, the net effect of the deduction is an economic transfer of wealth from renters to owners.

    Quote Originally Posted by Goobieman
    "...promote the general welfare..."
    And I would argue that it does not do that from the federal standpoint. From the local community standpoint, sure, in some cases maybe encouraging homeownership is a good idea. But I fail to see any benefit to the national welfare if more people are glued to specific buildings.

    Quote Originally Posted by Goobieman
    Yes, they can. This in no way precludes the federal government from doing so as well.
    Given the dispartiy between federal and local income tax rates, the effect that local governments can have to this end is severly limited, however.
    There is no reason they have to be disparate. Local governments are free to make their tax code friendly toward homeowners and odious toward renters, if they feel it's in their best interest.

    Quote Originally Posted by Goobieman
    Career mobility isnt -necessarily- a good thing,
    Not necessarily for individuals...but from a macroeconomic perspective it definitely is. It allows employers to have a wider talent pool from whom to pick their employees, and it allows workers to have a wider range of career options from whom to pick their employer.

    Quote Originally Posted by Goobieman
    and 'housng bubble' is just the most recent boogeyman. The "housing bubble' wasnt created because of the mortgage interst deduction, bu tby low mortgage rates.
    The low mortgage rates were made 10-35% lower by the mortgage interest deduction.
    Last edited by Kandahar; 10-25-10 at 10:17 PM.
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by pbrauer View Post
    Wrong, this was not the cause of the housing bubble or the recession. Aggressive preditory lending by greedy lenders and financed by Wall Street was.
    Not quite, PBrauer. Oh, there's enough blame to go around, but the beginnings, at the very heart of the bubble, was our government's strong-arming lenders into "finding a way" that everybody could buy a home. That started with Bill Clinton and George Bush carried on.
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by pbrauer View Post
    Wrong, this was not the cause of the housing bubble or the recession. Aggressive preditory lending by greedy lenders and financed by Wall Street was.
    Both were key causes. However, subsidizing mortgage interest rates (which is effectively what the mortgage interest tax deduction does) encourages people who have no business owning a home to own a home. It turns good renters into bad homeowners. After all, why not take out a big mortgage you can't afford, if you aren't paying 10-35% of the cost anyway.
    Last edited by Kandahar; 10-25-10 at 10:33 PM.
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by Kandahar View Post
    Fair enough. Just don't let me ever catch you ranting that the federal government doesn't have the constitutional authority to tax for the purpose of social engineering, or anything similar
    That doesnt at all follow from what I said.
    NOT taxing to promote the general welfare is an entirely different animal than taxing tp provide for the general welfare.

    I know you'll say that tax deductions aren't expenses, but that's really just a matter of semantics...
    No... because expenses are pay-outs, whereas deductions are not.

    Since you could just as easily look at it from the perspective of renters being burdened by an ADDITIONAL tax to which homeowners are not subjected.
    Sounds like an incentive to buy a house - which is the whole idea.

    And I would argue that it does not do that from the federal standpoint.
    Its good for everyne, everwhere. Seems like a federal standpoint to me, given that the term is 'general welfare'.

    There is no reason they have to be disparate. Local governments are free to make their tax code friendly toward homeowners and odious toward renters, if they feel it's in their best interest.
    Well, that;s true, but if cities start taxing at the same rates as the federal; government, they will soon be empty.
    The point is that the deduction applied to a tiny tax rate doesnt create the same benefit as the same deduction applied to a higher tax rate. As such, cities ans states cannot hope to match the incentive that the federal government can offer because the tax rates of the federal government are so much higher.

    Not necessarily for individuals...but from a macroeconomic perspective it definitely is. It allows employers to have a wider talent pool from whom to pick their employees, and it allows workers to have a wider range of career options from whom to pick their employer.
    None of that is retarded by home ownership, except in the few points in time where houses arent selling.

    The low mortgage rates were made 10-35% lower by the mortgage interest deduction.
    Them, by defintion, high mortgage rates were discounted even more - why was there no bubble when mortgage rates were high?
    Last edited by Goobieman; 10-25-10 at 10:50 PM.

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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by Kandahar View Post
    Both were key causes. However, the effect of subsidizing mortgage interest rates (which is effectively what the mortgage interest tax deduction does) is to encourage people who have no business owning a home to own a home. It turns good renters into bad homeowners. After all, why not take out a big mortgage you can't afford, if you aren't paying 10-35% of the cost anyway.
    Have gotten a mortgage lately? When a lender gives a mortgage today, it is immediately sold to an investment house and securitized. Without the regulators in place, lenders can lend and never worried about being paid because its no longer their worry. This was allowed to happen in the Bush administration, that's what brought the house down. And they want to blame Obama for the economy? The people should be in prison.


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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by pbrauer View Post
    Have gotten a mortgage lately? When a lender gives a mortgage today, it is immediately sold to an investment house and securitized. Without the regulators in place, lenders can lend and never worried about being paid because its no longer their worry. This was allowed to happen in the Bush administration, that's what brought the house down. And they want to blame Obama for the economy? The people should be in prison.
    You know who I REALLY think should be in prison?? Moody's, Standard & Poors and Fitch top management. These rating agencies graded this JUNK as AAA and Four Star. It was crap. THEY should be in prison.
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by Goobieman View Post
    That doesnt at all follow from what I said.
    NOT taxing to promote the general welfare is an entirely different animal than taxing tp provide for the general welfare.
    It's really just semantics. NOT taxing a certain group of people (i.e. homeowners) can just as easily be viewed as an EXTRA tax on everyone who isn't in that group (i.e. renters). The group that bears the tax is subsidizing the group that doesn't.

    Quote Originally Posted by Goobieman
    No... because expenses are pay-outs, whereas deductions are not.
    Well...the government has less money to spend, and the targeted beneficiaries (in this case homeowners) have more money to spend. That's basically the same as any other wealth redistribution programs, aside from the fact that it requires fewer bureaucrats. You don't have to call it an "expense" if that word makes you uncomfortable, but from an economic perspective it works exactly the same way.

    Quote Originally Posted by Goobieman
    Sounds like an incentive to buy a house - which is the whole idea.
    That's a perfect example of using the tax code for social engineering, which I thought you were against.

    Quote Originally Posted by Goobieman
    Its good for everyne, everwhere. Seems like a federal standpoint to me, given that the term is 'general welfare'.
    So then, would it be accurate to say that your opposition to "artificially supporting the weak, slow, sick, and stupid" is merely based on the fact that you don't think it successfully promotes the general welfare, rather than any opposition to the government power itself?

    Quote Originally Posted by Goobieman
    Well, that;s true, but if cities start taxing at the same rates as the federal; government, they will soon be empty.
    The point is that the deduction applied to a tiny tax rate doesnt create the same benefit as the same deduction applied to a higher tax rate. As such, cities ans states cannot hope to match the incentive that the federal government can offer because the tax rates of the federal government are so much higher.
    They don't have to, they could just do the same type of wealth redistribution that the feds currently do. For example, let's say that in a certain city, the average homeowner saves $4,000 per year due to the mortgage interest deduction. If it was abolished, the city could just tax the renters enough to give all the homeowners a $4,000 subsidy (or "tax cut" if you like).

    Quote Originally Posted by Goobieman
    None of that is retared by home ownership, except in the few points in time where houses arent selling.
    It is. If people are glued to a building, then they are less likely to move to pursue more lucrative career paths elsewhere. This is bad for both the employees and employers. If I'm an employer in DC, homeowners in New York are completely off-limits to me unless they are willing to sell their homes to relocate. It's much easier for renters to relocate, on the other hand.

    Quote Originally Posted by Goobieman
    Them, by defintion, high mortgage rates were discounted even more - why was there no bubble when mortgage rates were high?
    Probably because the rates were high enough, even with the deduction, to make mortgages sufficiently unattractive to most people. When you have low rates and you make them even lower through government policy, it's going to cause a bubble.
    Last edited by Kandahar; 10-25-10 at 11:01 PM.
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  10. #80
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    Re: Key Tax Breaks at Risk as Panel Looks at Cuts

    Quote Originally Posted by Whovian View Post
    I think his point was that according to Obama's promises, these should not even be on the table.
    I wouldn't go that far. Politics requires you at least consider breaking your word. Actually doing so is something people do reluctantly, however.
    Last edited by Morality Games; 10-25-10 at 11:13 PM.
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