View Poll Results: Should we end the tax deduction for mortgage interest?

Voters
12. You may not vote on this poll
  • Yes

    6 50.00%
  • No

    5 41.67%
  • Other

    1 8.33%
Page 2 of 3 FirstFirst 123 LastLast
Results 11 to 20 of 25

Thread: Should we end the tax deduction for mortgage interest?

  1. #11
    Sage
    SheWolf's Avatar
    Join Date
    Jul 2010
    Last Seen
    Today @ 03:47 PM
    Gender
    Lean
    Other
    Posts
    24,436

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by Kandahar View Post
    I think it's a complete waste of our funds. The federal government forgoes up to $130 billion in tax revenue because of it, and for what? Why are we subsidizing homeownership in the first place? Is there some societal benefit to owning a home as opposed to renting it?

    Furthermore, it is a subsidy to mortgage lenders. Since they know that the government is picking up part of the tab, they can charge higher interest rates than they otherwise could. It's also a subsidy to lenders themselves, who take out much larger mortgages than they otherwise would.

    The mortgage deduction has certainly contributed to the housing bubble. 38% of capital was invested in real estate since 1980. Ending the mortgage deduction would free up some capital for stocks, bonds, and other forms of investments.

    Furthermore, there's the simple fact that our tax code is too complex, and this is one of many pointless deductions that should be ended to simplify it.
    Unless you're single, this tax deduction won't benefit you much unless your total annual interst payment + property taxes are over 11,400 (MFJ standard deduction).

    I do think it's funny how a lot of cities don't tax... just collect revenue though the interst rates on the homeowners, and then the homeowners can possibly take a deduction for the interest on federal taxes though. Very loopholish.

  2. #12
    Sage
    SheWolf's Avatar
    Join Date
    Jul 2010
    Last Seen
    Today @ 03:47 PM
    Gender
    Lean
    Other
    Posts
    24,436

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by MaggieD View Post
    Take away the mortgage interest deduction any time in the foreseeable future and think of it as driving the final nail into the coffin of the real estate market.

    My answer is, "No way."
    I kind of don't think people make the decision to buy a house based on this deduction... I don't see it happening unless you're single. Getting married is better tax incentive than owning a house. The first time home buyers credit was probably more enticing than the interest deduction... I think it was up to 8,000.... wowza

  3. #13
    Equal Opportunity Hater
    obvious Child's Avatar
    Join Date
    Apr 2008
    Location
    0.0, -2.3 on the Political Compass
    Last Seen
    12-09-14 @ 11:36 PM
    Lean
    Other
    Posts
    19,883

    Re: Should we end the tax deduction for mortgage interest?

    Kandahar, doesn't that raise taxes primarily on the middle class? Considering that the HMD is a 2% phaseout and limited to I think $1 million of house (well, not for 2010), the uber rich wouldn't get it anyway. A $5,000 a month mortgage on a million house would disappear at $3 mil of income. And the poor don't buy. So it's levying a tax on the middle class.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  4. #14
    Sage
    SheWolf's Avatar
    Join Date
    Jul 2010
    Last Seen
    Today @ 03:47 PM
    Gender
    Lean
    Other
    Posts
    24,436

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by Kandahar View Post
    OK, but why would that be a bad thing? Home prices and mortgage interest rates would fall, if the government wasn't subsidizing them.
    Do you have proof of this... I think it's an interesting concept..

  5. #15
    warrior of the wetlands
    TurtleDude's Avatar
    Join Date
    Oct 2005
    Location
    Ohio
    Last Seen
    Today @ 09:19 PM
    Gender
    Lean
    Libertarian - Right
    Posts
    180,541

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by Troubadour View Post
    Tax deductions should be ended period. It just creates a wall of obscure accounting tricks for rich people to avoid contributing to their country.
    the biggest deductions or loopholes is the fact that almost half the country doesn't pay any income tax

    the rich contribute far more than most-indeed the top 5% pay more Income tax than the rest of the country combined

    only a moron would claim that the rich avoid contributing to their country

    its the bottom 20% who are more likely deadbeats than the rich when it comes to positive contributions



  6. #16
    warrior of the wetlands
    TurtleDude's Avatar
    Join Date
    Oct 2005
    Location
    Ohio
    Last Seen
    Today @ 09:19 PM
    Gender
    Lean
    Libertarian - Right
    Posts
    180,541

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by obvious Child View Post
    Kandahar, doesn't that raise taxes primarily on the middle class? Considering that the HMD is a 2% phaseout and limited to I think $1 million of house (well, not for 2010), the uber rich wouldn't get it anyway. A $5,000 a month mortgage on a million house would disappear at $3 mil of income. And the poor don't buy. So it's levying a tax on the middle class.
    true enough but perhaps the middle class is undertaxed



  7. #17
    Sage


    MaggieD's Avatar
    Join Date
    Jul 2010
    Location
    Chicago Area
    Last Seen
    @
    Gender
    Lean
    Moderate
    Posts
    43,242
    Blog Entries
    43

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by Kandahar View Post
    OK, but why would that be a bad thing? Home prices and mortgage interest rates would fall, if the government wasn't subsidizing them.
    Kandahar, I'm not at all sure that interest rates would fall. Interest rates are governed and driven by things other than the fact that mortgage interest is tax deductible.

    You say home prices would fall. I would agree with you. Why would they fall, though? They would fall because there would be less buyers. And because there would be less buyers, there would be less homeowners. Home ownership, rightly or wrongly, has long been an integral part of the American Dream. Should it be? I think so. Buying a home is a way of fixing one's living costs. When one lives in an apartment or other rental property, one is controlled by, and at the whims of, a landlord. Home ownership promotes personal pride. Encourages having a personal stake in the neighborhood and the schools. The American Dream of a white picket fence deserves to be there. For all that our government chooses to subsidize, surely home ownership is one of the more worthy.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

  8. #18
    Enemy Combatant
    Kandahar's Avatar
    Join Date
    Jul 2005
    Location
    Washington, DC
    Last Seen
    10-15-13 @ 08:47 PM
    Gender
    Lean
    Liberal
    Posts
    20,688

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by obvious Child View Post
    Kandahar, doesn't that raise taxes primarily on the middle class? Considering that the HMD is a 2% phaseout and limited to I think $1 million of house (well, not for 2010), the uber rich wouldn't get it anyway. A $5,000 a month mortgage on a million house would disappear at $3 mil of income. And the poor don't buy. So it's levying a tax on the middle class.
    No, it's mostly on the wealthy. Keep in mind that you get no benefit whatsoever unless you itemize your deductions, and even then you only benefit above and beyond the standard deduction. This year, the standard deduction is $11,600 for a married couple. So if the interest rate on your mortgage is 4.5%, you aren't benefiting at all unless your mortgage is larger than $257,000.

    And even beyond this point, you're only benefiting on the AMOUNT of your mortgage that exceeds $257,000. So if you're in the middle-class tax bracket (28%) and somehow you were able to get such a large mortgage, you'd be saving about 1.26 cents for every dollar of your mortgage in excess of $257,000.

    The primary beneficiaries of this are the wealthy. But I think it's kind of a moot point; the primary goal of ending the mortgage deduction isn't to soak the rich (as it could be made revenue-neutral if necessary), it's to end the distorting effects that it has on the economy.
    Are you coming to bed?
    I can't. This is important.
    What?
    Someone is WRONG on the internet! -XKCD

  9. #19
    Dungeon Master
    Hooter Babe

    DiAnna's Avatar
    Join Date
    Sep 2008
    Location
    Northern California
    Last Seen
    @
    Gender
    Lean
    Independent
    Posts
    32,575
    Blog Entries
    1

    Re: Should we end the tax deduction for mortgage interest?

    My husband and I don't have a mortgage, so the point is moot for me personally. However, mortgage interest is usually the largest single deduction any family has, and to lose it would be devastating to the average family. Even owning a home in this economy is a struggle for millions of people. This is not the economy to strip those struggling to keep a roof over their heads of their single largest tax deduction.

    I can see slowly lowering the percentage of interest that can be deducted over a period of ten years or more, but even then this is not the time to start doing so.

  10. #20
    Enemy Combatant
    Kandahar's Avatar
    Join Date
    Jul 2005
    Location
    Washington, DC
    Last Seen
    10-15-13 @ 08:47 PM
    Gender
    Lean
    Liberal
    Posts
    20,688

    Re: Should we end the tax deduction for mortgage interest?

    Quote Originally Posted by MaggieD View Post
    Kandahar, I'm not at all sure that interest rates would fall. Interest rates are governed and driven by things other than the fact that mortgage interest is tax deductible.
    That is one component of it. The mortgage interest deduction is, in part, a subsidy for mortgage-lending banks. If mortgage interest is tax deductible, that increases the demand for mortgages, which drives up the price (i.e. the interest rate). The banks know that the government will foot part of the bill, and so they can charge more than they otherwise would.

    Quote Originally Posted by MaggieD
    You say home prices would fall. I would agree with you. Why would they fall, though? They would fall because there would be less buyers. And because there would be less buyers, there would be less homeowners. Home ownership, rightly or wrongly, has long been an integral part of the American Dream. Should it be? I think so. Buying a home is a way of fixing one's living costs. When one lives in an apartment or other rental property, one is controlled by, and at the whims of, a landlord.
    Your costs are far more fixed if you rent than if you own. They are essentially limited to your rent (fixed cost), your renters' insurance (fixed cost), and your utilities (variable cost). These costs are known well in advance, are subject to market forces, and with the exception of utilities typically only change once per year. If you own a home, you have your mortgage (fixed or variable), your home insurance (fixed), your property taxes (fixed), your utilities (variable), the financial cost of repairs/maintenance (variable), the time cost of repairs/maintenance (variable), and the risk that your home will depreciate (variable).

    Quote Originally Posted by MaggieD
    Home ownership promotes personal pride.
    I see no evidence of this, and even if it's true, subsidizing personal pride isn't worth $130 billion of federal revenue per year when our infrastructure is crumbling, our schools are failing, and we have a huge budget deficit.

    Quote Originally Posted by MaggieD
    Encourages having a personal stake in the neighborhood and the schools.
    That would be a matter for local governments then. If they think that homeowners are better for their community than renters, they can subsidize the mortgages themselves. I don't see how it's a federal issue since (with few exceptions) people aren't going to pick up and move out of the country as a result.

    Quote Originally Posted by MaggieD
    The American Dream of a white picket fence deserves to be there. For all that our government chooses to subsidize, surely home ownership is one of the more worthy.
    I can think of a lot better ways to spend $130 billion than subsidizing dreams of white picket fences.
    Last edited by Kandahar; 03-07-11 at 12:03 AM.
    Are you coming to bed?
    I can't. This is important.
    What?
    Someone is WRONG on the internet! -XKCD

Page 2 of 3 FirstFirst 123 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •