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We MUST Keep The Mortgage Interest Deduction

Discussion in 'Political Discussion' started by PatriotsReign, Nov 27, 2012.

  1. PatriotsReign

    PatriotsReign Rookie

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    Or it will take us decades to recover.

    Besides, it be incredibly unfair.

    Why?

    Because home prices would come down as soon as the deduction was scrubbed from "write-off" status.

    So those who already own homes would screwed because they not only would be stuck with their current mortgages, but would also lose value on their homes.

    That doesn't even address how this would kill any housing recovery which drives much of our economy.

    Fiscal battle over mortgage deduction

    Hands off the mortgage interest tax deduction - Nov. 27, 2012

    If we really want to add jobs, this would be the most foolish move our elected officials could make. I can see capping it at a certain level so people who buy $3 million homes would be limitted in how much could written off.

    But if this deduction were to be eliminated, all hell would break loose economically. I would suggest they go back to the drawing board.

    Finally, wouldn't such a move break Obama's promise of not raising taxes on the middle class?

    Yes, of course it would.
    Last edited: Nov 27, 2012
  2. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #87 Jersey

    Well I'm pretty sure it is going to be phased out real slow. However ... home prices will reflect who gets what deductions ... the market always corrects itself ... always does.
  3. PatriotsReign

    PatriotsReign Rookie

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    Sure it does....but the market will reflect lower home prices if we get rid of the MID. And we don't want home prices to go down.

    Again, Obama promised he wouldn't raise taxes on the middle class and if they eliminate this one, he won't be keeping his promise.

    It would end up being an ok deal for new buyers while current/recent buyers would be getting the shaft.
  4. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #87 Jersey


    It will get phased out slowly ...

    That said I think single people making over 50K and families making over 100K should all pitch in something in new revenue as long as there are matching deductions from spending. After that those numbers should go down to the point that almost everyone except for impoverished, handicapped and retired pay more ... even if it's but 1% more. I do not believe the rich should be the only ones paying more in financing this country.
    Last edited: Nov 27, 2012
  5. 363839

    363839 PatsFans.com Supporter PatsFans.com Supporter

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    Let's see, I am at about 50k a year. Got my house at the worse possible time, just before the crash. My interest went up from 3 to 8.5
    Now I cannot even get cash for renovations that are badly needed because I am so up against it with my mortgage which had risen about 400 bucks per month.
    And Icy thinks I should give up the very little solace I get from this mess to help the government out of the mess they themselves created.:mad:
    No thank you!
  6. RI Patriots fan

    RI Patriots fan Rookie

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    Why on earth anyone would take out anything other than a fixed rate mortgage is beyond me. The only way it makes sense would be if you knew you were moving in a short period of time and you knew you could sell it.
  7. 363839

    363839 PatsFans.com Supporter PatsFans.com Supporter

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    I took a chance and it kicked me in the butt. I really didn't think my mortgage would go up as much as it did.
    I really didn't understand what I was doing. All I know was that at the time I bought, everybody was telling me how great an investment it is and how I will love having my own house. I really should have stuck with apartment life but now that I have the house, I intend to hold on as long as I can and hopefully, in the near future, I can get some cash to get this mortgage down to a roar.
    Last edited: Nov 27, 2012
  8. wistahpatsfan

    wistahpatsfan Rookie

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    Sorry to hear that, but them's da breaks. You gambled big-time and lost. I had a variable on an income property and when the fixed ran out, it was pretty much a wash. Then I unloaded it at near peak of market. I gambled and won (for once). Two stories...different outcomes.

    I think the deduction on mortgage interest is grossly unfair- which I gladly use- but if you get to deduct interest on one loan, why not all loans? It will and should be eliminated, unless, of course, all interest on all loans are included.

    Another deduction that's unfair is the child deduction. I use it also, but it places an undo burden on people who don't want or can't have kids.

    Social security should also be taken out of all pay regardless of how much one earns.

    Income tax should be abolished and the IRS...

    Oh...never mind.
  9. 363839

    363839 PatsFans.com Supporter PatsFans.com Supporter

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    Oh I don't think all is lost yet. I will have to have a few years of substandard living as I have been doing for the last couple of years or so.
    I have already a decade so if I can hold out at least until more of my payment goes to principle and perhaps may even take a loan out from 401k...we'll see.
    You want to equalize housing interest deductions to other loan deductions. I disagree. I am not positive about this but I am pretty sure the deduction was implemented to help the housing industry. This industry still needs help...probably more than ever before.
    Student loan...that's such a mess I will give you that but other loans such as personal loans for vacations or loans for second homes then no, they should not have deductions from interest and even loans for renovations should not get them.
    What other loans do you feel should get tax deductions for interest like the home interest deduction?
  10. wistahpatsfan

    wistahpatsfan Rookie

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    Your preference for the home interest deduction is understandable, but it colors your rationale. Of course it is designed to boost the real estate market. Who are the biggest players in that market? Banks. They get their interest no matter what. How does that incentivise anyone other than bankers, and real estate agents who get comission from each new sale. OK. That's great if you're a banker or a realtor. Who else?

    You don't think other sectors should be incentivised? Why not? What about building trades? The interest on loans for home improvement and additions shouldn't be deductible? Why not? Vacations and cars? Don't a lot of people make their livings off of those sectors?

    I'm not saying any of these sectors should get interest exemptions. I'm saying either all or none. It's discriminatory. It's also social engineering. Maybe the selling of the American Dream is not a good thing? Maybe it's just a marketing ploy because our economy has been shifted away from manufacturing into service. I don't know, but lots and LOTS of people raised families and lived and died in three-deckers and apartments. They had jobs and families. It was not discouraged but an option.

    What do you think about the child deduction? Is that fair to childless people? THe same goes for any other deduction.

    Don't even get me started on how corporations use the deduction menu to keep from paying the taxes they should.
  11. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #87 Jersey

    Home equity loans are deductible up to the original purchase price of the home aren't they? If they lop that off ... it will decimate the economy ... doubt they will do it except for the 250K + people right now.
  12. PatsFanInVa

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    Welcome to the fiscal cliff.

    Were this a bar, or the bad ol' days, I'd say welcome to the fiscal cliff, [selected good natured obscenity impugning your mental acuity.] But I wouldn't do that now because it's bad for civil discourse.

    Instead, I'll just say, what the hell do you think is going to happen when you hit the middle class one way or another?

    Now let's try a gedanken experiment.

    Let's take the point of view of an angry fiscal conservative whose mom and pop bought them a home, or who bought a home outright with a trust fund, upon attaining majority (er, turning 18.)

    Doesn't he have every reason to say "Why should I have to pay for your irresponsible layaway-plan for home ownership? I don't get a break for home mortgage interest!"

    Now let's try another.

    Let's take the point of view of an angry renter, who has never had the downpayment to buy. Let's say he's got an okay job, but got out of college after 2008, and lives in a big city. He's been busting his butt to save money, but he needs to get 20% down before anybody will consider him "owner material." He's single, and he pays 15% of the entirety of what he makes -- very little in the way of deductions -- just for federal taxes. Again, can't he say "Let's get this straight... I have no house, years of saving ahead of me, new (i.e. relatively poor) credit... and you want me to help housing prices get higher again, by paying you to stay in your home????"

    I think you get the picture.

    Just as we can cite reasons that any tax giveaway or any use of federal funds can be beneficial to the economy, we can also cite reasons that your favorite tax deduction is "stealing" from me, given that "me" can be any individual in the big continuum of American life.

    Cuts to the military will gut shipbuilding. Eliminating the mortgage interest deduction will depress the real estate market. Et cetera, et cetera, et cetera. And guess what? Slashing the safety net will slash demand, and tank the economy that way.

    This is why the timing for "Yay! Austerity!" er, sucks. But that's what we gotta do.

    By the way, PR, I agree with you. It would be a horrendous idea to cut the mortgage interest deduction. But others don't agree with you and me, and they've gotten one big point across: OMG, it turns out we're in debt!

    So, we'll be picking from among bad ideas.

    But you and I can take solace. We have a powerful lobby on our side, the realty guys. There's another powerful lobby, mortgage lenders, who'd never let their puppets vote for you and me to carry the load.

    I'd go for combining tax hikes for the rich with the Rmoney "deduction cap," but a tad higher than Rmoney set it in his "f'rinstance" version. (The $25K isn't going to handle the standard exemption, standard deduction, and mortgage interest for many.)

    Rmoney proposed the deduction cap to carry the whole load, which would slam the middle class along with the rich; and the rich could find other ways to hide the money. And of course, since he left rates alone, nothing would address the incredibly low capital gains rate, where really rich people make their money.

    But a higher total deduction cap, combined with a marginal rate increase kicking in at $250k, could be something I would get behind. I'd also cut military spending, which has become bloated -- not domestic programs which have been "reformed" again and again.

    But hey, if you want to spout absolutes and disregard the way the skittles shake out, this is the kind of thing you invite.

    If you want to judge the impact of various proposals, that's another matter. Want to apply it to some giveaways that aren't specifically targeted to your own comfort?

    PFnV
    Last edited: Nov 27, 2012
  13. PatsFanInVa

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    By the way, the proposal ascribed here to Obama is lowering the total you can claim in deductions from 35% of your income to 28%. Basically the same idea as Rmoney, except Rmoney wanted to have a dollar figure (which he wouldn't pin down.)
  14. wistahpatsfan

    wistahpatsfan Rookie

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    So basically the American Dream is all that matters and "fairness" in taxation is just a buzzword. Screw the single person in an apartment. He'd better have some kids and buy a house if he's going to be taxed fairly like everyone else.

    More garbage policy by the IRS.
  15. PatsFanInVa

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    Basically, Wistah, there is a ton of unfair stuff in the code. Yeah a single guy in an apartment is screwed by his married soccer dad buddy, subsidizing his little rug-rats, subsidizing his mortgage, subsidizing his marital bliss, if his trophy wife is of the non-working variety.

    Then we get to hear married guy in a single-family detached dwelling complaining about the "American family needs another break" constantly.

    Don't even talk to me if it's a farm family. :rolleyes:

    But all we hear about is this mythical welfare queen that we're alllll working soooo hard to help out.

    Everything's fine if it's someone else's ox being gored. And you'll never see Grover and company complain that the "American Family" is a huge cash drain on the single population.

    PFnV

    Edit - and again, I should reiterate that my point of view is to preserve what we do now (although I'd eliminate the marriage windfall, even though it would hit me hard since the Mrs. doesn't work.) I'd keep educating your brats, even though I don't have 'em, I'd keep -- no, expand -- public education funding, Pell Grants, low-cost college loans, the whole nine. Why? It's called a society. But those deductions you get for replicating your DNA? Really? I need to pay for that, to encourage people to do the single thing they're most likely to want to do anyway, i.e., reproduce? I dunno...
    Last edited: Nov 27, 2012
  16. IcyPatriot

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    #87 Jersey

    Still think the fairest tax increase should be a national sales tax phased in over time. Whatever the solution it will have to be phased in over time and we don't have time ... there was plenty of time but Congress has sat on their hands for far too long.
  17. wistahpatsfan

    wistahpatsfan Rookie

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    Agree.
    But that has to be unfair to someone!

    By the way, I get that the Code is inherently unfair. I just am sick of people whining about why their favorite tax should be kept. We should either make everyone pay taxes on their income - ALL of it- or not. This deduction tangle is absurd and the sole reason for the existence of 90% of accountants and 50% lawyers. Another jobs program we need so the People can stay busy spinning their wheels.
  18. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #87 Jersey


    what is unfair IMO that in past years our government always spent more money when they found new ways to tax us. However ... in theory if our government was spending our money wisely then paying taxes or having increased taxes has nothing to do with being unfair.

    Cuts have to be made ... being the police force of the world seems the best area to cut and cut it big. So Russia and China gain a few friends ... it's not like they are our enemies anyways ... nobody will be lobbing nukes anytime soon. Let the 3rd world countries go to the crapper ... not like the ones we support are any better after we give them the money anyways.
  19. DarrylS

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    Always thought the Steve Forbes Postcard Tax was fairly equitable, one nice thing about that plan is that you can pretty much phase out most of the IRS and its vast workforce...

    There are too many loopholes in the current system that favor those at the top..
  20. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I don't have a mortgage, but am more than happy to support that kind of handout to the middle class who still carry mortgages. Home ownership is an American ideal, and easier credit, lower interest rates, and mortgage deductions are all helpful in that regard. That said, saying that these handouts are necessary in order to preserve home prices is irrelevant. There are many factors in the economy that affect the value of homes. If the argument is to protect the value of the homes, then let's get rid of the mortgage deduction and invest that money into communities to provide better schools, more police, after school programs, and other services that make our communities more attractive. I think the argument for the mortgage deduction is to make it easier for people to afford their homes especially in a time when many are struggling. At any rate, PR thanks for drawing attention to one of the biggest middle class handouts, one that I was a beneficiary of for over a decade.

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