The case for ending housing finance subsidies

[all]

[quote=SK in CV]
Interest income has been taxable for almost 100 years. (income tax started in 1913.) Interest paid was also deductible since the beginning of income tax in the US. But 100 years ago, almost no one other than farmers had mortgages on homes. There were no credit cards or HELOCS or car loans. It wasn’t until the mid-30’s that the number home mortgages exceeded farm mortgages.

But that doesn’t negate the fact that the mortgage interest deduction is a subsidy (or in the current lingo, a tax expenditure.) As is the deduction for church contributions, retirement plan contributions, and medical insurance. The tax code continues to evolve, In the last 100 years it’s undergone 2 major overhauls (in 1954 and again in 1986), with top tax rates ranging from the 7% at the beginning, to a high of 94% during WWII. The argument that once a deduction is codified, then any elimination of that deduction becomes a “confiscation” is absurd, unless you consider the first dollar of income tax paid as confiscation. If that’s the case, the largest confiscation of all time ocurred during the mid-80’s. It’s not a term I ever remember hearing either before or after tax reform passed under Ronald Reagan.
[/quote]

I am under impression that you saw my remark as political, while it was a mechanical one. I don’t think the decision to start taxing something that was not taxed before should be framed as ending a giveaway (and interest, unlike retirement plan, is not a post-1913 concept). If you are going to take more of my money go ahead, but please don’t make it sound like you are simply stopping a generous gift you used to give me (not you in particular, of course 🙂 ). That’s all.

[quote=SK in CV]
…unless you consider the first dollar of income tax paid as confiscation. If that’s the case, the largest confiscation of all time ocurred during the mid-80’s. It’s not a term I ever remember hearing either before or after tax reform passed under Ronald Reagan. [/quote]

True, confiscation assumes no compensation and in this case I’m being compensated through services. However, I do not want some of those services and if the government can call the money not yet taken ‘tax expenditure’ I can call the process of collection under a threat of seizure and imprisonment ‘confiscation’. At least I did not say expropriation.

I was not here during Reagan’s years. I was a teenager with things more important than the U.S. tax code on my mind. I’m sure RR like any other president was a smart person and had many qualities but I heard nothing good about him.

On topic, ending mortgage rate subsidy and $500K exemption for sale of primary residence sound like good ideas to me, but I expect every solution to come with a loophole designed by those who participate in and influence the decision making process.

[briansd1]

[quote=FormerSanDiegan]Briansd1, I Love the string of cliches, but we WOULD have pride of (multiple property) ownership … and pride of tax sheltership. Also, we have the same curtains, wall colors, lights, appliances, etc as when we moved into out house. The only thing we added was nails to the wall for pictures (even then we reused 80% of existing ones) and light bulbs when they went out. Oh yeah, we also added a CO detector and some 9 volt batteries for the smoke detectors. The homeowner premium will be obvious in about 20 years when the existing tenants are payIng for our retirement.

People who take this approach if MID were eliminated would also have the freedom to move into new rentals as their needs or jobs change,which, as you know is a huge advantage to renting. People could rent in best school district for a few more years, then move into the condo with a view. The approach I outlined might be the optimal solution for many folks with upper middle class incomes and decent-sized mortgages. Now that i’ve thought about it more I am kinda motivated to run the numbers and see where it gets me. Maybe we can move into a trailer park rental, rent out our McMansion and retire now.
And the government would have to find another loophole to close to collect the rest of the $100 billion.[/quote]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

I believe that some people would want to game the system like you…. but the majority will buy and live in their houses.

It’s all about the monthly payments. Pure and simple, if the monthly payments, net of taxes, are reasonable, people will buy houses.

If you belive that the MID is so important to homeownership, then you’re obviating the argument for ever “paying off the mortgage and living stress-free” (another realtor talking point).

If you believe that the MID is baked into the prices of houses, then without the MID houses will be cheaper and the monthly payment will reflect that. Buyers don’t really care.

Ending the MID will be a huge revenue generator for the US Treasury. That may affect property taxes in high-cost areas but that’s not an immediate concern of the USG.

[briansd1]

[quote=FormerSanDiegan]Briansd1, I Love the string of cliches, but we WOULD have pride of (multiple property) ownership … and pride of tax sheltership. Also, we have the same curtains, wall colors, lights, appliances, etc as when we moved into out house. The only thing we added was nails to the wall for pictures (even then we reused 80% of existing ones) and light bulbs when they went out. Oh yeah, we also added a CO detector and some 9 volt batteries for the smoke detectors. The homeowner premium will be obvious in about 20 years when the existing tenants are payIng for our retirement.

People who take this approach if MID were eliminated would also have the freedom to move into new rentals as their needs or jobs change,which, as you know is a huge advantage to renting. People could rent in best school district for a few more years, then move into the condo with a view. The approach I outlined might be the optimal solution for many folks with upper middle class incomes and decent-sized mortgages. Now that i’ve thought about it more I am kinda motivated to run the numbers and see where it gets me. Maybe we can move into a trailer park rental, rent out our McMansion and retire now.
And the government would have to find another loophole to close to collect the rest of the $100 billion.[/quote]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

I believe that some people would want to game the system like you…. but the majority will buy and live in their houses.

It’s all about the monthly payments. Pure and simple, if the monthly payments, net of taxes, are reasonable, people will buy houses.

If you belive that the MID is so important to homeownership, then you’re obviating the argument for ever “paying off the mortgage and living stress-free” (another realtor talking point).

If you believe that the MID is baked into the prices of houses, then without the MID houses will be cheaper and the monthly payment will reflect that. Buyers don’t really care.

Ending the MID will be a huge revenue generator for the US Treasury. That may affect property taxes in high-cost areas but that’s not an immediate concern of the USG.

[briansd1]

[quote=FormerSanDiegan]Briansd1, I Love the string of cliches, but we WOULD have pride of (multiple property) ownership … and pride of tax sheltership. Also, we have the same curtains, wall colors, lights, appliances, etc as when we moved into out house. The only thing we added was nails to the wall for pictures (even then we reused 80% of existing ones) and light bulbs when they went out. Oh yeah, we also added a CO detector and some 9 volt batteries for the smoke detectors. The homeowner premium will be obvious in about 20 years when the existing tenants are payIng for our retirement.

People who take this approach if MID were eliminated would also have the freedom to move into new rentals as their needs or jobs change,which, as you know is a huge advantage to renting. People could rent in best school district for a few more years, then move into the condo with a view. The approach I outlined might be the optimal solution for many folks with upper middle class incomes and decent-sized mortgages. Now that i’ve thought about it more I am kinda motivated to run the numbers and see where it gets me. Maybe we can move into a trailer park rental, rent out our McMansion and retire now.
And the government would have to find another loophole to close to collect the rest of the $100 billion.[/quote]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

I believe that some people would want to game the system like you…. but the majority will buy and live in their houses.

It’s all about the monthly payments. Pure and simple, if the monthly payments, net of taxes, are reasonable, people will buy houses.

If you belive that the MID is so important to homeownership, then you’re obviating the argument for ever “paying off the mortgage and living stress-free” (another realtor talking point).

If you believe that the MID is baked into the prices of houses, then without the MID houses will be cheaper and the monthly payment will reflect that. Buyers don’t really care.

Ending the MID will be a huge revenue generator for the US Treasury. That may affect property taxes in high-cost areas but that’s not an immediate concern of the USG.

[briansd1]

[quote=FormerSanDiegan]Briansd1, I Love the string of cliches, but we WOULD have pride of (multiple property) ownership … and pride of tax sheltership. Also, we have the same curtains, wall colors, lights, appliances, etc as when we moved into out house. The only thing we added was nails to the wall for pictures (even then we reused 80% of existing ones) and light bulbs when they went out. Oh yeah, we also added a CO detector and some 9 volt batteries for the smoke detectors. The homeowner premium will be obvious in about 20 years when the existing tenants are payIng for our retirement.

People who take this approach if MID were eliminated would also have the freedom to move into new rentals as their needs or jobs change,which, as you know is a huge advantage to renting. People could rent in best school district for a few more years, then move into the condo with a view. The approach I outlined might be the optimal solution for many folks with upper middle class incomes and decent-sized mortgages. Now that i’ve thought about it more I am kinda motivated to run the numbers and see where it gets me. Maybe we can move into a trailer park rental, rent out our McMansion and retire now.
And the government would have to find another loophole to close to collect the rest of the $100 billion.[/quote]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

I believe that some people would want to game the system like you…. but the majority will buy and live in their houses.

It’s all about the monthly payments. Pure and simple, if the monthly payments, net of taxes, are reasonable, people will buy houses.

If you belive that the MID is so important to homeownership, then you’re obviating the argument for ever “paying off the mortgage and living stress-free” (another realtor talking point).

If you believe that the MID is baked into the prices of houses, then without the MID houses will be cheaper and the monthly payment will reflect that. Buyers don’t really care.

Ending the MID will be a huge revenue generator for the US Treasury. That may affect property taxes in high-cost areas but that’s not an immediate concern of the USG.

[briansd1]

[quote=FormerSanDiegan]Briansd1, I Love the string of cliches, but we WOULD have pride of (multiple property) ownership … and pride of tax sheltership. Also, we have the same curtains, wall colors, lights, appliances, etc as when we moved into out house. The only thing we added was nails to the wall for pictures (even then we reused 80% of existing ones) and light bulbs when they went out. Oh yeah, we also added a CO detector and some 9 volt batteries for the smoke detectors. The homeowner premium will be obvious in about 20 years when the existing tenants are payIng for our retirement.

People who take this approach if MID were eliminated would also have the freedom to move into new rentals as their needs or jobs change,which, as you know is a huge advantage to renting. People could rent in best school district for a few more years, then move into the condo with a view. The approach I outlined might be the optimal solution for many folks with upper middle class incomes and decent-sized mortgages. Now that i’ve thought about it more I am kinda motivated to run the numbers and see where it gets me. Maybe we can move into a trailer park rental, rent out our McMansion and retire now.
And the government would have to find another loophole to close to collect the rest of the $100 billion.[/quote]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

I believe that some people would want to game the system like you…. but the majority will buy and live in their houses.

It’s all about the monthly payments. Pure and simple, if the monthly payments, net of taxes, are reasonable, people will buy houses.

If you belive that the MID is so important to homeownership, then you’re obviating the argument for ever “paying off the mortgage and living stress-free” (another realtor talking point).

If you believe that the MID is baked into the prices of houses, then without the MID houses will be cheaper and the monthly payment will reflect that. Buyers don’t really care.

Ending the MID will be a huge revenue generator for the US Treasury. That may affect property taxes in high-cost areas but that’s not an immediate concern of the USG.

[UCGal]

[quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?

[UCGal]

[quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?

[UCGal]

[quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?

[UCGal]

[quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?

[UCGal]

[quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?

[briansd1]

[quote=UCGal][quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?[/quote]

yes, I do. But my main residence is a rental in SD.

[briansd1]

[quote=UCGal][quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?[/quote]

yes, I do. But my main residence is a rental in SD.

[briansd1]

[quote=UCGal][quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?[/quote]

yes, I do. But my main residence is a rental in SD.

[briansd1]

[quote=UCGal][quote=briansd1]

Well, I like how you think. I personally own, but I choose to rent and live in an apartment because that works out well for me.

[/quote]

Brian, don’t you claim the interest on your part time residence in Philly?[/quote]

yes, I do. But my main residence is a rental in SD.

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