The Gang of Six Tax Plan

I hate the mortgage interest deduction. I certainly wouldn't complain about it being limited to one residence.

 

Then I suppose a bunch of morons also live in the bay area, new york city, boston, and dc. No better in any of those places.

 

If they aren't paying substantially better, than yes. If what he said is accurate, for a small pay increase, I can expect to pay more than triple the housing costs in San Diego. No thanks.

 

According to voting demographics, those "morons" are probably Democrats too.

Perhaps I am stereotyping politically here, but the I would surmise that a lot of the people that want to get rid of the deduction also supported Obama's loan modification program and other programs to help poor-to-middle class people avoid foreclosure

Seriously though - someone single guy in Houston with no kids should generally NOT be making moral judgements on a middle-class family in Los Angeles.

There are PLENTY of idiots who overexteneded themselves but also plenty of good folks who need that deduction now that they have been laid off.

Our salaries in Los Angeles are generally larger - but so are our living expenses - so a one-size fits all cap is difficult.

So I would agree with a theoretical cap - but it is difficult to get a good number because of the differences in regional economies.

I wold be okay with elimination of it in the case of HELOCs. Not sure what the law is on this.

 

sigh...

 

Needs the deduction? Why does anybody need the deduction? The deduction isn't going to make those payments for you. If you are out of work, you don't have income for it to go against. So it is doing you no good. Of course if you don't have a job, and you were living paycheck to paycheck, you've quit making payments since you have no money to pay, and you can't deduct it if you don't pay it. $500,000 mortgage is a huge mortgage. That is a $625,000 house assuming you have the 20% equity to prevent PMI.

Edit: The deduction is a nice benefit for those that can take advantage of it, but the poor generally can't take advantage of it, especially if they are married. It discriminates towards renters as well. I've never been a fan of it.

HELOC's have a $100,000 limit, assuming you don't use it to improve your house or acquire another one.

 

At this point it would be horrible to the housing market to eliminate the mortgage tax deduction.

Though fundamentally I believe its silly in that its an artificial high as the increased demand for housing based on lower cost (due to writing off interest) simply increases the value of housing to reflect it. The government really shouldn't be subsidizing those that borrow more as opposed to those that wish to own a home outright.

The housing market is at the very epicenter of this financial crisis and continues to be what is dragging down the financial system as most banks and investment institutions have huge stockpiles of leveraged home mortgages on their books that become worth less and less as people default. The more underwater people are the higher propensity towards strategic defaults and thereby lowering prices and the value of the asset backed securities. These weaken banks further not allowing the financial system to provide credit to individuals and businesses and pushes companies to hoarde more cash as their belief in the financial system and liquidity is limited.

I haven't owned a home in years and don't plan on it anytime soon unless a real bargain comes up, but understand the goverment needs to back up housing any way possible.

It was absolutely idiotic for Obama to mention taking away the mortgage tax deduction or eventually backing out of the GSE's (Fannie/Freddie) as all that does is reduce the expectation of long term demand of housing which has an impact today which perpetuates the problems we face.

 

ugh

I own a home and I am OK with a cap. As a middle class guy with 2 kids I would be hurt by it. But that's okay since I know we are in tough times. So don't "sigh" me.

I am not cool with some single guy renter in Houston saying middle-class families in Los Angeles are moronic because they bought a house. A lot of us are ties to this area because of elderly parents, etc.

 

The First-time home buyer credit was a good idea. How about we cancel the mortgage deduction, but we give a credit of 10% of the purchase price up to $10,000 that is good for primary residence purchases only, and you can you can qualify every 5 years.

 

I agree with you here. Also on the heels of that 8k tax credit. It just isn't consistent.

I'd be cool with an eventual phasing out of the interest deduction. But to hit the delete button on it right now would harm a lot of people.

 

An assault on democracy. I've been to Norway and Oslo at least 3 times over the years and love the country, a country filled with both beauty and beautiful people. This is sickening.

 

Would that be sort of inconsistent? We are removing an incentive to buy houses and replacing it with another one?

I would much rather just have an eventual phasing out of the deduction.

 

I'm a married home-owner with 2 kids living in Warner Robins, GA saying that professionals making $65,000 are morons if they take on a $500,000 mortgage. Nobody is judging somebody based on the fact that they would buy a house, or want to live in a specific area. Just people who want to live somewhere that will be out their affordability.

 

Yes, but one that rewards all homebuyers and I'm betting would be a bigger boost to the housing market, but actually cost the government less money.

 

Well that explains some things.

 

Incomes are marginally the same in Houston as they are in Los Angeles.

Its that groupthink allows people to believe because their neighbors spend a disproportionate amount of their savings on housing, they should as well.

California also recieved more housing inflation which is now declining much more aggressively because their annual taxes on housing is much lower as Texas has no income tax. So in Texas, property tax rates are 2-3x as high. Combine that with the ability to walk away from an underwater mortgage without being adversely affected in CA with an exception of your credit record forces people to strategically default.

California laws which made people not as responsible for the losses combined with lower carrying costs and people willing to 'live for today' and spend a disproportionate amount of income on a mortgage or some 'funky' mortgage perpetuated this.

I don't think its going to get better soon either.

 

Make it not financially beneficial to strategically default on one's mortgage, allow banks to write-down the principal to lower payments, keep tax credits around to encourage home ownership (not temporary) and allow internationals to become citizens if they buy a home with 20% down and make payments for 10 years.

The above points will have a subsidizing effect on current housing excess and will limit strategic defaults. This will keep prices from continuing to decline as the natural inventory diminishes as building is slow. That will therefore have the secondary and securitized markets stabilize which will afford banks more solvency and capital which adds liquidity to all in the economy and encourages risk taking which promotes new jobs and commerce.

 

I don't think you can equate the government to a business. A business can't force you to buy their stuff. If it was like that, then the business/govt should impose a 100 percent tax rate.

I do think taxes can be raised but there is a point where revenues will decrease as rates increase. No I don't think we are at that point.

 

Calm down. I'm reacting to the thread, not you. Your post just happened to be just before mine. Everything I've read about this supposed "deal" points to the middle class getting screwed and the wealthy/corporate America coming up roses, thus the "sigh."