patrick.net

CL says

Smart rich people would finance, and let THEIR money make more than their low interest rates, right?

Depends on their risk tolerance. Mortgage prepayment is a guaranteed return while the performance of stocks/bonds/mutual funds is not guaranteed.

I agree that the deduction should be eliminated. It actually doesn't benefit any buyer, ever.

It just allows people to borrow more money than they otherwise could, forcing you to bid against them and driving up the price. The higher price you have to pay negates the deduction.

The only beneficiaries are the banks.

Of course eliminating the deduction will be politically difficult, because it will lower house prices back down to the unsubsidized market level.

If the deduction were to be eliminated, they should either grandfather in those who bought before the law is changed or send a nice check to compensate the previous buyers.

This is Washington, if they talk about it, surely it means nothing will be done for a decade. It's a triple green system where house, senate and president have to all agree, which is nearly impossible.

Major tax reform has been discussed forever. Obama can't even undo the temporary bush tax rates, nevermind MID.

and yes, the MID primarily benefits buyers in SF, NY, Boston, LA, DC, etc. It's a fair system, pay more tax, get more break.

Ruki says

Then the top 25% of income earners who pay 70% of total income tax revenues

Did you forget that they get 90% of total income?

Ruki says

sigh. I guess you can't tell the difference between having a $400k mortgage vs a $700k one then, by your own words.

What the hell are you talking about?? Do you even know what you are trying to say?

Ruki says

More like the other way around. See, I nailed your ass with your own gross illogic. You couldn't defend, so you resort to ad hominem name calling.

Nailed my ass? Seriously? Are you trying to score some technical point? Do you disagree that the ending the MID would benefit Reps more than Dems?

Do you disagree that Republicans in Congress would NEVER let any bill pass that ended the MID?

If not then give it up.

It's a fair system,pay more tax, get more break.

They're not getting a break for paying more tax, they're getting a break for paying more mortgage interest(to the TBTF banks, where's the fairness in that?). Which means the government is encouraging people biting off more mortgage then they need chew, by dangling this carrot for them.

Supposedly, it "costs" about 100Billion per year, but I assume that's just a figure on what the government loses on revenue directly from income tax filers utilizing the deduction. What about the layers of implications and those costs? Untold opportunity costs in the usfedgov encouraging stupidity

Ruki says

Cap Shuddup is correct: It will kick the SF-Boston-NYC liberal middle to upper middle class in the balls way more than Reps kicking it in Texas. Big time.

Very true and would certainly help the economy by dragging CA into the real world...more competitive. After all we were much cheaper back in the 70s-80s compared to other liberal dominated states in the north east. As such CA saw great
investment boom in business.

Anything to bring prices down to reality makes sense.

Ruki says

No, I do not disagree that ending the MID would benefit Reps more than Dems...because Dems will get hit harder than Reps. Thank you for agreeing with me!

Yes--I misspoke on that one. You honestly think that Dems will get hit harder than Reps? I'm shocked. I thought Dems were the party of freeloaders, welfare recipients, etc. Now they are the job creators too? Awesome. How do they not win every election?

Ruki says

Oh, and the Dems would be against it also because of the reasons I already outlined -- even if you are so totally clueless to see that (either that or you're simply trolling).

Exactly which reasons were those? I don't recall you posting any reasons.

errc says

Which means the government is encouraging people biting off more mortgage then they need chew, by dangling this carrot for them.

The idea behind creating MID was due to much HIGHER interest rates back in the day. It was designed as a "Tax Relief Program".. but with interest rates so low there is no purpose to have the MID any longer.

Cost benefit analysis

What do we get in return for having this tax loophole?

Who benefits?

This is one of those things you'd think we'd all agree on, seeing as how we get nothing positive in return, and it only benefits the hyper levered, yet half the thread is littered with bickering over repukes or demtards.

tatupu70 says

I thought Dems were the party of freeloaders, welfare recipients, etc. Now they are the job creators too? Awesome. How do they not win every election?

Look to Texas for that one! It could have been very easy for Brown (CA Gov) to cut many deals to keep jobs near the Bay Area (say Apple in Stockton)..but they still ignore the facts of the current world.

Apple Inc. will expand its Austin presence with a $304 million campus that will ultimately create 3,600 new jobs, according to an announcement today by Gov. Rick Perry.

errc says

tax loophole

MID are not tax loophole, its direct actions by Congress for a reason. Tax loopholes are ambiguities caused in the tax laws.

OK--I'm done after this because I understand errc's complaint.

"Republicans have a big edge among conservatives and White Evangelical Protestants, and hold smaller but significant advantages among middle- and upper-income citizens and whites. The parties are about equally represented among people with college experience, White Catholics, and men"

from Pew research

http://www.people-press.org/2005/01/24/politics-and-values-in-a-51-48-nation/

dublin hillz says

If the deduction were to be eliminated, they should either grandfather in those who bought before the law is changed or send a nice check to compensate the previous buyers.

Which law?

What I am saying is that if the government in the future were to pass the law that states that interest and/or property tax would no longer be tax deductible, that it would only be fair to go ahead and grandfather in those who purchased prior to the change. Meaning that those individuals would still be able to deduct interest/property tax from their taxable income.

errc says

You got one thing correct, in that its not going away.

I could see them grandfathering it in. I.E. you get to keep your mortgage interest deduction on your existing mortgage, but you don't get it on any new mortgage or refinance. After a decade they could then do away with it completely.

Ruki says

Yup. There are a lot more middle-class liberals who will get hit than there are rich Reps who will also get hit.
It's called 'MATH'. I know you libs don't like it because it shits all over your reality-impaired fantasies, but that doesn't mean it doesn't exist. :)

See. I posted a study that proves my assertion. You've posted nothing. Again, in case you missed it--

tatupu70 says

Republicans... hold significant advantages among middle- and upper-income citizens

Sorry to burst your bubble, but while there are wealthy liberals, Republicans will get hit much harder with a MID repeal.

Ruki says

zzyzzx says

I could see them grandfathering it in. I.E. you get to keep your mortgage interest deduction on your existing mortgage, but you don't get it on any new mortgage or refinance.

But it will impact the resale value of your house regardless. This is the part nobody on this thread is thinking about.

Future buyers of your house (whether it be tomorrow or ten years from now) = people who won't be grandfathered.

Ergo, they will afford 'less' house (debt to purchase it with). What does that mean for the future price of your house regardless if your MID is capped or not?

And what if you refi? You'll still lose the grandfathered MID.

Give HRHMedia access to patrick.net...and he'll masturbate with it.

Good!

Kinda like telling the slave owners that they'd have to pay the help to work the fields now. Boo hoo hoo

Time to tell the MID welfare queens, we ain't subsidizing your levered, bloated mortgage any more. This is the path to a more constitutional, equitable society, do away with all the stupid economic distortions. If you're only justification for 'buying' a house is the MID, no way in hell should you be buying it in the first place. And it will help prices come in! Win win

This is a party platform, not a bill. The only people this document matters to are the people who write it. I agree that there are just as many Democrats as Republicans who support keeping this on the books, but Republicans will not repeal this because a group of Republicans put it on a piece of paper or some random Republican from Fremont supports it.

Ruki says

And all those liberals who own $700k condos in SF are 'rich', too. I say tax the shit out of all of them.

What about all the reps in danville and pleasanton? I am sure that "tiger" reps in the 94539 in fremont won't be too happy either!

Ruki says

So, let us recap: Not only do the number of Dems getting hit with the elimination of the MID be way larger than the number of Reps getting hit, the hit will be HARDER on them way more than it will be for said Reps just like sales taxes hit poor people harder than it does the rich.

Again--that statement is complete and utter BS. Your analogy is ridiculous.

Do you agree that the wealthy votes strongly Republican? (I'll remind you that stats show this).

I don't care where they live. If the wealthy vote Republican, and the wealthy will take the biggest hit, then Republicans will take the biggest hit.

Ruki says

Look, here's a way I can make this REAL EASY for you, Tat: I FULLY SUPPORT THIS CUZ I'VE DONE THE MATH. And, if for some reason that doesn't raise a red flag for you to worry about, do some research on all past attempts to cut/remove the MID. You will find that the politicians who do the most squawking against it were hyperpriced real estate representin' Democrats, not Reps.

Want to share this MATH with everyone else? Or some of these squawking politicians names? Nah, never happened, just take Ruki's word for it. Jesus loves me this I know cause rush limbaugh told me so.

I agree that the deduction should be eliminated. It actually doesn't benefit any buyer, ever.

I agree, but it screws over everyone that owns or just bought a home. I know, life ain't fair. I would think a long slow phase out or cap would be the only "fair" solution.

I agree with GOP on this one too. This deduction is only there for the wealthy and for the banks. An average person getting a loan will get more from standard deduction.

I do think they should phase it out overtime, and reduce our national debt with the savings.

You mean, math like this?

Standard Deduction, $11,900. Interest Payments on $160,000 mortgage @ 4% = $6400. Property tax @ 2% = $3200. Income required for $1110 PITI payment (28%) = $48k. State income taxes @ 5% on 48k income = $2400. Total Itemized deductions = $12,000.

Therefore, any family making under $48,000 gross income with less than a $160,000 mortgage (a $200k home with 20% down) will be unaffected by elimination of the MID.

Since 1972, Republicans have carried the majority of those voters whose incomes have exceeded $100k in every presidential election.

Democrats hold significant advantages in nearly every election since 1972 with those incomes below the median.

How are Democrats going to be more affected by this? I know you say something about $7000k condos in the BA as an example, but not ALL of those condo owners are Democrat..

zzyzzx says

I could see them grandfathering it in. I.E. you get to keep your mortgage interest deduction on your existing mortgage, but you don't get it on any new mortgage or refinance. After a decade they could then do away with it completely.

Suggestion: Phase out the MID over 5 years. If you purchase a house this year, interest is 100% deductible. Next year, 80% and if you wait three years it'll only be 60% deductible. Why? First, it eventually eliminates the MID. Second, it pushes the high-end housing market which has been slower to move by incenting the "move-up" buyer as high debt (mortgage) recieves more benefit from MID. Finally, the additional availability of houses at the low end from the move-up buyers will drop the prices further and incent the entire housing market. Economy recovers, life is good.

Yes, this will drive down price, but all that will do is send a massive wave of strategic default as most people with any kind of mortgage will be underwater. This will signal the 'investors' to come into the market, buy up large swaths of devalued real estate at dirt cheap prices and once they control enough homes in a given area, set prices as they see fit. Nearly everyone will be a renter and the rents will be as high as they are today if not higher. Then the real fun begins as deregulation comes to renter protection laws. Banks won't be hurt except in the first few years, which will see them begging bailout again. They'll more than make up for it on RE investor money, that is if they themselves arent't he megalandlords.

On paper this sounds good, eliminate the MID, and in a free market, it would be great, but we live in an oligarchy, so the end result of any change always serves the banks and the 1%. How do you know a bill will scr*w the average American? It gets out of committee.

The only beneficiaries are the banks.

I disagree that banks are the only beneficiaries. Anyone who owns a house at the time the tax break was passed, also benefited from the break. The tax privileged cap gain is a recent break that once again benefited the owners of houses.

In many ways these breaks are often a transfer of wealth from the young to the old, and the poor to the rich.

Local governments benefit as well as they get their rake from the inflated values. It hurts a little less to pay them a little more, when you get a kickback at tax time from the feds

From my experience, the so called tax break still results in relatively similar overall tax. It's just how money is divided that is different. The tax break via MID almost offsets the property tax. So the result is basically the same. The renter's fed+state tax is very similar to owner's fed+state+property tax for apples to apples properties. The government gets its money either way, just the amount in each pot is different.

Ruki says

Furthermore, WEALTHY people only take out mortgages to use the MID to provide tax-subsidized financing for other things besides purchasing the home, too. Their accountants encourage that.

Why would they spend a dollar to get 35 cents back? Wouldn't it be easier to finance these other expenditures straight up?

Ruki says

HOW MANY TIMES do you require this simple math lesson?

The next time you provide any math will be the first. So go for it--surprise me with some numbers. I'm waiting with bated breath...

Ruki says

You're just trolling, I provided such and you know it:

Great---just kindly direct me to it. It shouldn't be too much trouble, right? This thread only has 60 or so posts, so just find the one with the data.

Ruki says

Or are denyin that rich folk are outnumbered by middle class folk? Hell, even the number of middle class folks with $700k condos in SF and NYC outnumber all the rich (Rep/Dem) in the ENTIRE COUNTRY.

You are actually right about something. But what you conveniently forget to mention is that the middle class vote Republican too. People with household income greater than $75K vote Rep. This his well known.

Nice pictures--where is the math again?

Ruki says

But the vast majority of those don't have mortgages above $250k -- unlike how the majority of their liberal counterparts do.

Really? And your source is??

Ruki says

It's as if you are totally ignorant of some basic demographic truths - like how the vast majority of middle class liberals are highly concentrated in high-priced real estate areas -- and thus overwhelmingly represent the middle-classers who are on the hook for the highest mortgage liabilities:

And the vast majority of all poor people are concentrated in the same urban areas. You've shown that most people live in cities. Thanks for that great insight!

Still waiting for the math you promised that shows that most people with mortgages over $250K are Democrats.

Interesting images. It would seem that the blue voting countys line up with the overpriced RE that would benefit most from the government handouts like MID.

Regardless, MID should be done away with. Can anyone make the case that 'we' get a good bang for our buck with the 100B "we spend" on MID every year?

It seems everyone would agree that if it effects RE prices, then it will make them cheaper, which is good for everyone, no?

Ruki says

Because the median prices of the houses purchased by Reps is no where near $250k...unless you want to deny that.

I see. The source is your ass then?

Ruki says

The maps prove it. Too bad you can't derive the math from those maps.

Really? I would argue that some of the poorest well populated areas line up pretty well with the blue areas also. The maps prove nothing. In order to prove it, you'd need to actually show me some data.

Or math.

So far, you're 0-2.