patrick.net

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.

Ruki says

So says the Village Idiot of P-net.

Good--now the personal insults come. I guess that means you're giving up.

Still waiting for the math or data....

pdh says

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.

Will NOT happen. It should, but it won't...because wealthy suburbanites are too important to the Republican base. To suggest otherwise means you don't know anything at all about the party.

I do think that owners of vacation homes who currently take advantage of the mortgage interest deduction will have that part taken away. I also think the deduction itself will be capped for high earners.

Ruki says

tatupu70 says

Good--now the personal insults come.

In this case, it is a statement derived from proven fact -- your behavior.

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

Have you found the post with the math and data in it yet?

Ruki says

So says the Village Idiot of P-net.

Go ahead and keep 'thinking' (if you can call it that) what you 'believe' on this subject. It works so well for me that I even encourage you to brainwash as many other liberals into believing it as well:

The villiage idiot here is the one that believes his maps show anything about who is taking the MID. It has obviously never occurred to you that there could be large numbers of low income democratic voters and smaller numbers of high income republican voters within a voting district.

There is a wonderful tool out there called google. Check it out, there are plenty of actual web pages that document who really benefits from the MID. Here's a little hint, 2/3's of people claiming MID make over 100k, half make over 250k. Care to guess voter breakdown by income? Over 100k usually around 2/3 Republican, 2008 was an exception to that long standing number. Even the upper incomes were sick of republicans by the end of the Bush error, whoops, era.

Ruki says

But they aren't the ones with $700k+ mortgages for shitty condos in SF or Boston or NYC. Instead, have $400k places that are mini-estates in places like Huntsville, Alabama.

And again--your data to back that claim is found where?

Ruki says

Or are you saying the libtard middle class folks are outnumbered by all WEALTHY Reps numberically? Tat even backed of that idiocy.

I didn't back out of anything. The liberal middle class folks are outnumbered SIGNIFICANTLY by the conservative middle class folks (not to mention the wealthy folks).

fyi--still waiting for the math.

bob2356 says

There is a wonderful tool out there called google. Check it out, there are plenty of actual web pages that document who really benefits from the MID. Here's a little hint, 2/3's of people claiming MID make over 100k, half make over 250k. Care to guess voter breakdown by income? Over 100k usually around 2/3 Republican, 2008 was an exception to that long standing number. Even the upper incomes were sick of republicans by the end of the Bush error, whoops, era.

it only benefits a small portion on the coasts West/NorthEast. there is no benefit to inland California, Texas, Florida, or many other parts which are Republican !

And frankly if you so called liberals are so worried about inequalities and fairness it certainly makes sense that the vast majority shouldnt foot the bill of Lexus Liberals in California or NYC/Boston. But its the Lexus Liberals in California who complain since it would deflate their $1m home back to normal....(300K)..no more hand outs to the bubble chasers!

It serves no purpose since it was designed as tax relief when interest rates were much higher in the past.

Here's one of many links I could provide. Bob is right--there are a multitude out there that all say the same thing. The MID overwhelmingly benefits the wealthy. I like this link though because it shows who/where the biggest beneficiaries are/live and it's a shocker:

White families in the suburbs. Big shock. And, Republican central.

http://blog.metrotrends.org/2011/07/biggest-housing-subsidies/

I know this will come as a shock to some of the BA folks, but I can find neighborhoods of 700K homes in the burbs of Cincinnati, St. Louis, Nashville, and any other decent sized city... And those neighborhoods vote Rep.

tatupu70 says

I know this will come as a shock to some of the BA folks, but I can find neighborhoods of 700K homes in the burbs of Cincinnati, St. Louis, Nashville, and any other decent sized city... And those neighborhoods vote Rep.

you would have found them anyway, even before the bubble! But many dont use loans to purchase these homes. They are rich anyways.. be it Elvis, or some sports/movie star. They are few and not much to crow about.

The mortgage interest deduction isn't worth as much as people think that it is because of the standard deduction, which I call the house minimum, and the fact that it's a deduction. not a tax credit, so the impact is about 30% (to include state income tax) of whatever is deducted in excess of the standard deduction.

Of course, your results may vary depending on tax rates in your area. It is quite possible that you have state income tax well in excess of the standard deduction. I know that I do.

I think that we'r going to see broadening of the tax base in the next couple of years, and the mortgage interest deduction is a tempting target. Remember, most states base their taxable income on federal adjusted gross income and disallow some things that are allowed under federal las such as state income tax.

Ruki says

True or false: There are way more middle class folks with mortgages above $250k than there are wealthy people with mortgages above $250k.

I don't know. What I do know is that the majority of the MID $$ goes to the wealthy. The average middle class household gets ~$329 in tax savings while the average rich household gets $1,322 in tax savings.

Ruki says

You keep demanding me to prove a (bogus) negative, so please prove that at least.

I'm doing nothing of the sort. I'm asking you to provide ANY evidence that the MID benefits Dems more than Reps. Because ALL the data I've seen shows the exact opposite.

My compliments on the intelligent comments! Regardless of who gets elected the mortgage interest deduction will get capped at $500,000!

Ruki says

A middle classer with a $700k condo mortgage sure as hell NEEDS that MID more than a rich person with a $400k mortgage, as I keep saying but you keep ignoring.

I'm not ignoring it. It's just completely irrelevent to the discussion. A middle classer with a $800K mortgage needs it even more. So what? You have NO idea if these people even exist, much less who they vote for.

Ruki says

There are way more middle classers with extremely high mortgage burdens than rich people too, as the BA and other areas prove beyond a doubt.

lol--just because you say it doesn't prove it. You have absolutely NOT proven that people in the BA have extremely high mortgage burdens. Or that they are middle class. What do you consider middle class anyway?

Ruki says

Ergo, who really gets screwed the most here if the MID is capped?

As I have proven beyond a shadow of a doubt, it's mainly Republicans.

Ruki says

Numerically, there are WAY more middle classers who do and need it more than the rich.

Source?

Still waiting for the math you keep promising.

Ruki says

A middle classer with a $700k condo mortgage sure as hell NEEDS that MID more than a rich person with a $400k mortgage, as I keep saying but you keep ignoring.

The only places in the country where "middle class" is a 700k condo is NYC and the bay area. I don't know about the bay area, but once you get more than an hour outside NYC 200k-300k houses are pretty common if not the norm. That's a pretty limited number of people you are talking about.

Ruki says

That's because you aren't analyzing it correctly. So what if rich Republicans get more back from the MID when looking at the total pie? Numerically, there are WAY more middle classers who do and need it more than the rich.

No you aren't analyzing it correctly because you are focused on a very tiny subset of the population in a very tiny geographic area. You may find it hard to believe but the bay area is not the entirety of the universe. Middle class everywhere but la la land, including huge swaths of blue on your map, is generally considered 40 to 90k. They don't have 700k mortgages and don't use MID because the standard deduction covers it. Over 100k in income is the top 10%. About 2/3 of the MID benefits goes to people over 100k. They vote majority republican. Read that again, 2/3 of MID goes to people with over 100k in income. There isn't a few rich republicans spiking the number. It is broadly based. It has to be because the MID cuts off at 1 million total mortgage. That includes a lot of people well off enough to own second homes. Obviously you lack the ability to comprehend and analyze this thought through to the logical endpoint yourself.

Where exactly is your proof that the wealthy in the bay area vote overwhelmingly democat. They are vastly outnumbered by the lower and middle class voters so just saying the area is democrat means nothing. Please feel free to provide actual documentation on this subject at any time. People have been asking for it time and time again. Without it your entire argument falls apart.

Ruki says

I never said that the wealthy in the BA overwhelmingly vote Dem, I said the middle class with those huge mortgages overwhelmingly vote Dem

And that is where you are ridiculously incorrect. Period.

That's the best you've got. Deliberately misinterpreting a post? Again--you've obviously lost when you resort to petty tactics like that.

dublin hillz says

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

Lets say you are going to buy a new Mercedes for $50k. You can either take out a home equity loan for $50k and use it to buy the car, or you can take out a car loan to buy the car. The home equity loans lets you deduct the interest form your taxes, the car loan does not.

That's why it can make sense to do it that way -- so no, you are not paying $1 to get $0.30 back.

Ruki says

Only you would think that getting caught deliberately lying about something I wrote doesn't destroy your credibility in the process.

And only you would continue to make yourself look more and more foolish with each post by making ridiculous claims that are obviously false.

Again--any time you want to get back to the topic at hand, I'm all ears. (or eyes in this case)

When are you going to show me some of that math you kept talking about?

how long is this gonna take? i'm eager to see house prices fall even further!

People with mortgages should be taxed more for adding risk and instability to the economy and thereby affecting jobs negatively.

Seems a simple place to start would be to eliminate the intrest deduction on HELOC's. and perhaps all second mortages. Doesnt seem like much down side to that. Many here may not remember but there was a time when interest on credit cards and car loans was deductable. Seems like it was eliminated in the early 1980's.

AdamCarollaFan says

how long is this gonna take? i'm eager to see house prices fall even further!

If the GOP goes anywhere with this, the other side will have a field day: "Why are they starving granny?"

Then the GOP will reply by questioning the patriotism of the Dems, and also by calling them baby killers, and something something burned the flag, and what would you do if your wife were raped?

The deduction will survive.

Dan8267 says

People with mortgages should be taxed more for adding risk and instability to the economy and thereby affecting jobs negatively.

Instead, how about making sure people who are a risk don't get loans?

HydroCabron says

If the GOP goes anywhere with this, the other side will have a field day: "Why are they starving granny?"

I'm pretty sure that the stereotypical grandma paid off her house a long time ago.

zzyzzx says

HydroCabron says

If the GOP goes anywhere with this, the other side will have a field day: "Why are they starving granny?"

I'm pretty sure that the stereotypical grandma paid off her house a long time ago.

Have you paid any attention to the arguments in favor keeping Prop 13, or forgiving taxes on principal reductions? There are more grandmas who owe > $1 million on their homes than there are Mexicans in Mexico City! And it's not their fault - it's because their home went up in value so much, or something.

(Sorry, Patrick.net, but I'm going to spell that word as "principal." Call me contrarian.)

rooemoore says

Instead, how about making sure people who are a risk don't get loans?

Hey, look everyone: Karl Marx just posted here!