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View Diary: Obama campaign to Mitt: 'Prove it' (190 comments)

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  •  What's morally... (0+ / 0-)

    ...troubling about getting a refund if you overpaid? You gave the government money interest free for months so it helped the government's finances.

    Selling stocks at a loss to offset capital gains is not "gaming the system" at all or immoral. Nor is taking a mortgage interest deduction on your primary residence (although I think that should be eliminated). Nor is taking a deduction for qualified charitable contributions (although, I think that should also be eliminated).

    Do you seriously expect people who paid too much in withholding or estimated taxes to go back and manipulate their tax return (such as by not claiming deductions -- since that's a legal manipulation unlike over reporting your income which would be illegal) in April to get a zero refund just because the economy is not doing well?

    Do you know anyone that does this? I am pretty sure I don't.

    •  You think the mortgage deduction (2+ / 0-)
      Recommended by:
      david78209, sharman

      should be eliminated?  Really?  Seems to me this would crush the already struggling housing market.  A huge percentage of home owners would not be able to afford their homes without the mortgage deduction---which was the whole purpose of it.  To act as a stimulus for the housing industry.

      "A typical vice of American politics is the avoidance of saying anything real on real issues." Theodore Roosevelt.

      by StellaRay on Thu Aug 16, 2012 at 12:34:57 PM PDT

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      •  I favor the mortgage income deduction because (0+ / 0-)

        It extends to someone who's just bought a house a hidden tax break enjoyed by someone who's house is completely paid off.

        If you own your house, it pays you a tax free 'dividend' in the form of the roof over your head.  That's worth a lot, even though you don't have to figure out just how much (which is tricky) and report that as income.  In fact, in some measures of the GDP they include that value as 'imputed rent' or imputed something or other.

        If you've just bought your house, the mortgage interest deduction is roughly equivalent to that tax break on imputed income enjoyed by people who own their house free and clear.

        If we're going to cancel the mortgage interest deduction, we should also make people compute, report, and pay tax on the imputed value of living in the house they own.

        Actually, at least in my home state, Texas, property taxes more than make up for this "loophole".  I once figured that what I pay in property taxes on my house was about twice what it would come out if I figured an imputed value of living in the house and paid income tax on that amount.  

        I think that in most jurisdictions, property taxes pretty well plug that loophole.

        We're all pretty strange one way or another; some of us just hide it better. "Normal" is a dryer setting.

        by david78209 on Thu Aug 16, 2012 at 01:27:33 PM PDT

        [ Parent ]

        •  I don't understand... (1+ / 0-)
          Recommended by:


          If we're going to cancel the mortgage interest deduction, we should also make people compute, report, and pay tax on the imputed value of living in the house they own.
          This is true IF we have the mortgage interest deduction as we do now. Without this tax break, why would you pay Federal income tax on the imputed value of living in your house -- any more than you do on the imputed value of your cars, iPhones, computer, education, or hamburger you purchased -- none of which you get a break on for Federal income tax purposes? What you seem to be proposing is a flat wealth tax on equity in one's own home - I don't get why.

          Property taxes (and state income taxes) are unrelated to Federal income tax policy. Voters in states that choose to have high property taxes and low income taxes have made that decision. That decision should not drive Federal income tax policy.

          I understand that you want to offer a "hidden tax break" for people who haven't paid off their homes which is something I don't have a desire to do. What's wrong with having paid off your home and why wouldn't we want to encourage that behavior? It's a very convenient thing to have done when you retire. As it is, this tax break encourages people to put down minimum down payments even when they could roll over the equity in their prior house into their new one. This results in people hitting retirement age and not being able to continue to make the payments on the house and too often they have long since spent, rather than saved, that equity that they extracted on each sale/purchase cycle rather than rolled over.

      •  I think,... (0+ / 0-)

        ...and have for years, that it should slowly be phased out - perhaps over 30 years -- reducing by 1% a year the first five years, 2% a year the next five years, 3% over the next five years, 4% a year the next five years, and 5% a year over the last ten years of the phaseout. This gradual phase out would temper the impact on the housing market while eventually achieving the goal.

        I would however agree that now is not the time to start this. Indeed, this recession is the only time that I've believed the economic situation merits delaying the phased elimination of the deduction.

        The problem with the mortgage interest deduction is that, esp. during bubbles, it allows people to overextend themselves and overpay -- with the gain going to home builders, real estate agents, existing homeowners etc (all of whom disappear with their money with the bubble bursts). In fact, it is partially this ability to overextend that creates housing bubbles. All this activity drives housing prices up making housing (and, unfortunately, even rents) less affordable to those with lower incomes.

        The notion that "everyone should own a home" has never made sense to me. And, the more mobile our society becomes, the less sense it makes. Among other things, home ownership tends to discourage people from moving to areas with greater long term opportunities.

        •  Problem is, even a moderately priced home (0+ / 0-)

          at today's more deflated prices, will cost a buyer at least 2,000 to 2500 a month.  That's a 24,000 deduction, minimally, and depending on the buyer's tax situation, accounts for at least 8,000 a year, in some cases more.  This is significant money to most in the middle class.

          Fine for you to think not everyone needs to have a house, but with today's income disparity between the rich and the middle class, you're rooting for a system that would allow the well to do to buy, while the rest of us rent.  

          Renting is not an investment, has no opportunity to build wealth the way real estate ownership does.  So what we'd have is the wealthy stepping in to own our housing and get richer for it, while yet one more path to income is hosed for the middle class.

          Regardless of the time you grandfather in the absence of the mortgage deduction, you've still got the same problem, unless housing prices return to what they were 30 years ago. Not likely.

          "A typical vice of American politics is the avoidance of saying anything real on real issues." Theodore Roosevelt.

          by StellaRay on Thu Aug 16, 2012 at 05:41:39 PM PDT

          [ Parent ]

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