The case against mortgage interest deduction

I understand the gist of the article but I am not sure I agree with it 100%. While rich folks might be able to play the system and benefit more from it, there is no doubt that I have benefited from it and I am far from rich. So the tax deduction definitely helps the middle class, IMO, even though the wealthier might be able to take additional advantage of it.

Here are a couple of paragraphs that jumped out at me as well:

Very few other countries allow taxpayers to deduct the cost of their mortgage payments. Countries including Iceland, Luxembourg, and Switzerland, in fact, tax homeowners for “imputed rent”: the amount of income homeowners would earn if they rented out (rather than lived in) their home.
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Are you kidding me. This is terrible. Property taxes are one thing but don't penalize people for trying to do better with additional taxation. Talk about incentivizing a nation of renters where only the rich own property.

On the other hand, encouraging homeownership creates sprawl and makes workers less likely to move for a better job. And those local, “long-term investments” include resisting racial integration and the construction of new housing that would lower property values. $75 billion is also a lot to pay for people gardening and painting their homes bright colors.
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Most of the people I know who are resistant to moving for jobs don't cite home ownership as the reason. Rather it is a settlement of family and extended family that causes them to want to stay in one area. I have seen people move off and work only to be pulled back here and work for less money (this is Oklahoma so let's face it, we work for less money) just to be closer to their families. I don't necessarily see this as a bad thing.

I am a strong proponent for ownership. In my mind it is a great part of the American Dream. I have a modest house (2200 or so sq ft) on two acres that I've been paying on for nearly 20 years. It is almost paid off and would have been if I hadn't gotten married 14 years ago and added on to the house. I can't tell you how much satisfaction I will feel when I write that final check next March and have no more mortgage payment. No more "rent," just property taxes and insurance. It will be like a $900 a month raise. The deduction for mortgage interest has definitely been a help along the way. I am of the opinion that the rich will always take advantage where the common man can't.
 
leaningright said:
I understand the gist of the article but I am not sure I agree with it 100%. While rich folks might be able to play the system and benefit more from it, there is no doubt that I have benefited from it and I am far from rich. So the tax deduction definitely helps the middle class, IMO, even though the wealthier might be able to take additional advantage of it.

Here are a couple of paragraphs that jumped out at me as well:



Are you kidding me. This is terrible. Property taxes are one thing but don't penalize people for trying to do better with additional taxation. Talk about incentivizing a nation of renters where only the rich own property.



Most of the people I know who are resistant to moving for jobs don't cite home ownership as the reason. Rather it is a settlement of family and extended family that causes them to want to stay in one area. I have seen people move off and work only to be pulled back here and work for less money (this is Oklahoma so let's face it, we work for less money) just to be closer to their families. I don't necessarily see this as a bad thing.

I am a strong proponent for ownership. In my mind it is a great part of the American Dream. I have a modest house (2200 or so sq ft) on two acres that I've been paying on for nearly 20 years. It is almost paid off and would have been if I hadn't gotten married 14 years ago and added on to the house. I can't tell you how much satisfaction I will feel when I write that final check next March and have no more mortgage payment. No more "rent," just property taxes and insurance. It will be like a $900 a month raise. The deduction for mortgage interest has definitely been a help along the way. I am of the opinion that the rich will always take advantage where the common man can't.
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Nice, the bottom line was actually on the bottom line...

Is it just a coincidence that the rich folks writing the codes & laws just so happen to give themselves a lil bit more than us, EVERY SINGLE TIME??
 
Althea said:
Don't have the time to read through the piece, but if homeowners overwhelmingly fund education/local highways etc. via property taxes, the mortgage interest deduction is the least that the govt. can do in lieu of a more fair way to fund the aforementioned programs.
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I've read a handful of articles/columns/research papers and I haven't seen one of them use that as an argument for keeping the tax break.
 
Anyone But Trump said:
Property owners only fund the local and state government. There are few property federal taxes. Plus property taxes are great, they are much more progressive than consumption taxes (which should be banned nationwide) or flat income taxes (which should also be banned). Only progressive income taxes and property taxes (preferably net wealth taxes) should be allowed.
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Property taxes fund education as well. Sure...they're called 'school taxes', but they're computed based on your tax levy/% of assessed value.
 
cawacko said:
I've read a handful of articles/columns/research papers and I haven't seen one of them use that as an argument for keeping the tax break.
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Of course not. The interest deduction keeps banks in business.

Only a person who has the ability to employ deductive reasoning realizes that homeowners fund education in this country. As such, the mortgage interest deduction is the least the govt. can do.

Would you prefer a state income tax for all people instead?

Stop worrying about the amount of money the wealthy save. They also pay a lot more in property taxes.

Your piece does nothing to support the position offered. It's actually a lot of extraneous fluff.

Wanna argue against carried interest? I'll argue right along with you.

This is a tax credit for interest payments only...not principal.
 
PostmodernProphet said:
I've paid off the mortgage on my house, refinanced to buy an investment property - paid off again, refinanced to pay off student loans - paid off again......now I take the standard deduction because its higher than the itemized......I'm fine with simplifying taxes with one standard deduction and forget about the other dozen boxes you need to check off and fill in....
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Agreed. I'm all for eliminating tax deductions across the board to simplify the tax code and to eliminate subsidies and loopholes and corporate welfare.
 
Mott the Hoople said:
Agreed. I'm all for eliminating tax deductions across the board to simplify the tax code and to eliminate subsidies and loopholes and corporate welfare.
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I wouldn't be opposed to this at all. If they eliminate one (mortgage interest deduction) then eliminate them all and simplify the whole thing.
 
Althea said:
Sorry...the article could have been a few thousand words shorter, and still missed the obvious point.

A person paying $500,000 for a home will pay far more in property taxes than a person buying an $80,000 home.


Why doesn't your article even mention (save for the one time in passing) the property tax burden of homeowners?

In essence, the govt is getting deferred payments on many social/infrastructure projects.

That's what govt is for...to fund the things that the private sector will not.
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That's a completely different and really unrelated issue.

Also funding education and infrastructure based on property taxes isn't spent equitably but is spent in the communities where the tax revenue is generated exacerbating inequality issues.

But again that's a completely different issue than the mortgage interest deduction. Wacko is right. Read the article.
 
leaningright said:
I understand the gist of the article but I am not sure I agree with it 100%. While rich folks might be able to play the system and benefit more from it, there is no doubt that I have benefited from it and I am far from rich. So the tax deduction definitely helps the middle class, IMO, even though the wealthier might be able to take additional advantage of it.

Here are a couple of paragraphs that jumped out at me as well:



Are you kidding me. This is terrible. Property taxes are one thing but don't penalize people for trying to do better with additional taxation. Talk about incentivizing a nation of renters where only the rich own property.



Most of the people I know who are resistant to moving for jobs don't cite home ownership as the reason. Rather it is a settlement of family and extended family that causes them to want to stay in one area. I have seen people move off and work only to be pulled back here and work for less money (this is Oklahoma so let's face it, we work for less money) just to be closer to their families. I don't necessarily see this as a bad thing.

I am a strong proponent for ownership. In my mind it is a great part of the American Dream. I have a modest house (2200 or so sq ft) on two acres that I've been paying on for nearly 20 years. It is almost paid off and would have been if I hadn't gotten married 14 years ago and added on to the house. I can't tell you how much satisfaction I will feel when I write that final check next March and have no more mortgage payment. No more "rent," just property taxes and insurance. It will be like a $900 a month raise. The deduction for mortgage interest has definitely been a help along the way. I am of the opinion that the rich will always take advantage where the common man can't.
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You forget that European nations have a long tradition of limiting social mobility. With stronger and more encompassing social safety net lif is a bit more secure for the average Euro but social mobility is far more limited.

I can't completely agree with you on home ownership. It's a trade off. In my career I found out early on that to make money I had to go where the money is. Being married to a mortgage would have harmed my career development.

Now later in my career I can afford to own a home though it has limited my career growth. I've turned down job offers with 6 figure salary because I would have to relocate. I don't want to relocate and with the wife's income our household income exceeds 6 figures anyway.

So it is a trade off. I would encourage a young single person just getting their career started to not enter into a mortgage unless they earn enough to pay for a second one so that they can keep open the option to relocate for a better opportunity.

Your point of view is based on prioritizing living in the community of your choice, I.e. Your home town, and making sacrifices to do. That's a bit naive to recommend to others because not everyone will be able too or want too. Hell if I knew I had to spend the rest of my life in Mercer county, Ohio, where I was raised, I would have ate a bullet a long time ago. My highest priority when I graduated high school was to get the hell out of there as quickly as I could as I detested the place. Which is obviously not how you feel about your hometown but I hope you see my point. Your preference isn't for everyone, though neither is mine.
 
Mott the Hoople said:
That's a completely different and really unrelated issue.

Also funding education and infrastructure based on property taxes isn't spent equitably but is spent in the communities where the tax revenue is generated exacerbating inequality issues.

But again that's a completely different issue than the mortgage interest deduction. Wacko is right. Read the article.
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Unrelated? Hmmmm.....perhaps. If it's better for the sake of discussion, then I'll ask the OP why he feels that property owners should fund most of this country's education? Whereas the real reason for the deduction is to keep the real estate market moving....my point is yet another aspect of the deduction that should be addressed.

Why should property owners fund all or most of local govt/infrastructure, as well as education?

Mott the Hoople said:
At 3.5% interest rate, yes. At least for the first year.
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In my area, as well as many others, a $1 million+ home (a $1 million mortgage would be on a home that's assessed higher) will have a property tax bill that is at least $32k/year.
 
Althea said:
Unrelated? Hmmmm.....perhaps. If it's better for the sake of discussion, then I'll ask the OP why he feels that property owners should fund most of this country's education? Whereas the real reason for the deduction is to keep the real estate market moving....my point is yet another aspect of the deduction that should be addressed.

Why should property owners fund all or most of local govt/infrastructure, as well as education?

In my area, as well as many others, a $1 million+ home (a $1 million mortgage would be on a home that's assessed higher) will have a property tax bill that is at least $32k/year.
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Based on the questions you are asking what do you think would happen if the mortgage interest deduction were removed? Do you believe home ownership levels would plummet? Home values would plummet?
 
The mortgage interest deduction is popular with the public, and perceived as helping the middle class afford homes. Yet nearly every government official who doesn’t hold elected office, whether Republican, Democrat, or technocrat, believes that the mortgage interest deduction is a terrible policy that does more to subsidize the wealthy’s vacation homes than to help the middle class.
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If I couldn't deduct the interest on my vacation home I'd just cash out my main home and pay that mortgage off.
 
cawacko said:
Based on the questions you are asking what do you think would happen if the mortgage interest deduction were removed? Do you believe home ownership levels would plummet? Home values would plummet?
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What's the difference? Your position is that the wealthy are raping renters because of this interest only deduction. Do people only purchase a home for an interest deduction? Of course not.

Why should renters not have to share the burden of local education/infrastructure.

Even if the two are not related, I'm easing your mind by telling you that the interest deduction helps to sway some of the costs associated with being responsible for funding education.


If carried interest were eliminated, would hedge fund managers find other means of employment?
 
Right said:
If I couldn't deduct the interest on my vacation home I'd just cash out my main home and pay that mortgage off.
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the mortgage interest deduction is popular with the public, and perceived as helping the middle class afford homes. Yet nearly every government official who doesn’t hold elected office, whether Republican, Democrat, or technocrat, believes that the mortgage interest deduction is a terrible policy that does more to subsidize the wealthy’s vacation homes than to help the middle class.
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Of all the idiocy put forth in the OP, this snippet was one of the stupidest comments made.
 
Althea said:
Your position is that the wealthy are raping renters because of this interest only deduction.
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were you aware that landlords pay property taxes on their rental property and that tenants are allowed to deduct a portion of their rent from their income taxes because of the property tax deduction?........
 
Althea said:
What's the difference? Your position is that the wealthy are raping renters because of this interest only deduction. Do people only purchase a home for an interest deduction? Of course not.

Why should renters not have to share the burden of local education/infrastructure.

Even if the two are not related, I'm easing your mind by telling you that the interest deduction helps to sway some of the costs associated with being responsible for funding education.


If carried interest were eliminated, would hedge fund managers find other means of employment?
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What's the difference? Do you understand what's being discussed here and why the two sides argue what they do on this issue?

You're discussing funding issues that aren't at issue with this subject
 
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