Support or oppose change to mortgage deduction?
The once sacred mortgage interest deduction may be on the chopping block.
Earlier this month, the leaders of the deficit reduction commission floated the idea of cutting the deduction for homeowners who have mortgages over $500,000, AJC reporter Michelle Shaw writes.
The plan doesn’t mean those homeowners would lose their deduction, Shaw explains. But it would be limited. Homeowners could deduct only interest paid on the first $500,000 of their mortgage.
Of course, the proposal could change and include more or less of a mortgage.
What do you think of the idea? Is it a good way to tackle the deficit?
What would you be willing to give up to reduce the trillions of dollars in red ink?
- Henry Unger, The Biz Beat
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84 comments Add your comment
catlady
November 20th, 2010
8:16 am
Entitlement: food stamps, welfare, Medicaid, BUT ALSO Social Security, Medicare, student loans, deductions for home ownership, tuition payments, 401K, and charitable giving, If you want to end entitlements, you have to be serious about ALL entitlements. Start mentioning those other entitlements shut folks up who rail about the first ones.
Awful, Awful, Awful
November 20th, 2010
8:36 am
Anne
November 19th, 2010
4:20 pm
IF, they are successfull in simplifying the tax code, they will actually collect more taxes and reduce IRS staff…considerably.
All good.
To Anne – And “what planet do you call home”? Don’t you realize that the millions of people the IRS employs represents a voting block for the democrats? It will never be completely done away with, even with a “Fair Tax”.
Tanuki
November 20th, 2010
10:43 am
I don’t like changing the rules on people who worked out their financial obligations thinking they were going to get a mortgage interest deduction, BUT I have no opposition to stopping the mortgage interest deduction at all levels of income on mortgage loans issued after a certain agreed upon date.
Just stop the mortgage interest deduction entirely.
What you decide to pay for your house doesn’t determine if you are rich or poor. It just determines how much debt you want to take on over a long period of time vs what you think you can get in the future for the property should you decide to sell it later. That is the lesson we are taking home from the sub-prime debacle. People thought they could flip those houses.
I don’t think the taxpayer should be on the hook for the interest so money could be borrowed to make bad investments in real estate. We don’t allow people to deduct the interest when they borrow money to invest in stock on the margin.
Greedy greedy baby boomers
November 20th, 2010
2:22 pm
Think Before U Post – what part of the arithmetic did you not understand? A common LIE that is used by Fair Taxers and Fox News followers is that the top 10% pay 70% of the taxes (not to mention that 50% of people pay NO taxes at all – another lie). My point is the number paid by the top 10% is closer to 30% of taxes, not 70%. And since the top 10% controls 70% of the wealth, is paying 30% of receipts REALLY something to complain about? If you think that is unfair, well, that’s your right, but try and look at it from the other perspective. 90% of the people in this country are paying 60% of the taxes to help support a system gives them a return of 30% of the wealth.
And I know its tough, but try and hold back with the name calling. Just makes you sound like an ignorant bully.
TnGelding
November 20th, 2010
3:14 pm
As I’ve written many times before, the only thing wrong with the Fair Tax is it’s unfair. It would shift the tax burden from the wealthy to senior citizens and anyone else with considerable savings. It’s a GOP scheme to recover Social Security and Medicare costs. I could support it with two major changes. Keep the payroll tax. Make purchases made with savings non taxable. Then you could just tax retail sales as we do now instead of any transaction.
Calling All Hypocrits
November 20th, 2010
4:13 pm
@ TnGelding
Please be honest. Everyone knows you are a Sr Citizen and are only finding excuses to look out for yourself. Give up your entitlement, which is Social Security, and then we will talk.
Calling All Hypocrits
November 20th, 2010
4:16 pm
@ Greedy
Look who is calling who a bully! Your moniker has bully written all over it – you hate Gelding!
Calling All Hypocrits
November 20th, 2010
4:19 pm
@ catlady
Are you scared your Medicaid or food stamps might be next? Stop calling tax deductions entitlements, it makes you sound envious of anyone that might have a little more money than you do!
TnGelding
November 20th, 2010
9:06 pm
Calling All Hypocrits
November 20th, 2010
4:13 pm
Sorry I can’t do that. I played by the rules and contributed for 40 years, as did my wife. I’ve written that I’m willing to adjust the COLA minus 1% and eliminate it all together in 5 of the next 10 years; also pay more in deductibles and copays for Medicare and tax on my Social Security. Combined with eliminating the wage cap, that should “fix” Social Security, which has been funding the Pentagon for 27 years.
Our savings have been taxed many times and will be again when we withdraw them, but modestly. If I go down and pay $30k for a new car, I certainly wouldn’t be willing to pay an additional 25-30% federal tax on top of the 7% the state collects. And don’t forget, evrey type of transaction is taxed under the Unfair Tax, including rent and insurance premiums.
Young folks today have savings instruments available we only had for a short time. If we’d had
401(k)s our entire “careers” maybe I could take you up on it.
jms
November 20th, 2010
9:43 pm
What’s really annoying is the constant tinkering with the tax code. You make long-term decisions based on the current code and SURPRISE they change it two years later. Just set the tax code and leave it alone!
Immigrants Grandson
November 20th, 2010
10:45 pm
As the grandson of Greek immigrants that come to this country after WWI, I remember them telling me of the poverty they endured and the discrimination they encountered as they WORKED to obtain middle class status during the days of ZERO entitlement programs. I mimicked their work ethic, worked my way through college WITHOUT federal grants/loans and now that I am successful am being told I “owe” the fruits of my labors to others. No doubt, I am my brother’s keeper BUT I want the freedom to do it MY way via religious charities AND not through mandated federal entitlements.
TnGelding
November 21st, 2010
3:57 am
jms
November 20th, 2010
9:43 pm
It has to be made simpler and less costly to comply with. That’s the appeal of the unfair tax, not it’s “fairness.”
Immigrants Grandson
November 20th, 2010
10:45 pm
I started mowing yards when I was 12 years old, about the same time my wife was picking fruit in Oregon alongside migrant workers. I made my first involuntary contribution to FICA when I was 15 and joined the USAF at 17. We worked for and paid for the Social Security and Medicare benefits we receive. Don’t forget you have survivor and disability benefits too with SS, not just old age. So you’re reciving benefits now.
jeff sutter
November 21st, 2010
10:06 am
I agree J. L. Pinckard that 99.9% of us are rich. We need 99.9% paying taxes rather than sucking the tit of government.
gooberpeas
November 21st, 2010
11:47 am
it’s obvious that J L Pickard drank the flavor-aide…..he says: “The public (taxpayers) should not continue to *subsidize* extravagent living of the wealthy. ”
tell me sir, just how does the public “subsidize” the wealthy?
they work, they make money, they spend their money however they see fit.
the government takes a portion of their money according to the laws of the land.
what has the public given them that qualifies as a “subsidy?” how does the public “subsidize” the wealthy? by allowing them to keep more of their own money? how can that possibly be a subsidy?
maybe we should increase your tax liability so as to stop subsidizing your lifestyle (IF you even pay any tax, that is)
sheesh people….wake up!
sure, they’ll start it out high to get it passed, but rest assured, the limit will be lowered over time until the deduction is gone for everyone.
TnGelding
November 21st, 2010
12:01 pm
Immigrants Grandson
November 20th, 2010
10:45 pm
It’s hard to believe that in a country with so much opportunity that private and public assistance still doesn’t reach every family in need. Much of it is caused by alcohol, drugs and mental illness.
ACC Fan
November 21st, 2010
3:31 pm
The housing problems are what got us in this recession. It will take a revival of the housing industry to get us out of it. Eliminating or restricting the mortgage interest deduction will only make this recession last a lot longer. However, I might favor restricting it to a primary residence only.
steve
November 21st, 2010
5:11 pm
To all you right wing media parrots of the “fair” and “flat” tax systems, do your research. Guess…just guess who benefits from these? The wealthy. You know, those people in power who brainwash you into voting for them via hating Muslims, or gays, or the hate target du jour?
These flat/fair tax systems actually INCREASE taxes on YOU…yes, you. The middle class.
If you read the studies done via NON PARTISAN think tanks, that is the conclusion.
Why are you people so steeped in fear and stupidity? I mean, REALLY!
steve
November 21st, 2010
5:18 pm
The progressive tax system is what build this country. We prospered when the wealthy were taxed higher, and this in turn boosted the economy, corporate profits, and despite the higher taxes…the wealthy were MAKING MORE MONEY because of the entire country prospering.
However, with the greed that has taken over so many today, with the lowest tax rates ACROSS THE BOARD IN US HISTORY, with TRILLION DOLLAR FAILED WARS…and we wonder why we are tanking our economy?
Are wars free? Really?
Barry
November 21st, 2010
5:40 pm
OK here’s the deal. I get rid of all the deductions and lower the marginal rates (promising to keep them low). Then I spend like no tomorrow bailing out my union (goonion) buddies pension plans and surprise surprise I have to raise the tax rates on the “billionaires” to fight the deficit (and put a little more cash in my stash).
HAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHH !!!!!!!!
TnGelding
November 21st, 2010
8:55 pm
Barry is scary, with a weird sense of humor!
TnGelding
November 22nd, 2010
4:09 am
Take it from Waren Buffett:
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aJH69IPf28ZM
IMHO he’s only halfway right. The rest of us are going to have to kick in a little more too.
BitterEXdemocrackkk
November 22nd, 2010
6:47 am
We need the FAIRTAX ** AND ** the Mortgage interest deduction!
STRIVE to be SMARTER than the EVIL force of democrackkks WANTS you to BE!
BitterEXdemocrackkk
November 22nd, 2010
6:48 am
STEVE…YOU are the one who needs to STUDY the FAIRTAX and its benefits! Power to the PEOPLE! STrive to be smarter, Steve…
This country needs a lesson in economics
November 22nd, 2010
11:35 am
First, the person who said Inflation makes our money worth more – really needs a basic lesson in economics. Inflation does the opposite – it allows you to buy less with the $$ you have – making everyone’s money worth less.
Second, by making home purchases of any price less desirable you are not only harming those who buy the homes, but the builders who build them, the carpenters, brick layers, plumbers who work on them, the workers who make faucets, appliances, agents who sell the houses, furniture sales people, manufacturers etc. AND the governments who receive taxes from all these supporting business and individuals. So – let’s think about the unintended consequences.
It sounds easy to say tax the “rich” – but every dollar taken by the government is a dollar not being spent and put back into the economy.
No, I don’t own a $500K+ house – Yes, I might like to one day.
Nan
November 22nd, 2010
11:39 am
I support eliminating the mortgage interest deduction because it is indeed welfare for the middle class (if the only home you can afford to buy is a double-wide, this is one deduction you’re probably never going to be able to take advantage of), but would support a credit for home buyers that would help with the initial purchase.
Bob Walters
November 23rd, 2010
12:30 am
The mortgage deduction should be ended immediately and let the chips fall where they may. The windfall should be used to fund lower tax rates. We need to cut deductions and cut expenditures, especially education. Expeditures on education is killing us in GA. It’s time to consider complete privatization of our elementary and secondary education systems.
Tom
November 23rd, 2010
7:38 am
A lot of folks thoughtfully invested in real estate, taking tax breaks into consideration. Those close to abandoning their properties because they are upside down, will likely “jump ship” if this plan goes into effect. The cost of holding real estate is going up; look for a housing market crash. Just what we need.
SR
November 23rd, 2010
8:19 am
Support.
However, for those who are concerned that this will hurt the economy by reducing home sales, I have a better deduction that could go away…the per-child tax deduction. Considering how much of our taxes go to schools/children’s healthcare, I do not understand the concept of reducing someone’s taxes when they have children. (Yes, I do understand that children are expensive and I respect those who choose to do so, but that doesn’t mean that you should expect others to pay for them.)
Can someone else tell me of a different action (having children) that increases the cost to government (school/healthcare costs) and reduces the taxes on the person who performed the action? (I suppose one could say going on welfare, but that isn’t really the comparison you want to make, is it?)
SR
November 23rd, 2010
8:39 am
BTW…Since somehow we got into a Fair Tax discussion, I agree with the concept but cannot see how there can be a ‘fair’ application. By its nature, at the time of the change from the current tax system, you are going to reward the people in debt and punish the people who actually lived within their means and saved their money.
If I just bought a $40K car that I can’t afford with someone else’s money (loans) and the fair tax starts, then I get to pay it off with my non-taxed salary. Hooray! If I saved up for that same car using my already-taxed savings, and then go to buy it after the fair tax starts, it’s going to cost almost $50K (using the common 23% figure).
Um…how is that ‘fair’?
(And no, I’m not retired…I just choose to live within my means. Yes, I know that’s very un-American.)
Mike's wifey
November 23rd, 2010
11:48 am
My husband and I saved 10% of our income for years. Then he got sick. Even with insurance, we ended up several hundred thousand dollars in debt. After he was able, he went back to work and we started saving again. Then he got laid off after winning awards at his job and several promotions. You can’t control all health issues–he worked out, watched his diet, had good numbers on his cholestrol,etc. He has been on unemployment for a year and has applied for every single job out there. He even visits businesses. Once the unemployment ends, we will have to take what little money we have left in savings to pay for his FULL insurance (no more COBRA). We are NOT moochers. You all are cold hearted rich thugs and God will get you for that–your wealth will not buy you a seat in heaven. Jesus said what you do for the least of these, you do for HIM. What have you done for the least of these lately? Write a $100 check to a food bank? Big Freaking deal.
anonymous
November 23rd, 2010
11:49 am
Actually, the 40K car would be 31.2K plus 23% because prices would decline by 22% after the embedded taxes are removed by the repeal of the income tax, so the car would be $38,376.
SR
November 23rd, 2010
12:06 pm
Re:anonymous…
Everyone assumes that the current embedded taxes will be removed. I doubt it’s going to happen. And, if it does happen, I doubt it will be the full amount.
Smokewagon
November 23rd, 2010
12:53 pm
I think everyone should get off their butts and go to work. Quit looking to the government and taxpayers to support you. No more free handouts through Freddie and Fannie.
Michelle
November 23rd, 2010
2:07 pm
The proposal is not to get rid of the deduction, but rather to limit it to allow a deduction on the first half million only. I think that sounds fair if something has to be done.