Tax Panel Says Popular Breaks Should Be Cut

Discussion in 'Politics, Religion, Social Issues' started by zimv20, Oct 12, 2005.

  1. zimv20 macrumors 601

    zimv20

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    toronto
    #1
    link

    gotta say, i like both these deductions a lot. especially, being self-employed, with the outrageous insurance premiums i pay. at least i get to deduct them.
     
  2. mactastic macrumors 68040

    mactastic

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    #2
    Couldn't we just tweak the AMT to make it conform to it's original intent rather than scrapping it? Everyone agrees it's bad in it current form, but the goal is good. Right?

    Same crap with Social Security. The obvious fix is to tweak the formula a little to gain decades of solvency. But no, let's toss the baby AND the bathwater out into the street. Typical Republican response.
     
  3. tristan macrumors 6502a

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    #3
    I think our tax system does the economy a disservice by automatically steering people towards owning real estate. I don't like owning real estate and would rather rent and put my savings into long-term investments like stocks and bonds. As a result, I lose the mortgage tax deduction and get hit with taxes on my investment gains and income. Is what I'm doing really so bad for the economy that I need to be penalized?
     
  4. mactastic macrumors 68040

    mactastic

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    #4
    Unfortunately for people like you, there is a pretty substantial argument to be made that communities are stronger when rates of owner-occupied homes are high. People tend to have more pride in something they own and live in themselves. It encourages people to take care of and improve their property -- thereby helping their investment. Owners of rentals aren't likely to want to upgrade if the return doesn't pencil out. A landlord will likely want to replace a leaky faucet with the cheapest option. A homeowner may decide to drop $250 and put in a beautiful fixture that will add to the appeal of the house when they do sell.

    It sucks for the renters who do take care of their property and is a godsend to those who own homes and don't care for them anyway, but I think there is a large amount of civic value in people owning the home they live in. And if you accept the idea that tax policy should at least partially be about encouraging behaviors that make our communities stronger, then the mortgage tax deduction makes sense.

    And believe me -- there is plenty of money to be made in real estate. It's not an area anyone needs to shy away from investing in. Take advantage of the deductions offered I say.
     
  5. tristan macrumors 6502a

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    #5
    I know the conventional wisdom on homeownership, but here I am, living in one of the nicest communities in the DC area and its full of luxury apartment buildings where we all rent. Our secret of success is just good management at both the apartment and the community level.

    The other thing is that the tax system doesn't really reward homeownership, it rewards mortgage debt and lots of it, which means big houses and big mortgages. If you have a half million dollar house that you're happy with and some potential investment capital, there's a big temptation to buy that million dollar house that you probably don't really need, rather than investing that money somewhere else.
     
  6. 3rdpath macrumors 68000

    3rdpath

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    #6
    if this administration seeks to "recommend limits in the popular tax deductions for mortgage interest and employer-provided health insurance.", they better be prepared to be tarred and feathered.

    if bush was surprised by the reception of his SS reforms, wait till he floats this.
     
  7. zimv20 thread starter macrumors 601

    zimv20

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    toronto
    #7
    really? i'm quite keen on paying off my house and i didn't get a mortgage for the tax break, i got it because i couldn't afford to buy the house outright.

    the deduction is a nice thing to have, but i'm in no way looking to increase my interest payments to increase that deduction. it doesn't add up. (i.e. pay $4 to save $1 -- that's nuts). the phenomenon you cite, is it actually happening?
     
  8. Ugg macrumors 68000

    Ugg

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    Penryn
    #8
    I think there need to be some practical limits on the mortgage interest deduction. People who buy multimillion dollar homes or extremely large homes should have the deduction limited. Sprawl is a serious social issue and why give tax deductions to those who build energy greedy mansions?

    The second home deduction also needs a major overhaul as the point of mortgage interest deduction is to get people into their own homes and second homes only drive up property values and decrease the housing stock.
     
  9. mactastic macrumors 68040

    mactastic

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    #9
    Exactly. I'm not saying the mortgage deduction system we have is perfect, but like so many things in DC right now (Social Security, AMT) it seems like some people would rather eliminate it than tweak it to work right.

    Tristan -- luxury apartments are one thing. The owners are usually willing to keep them looking nice. But if you're a guy like me who likes to tinker, an apartment (or any rental for that matter) is a very sterile place with no personal touches. I'm sure some people don't mind that, but when I get my hands on my own place it's going to be nicer (eventually I hope) than all my neighbors, not identical. And one you get out of the 'luxury' category -- watch out! I've lived in some pretty substandard rentals.

    Speaking of which, my sister just called to tell me that not only is she pregnant, but her and the hubby just bought a two-bedroom 'fixer-upper' for $800K... and that's a good deal! Now they want me to come up and help them make it livable by Thanksgiving. :p
     
  10. tristan macrumors 6502a

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    #10
    There is a limit of $1m in principal for the mortgage interest deduction. At a 6% mortgage that would save you about $20K in taxes.

    I still dunno - the UK gets along just fine without a mortgage interest deduction.
     

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