Case for Schiavo-ing Housing Life Support Catches On: Is Common Sense Returning to America?

One of the great fake bedrock principles of America may finally be crumbling like so much papier mâché: the belief that tax policy, spending decisions, and even bank lending rules should all be designed to "promote homeownership" for all Americans.

USA Today reports on the growing (dare we say, almost bi-partisan?) sense that the governent has gone wrong in getting into the housing business. The Obama Administration is, of course, avoiding the obvious solution of not interfering in the market at all, but it is considering changes in mortgage financing and down payment requirements:

Congressional Republicans doubt the administration has the nerve to make bold changes. They say the White House squandered an opportunity to deal with what they see as the No. 1 problem — limiting taxpayer losses on Fannie Mae and Freddie Mac — in an overhaul of financial regulations Congress passed last month. "What you've seen is two years of lip service," says Rep. Spencer Bachus of Alabama, ranking Republican on the House Financial Services Committee. "The administration and the congressional Democrats have not shown any willingness to address the issue other than to talk about it and have planning sessions."

Other critics say eliminating or overhauling Fannie and Freddie isn't enough: The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales.

They say these misguided or outdated government policies encourage the United States to massively overinvest in housing, shortchanging other parts of the economy. "There's only so much subsidy to go around at the end of the day," [author Alyssa] Katz says.

As I have argued here, there and everywhere, promotion of homeownership is a piece of social engineering that inflicts a painful price on this country. The ideas under discussion are really just social engineering in the other direction, but it's a good sign that what was once considered a core principle is being called into question by somebody other than cranky libertarians.

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  • ||

    Just a question--how can we compare housing data from different years? How does the US home ownership rate in 2006 compare to the Canadian rate that year?

  • #||

    i noticed that myself... the US homeownership rate has come down a lot the past few years. In 2006, if memory serves me correctly, we had about the same rate as Canada.

  • Paul||

    A retired veteran IRS agent once told me that the government wants to promote marriage, hence the tax cuts for married couples. When can we get the government out of that shaky business, too?

  • Hugh Akston||

    But without tax incentives and government regulation, marriage will only be available to the richest 1%.

  • Paul||

    Let them have it. They're the only ones who can afford it.

  • ||

    "A retired veteran IRS agent once told me that the government wants to promote marriage, hence the tax cuts for married couples. When can we get the government out of that shaky business, too?"

    There are NO tax cuts for married couples(there are a number of tax advantages to having kids, because we know that we are in a popluation shortage apparently. There is a marriage penalty at higher tax brackets.

  • PR||

    you get to avoid the estate tax if you're married.

  • ||

    No you don't. Your kids are still taxed on it. Your wife is considered to be an equal owner, so she's not taxed.

  • Barely Suppressed Rage||

    Your wife is considered to be an equal owner, so she's not taxed.

    Not necessarily true. It depends on what asset we're talking about, and how it's owned. Your wife is not simply an equal co-owner on everything you own.

    Simply leaving everything to your wife does not automatically get you out of the estate tax.

  • Barely Suppressed Rage||

    you get to avoid the estate tax if you're married.

    Wherever did you get that idea? Totally not correct.

  • PR||

    I was only responding to the claim that there are no tax breaks for being married. Spouses get to avoid some estate taxes that other co-owners of property wouldn't. That's what I meant.

  • ||

    I would say spouses get to delay some estate taxes.

    Still, that's not what people usually are referrring too.

    They think there are some types of tax benefits in the income code to being married. Like a married deduction or something,

  • ||

    Especially if a 2010 AMT patch isn't passed, a whole lot of middle-class MFJ filers are gonna get fucked.

  • ReasonableOne||

    The main advantage to marriage is passing on your government benefits to your spouse, visitation rights, etc. In fact, if both spouses work, marriage is a tax burden in most brackets.

  • Chad||

    Kroneborg: there is a huge advantage built into the heart of any progressive tax system.

    Go do the calculations for how much tax two individuals making $80k and $20k pay, and compare that to a couple making $100k. I'd bet the latter saves at least $2k in federal tax.

  • ||

    A retired veteran IRS agent once told me that the government wants to promote marriage, hence the tax cuts for married couples.

    Replace "tax cuts" with "tax penalties" and you'll see a great example of how social engineering via the tax code generally works out.

    On the estate tax (caveat: I am not a trusts and estates lawyer):

    My understanding is that any property that is owned jointly is effectively exempt from the estate tax (when you die, the other joint owner becomes the sole owner, presto, with no transfer of title or other realization event).

    Not all property owned by married couples is owned jointly. You can own property jointly with anyone - you just have to title it "joint title with right of succession (JTWROS)" and it passes outside the estate and untaxed. Even if you're gay!

    So I don't see any estate tax advantages that automatically accrue, unless by operation of state law some property is deemed held jointly by a married couple.

  • ||

    I think this is generally correct. I'm a CPA, but also don't specalize in estates.

    Side note, my Dad's trust guy is a CPA/lawer.

    Bills out at $400

    maybe something to look into, lol.

    I heard it's really not that hard to become a lawyer, thoughts RC?

  • Ska||

    Dude, that's a pretty low billing rate for a tax attorney.

    Go look at the billing rate for a partner at Weil Gotshal or Paul Hastings.

  • ||

    Well, it's higher than my current CPA rate. I only bill out at $200.

  • ||

    I heard it's really not that hard to become a lawyer, thoughts RC?

    Three years of school, pass an exam.

    Go look at the billing rate for a partner at Weil Gotshal or Paul Hastings.

    Maybe 1% of the attorneys in the country can bill at those rates.

    $400 is a pretty good rate. If he's a hard worker, he can gross around $800,000/year, and probably take home at least $300,000 pre-tax, just on his practice

  • ||

    R C-

    I believe you got it right with your post at 4:26. In addition, property titled in the name of the deceased spouse alone passes estate tax free to the surviving spouse.

  • ||

    Does whether or not you're in a community property state make a difference for estate tax (ie, all property is presumed jointly owned)?

  • ||

    I'm not postive, but I think that it can.

  • Zero||

    yes, community property matters, determines the size of the estate and possible estate taxes

  • Pip||

    Really off-topic, but I just read a great name for the Ground Zero Mosque Bar:

    "The Queer'an"

  • Old Mexican||

    The "Suspicious Package"

  • Paul||

    And they can have "Let's roll" Taco Tuesdays.

  • Hank||

    Wet Suicide Vests contests. Bottomless of course. I kid the gay muslim. Surely a tough community to come out in. I'm sure a few suicide bombing turrist are hopin' Paradise is going to be more like South Beach.

  • Subsidize Me!||

    Ever heard of bacha bazi? Afghans are some sick fucks.

  • Libertarian Pedophile Strawman||

    Sounds like the Afghans are ready for democracy.

    http://en.wikipedia.org/wiki/Pederasty_in_ancient_Greece

  • ||

    Nice.

  • Fluffy||

    OK, that one is REALLY good.

  • ||

    Best one yet.

  • ||

    How about Sheik Yabudi's?

  • Barely Suppressed Rage||

    Sheik Hai'di Saalaami

  • PR||

    Tas 'n Saladin's

  • Paul||

    :)

  • kilroy||

    "There's only so much subsidy to go around at the end of the day,"

    And the amount at the beginning and end of that day should be $0.00

  • ||

    good luck...

  • Pip||

    What does a gay Muslim martyr do with 72 virgins? Their hair and nails

    I'm done now. Thanks for your indulgence.

  • Ron L||

    Is there an icon for a rim-shot?

  • ||

    How does spain have such a high home ownership rate?

  • #||

    they have had a massive housing bubble themselves. Im sure its come down quite a lot since then.

  • ||

    Wee houses?

  • Old Mexican||

    Re: Lurker Kurt,

    How does spain have such a high home ownership rate?

    I read a Spanish economics and political magazine (free market) and there was a BIG, MASSIVE real estate bubble happening during the 1990's and 2000's years, through home ownership subsidies and a very heavy attack on rental properties by the Tax Man.

    So the above statistic looks truthful - it is just that most people in Spain are even LESS able to afford the tiny Spanish pigeon holes than Americans can.

  • ||

    Thanks all.

    I assumed the statistic was truthful, I just wonderered why it was so high compared to other nations.

  • Invisible Finger||

    So Spain is living the American Dream.

    Wonder how that's working out for them.

    Meanwhile, Germany is doing just fine. Wonder what the German Dream is? Something about exterminating the merchant class, IIRC.

  • Libertarian Pedophile Strawman||

    Schiesse films.

  • ||

    Wouldn't Schiavo-ing mean the republicans are going to pass a stupid uncontitutional bill to keep it alive?

  • ||

    + 1.41421356...

  • ||

    Plus (e/2) + 10%?

  • Brian||

    Sqrt(2) obviously

  • ||

    Do we really need to turn "Schiavo" into a verb?

    Let the poor guy alone.

  • Old Mexican||

    They say these misguided or outdated government policies encourage the United States to massively overinvest in housing, shortchanging other parts of the economy.

    Better known as Malinvestment. The Austrian Business Cycle Theory explains that one, by the way...

  • Invisible Finger||

    and the tax exemption of most capital gains from home sales.

    Talk about bait and switch!

    People who bought in the last 5 years probably won't see any capital gains for another 10, but people who bought 15 years ago or longer would see a serious tax bite that they hadn't planned their financial futures around.

    So lets see... they'll means test me out of the Social Security I paid, then they'll take a major chunk out of the proceeds of the eventual sale of my house, my 401k's already down 15% from peak...

    Congress continually treats me like a prison bitch.

  • Sandy||

    If you were planning your financial future based on the government's largesse, you were kinda asking to be somebody's bitch.

  • Ryan M||

    umm, isn't this their goal? They want to make everyone poor and 100% dependent on the government.

  • Fluffy||

    I like the general thrust of this article, except for the fact that it is based in part on the claim that the failure to tax something can be said to be a "subsidy".

    Under that way of looking at things, the Bush tax cuts are a "subsidy" to the rich.

    Is that a libertarian way of looking at things?

  • Russ 2000||

    I agree. I don't see why interest expense is a legitimate business write-down but is considered a subsidy for households. This is the main reason I hated Ronald Reagan.

  • ||

    A household and a business are different.

    A business is trying to generate income, they get to deduct pretty much ALL the expenses to generate that income (COGS etc).

    households start with income, and then have expenses. Generally they shouldn't be able to deduct any of those expenses. because that leads to special interests, and mangleing of the tax code.

    The best solution would be the Fair Tax.

  • Law Student||

    The best solution would be no tax actually.

  • x,y||

    The best solution would be the Fair no Tax.

  • ||

    No, I do think there are some things worth paying taxes for.

    National defense comes to mind.

    I also don't mind paying for a national highway system. I'm sure there are a couple of others things as well.

  • Law Student||

    All of which can be paid for without income or sales taxes.

  • ||

    I'm not sure where you would get the hundreds of billion each year necessary for national defense without a income or nationa sales tax.

  • Ryan M||

    I think a hooker tax and/or marijuana tax would generate more than enough income, even at a modest 1%.

  • slayer of beer||

    Voluntary tax system. People can put their money where their mouth is.

  • BakedPenguin||

    We did pretty well with excise taxes until 1911.

  • ||

    Ahh, that was before Empire.

  • Shannon Love||

    Prior to the early 20th century, the primary source of Federal government revenue was tariffs collected on imported goods. This was largely simply pragmatism instead of ideology. Ports could be easily controlled and the commerce that passed through them easily taxed whereas taxing the income of individuals was logistically unfeasible given the information technology of the day. State and local governments relied on property taxes for the same logistical reason.

    One of the libertarian mythologies is the 1800s was a low-tax, free market paradise. While this was largely true for internal trade, international trade was heavily taxed and regulated.

  • ReasonableOne||

    Fair Tax, definitely. I'll ride my unicorn to the signing ceremony. In the meantime, if generating revenue/income is the basis for expense deductions, how come I can't deduct commuting expenses? Can't generate that income without transporting myself to work...

  • ||

    You can - Section 132(f) of the Internal Revenue Service allows employees to use up to $230/month of pre-tax income to pay for commuting. (it was raised to $230 from $120 by the stimulus package).

    Of course this is only if you commute by public transit/vanpool.

  • ||

    You can - Section 132(f) of the Internal Revenue Service allows employees to use up to $230/month of pre-tax income to pay for commuting. (it was raised to $230 from $120 by the stimulus package).

    Of course this is only if you commute by public transit/vanpool.

  • mj86||

    All expenses made to generate income are deductible. Otherwise you'd be taxed on revenue not net income.

  • ||

    This is true for the capital gains exemption, it's not true for the interest rate deduction.

    So yes, I think a capital gains exlusion is still reasonable. But no, I don't think people should get an deduction on home interest.

    In fact the deduction on home interest encouraged a lot of the refi's that resulted in all the underwater home owners.

    House != ATM

  • ReasonableOne||

    Renter, Kroneborge? I haven't used my house as an ATM and it would take an Act of God to get me to re-fi at a higher rate to get a higher deduction.

  • ||

    Used to be, bought our first home at the start of the year.

    Long wait, hope it was worth it.

    I'm sure values will decline a bit more, but the wife is happy, and that counts for a lot.

  • ||

    If you could write off rent, I would agree with you. But as it is, they are fucking non owners so badly, it is hard not to see it as a subsidy.

  • x,y||

    Renters receive the benefit of the subsidy in a competitive market. Landlords get the benefit directly as "owners," but they have to compete for tenants and pass the subsidy through in the form of lower rent.

  • mad libertarian guy||

    Even worse is it leads directly to tax breaks adding to the national debt.

  • Tony||

    Against my mother's pleading I decided to become a renter-by-choice out of college. I like being vindicated. I'da been fucked if I bought a house at the time. And I'd have nowhere near as nice a view.

  • Lowdog||

    And why would you have been fucked? Government meddling in the market, it seems. See how all it touches turns to feces?

  • Tony||

    Government subsidies for home ownership did not cause the housing bubble or its collapse.

  • ||

    Goddamn you are stupid.

  • Tony||

    Because I don't buy a dishonest, self-serving Republican talking point that is refuted by all the facts?

  • AA||

    Is everything you disagree with a Republican talking point?

  • Tony||

    No, it's just that there are so many floating around here.

  • ||

    Idiot.

  • Tony||

    And there really is no reason for SugarFree to buy into them. I'm sorry that lying and making excuses for the failure of your pet economic policy ideas just happens to coincide with the political interests of the GOP, who whore said ideas out as cover for their corporate looting, but that's not my fault.

  • ||

    You subsidize something you want more of. Government subsidized housing. That means government wanted more people in houses. When all the people who were financially suitable for house ownership (and wanted one) had a house, then anything past that was encouraging people who were not financially suitable to have a house. Bubble go up. Bubble go pop.

    If you are going to insist on being an idiot, then we'll just a have to treat you like one.

  • AA||

    "GOP, who whore said ideas out as cover for their corporate looting"

    Well at least you understand that much.

    And what SugarFree said.

  • Tony||

    AA it's not libertarian to lie about the prime causes of the housing collapse. It is very much Republican, though.

  • AA||

    True. Just because two things sound alike, does not men they are the same.

  • The Gobbler||

    Tell us, Tony, what caused the housing collapse?

  • T||

    Republicans, obviously.

  • ||

    Let's be honest, government medelling was a big factor but wasn't the only cause of the problem.

    A lot of it also had to do with bad incentives in the financial system.

    For example, if you give someone a bonus based on the amount of shitty loans they can make guess what, they make shitty loans.

    And if you allow banks to securtize the loans, they won't care if they are shitty.

    So yes getting government to stop subsidizing housing in a necessary but not sufficient condition to prevent future financial crises.

    We also need to reform the incentive system in the financial system.

    For example,
    higher capital requirments

    make bonuses based on long term perforance

    reduce or elimnate securization

  • ||

    ""For example, if you give someone a bonus based on the amount of shitty loans they can make guess what, they make shitty loans.

    And if you allow banks to securtize the loans, they won't care if they are shitty.""

    Bingo.

  • ||

    Let's not forget that the secondary market for loans (which allowed banks to lay them off on third parties) was a creature of government.

  • ||

    Yes, good ol Freddie and Fannie.

    Here to save the day.

    I kind of laughed when in the referenced article they said interest rates my be .25 to .5% higher if there were no Fannie or Freddie subsidies.

    Well worth it IMO.

  • ||

    I don't see anything wrong with securitizing the loans. The problem was the ratings agencies and their bad risk models. Securitization would be fine if you calculate the risk correctly.

  • ||

    ""I'da been fucked if I bought a house at the time.""

    Let me get this straight. Giving someone else money for a place to live getting nothing in the long term is better than put money toward something you will own in the long term?

  • ||

    If the cost of renting is significantly less than buying then yes renting is better.

    It's pretty easy to apply NPV principals to see which is better.

    We can walk through an example if you like.

  • ||

    Yeah. But both the Real Estate industry and the Government did a hell of a job over the last 40 years of selling the like that "A home is the best investment you'll ever make", while completely ignoring NPV principles.

  • ||

    My wife and I waited till it was pretty close. Renting our house would be near our mortgage payment. Any difference I'm fine with going to the "pride of ownerhship", lol.

    Plus, if we can pay it off in 15 instead of 30 it will make a great rental one day.

  • Night Elf Mohawk||

    Can you math up this example for me?

    Mortgage & Interest: $1000 / month
    Property taxes: $300 / month
    Loan: 15 years at 5.25% (let's call it 100% LTV for simplicity)

    The owner lives in the house for 40 years, 25 of which are without mortgage.

    Presume a reasonable rate of increase on property taxes and rent, as well as the rate of change on the value of the house.

    After 40 years, what would the initial rent need to be for the potential buyer to be financially indifferent as between renting and buying?

  • ||

    For simplicity's sake, I presumed property taxes and rent would both increase at the same inflation rate, assumed to be 2.5% In this example, after 25 years of living in the house with no mortgage payment the initial rent would need to be as low as $630 for them to come out comprable in time value discounted terms.

    The big problem with this is that it does not take into account home repair expenses, which over 40 years will be very significant. I also think it's very difficult to model for these, as there are large expense differences between the capable handyperson who is comfortable replacing his own water heater and roof, the diligent consumer who shops around, and the consumer lacking caution who goes with the first repair person he talks to and does not attempt to negotiate.

  • Night Elf Mohawk||

    Very fair point about repairs and maintenance. Another would investment return on the difference between renting and buying while renting is cheaper offset, perhaps, by the investment return for the 25 years during which there is no mortgage.

    Does the break even point include the value of the house the buyer owns at the end of the period but that the renter doesn't?

  • ||

    Negative on house value. I was looking at it specifically from a monthly cash outflows under mortgage (higher for first 15 years, then lower for 25) vs renting for 40 years. If I introduce investing the difference between the higher mortgage+property tax at 5% permanently it puts you ahead in renting until year 33, at which point the lower monthly expense of no mortgage payment catches up. However, in my experience most people will not simply save and invest money that they saved by buying cheaper/smarter.

    In real life the power of a commitment device like a mortgage is very powerful and most people you would be lucky if they invested half of what they saved by not renting. The rest would get spent on frivolities, trips to europe, etc.

    Furthermore, we're not accounting for the significant tax advantages discussed throughout the thread. In our example, interest on a 15 year loan at $1,000 a month principle and 5.25% would come out to $55,602.97 by my calculation, plus $69,768.81 in property taxes (adjusted upwards at 2.5%/year). That's a lot of income deductions over the years! At a top marginal rate of 25% that would be worth $2,090 in tax savings per year over 15 years.

  • ||

    Althouh you have to remember only the deductions after the standard deduction count. So married filing jointly you are already at 11k of deduction. So you need almost a 200k mortgage to get a bigger deduction (not looking at other deductions)

  • Chad||

    I love the name, Night Elf, but anyways...

    One thing to consider when discussing rent vs own is that it is almost absolutely certain that you will buy more house than you were previously renting AND that you will continually upgrade the house.

    Trying to make an apples-to-apples comparison is misleading, because almost no one actually is choosing between renting an apple and buying one. They are choosing between renting an apple and buying a upgradable watermelon.

    That being said, if you WERE to do a pure apples to apples comparison, the answer is that it typically takes 5-7 years to recover your moving, closing, and selling costs. If you stay in the house longer than that, or if the house appreciates faster than inflation, you make a profit. If you stay less than 5-7 years, or it depreciates, you lose money.

  • ReasonableOne||

    Viewing home ownership as a strictly financial transaction is misleading. What about stability? What about being able to do what you want with your own property? Renters often *think* they own their unit but they don't. Ever. And, in most jurisdictions, they can be tossed out on their asses with 30 days notice.

    Granted, the government has no business in any business, but arguing in favor of renting based purely on the monthly cost is either disingenuous or unintelligent.

  • Tony||

    It's better than paying a premium for something whose value was months away from falling off a cliff.

    I don't care about ownership per se, and I think treating houses as ATMs was an unsustainable way of living. I agree with the spirit of this article that home ownership doesn't need to be some sort of life goal for Americans. Depending on the whims of fortune, renting can be a better deal in the long run. I also like the fact that I'm not tied down by anything but a lease term.

  • #||

    " also like the fact that I'm not tied down by anything but a lease term."

    But thats giving people choices. People are too stupid to make choices. We need government officials to make those choices for people.

  • The Other Kevin||

    Depends on your motive. If you bought the house with the intention of living there for a long period of time, and because you really like the property, you did not get fucked. If you bought it with the intention of selling it for a profit or only living there for a few years, you did get fucked.

  • ||

    I agree.

    But I did say long term in my post.

  • DG||

    How many people stay in the same house for 30 years these days?

  • ||

    Well there are a lot of homeowners who wish they were renters because they are upside down in their mortgages and no one wants to buy their house. Some of them are so upside down that they will indeed get nothing in the long term.

    Being a renter offers 3 advantages--no responsibility for property taxes and maintenance/repair; flexibility to move with little notice and no need to sell one's residence; and in today's market a lot of homeowners could get rent a nice place for a lot less than their mortgage payments.

  • ||

    Renters are still exposed to property taxes indirectly through their landlords. If property taxes go up, landlords will raise rent accordingly. Given elastic demand some of the extra cost of doing business will be absorbed by the landlord, but the consumer will see some of it passed along in higher rent prices.

  • ||

    True, landlords will have to pass on extra expenses to renters at some point. But if you sign a six month or one year lease the landlord cannot pass on a tax or cost increase, in the form of higher rent, without warning (unlike the government). He has to wait until the lease is up for renewal before raising the rent. And of course the tenant is then free to refuse to renew the lease, and look elsewhere for cheaper housing.

    Dont get me wrong, Im not saying everyone should rent. But neither should everyone be a homeowner, and there are advantages to renting that are seldom considered.

  • ||

    I agree with that 100% I also don't think government should be changing any rules, especially mortgage interest deductions, capriciously or without lots of advance warning. That said, I do think the deduction causes market distortion and we would be better off without it.

  • Ryan M||

    AFAIK (and IANAL), in MA, after your lease expires it automatically becomes month-to-month but keeps the other terms of the lease (price, etc). The law allows the landlord to inclue a provision in the lease for making the lessee pay a share of increased taxes, but the if landlord does not include such a provision, the landlord can't raise your rent. If you refuse to leave, they have to go to court to evict you, and they will have a very hard time doing that if you're still current with your rent... if you get in (as a renter) with a lease that doesn't include that tax increase provision, I think you're pretty much able to keep that rate for a very long time, maybe forever. Again, IANAL, YMMV, etc.

  • Paul||

    Against my mother's pleading I decided to become a renter-by-choice out of college.

    If you finished college younger than 32, then yes, it was definitely the proper way to go.

    Why anyone would want to own a house at 23 years old is beyond me.

  • ||

    It really is pretty lame that you can deduct mortgage interest and real estate taxes but not, say, rent payments. It makes non-homeowners (especially in low- or no-state income tax states) basically unable to itemize. But icky renters living our un-American lifestyles shouldn't expect any better, I guess.

  • ||

    That is why, unlike most tax breaks, it is really a subsidy. Renters are so fucked by it, it is something more than just not taxing income.

  • ||

    ""It really is pretty lame that you can deduct mortgage interest and real estate taxes but not, say, rent payments"'

    You don't pay interest on rent, nor taxes when you rent. If home owners could deduct their mortgage payments, then what you're saying would be fair game.

  • ||

    except that most of the mortgage payment for a long time is just interest.

    So yes renters are paying higher taxes to subsidize home ownership.

  • ||

    ""So yes renters are paying higher taxes to subsidize home ownership.""

    What taxes are renters paying that does this?

  • ||

    They don't have access to the home mortgage deduction. If you don't own a house, you take it up the ass in taxes.

  • ||

    If I don't own a home, I don't have to pay property tax either.

    What extra taxes am I taking up the ass? Do you mean the idea that my federal taxes goes to their subsidy?

  • ||

    "If I don't own a home, I don't have to pay property tax either."

    Only if you have a landlord who out of the kindness of his heart doesn't pass his property tax expenses onto his tenants. Of course you pay property taxes or at least good portion of them. They are just disguised in your rent payment.

  • ||

    True.

    But maybe my rent has his tax credit built in. He may need to raise my rent if he loses the subsidy.

  • ||

    IOW, his tax break could be disguised in my rent payment also.

  • x,y||

    This is almost 100% inaccurate. Landlords have every incentive to pass the subsidy through as lower rent. It's called a competitive marketplace, and I challenge you to show me one in the U.S. that is not.

  • x,y||

    @ John

  • ||

    We are talking about property taxes here. How do landlords not have the incentive to pass their property tax expenses on to their tenets if the market will bear it? Is it your contention that if property taxes were eliminated tomorrow that rents would not go down?

  • ||

    I see what you are saying about the interest deduction. Certainly if the deduction were eliminated, rents would go up. But they don't pass on all of the savings. They will pass on as little as the market will allow them to. In a place where rental property is in large demand, little if any of the savings will be passed on. In a place where demand is low, perhaps all of it. It just depends.

  • ||

    John, the percentage of a tax increase/decrease is determined primarily by the demand elasticity in the market. In residential markets, this is likely pretty inelastic in the short term (because moving is hard) and more elastic in the long term (because people will eventually move away from high taxes).

    I feel like you're using an economic principle to defend one side of an argument (landlords pass on increased property taxes in the form of higher rent) and downplaying the same economic principle in another area (increased taxes vis a vis eliminated mortgage interest deduction causes higher rents). I apologize if I misread you, but it seemed inconsistent to me.

    More importantly, I think the real story here that the housing market is heavily distorted by government meddling. Why don't they butt out and let individuals figure out what works best for them on their own?

  • ||

    Ah, I see what your saying.

  • ||

    """"So yes renters are paying higher taxes to subsidize home ownership.""""

    In the same way we pay higher taxes to subsidize businesses that get tax breaks.

    Or does the idea that our taxes cover their tax breaks not work the same way for them.

  • ||

    Yeah, I realize that. Some kind of calculation to determine what % of your yearly housing expense is deductible, regardless of whether you rent or own, then.

  • ||

    Renters don't directly pay property taxes, but a fraction of their rent is certainly used by the landlord to pay property taxes and service whatever debt he might carry on the property.

  • ||

    If you hate America so much, why do you live here? Unless you are some sort of a Telefon-style sleeper agent...

  • ||

    Listen, I am not the next sexy Russian spy. And I fucking hate Robert Frost. There, I said it.

  • ||

    More's the pity.

  • ||

    Vat is meanink, "diverging in yellow vood"? Is stupid, da?

  • ||

    And curling is the world's most exciting sport.

  • Hugh Akston||

    Wait, Dagny is a sexy Canadian spy?

    Here I thought I could disparage Canada with impunity. But I was clearly a fool to think I could escape the all-seeing eye of the RCMP.

    One of these nights I'll pick up a girl at a bar and the next morning they'll find me in a drainpipe with my lungs mysteriously full of Molson.

  • Ted S.||

    I think she's Mrs. Igor Gouzenko. Gene Tierney was quite sexy.

  • ||

    Dagny's association with the Cannuckistan Secret Service is well known and registered with the government.

  • PR||

    It really is pretty lame that you can deduct mortgage interest and real estate taxes but not, say, rent payments

    allowing homeowners a mortgage interest deduction and property tax deduction merely levels the playing field with investors who own rental property and are rightly allowed to deduct these legitimate expenses from gross revenue like any other business. And if investors were not allowed to, your rent would be higher.

  • ||

    So we go in a vicious cycle until everybody's taxes are completely deducted to allow an even playing field with everyone else? In my mind the overleveraging the mortgage interest deduction encourages far outweighs any positive benefits it might have. Why not stop the engineering and let the market adjust to it's natural levels?

  • PR||

    so you're in favor of only investors getting to deduct the expense of interest? wouldn't that be tilting the market in their favor?

    If you want to take it from them too you are advocating taxes on gross income, instead of net income.

  • ||

    I've actually been thinking more and more about gross receipts taxes lately. I think a lot of us tend to forget that no matter what you do someone gets stiffed under any tax regime. Personally, I dislike meddling politicians and social engineering enough that I am willing to look more at gross receipts or national sales tax.

  • PR||

    That's a pretty radical change to the economy as a whole.

    I still say the mortgage interest deduction for homeowners isn't social engineering. It's treating them the same as every other real estate owner, whether idividuals, landlords, or businesses. Renters reap the financial benefit of their landlord's interest deduction in their lower than otherwise rent instead of on their tax bill.

  • ||

    "...promotion of homeownership is a piece of social engineering that inflicts a painful price on this country."

    The comparison with Euro countries means nothing. What is missing from the article is a discussion on the extent that rental properties are subsidized. For instance, in the UK if there is a 70% home ownership rate, then there is probably a rate of living in subsidized rental housing of 28%, with only 2% of the population living in unsubsidized rental housing. While admittedly, my information is old – I left the UK in 1992 and my experience is Scottish-centric, there is very little in the way of unsubsidized rental housing in the UK. At least in the west of Scotland, the only year-round residential properties for rent were properties owned by individuals that couldn’t sell a property they already lived in and then moved or had inherited the property. There just was not anything like the privately owned apartment complexes that we know in the US.

    Also, though probably not the extent it was a recently as it was in the '70, but a lot of the housing in the rural areas especial is "tied" to the job. Many of my now ex- inlaws live[d] in housing that was owned by the "Laird" and was provided as a part of their compesation for working on the estate.

  • ||

    You kill the mortgage interest deduction you're not only jacking with homeowners but renters too.

    A mortgaged rental property doesn't make any damn money-- the profit comes from the fact a mortgaged rental property is a (mostly) self-funded tax write off generator. Kill the deduction, and either rents will go up or the value of rental properties will go down to the point where the new owner would be able to make a profit without the deduction. Since the non-mortgaged rental properties would be happy to help their mortgaged brothersby charging more rent (esp. above taking a hit on the value of their property), my money would be on option 1. Since homeownership would be a lot more expensive without the deduction, there would be a lot of renters who wouldn't have much of an option but to rent... so yeah, rents would be going up.

  • ||

    Good reasoning, but the most likely course is option 2.

    You can see that happening now, housing prices going down to where they make sense based on rental prices.

    Without the tax deduction people would be willing to pay less for a home. This would drive down prices till we reach a new equilibrium. Rents would probably stay about the same.

  • bikerider||

    Rented homes would still have a mortgage interest tax break because it would be a business expense. In fact, killing the mortgage deduction for owner-occupied houses could encourage far more renting.

    If you and your neighbor have similar houses and similar mortgages, it could be cheaper for the two of you to "trade" houses. You could rent from your neighbors and they could rent from you. Then you could both deduct not only your mortgage interest, but your entire mortgage payment. If you rent with utilities included then even utility bills would be tax deductible.

  • ||

    Yes, but a lot of the houses that become rentals were first bought for ower occupied housing.

  • ||

    Also, you can only deduct the expenses against the rental income, not against regular income normally.

  • ||

    Re. alt-text: a notable exception would be tapas.

  • ||

    Albariños and Roth Kase Grand Queso. Never have too much of either of those.

  • ||

    Just discovered a Seattle source for reasonably priced jamon Serrano. Yum. With such good food, how did Spain go wrong?

  • Law Student||

    and women

  • ||

    In defense of the mortgage interest deduction (advocat diaboli)

    Everyone agree that you should be able to deduct the expenses that go into generating income.

    Everyone also agrees that these expenses include the interest on money that you borrow to generate income.

    This is why you can deduct the interest on money that you borrow to invest in capital assets, including stocks and what-not.

    So what's differant about the interest on money that you borrow to invest in any capital asset, such as a house?

  • ||

    "Everyone agree that you should be able to deduct the expenses that go into generating income."

    What income does your home produce? The value of living in it, but renting does that to. At best it produces the capital gain you can make on it if the value goes up. If I borrow money to buy any other asset as an investment like Gold or Stocks I don't get to write off the interest expense. Why are homes special?

  • bikerider||

    "If I borrow money to buy any other asset as an investment like Gold or Stocks I don't get to write off the interest expense."

    This isn't entirely true. I'm not sure how it would work for an individual tax filer, but if you incorporate an "investment business" and borrow funds through that business to invest in stocks, then the interest payments are a deductible business expense.

  • ||

    The incorporate card makes it a slightly different debate. No?

  • ||

    If I incorporate a business, I can deduct my rent as long as I am using the space for my business. As an individual I can't ever deduct my rent.

  • bikerider||

    TrickyVic & John

    Absolutely - the incorporation issue changes the debate but at the same time is part of the debate. Killing the mortgage interest deduction will likely encourage more people to incorporate small side businesses.

    As for an individual being unable to deduct rent, the home office deduction trick can work for rent too (although I know very few people who try that one).

    Under current law, some personal finance/tax advisors recommend creating a small business on the side just to take advantage of tax breaks that individuals can't get.

    Even though I do a great deal of work out of my home, I've never tried the home deduction because the record keeping is a pain in the ##$ and I'm getting a decent deduction on my mortgage interest anyway. If the interest break disappeared, I'd take a fresh look at the situation.

    I'm not saying whether the mortgage interest deduction should or shouldn't be killed. I'm just pointing out that taxes and tax breaks have behavioral consequences even if no social engineering is intended and we can't be sure what those behaviors will be. Yes, I've offered some predictions but we won't know unless it actually happens.

  • ||

    Just deduct an amount based on the square footage. For example,
    200 sq foot house, you set aside a 400sq ft room as an office. You can deducet 20% of utitlites, rent etc.

  • bikerider||

    With a wife & two kids I don't have an extra room that I can set aside and my work at home is a mixture of "as an employee" and "as a contractor". I don't even understand all of it, but what my tax advisor laid out for me was keeping logs of business -vs- personal use for space and equipment for a minimal deduction. Selling the house becomes more complicated too.

    Under current tax laws I decided that it wasn't worth it - if the laws change, who knows?

  • ||

    ""Killing the mortgage interest deduction will likely encourage more people to incorporate small side businesses.""

    Some people who buy property to rent are not interested in become a corportaion. They are just looking to make a little money, or get the house for free or almost free by having a renter cover the cost or most of the cost.

  • robc||

    In 1913, all interest was written off. It was one of the tiny handfuls of deductions, right next to losses in a shipwreck.

    Somewhere along the line, non-mortgage interest was removed from the deductions list.

  • ||

    It was removed in 1986 with the 1986 Tax reform bill.

  • robc||

    I always assumed it was much earlier.

  • ||

    What income does your home produce?

    Like a stock that pays no dividend, it produces income on sale.

    If I borrow money to buy any other asset as an investment like Gold or Stocks I don't get to write off the interest expense.

    Yes, you can, subject to some of the usual IRS folderol. For example, if you trade stock on margin, you can deduct the margin interest.

  • ||

    So you are telling me that if I borrow money to make a hard investment, I can always deduct the interest? I don't think so. Maybe you can in a few cases, like buying stocks on margins, but you cannot in most cases.

    And regardless, your case for the deduction totally ignores the second order effects of the policy. Since the home interest deduction is the only tax break available to most Americans it artificially raises home prices. The deduction combined with our tax policies on savings and capital gains cause people to seek wealth in their home equity rather than savings. Home equity wealth is about the most worthless form of wealth there is. It doesn't produce any further wealth beyond speculation.

    Treating home mortgage interest differently than other interest has been economically disastrous. It reduced our savings rate and helped produce the housing bubble. There really is no defending it.

  • ||

    You can normally only deduct the expenses against the income. You have to match like with like.

    IE, you can deduct rental interest expense against rental income, but not against dividens, or capital gains from sale of stock.

  • ||

    You represent Satan? I hope it pays well.

  • bradr98||

    Isn't the answer to this that once you sell a stock for gain, you are taxed on it, but when you sell a house for a gain, you are not? Homeowners get that benefit.

  • Tim||

    The simple solution is to allow people to buy houses but simultaneously outlaw selling an existing house:
    Home ownership rates will climb and the construction industry will get a stimulus.

  • ||

    Is this discussion assuming that if someone gets a tax break, everyone else is subsidizing that tax break?

    I'm usually a fan of tax breaks, subsidies not so much.

  • ||

    No it is assuming that if you treat one kind of interest expense more favorably under the tax code than other interest expenses, you are going to warp the market and cause people to incur the more favorably treated interest expense than they otherwise would have or efficiently should have.

  • ||

    I thought we were talking about tax breaks for mortgage interest and that becoming a subsidy. What "other interest expense" are we talking about?

  • ||

    Pehaps we are having two different conversations.

  • ||

    "Is this discussion assuming that if someone gets a tax break, everyone else is subsidizing that tax break?"

    I would say that this is so.

    For example, assume that 3 trillion a year is coming in tax revenues. A 200 billion tax deduction is given to a certain group. Thus to get the same amount of revenue eithe other taxes have to be raised by 200b, or money is borrowed (which equals taxes eventually, or higher inflation, which is still a tax)

  • Ron L||

    The problem with this is the presumption that any money not taxed is "granted" a "tax break" and is therefore a "subsidy"; i.e., that all money belongs to the government and any that you're allowed to keep is just largess on the part of the government.

  • cynical||

    Contrariwise, the problem is ignoring the fact that when a tax break has a string attached, Congress is controlling the disposition of your money as surely as if they had taken it and spent it themselves.

    Moreover, limiting Congress's capacity for social engineering or granting privilege (and being allowed to keep more of your money than the ordinary person is a government-granted privilege, whatever your feelings on the word subsidy) is more critical to the cause of liberty than small reductions in the tax rate.

  • ||

    Everyone agree that you should be able to deduct the expenses that go into generating income.

    Not everyone. I have pretty much decided in favor of a (SMALL) gross receipts tax. No more fiddling with "preferred" deductions, or amortization, or any of the other bullshit social engineering we currently allow Congress to indulge themselves with.

    The effect, of course, would be essentially the same as a national sales tax, with no corporate income tax.

    I also favor, on the individual level, a flat tax, no deductions, and higher usage based charges for government services actually used.

    I'll be right here, holding my breath.

  • ||

    You could do a lot with use taxes. For example, if you are on unemployment, the government could take the money back that it gave you via a small tax spread out over a long period that was in effect until you paid the money back. It would fun unemployment and create an incentive for people to take the first job available.

  • ||

    I'm very much in favor of a national sales tax (The Fair Tax).

    This should be done at the indvidual/consumption level. Get rid of all payroll/income/corporate taxes.

    It would bring back home trillions of dollars. It would also make American goods more competitive.

  • ||

    One of these days, maybe I'll get off my ass and look at some annual reports, and see what sort of rate (on gross receipts) would produce a "revenue neutral" result. My suspicion is three to five per cent would be sufficient.

  • ||

    23%

  • ||

    Don't get me wrong; I'm fairly agnostic on the mortgage interest deduction, and would be happy to pitch it overboard as part of a radical simplification.

    I'm just pointing out that its not that unusual, that you can deduct "investment interest" in lots of other situations, and that interest is a legitimate cost of doing business that has just as much claim on being deductible from taxable income as anything else.

  • ||

    "Other critics say eliminating or overhauling Fannie and Freddie isn't enough: The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales."

    Those "other critics" have no intention of offsetting such tax increases anywhere else in the economy.

    Sometimes I feel like the last human at the end of "Invasion of the Body Snatchers". Not you too, RC Dean! Please tell me the whole world hasn't gone mad...

    No one is about to raise taxes on one thing and offset them by lowering taxes elsewhere in the name of tax harmonization--in a blow to the concept of social engineering?

    Those "other critics" want more of our money--I haven't seen anything that makes me think they're thinking about the ultimate effects of anything other than getting more of our money. They're just blowing smoke.

  • ||

    P.S.If they want to harmonize tax policy, so that no type of investment proceeds are favored over another, then the capital gains tax should be zero.

    For everything.

  • ||

    Oh you are right for sure. But then again, IMO you shouldn't give deductions while running a deficit.

    government debt should only be taken in time of war, or to build infrastructure IMO. Eveything else should be fully funded.

  • ||

    But there's no world in which politicians and their constituents are so well principled that they would limit themselves to only what they can afford to fund.

    Why would any politician or interest do that? I the real world--when it isn't necessary and never will be.

    It's so naive!

    Even if these jokers really meant what they said right now, that's not what they'd do later...

    It's like the Prop 13 thing, and the 2/3 majority needed to raise taxes in California--there are a lot of perfectly rational reasons to do away with both of those things--none of which account for the fact that the government will squander every penny of our tax money their given with absolute certainty.

    Again, these "other critics" may be well intentioned for all I know--but the effects of giving the feds more of our sales proceeds will never be harmonization or a balanced budget! The only reason the government hasn't squandered those sale proceeds is because they haven't gotten their grubby little hands on it yet!

    Our problems have nothing to do with the government being underfunded--that's the idea I'd like to get across here. If they had twice as much funding or half as much funding, we'd still be talking about the very same problem.

    The spending. The solution to spending isn't squandering more of our future earnings and proceeds.

  • ||

    "The spending. The solution to spending isn't squandering more of our future earnings and proceeds."

    The problem is we hit an iceberg, and there's a hole in hull of the ship.

    Bashing another hole in the other side of the ship in the name of harmonization isn't about to help any.

    In fact, what we should be doing right now? Is cutting taxes.

    We're teetering on the edge of a double-dip recession, and anything--like tax increases--that discourages economic activity is a stupid thing to do.

  • Chad||

    Kroneborge: even the exception for war should come with some explicit definitions. I would say that the government should be forbidden from borrowing in a "time of war" until military spending exceeds 10% of GDP, and then can only borrow to cover the portion of military spending in excess of 10%. This should come with a requirement for a special 2% of GDP war tax that would be implemented as soon as military spending dropped back below 8%, and would last until the war debt had been paid off in full, with interest.

  • PR||

    Good lord. The mortgage interest deduction applies to business, landlords, homeowners, and indirectly renters. All treated equally. It would skew the real estate market and be a subsidy if landlords and businesses were the only ones who could deduct. It would be a completely different tax code if business and landlords could not.

    The only real tax break homeowners get is the capital gains exemption and in some states a property tax reduction for their primary residence (25% in Texas).

    Renters: will your rent go up or down if your landlord is prevented from expensing interest? If you could deduct your rent, shouldn't homeowners be able to deduct their entire payment too instead of just the interest?

  • Ron L||

    PR|8.11.10 @ 6:52PM|#
    "Renters: will your rent go up or down if your landlord is prevented from expensing interest?..."

    This argument seems to get lost in the 'politics of envy' gripes about CA's Prop 13.

  • PR||

    And for all the bad that Fannie and Freddie have done, let's consider the good. All the refinancing of the last two decades has put more disposable income in people's hands while at the same time reducing mortgage interest deductions and increasing tax revenues. I'm not saying that outweighs the bad. But it did do those things.

  • ||

    The net result? A bankrupt society headed for collapse.

  • ||

    That was the result of the bailouts.

    Not the refinancing.

    Refinancing might have led to a lot of bankruptcies (and more renters), but the economic quagmire we're in is a result of the decisions of politicians.

    Don't blame homeowners for the stupidity of politicians. Blame voters for not punishing politicians when they get the chance.

  • ||

    That was the result of the bailouts.

    Not the refinancing.

    Refinancing might have led to a lot of bankruptcies (and more renters), but the economic quagmire we're in is a result of the decisions of politicians.

    Don't blame homeowners for the stupidity of politicians. Blame voters for not punishing politicians when they get the chance.

  • PR||

    Ken your comment reminded me of the people who did cash-out refinances, which could be a problem for the irresponsible. Not in Texas though. State law limited cash-outs to 80% of appraisal value. But the people taking out cash-out loans were rational to place their debt in the lowest interest instrument possible, with the side benefit of the interest being deductible. Those were the rules and people took advantage of the opportunity.

    Realtors would love for cash-out refinancing to be illegal. They would prefer that you only be able to access the equity in your home through a sale.

  • Ron L||

    Disregarding what a state allows, there's all sorts of valid reasons to re-fi with cash-out.
    You can, for instance, cash-out on a car purchase, paying the mortgage rate instead of the auto rate for the 'loan'.
    Even *if* it wasn't deductable.

  • ReasonableOne||

    I agree with most of this article but taking away one of the few tax breaks from the dwindling middle class rankles this cranky libertarian. Tell ya what: Remove all the business tax breaks and I'll give up my interest deduction. 'K?

  • ||

    Save us Hari Seldon*


    *I do not actually subscribe to this statement

  • Ron L||

    ReasonableOne|8.11.10 @ 8:03PM|#
    "Tell ya what: Remove all the business tax breaks..."
    Uh, removing whatever "breaks" you have in mind won't do squat; doing so merely increases the costs of the goods or services you buy from those businesses. You *still* pay those 'business taxes'.

  • ReasonableOne||

    That's acceptable -- it's the true value of the purchase.

  • Ron L||

    Nope; it would be the value of the good or service *plus* the taxes.
    Can't see that as the "true value"; it's the market value plus whatever the state chooses to load on top of it.

  • Alice Bowie||

    Unless you by IN CASH, homeownership may be a mere illusion to many Americans.

    If u take 30years 2 pay for a house, you paid three times as much at times.

    As liberal as I am, I don't believe it is a right (nor is it necessary to be a happy productive American) to own a home.

  • ReasonableOne||

    I couldn't agree more with your last statement. And having a choice about paying for the house is nice. Of course, at that 30 year payment rate, no one can raise my rent, kick me out so their cousin can move in, or forbid me to paint or take out a wall, if I want to.

    I would rent again if I had to, but I'd be dragged screaming and kicking from my house, interested deduction or not!

  • ReasonableOne||

    Hehe...interest deduction...

  • Ron L||

    Alice Bowie|8.11.10 @ 8:59PM|#
    "Unless you by IN CASH, homeownership *may* be a mere illusion to many Americans."
    Well, you can own less than 100% of any asset, and it is still an asset. did you have a point here?

  • ReasonableOne||

    Saying that the housing bubble was due to the mortgage interest deduction completely discounts the fact that brokers and borrowers were colluding to defraud lenders by lying about income and basically borrowing money they knew they couldn't repay in hopes that they could just re-fi it all away later -- the subprime bubble was exactly that. Qualify with subprime credit for an ARM then re-fi into a conventional 30-year fixed after a few on-time payments at the teaser rate. Only, by the time those payments were made, credit was tightening up and the re-fi became impossible. Instead of selling, the borrowers counted on the correction being milder. In the end, they ran out of time and the idiot banks foreclosed instead of renegotiating, leaving them with huge inventories of unsold, unoccupied homes. They did this because they subscribed to the old saw that real estate can only go up. We discovered otherwise.

    Some of us bought homes we could afford with 30-year fixed mortgages and, despite being underwater (way underwater), we can still keep our home and we're happy to, since we bought it to live in, not to "get rich."

  • Alice Bowie||

    The deduction did NOT help the Crisis ReasonableOne. Many people (including and especially myself) made tons of money acting like a primary dueler as oppose to an investor.

    Many things caused the crisis:
    1. Removing the CAPITAL GAINS/LOSS (a Clinton exclusive)

    2. Synthetic Securitization (The Main cause) which created loan money without the demand.

    3. The lowering of the standards of Lending.

    4. AND, THE PRIMARY THING THAT CAUSED ALL OF THIS IF U ASK ME, The speculators.

  • Ron L||

    ReasonableOne|8.11.10 @ 8:59PM|#
    "Saying that the housing bubble was due to the mortgage interest deduction completely discounts the fact that brokers and borrowers were colluding to defraud lenders by lying about income and basically borrowing money they knew they couldn't repay in hopes that they could just re-fi it all away later -- the subprime bubble was exactly that."

    Uh, who was doing what to whom? Lenders were the victims? Really?

  • Chad||

    Get rid of Fannie and Freddie:

    Agreed.

    Get rid of the mortgage deduction:

    Agreed.

    Institute capital gains on homes:

    Agreed.

    Wow. That was easy.

  • Alice Bowie||

    Agree!!!

    However, removing the mortgage deduction would cause a riot in this country that would make the King (Rodney and MLK) , the WATTS , and the Newark NJ riots look like NOTHING.

  • Ron L||

    Chad|8.11.10 @ 9:04PM|#
    "Get rid of Fannie and Freddie:
    Agreed."
    Agreed.

    "Get rid of the mortgage deduction:
    Agreed."
    Agreed.

    "Institute capital gains on homes:
    Agreed."
    Disagreed. Reduce all capital gains taxes to zero.

    "Wow. That was easy."
    Agreed.

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  • Rodger Malcolm Mitchell||

    "The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales."

    Notice how every debt hawk "solution" to a perceived tax situation is to raise a tax. How about reducing taxes, for instance, by giving renters the same tax benefits as home owners?

    Then the debt hawks compound the injury with this myth: ""There's only so much subsidy to go around . . ." Oh really? And how much is that?

    The U.S. is a monetarily sovereign nation, meaning it has the unlimited ability to create money (aka "subsidy"). So tell us please, how much is there to go around?

    Rodger Malcolm Mitchell

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