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La literatura
09-21-2012, 03:57 PM
Would it be better to get rid of the mortgage interest deduction and replace it with a lowered rate deduction?

KC native
09-21-2012, 04:01 PM
Our tax system needs a dramatic simplification.

Retain the structure while eliminating all credits and deductions (obviously the lowest amount where taxes kick in would have to be raised).

This would eliminate massive costs associated with tax compliance and IRS collections and administration.

La literatura
09-21-2012, 04:07 PM
Our tax system needs a dramatic simplification.

Retain the structure while eliminating all credits and deductions (obviously the lowest amount where taxes kick in would have to be raised).

This would eliminate massive costs associated with tax compliance and IRS collections and administration.

Life is complicated. We need a complicated tax code to go with it. But if we did get rid of all credits and deductions, what would you think a good tax rate schedule would be?

Rain Man
09-21-2012, 04:08 PM
By 'lowered rate deduction', do you mean a lower rate in general? Or is this some other term that I don't understand?

The mortgage rate deduction is flawed in that it provides a bigger benefit to those who are more affluent and it encourages people to buy more home than they need, which has all sorts of other implications. It would be better to have a lower rate, but I have no idea how you put that genie back in the bottle. Phasing out the home mortgage deduction would be very difficult and it would damage a lot of households. I don't know how you could even do it from a realistic perspective.

La literatura
09-21-2012, 04:13 PM
By 'lowered rate deduction', do you mean a lower rate in general? Or is this some other term that I don't understand?

The mortgage rate deduction is flawed in that it provides a bigger benefit to those who are more affluent and it encourages people to buy more home than they need, which has all sorts of other implications. It would be better to have a lower rate, but I have no idea how you put that genie back in the bottle. Phasing out the home mortgage deduction would be very difficult and it would damage a lot of households. I don't know how you could even do it from a realistic perspective.

I was thinking something like "Homeowners with existing mortgage, check box" and check box provides a certain percentage rate deduction on gross income. Not sure what a good percentage would be. I'll throw out 2%, and people can tell me about that.

jjjayb
09-21-2012, 04:18 PM
I'm sure this will relate to Romney in some way or another, so why don't you just get on with it and make your point Literature?

La literatura
09-21-2012, 04:20 PM
I'm sure this will relate to Romney in some way or another, so why don't you just get on with it and make your point Literature?

I didn't have any intention to bring Romney or Obama into this discussion. I'm unaware of any specific proposals by either camp re: the HMID. You're certainly welcome to share them if you are, though.

Trivers
09-21-2012, 04:26 PM
flat tax is the way to go. But will never happen.

Baby Lee
09-21-2012, 04:36 PM
Would it be better to get rid of the mortgage interest deduction and replace it with a lowered rate deduction?

While I don't like social engineering through the tax code, immediate cessation of mortgage deductions fall pretty far down the list of what to enact.

First and foremost is the concept of settled expectations. Mortgage holders are in the midst of 10-20-30 year investments, for many the biggest investment they have, based on the settled expectation that a portion of that investment would be deducted from their tax liability.

Secondarily, engineering the attractiveness of home ownership is one of the more beneficial of those baked into the code. One's family home is a primary connection to the community. If we made ownership less attractive and started funneling the population back into a renters society, I see big problems that eclipse the Occupy Movement when people realize a generation from now that 'the 1%' don't just own Wall Street and Big Business, but the very place we lay our heads each night.

Brock
09-21-2012, 04:38 PM
Owning a home is already a giant pain in the ass, and people want to take away one of the few positive aspects?

ChiTown
09-21-2012, 04:40 PM
Owning a home is already a giant pain in the ass, and people want to take away one of the few positive aspects?

It will no doubt have a massive impact in resolving our debt issues..........

HonestChieffan
09-21-2012, 05:21 PM
I was thinking something like "Homeowners with existing mortgage, check box" and check box provides a certain percentage rate deduction on gross income. Not sure what a good percentage would be. I'll throw out 2%, and people can tell me about that.

One of the dumber ideas to grace this site

A Salt Weapon
09-21-2012, 05:54 PM
flat tax is the way to go. But will never happen.

:Round of applause:
Posted via Mobile Device

Swanman
09-21-2012, 06:15 PM
flat tax is the way to go. But will never happen.

As funny as it sounds, the flat tax would be regressive for the working poor. It has to be with people at very low income levels spending a large portion of their income on bare necessities. If the flat tax kicks in after a certain low income level, I would be on board.

La literatura
09-21-2012, 06:18 PM
One of the dumber ideas to grace this site

The 2% or the idea in general? Because the idea in general mostly comes from a tax law professor.

RaiderH8r
09-21-2012, 06:37 PM
Entitlement spending is 70% of the budget spending. Fucking around with the other 30% isn't going to fix shit.

Rain Man
09-21-2012, 06:41 PM
Owning a home is already a giant pain in the ass, and people want to take away one of the few positive aspects?

If the deduction had never existed, I think housing prices would be much lower. So you've still have the pains, but you would've paid 40 percent less for the house, or some such amount, which would in turn save a ton of interest that might be as much or more as the deduction.

At least, that's my theory. The deduction makes home ownership cheaper than it ordinarily would, and that has to have some sort of impact on the market. It seems to me that along the line the various middlemen take advantage of that to up their profit, with prices passed along to the buyer. It's hard for me to believe that the big banks haven't figured out some way to skim off part of that massive amount of market intervention.

Rain Man
09-21-2012, 06:43 PM
Entitlement spending is 70% of the budget spending. ****ing around with the other 30% isn't going to fix shit.

I saw something the other day that I thought was a good point. Social Security and Medicare shouldn't be lumped in with the rest of government. They're independent programs that are independently funded with the premise that people are merely getting back what they paid in (minus some social engineering).

It seems to me that we should have three sets of books for the federal government: social security, medicare/medicaid, and "the federal government".

Brock
09-21-2012, 07:32 PM
If the deduction had never existed, I think housing prices would be much lower. So you've still have the pains, but you would've paid 40 percent less for the house, or some such amount, which would in turn save a ton of interest that might be as much or more as the deduction.

You think there's 40 percent profit in building a house? Maybe in some places where things are artificially more expensive like California. It definitely doesn't hold true here. Gross profit of 20 percent is a vain hope around here.

KC native
09-21-2012, 08:22 PM
Life is complicated. We need a complicated tax code to go with it. But if we did get rid of all credits and deductions, what would you think a good tax rate schedule would be?

No we don't need it to be complicated. We should not be using the tax code to modify behavior.

I don't know what the exact rates should be, but if all the nonsense were thrown out the statutory rates would be significantly lower than what they are today.

Saul Good
09-21-2012, 08:58 PM
Life is complicated. We need a complicated tax code to go with it. But if we did get rid of all credits and deductions, what would you think a good tax rate schedule would be?

Life isn't fair. We need a really unfair tax code to go along with it.

RaiderH8r
09-21-2012, 08:59 PM
I saw something the other day that I thought was a good point. Social Security and Medicare shouldn't be lumped in with the rest of government. They're independent programs that are independently funded with the premise that people are merely getting back what they paid in (minus some social engineering).

It seems to me that we should have three sets of books for the federal government: social security, medicare/medicaid, and "the federal government".

Then make those accounts individual accounts and be done with it. If people truly are "getting out what they put in" then just put it in each person's name.

La literatura
09-21-2012, 09:09 PM
Life isn't fair. We need a really unfair tax code to go along with it.

We need a tax code that follows life. The tax code currently just follows business innovations.

Saul Good
09-21-2012, 09:12 PM
We need a tax code that follows life. The tax code currently just follows business innovations.

Is this true of all laws, or is it a phenomenon unique to the tax code?

La literatura
09-21-2012, 09:17 PM
Is this true of all laws, or is it a phenomenon unique to the tax code?

Is it true that laws follow business innovations?

HonestChieffan
09-21-2012, 09:25 PM
We need a tax code that follows life. The tax code currently just follows business innovations.

Good. More proof you are a complete moron. A tax code that follows life. This has potential.

Saul Good
09-21-2012, 09:25 PM
Is it true that laws follow business innovations?

Is it true that laws should follow life? Should the speed limit be higher for high performance cars with better handling?

Saul Good
09-21-2012, 09:26 PM
Good. More proof you are a complete moron. A tax code that follows life. This has potential.

He'll post that while bitching about what Romney legally pays.

La literatura
09-21-2012, 09:51 PM
Is it true that laws should follow life? Should the speed limit be higher for high performance cars with better handling?

Yes, laws should follow life. I don't understand your hypothetical. Can high performance cars with better handling not slow down to average speeds in real life?

La literatura
09-21-2012, 09:52 PM
Good. More proof you are a complete moron. A tax code that follows life. This has potential.

What do you think comes first: the tax code statutes and regulations, or the issues that the statutes and regulations cover?*



* Also, have you ever read a tax code regulation, or a revenue ruling, or a tax court opinion? Just wondering so I know if I'm talking with someone who is familiar with them.

Pawnmower
09-21-2012, 10:43 PM
Typical small brain thinking....this would be like looking at the economy, asking what we could do to make it better , and focusing on the price of Pez dispensers.


The tax code as a whole is a bloated mess....why start with THAT particular bit of code?

I mean, I realize you will never be competent enough to own a home but why hate on successful people?

Pawnmower
09-21-2012, 10:48 PM
We need a tax code that follows life.

I actually agree...and furthermore I have done research and plenty of thinking on this.....The only way to accomplish this fairly is to abolish income tax altogether....We do not want to punish people for investing or saving or making money...

What we have to do is tax based on CONSUMPTION.

You want a 'life' following tax, there you go.


If you want to live like you are rich: consume more & pay more tax

If you want to live frugally and help society: consume less, recycle,buy used goods and get rewarded with less taxes.

No loopholes.

Rain Man
09-21-2012, 10:53 PM
Then make those accounts individual accounts and be done with it. If people truly are "getting out what they put in" then just put it in each person's name.

That'd be awesome. However, as I mentioned there's some social engineering where they take money from the wealthier people's accounts and put it in the poor people's accounts, so I think they wouldn't want to make each account individual.

Interestingly, we do get "account statements" every year showing us our expected income from Social Security, so one could almost believe that we have individual accounts. They just don't correlate to what we put in.

Rain Man
09-21-2012, 10:57 PM
You think there's 40 percent profit in building a house? Maybe in some places where things are artificially more expensive like California. It definitely doesn't hold true here. Gross profit of 20 percent is a vain hope around here.

I don't know if it's 40 percent or not. I was just throwing out a number. But I have a hard time believing that prices aren't inflated as a result of the deduction. Imagine what would happen to house prices if the mortgage deduction was eliminated. I have to think that they would go down, which kind of implies that they're higher because of the deduction. At least, I think that's sound logic.

I'm not really sure how it relates to new construction versus the sale of existing homes. I have this inkling that homeowners got a big boost in their home value when the deduction was created, though. All of a sudden people could buy your home for a significantly lower monthly payment; that's got to have a payoff for you.

I have no idea when the deduction was created, though.

Pawnmower
09-21-2012, 11:50 PM
I have no idea when the deduction was created, though.

1913 I believe, same as all of the other interest deductions

BWillie
09-22-2012, 01:07 AM
I will fight someone if they take mortgage interest deduction away. Waahhhhh but poor ppl dont own houses not fair. Wahhhh. As someone said, the tax ccode is complicated because life is complicated.

BWillie
09-22-2012, 01:13 AM
So when they get rid of the mortgage interest deduction are they going to waive my property tax too? Taxing someone for owning something makes no sense to me. I can't wait for new taxes to come up. Golf club tax, 65 inch tv property tax, food ownership in cupboards tax

J Diddy
09-22-2012, 03:09 AM
I will fight someone (because i have the maturity of an 18 year old )if they take mortgage interest deduction away. Waahhhhh but poor ppl dont own houses not fair(because I'm better than somebody, because I think I am). Wahhhh. As someone said, the tax ccode is complicated because life is complicated.(Because I'm going to ignore taxes that effect someone else, but I'll fight someone if they affect me.)

I broke your message down

Superbowltrashcan
09-22-2012, 05:13 AM
While almost a couple years old, I found it interesting how the writer of this op-Ed piece framed getting rid of it. It is all over the place, but has some salient points in there.... I think?

http://www.cnn.com/2010/OPINION/12/02/brown.repeal.homeowner.break/index.html

Superbowltrashcan
09-22-2012, 05:19 AM
I actually agree...and furthermore I have done research and plenty of thinking on this.....The only way to accomplish this fairly is to abolish income tax altogether....We do not want to punish people for investing or saving or making money...

What we have to do is tax based on CONSUMPTION.

You want a 'life' following tax, there you go.


If you want to live like you are rich: consume more & pay more tax

If you want to live frugally and help society: consume less, recycle,buy used goods and get rewarded with less taxes.

No loopholes.
I have read several flat tax consumption tax books and studies, could you elaborate on what model you support? Is it possible or even a viable concern to be worried about secondary/black markets as a means of avoiding a consumption tax? And do you view usage, purchase, and consumption equally in your model?

RaiderH8r
09-22-2012, 09:43 AM
That'd be awesome. However, as I mentioned there's some social engineering where they take money from the wealthier people's accounts and put it in the poor people's accounts, so I think they wouldn't want to make each account individual.

Interestingly, we do get "account statements" every year showing us our expected income from Social Security, so one could almost believe that we have individual accounts. They just don't correlate to what we put in.

Well then it never truly was "theirs". If they take out more or less than they put in then someone is getting robbed and someone is stealing.

Brock
09-22-2012, 10:33 AM
I'm not really sure how it relates to new construction versus the sale of existing homes. I have this inkling that homeowners got a big boost in their home value when the deduction was created, though. All of a sudden people could buy your home for a significantly lower monthly payment; that's got to have a payoff for you.

I have no idea when the deduction was created, though.

New construction prices have a very obvious effect on existing home prices.

La literatura
09-22-2012, 11:19 AM
More than half of respondents have selected the option that would entirely get rid of it with nothing to replace it. Is that because those people want an entirely different tax system (consumption or flat)? I suppose I should have clarified "Please assume that we will not have a revolution in tax systems."

DaneMcCloud
09-22-2012, 11:38 AM
Taking away the interest mortgage deduction would do irreparable harm to an already weakened industry.

Trivers
09-22-2012, 12:45 PM
As funny as it sounds, the flat tax would be regressive for the working poor. It has to be with people at very low income levels spending a large portion of their income on bare necessities. If the flat tax kicks in after a certain low income level, I would be on board.

www.fairtax.org

But will never happen for a while.

Progressive moment is still too strong. Social engineering approval ratings are too high.

I expect after next financial collapse that other tax options may be explored.

Deberg_1990
09-22-2012, 12:50 PM
Our tax system needs a dramatic simplification.

Retain the structure while eliminating all credits and deductions (obviously the lowest amount where taxes kick in would have to be raised).

This would eliminate massive costs associated with tax compliance and IRS collections and administration.

Exactly why it will never happen. Simplifying taxs would not require the IRS or as large a system. The governments doesn't get rid of jobs that easily.

AndChiefs
09-22-2012, 01:10 PM
Exactly why it will never happen. Simplifying taxs would not require the IRS or as large a system. The governments doesn't get rid of jobs that easily.

It would also raise the unemployment rate. Why do all of you hate American workers?

Chiefshrink
09-22-2012, 01:12 PM
Just ask yourself why is this being touted at all and who is supporting this move and then you will be able to put 2+2 together:thumb:

Trivers
09-22-2012, 01:14 PM
Just ask yourself why is this being touted at all and who is supporting this move and then you will be able to put 2+2 together:thumb:

maybe the ones that see the fiscal train wreck coming?

Stewie
09-22-2012, 01:22 PM
I pay so little interest on my home mortgage now that I take the ridiculously high standard deduction... for doing nothing but breathing air and shitting in their sewers.

RedNeckRaider
09-22-2012, 01:58 PM
I pay so little interest on my home mortgage now that I take the ridiculously high standard deduction... for doing nothing but breathing air and shitting in their sewers.

What is your rate? I recently bought a new (to me) house at 3.25~

HonestChieffan
09-22-2012, 06:31 PM
With rates this low what difference does it make but when QE is over and inflation takes off anyone with a mortgage will scream for the deduction

Pawnmower
09-22-2012, 07:04 PM
I have read several flat tax consumption tax books and studies, could you elaborate on what model you support? Is it possible or even a viable concern to be worried about secondary/black markets as a means of avoiding a consumption tax? And do you view usage, purchase, and consumption equally in your model?

I'm not at my desk, so forgive me if I don't have the exact terminology (would love to continue this during the week)....

but

The keystones to it IIRC are:

1) abolish ALL federal income tax, corporate & personal

2) replace with a consumption tax of an additional X%, on most goods & materials...purchased new.

2a) exceptions for some basic goods would be made, like basic food items...bread,milk,tortillas,rice,veggies, basic cuts of meat ...foods that are staples.

2b) exceptions to used goods sold at non-profit /charity type situations could also be made (thrift stores, goodwill etc)...possibly all used goods

3) The % (x) could also be variable....like have 2-3 classes of items...say normal & luxury....where luxury items could suffer an even higher % penalty (yachts, luxury or inefficient vehicles, large homes, appliances that consume over x amount of energy etc...)



Results / examples:

a) a middle class family making 75k can choose to buy used items, refurbish used furniture live modestly and save on taxes.....or buy new stuff , live a more lavish life style, but pay for it via taxes. Much better than current option where you have no choice.

b) a lower income family on welfare who (under the current system) pays nothing in federal income taxes buys an x-box for their family instead of saving it for college. They would thus now be forced to contribute into a system that they currently only TAKE from. Also, if they chose to save this money for a better use, they would not be penalized for income, as they would currently. The proposed system rewards desired economic practices.

c) companies just starting, small / low budget could buy used furniture / equipment etc......and money they make would not be penalized. Larger / wealthier companies buying new / lavish items would pay taxes accordingly.......want to run a green/ low impact company? you will pay little taxes.......want to run a lavish company with planes/yachts? you will PAY now instead of being able to write these 'expenses' off.


tl;dr : fuck income taxes it doesnt work....too many loopholes....too many deductions ....consumption based system with no loopholes for a fair and just tax system

Pawnmower
09-22-2012, 07:06 PM
I would definitely worry about black markets, but we would have something for some of the IRS employees without work to do. There would have to be fairly severe penalties for people violating the cod, or it wouldnt work....(just as there are now)

La literatura
09-22-2012, 09:11 PM
So Pawnmower, your consumption tax system is only taxed at the final purchase stage of the item, and not at each stage of production? Are there any countries that do that?

Chiefshrink
09-23-2012, 10:59 AM
maybe the ones that see the fiscal train wreck coming?

No, it's ones who want to continue to spend more and they can spend more when "We The People" have less to claim.

With rates this low what difference does it make but when QE is over and inflation takes off anyone with a mortgage will scream for the deduction

BINGO !:thumb:

RaiderH8r
09-23-2012, 11:00 AM
So Pawnmower, your consumption tax system is only taxed at the final purchase stage of the item, and not at each stage of production? Are there any countries that do that?

Translation: Why would you only tax a thing once when you can tax it multiple times?

La literatura
09-23-2012, 12:11 PM
Translation: Why would you only tax a thing once when you can tax it multiple times?

Yes, there would be multiple taxes, but that's the way I understand consumption tax works in the countries that have it. If a person buys 200 widgets, and gets taxed on them, there's a consumption tax. But if a business buys 200 widgets to use for their widgetteer, they don't get taxed on that?

Pawnmower
09-23-2012, 07:57 PM
Yes, there would be multiple taxes, but that's the way I understand consumption tax works in the countries that have it. If a person buys 200 widgets, and gets taxed on them, there's a consumption tax. But if a business buys 200 widgets to use for their widgetteer, they don't get taxed on that?

Actually it is a good question....The way it is handled in most countries is similar to how they do it in Europe (VAT/HST type of system)

For example:

Litcorp buys 1000000$ worth of widgets from Pawn corp, and pays some sort of consumption tax......then Litcorp silk-screens them all, and sells them to Dane Corp for packaging/labeling/warehousing......and gets 1.5 million.

Danecorp would pay consumption tax on only 500k, and not the 1.5M.....

Of course there are other ways to handle this but I believe that is one of the more common ways...

Now, that being said you could have different rates for raw materials (less for example) to promote manufacturing....or whatnot.

Sorry for the ramble, its a fair question and there are many ways it could be handled but I believe all of them are superior the current system.