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La literatura 09-21-2012 03:57 PM

Home Mortgage Interest Deduction
 
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

Quote:

Originally Posted by KC native (Post 8933703)
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

Quote:

Originally Posted by Rain Man (Post 8933725)
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

Quote:

Originally Posted by jjjayb (Post 8933742)
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

Quote:

Originally Posted by Literature (Post 8933690)
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

Quote:

Originally Posted by Brock (Post 8933785)
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

Quote:

Originally Posted by Literature (Post 8933733)
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

Quote:

Originally Posted by Trivers (Post 8933760)
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

Quote:

Originally Posted by Trivers (Post 8933760)
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

Quote:

Originally Posted by HonestChieffan (Post 8933870)
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.


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