Home Mortgage Interest Deduction

[La literatura]

Would it be better to get rid of the mortgage interest deduction and replace it with a lowered rate deduction?

[Deberg_1990]

Originally Posted by KC native

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]

Originally Posted by Deberg_1990

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]

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

[Trivers]

Originally Posted by Chiefshrink

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

maybe the ones that see the fiscal train wreck coming?

[Stewie]

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.

[RNR]

Originally Posted by Stewie

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]

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]

Originally Posted by Superbowltrashcan

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 : **** 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]

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]

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]

Originally Posted by Trivers

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.

Originally Posted by HonestChieffan

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 !

[RaiderH8r]

Originally Posted by Literature

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]

Originally Posted by RaiderH8r

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]

Originally Posted by Literature

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.