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Not the home mortgage deduction

November 28, 2012 @ 8:38 am (Updated: 10:02 am - 11/28/12 )

Now we're hearing that the home mortgage deduction is on the table in the fiscal cliff negotiations.

And that's scary to a lot of us because we thought they were only talking about cutting loopholes.

The mortgage deduction doesn't sound like a loophole to us; it sounds like ... a worthy tradition. That helps build strong neighborhoods. If deductions had an aroma, the home mortgage deduction would smell like a warm apple pie.

In fact, for families earning more than $250,000, it smells like about $5,500 a year of warm apple pie.

Debbie Scully, a real estate agent in Chicago, who's been watching the housing market recover, doesn't get it.

"It certainly wouldn't be good. There's sort of a glimmer of hope. It looks like things are stabilizing. Why would they do anything that could hurt that?"

But it's being floated for a reason.

The outcome of these tax increase negotiations are going to depend on public pressure. Since the last go-round, the numbers haven't changed, the Congress has changed only slightly. The one thing that has changed since the last time we had this debate is Barack Obama got re-elected after running on a clear promise to raise taxes on the rich.

And yes, we all know that raising taxes on the rich by itself will not fix everything, but what's going to emerge in the next few weeks is that if you don't raise them, a lot of stuff that non-rich people depend on, like social security, and medicare, and the home mortgage deduction, all of which are like fresh apple pie on America's windowsill, will be pecked away by a bunch of crows. Who already look fairly well-fed.

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Comments (23)


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  • ron prevost wrote...
    I'm a real estate appraiser. Motivation for home ownership seldom revolves around a tax deduction. BUT.....
    November 28, 2012 8:38 am
    The mortgage deduction IS one of the things that makes home ownership affordable. ESPECIALLY during the first few years of a mortgage when at least 90%, usually more, of your mortgage payment goes for interest rather than principle. ... And NOT paying taxes on, say, $15,000 in interest saves the typical middle class homeowner a heck of a chunk of change. ............ Elimination of the home mortgage deduction just ain't gonna happen. Neither Republicans nor certainly Democrats dare face the wrath of voters on that one.

    What MAY happen, however, is a CAP on interest deductions. That in itself is dangerous if inflation should ever run rampant again, as in the Carter days. But currently $50,000 interest typically represents a mortgage of over $1,000,000. And interest on vacation homes (as opposed to investment property) likely also might go away.

    BUT, before we look to the elimination of major deductions, we need to remember the PURPOSE of deductions. Certainly mortgage deductions encourage home ownership and charitable deductions encourage direct help for the needy without government filter. But, of course, if you actually expend enough to USE catastrophic medical deductions, you're SOL anyway, regardless of ObamaCare.

    I don't know really what's best, but I do hope that IF and when the parties look as deductions (no - they are NOT entitlements) they don't do anything stupid that will actually set back the economy. .. Probable too much to hope for, but someone back in DC must have both a heat and a brain. Mustn't they ???????

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Chuck Gould wrote...
    @ron, based on the fallout from far-too-easy credit in the mid-00's
    November 28, 2012 9:47 am
    Those buyers who are so stretched by their prospective mortgage payments that the only way they can hope to afford them is through tax savings? I would rather see them encouraged to shop for a less expensive house.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • ron prevost wrote...
    Ideally, buy what you can afford.
    November 28, 2012 10:07 am
    But the hype and greed circa 2006 would have been there deductions or not.

    But now that you mention it, a lot of those 'stretched' mortgages that people are hanging on to for whatever reasons would be next to impossible if ALL mortgage interest were taxed. ........ And, in reality, should someone currently under water short sell and actually try to buy that affordable house, they likely have their credit shot, so it can't even be reasonable for 5 to 7 years.

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  • logical open mind wrote...
    yes libs end the mortgage deduction, charitable deduction, capital equipment, Research and Development deduction then
    November 28, 2012 10:41 am
    add a new tax on home owners furniture, TV, stereo, carpeting, skis, golf clubs and everything so we can increase payments for welfare, increase food stamps and housing credits, pay for womens birth control and pay for womens clothing. This will work cause hard workers are evil and non workers are good. Ah is so easy to solve problems when you're a lib.
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  • listener99 wrote...
    logical open mind...
    November 28, 2012 11:30 am
    I agree with the point you're making re: "hard workers are evil and non workers are good" viewpoint, but we are taxed at the state level - it's sales tax. Now I don't know the demographics, but it's highest in King County (9.5 - 9.9% depending on what you're buying) and we have a lot of wage- and salary-earners in the county, so we must generate a fair amount of income for the state assistance programs. My huge beef is that governments waste money and fund programs they shouldn't even be involved with. If one looks at any thorough, credible research, raising taxes always decreases revenue in the long-term, ALWAYS!
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  • Chuck Gould wrote...
    Logical absurdity, listener 99
    November 28, 2012 12:21 pm
    You wrote: "Raising taxes always decreases revenue in the long-term, always!"

    Nonsense. If your logic doesn't withstand an examination from an extreme perspective it cannot be considered always or absolutely true.

    Example. The tax rate for some group of taxpayers is 38%. The rate is temporarily reduced to 35%. Revenues go down accordingly.

    By virtue of your logic, restoring the tax rates to the former 38% would additionally *decrease* revenue. Why would that be so? We have already tested that tax rate, and found it to produce more revenue than the figure to which taxes were temporarily reduced.

    Some supply side theorists love to expound that "decreasing the tax rate *ALWAYS* increases tax revenues." Not so. Imagine the tax rate were 5%. A huge reduction. Yes, it is likely that additional economic activity would occur at the reduced rate, but almost certain that there would not be 8 times as much economic activity to tax and thereby restore the revenue generated at 38%.

    Plus, that additional economic activity places some level of increased demand on government in an interstate economy. A growing economy creates a certain need for more government workers involved with facilitating trade, combating commercial fraud, etc.

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  • messiah101 wrote...
    Logical??
    November 28, 2012 2:54 pm
    Actually giving wealthier then average people money to assist them in not only purchasing their primary home as well as a second home is a GREAT example of the NANNY STATE at its worse.Do your self a favor start THINKING for a change. Your an embarrassment to the Far Right LOONs
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  • Hayduke wrote...
    The righties love to blather on about any talk of the slightest tax increase on the richest Americans as "class warfare."
    November 28, 2012 12:27 pm
    So what do they call it when they want to raise taxes on middle class families like mine, when they take away the mortgage interest deduction?
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • logical open mind wrote...
    hayduke-you have been duped if u think that your middle class home deduction will be eliminated.
    November 28, 2012 10:26 pm
    Read the news-this elimination is for those earning $250K or more and in fact is not even been discussed on House floor-dont be so gullible.
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  • It's me! Ha ha! wrote...
    All of this because of all you mindless Left wing Parrots did what you were supposed to do.
    November 28, 2012 12:28 pm
    That was re immaculate your Dear Leader Obama!

    And all you Useful Idiots who did exactly as you were brainwashed to do will have to live under this umbrella of Obamunism like the rest of us Americans will be forced to for at least until midterms.

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • messiah101 wrote...
    haha
    November 28, 2012 2:57 pm
    I can see that the next 4 (12YEARS?)are going to be miserable for you.And that thought makes me very very HAPPY!Your cry of wait till the midterms is Hilarious.Thanks for the Laugh
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  • It's me! Ha ha! wrote...
    More taxpayers = more taxes. Not taxing so called "Rich" at higher rates.
    November 28, 2012 12:39 pm
    While your regime is at it, why not include the 47 percent or so who do not "Pay their fare share"?

    You Parrots claim to be all about fairness, so tax those who are hiding behind the Dear Leader and not paying taxes since they helped re immac their Dear Leader?

    Next, de fund ObamaCare.

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  • Chuck Gould wrote...
    Tax the rich at the same rate as the middle class. Joila, "class warfare" solved.
    November 28, 2012 2:06 pm
    However, you won't get that to fly. Most of the income earned by the extremely rich is *already* taxed at rates that are far, far below those paid by their middle class employees and lower middle class servants.

    Corporate dividends: 15%

    Long term capital gains: 15%

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Snout wrote...
    Huh, I thought Obama was only going to stick it to the other guy?
    November 28, 2012 2:17 pm
    With Obamacare and now the interest deduction all of us will suffer at the dull axe of liberalism. The only solace I can take is that Obama voters will be miserable too. You peed in your bed now lay in it.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • It's me! Ha ha! wrote...
    Life for all us Americans would have been far better had Romney won. Not to mention that we FINALLY would have had a President again!
    November 28, 2012 3:54 pm
    Yea I am POed and sad that you Parrots were able to get your Dear Leader re immaculated again. All that I can say to this is you Useful idiots did exactly what you were told to do and keep this hate filled anti-American insanity going for 4 more years. Your Dear Leader SHOULD be thankful to you Parrots but he will never tell you so! I voted to change it. To stop this from happening and I and my nation lost. I was not the only one! I am not sorry for my votes and would do them again today!

    I do not know if we can ever repair all the damages this regime and your beloved Dear Leader will wreak upon my country. Not in our lifetime anyway!

    Yes you Parrots did what you were told. You were told "Voting is the best revenge" by your Dear Leader. That you can "Stick it to the EVIL RICH!" Whatever reason(S) you Parrots were conditioned by the ministry of propaganda to re immac Comrade Obama. And like good little mindless minions that you are, YOU DID IT!

    Parrots, Your Dear Leader is now UN accountable. You Parrots have no more control over this regime than we Americans do. Actually you Parrots had no control over him before re immaculation! You Parrots will live under the umbrella of this UN accountable regime as we Americans will. At least until mid terms!

    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • It's me! Ha ha! wrote...
    The Excrement Sandwich that is this regime,
    November 28, 2012 3:58 pm
    you Left wing Parrots will have to eat that sandwich along with the rest of us!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • roomtemp wrote...
    Eliminate all tax deductions...
    November 28, 2012 5:37 pm
    They're all social engineering anyway. Something a government of the free man has no business doing.

    Why should someone buying a house pay less tax than someone who rents one? Why should someone who has children pay less tax than someone who doesn't? The whole idea of deductions and 'progressive' taxation is antithetical to fairness and freedom. It's not the business of government to steer the behavior of a free society with financial carrots or sticks.

    Sadly, America (and the entire 'west') is circling the drain. We are no longer a free society. We are generational debt slaves. This frenzy over the 'fiscal cliff' is a sad joke. We are already in fiscal free fall and have been for quite some time. There is no more road to kick the can down. The unabated creation of money with no real value will cause massive inflation and our economy will collapse. It is inevitable now.

    Dave was cooing the other day about the higher tax rates in the 50's didn't stop our economy from growing. Fine Dave... (Leaving aside the differences in the global economy then, which were huge.) Are you also willing to eliminate every single government agency or program created since the 50's and reduce the spending of the ones that are left to inflation adjusted parity? Yeah, I thought not. We lack the political or social will to do what needs to be done to fix it.

    Historically, chaos and then a dictatorship is what follows an economic collapse. I'm hoping that we can skip the dictator phase, but that's probably arrogant of me.

    Till then, Have a nice day :-)

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  • logical open mind wrote...
    room temp- In the 50's the Marshall Plan rebuilt destroyed Europe and japan. The US then benefited as a huge country that had not been destroyed.
    November 28, 2012 10:24 pm
    We built and Japan/Europe bought from us. It was a brilliant plan. FOR DAVE R TO NOT MENTION THIS MAJOR DIFERENCE WITH TODAYS FREE TRADE ECONOMY IS WHY I LOST ANT RESPECT FOR THE PARROT OF THE DEM'S.
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  • daveismenotyou wrote...
    Your smarmy post Dave....
    November 28, 2012 6:44 pm
    This translates to real dollars to those who cannot afford to be liberal. You know, those who cannot afford a Prius but wish to someday. This is not a joke, and I don't appreciate your smarmy attitude about this one.
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