Will They Really Do This With Taxes??...there goes Yuppie-ville!!!

[DemocracyInaction]

Editorial in local paper which is usually fairly liberal--I've heard this hinted at before and have a real sickening feeling it's going to happen.

Subject of editorial was the appalling lack of savings on the part of the American people--last month was the lowest since the Depression (gee, you think loss of well paying jobs, soaring gas prices, etc. might have a bit to do with it??). Anyway, very quickly the piece suggested that this could all be cured by tax reform (note that Congress is suppose to deal with this baby come fall). Then the editorial just off-handedly snuck in a "wee" suggestion.

It said that Congress is crazy to let the deducting of mortgage interest and second mortgage interest from the income tax remain. Said this would make people save. Suuuuure....and may I suggest a couple other things that would happen:

First, Yuppieville would explode and implode (hell, then again, maybe that's what it would take for them to turn against the repukes and realize that they "ain't the rich" the repubs cater to). You would see a lot of their 'stuff' for sale, including a lot of expensive real estate being dumped asap which would start collapsing housing prices. These people are so overextended that many of them literally could not take the blow.

Second, the impact on most everyone would be the possible selling of home; but definitely people would be living on such a shoestring that they wouldn't have a buck for an extra pair of socks!! Business would collapse in this country. Also, there would go all those "housing market" jobs that are keeping blue collar workers employed. Is there no understanding that the totally raped middle class just can't bear anymore hits??

And what totally pisses me is that the bastards never talk about pulling the tax breaks for the rich and finally making THEM pay what they should since they always avoid paying anywhere near the true bill anyhow. Or talk about taxing these corporations who are bleeding us dry and then investing overseas, etc. Maybe if they would stop throwing money at the rich and thus, relieve the tax burden of everyone else, people would have a few pesos to save!!!! Keep an eye out folks. I have a feeling the slime are going to propose this----and the shit is going to hit the fan on this one. Now let's pray our Dems don't think this a super idea but really make an issue out of it because there is going to be NO homeowner who is going to be anything less than livid!!!

[JDPriestly]

1. How would abolishing the deduction for interest on a mortgage

encourage people to save or increase their savings? I don't see the connection. Interest rates have been incredibly low in the past few years. I don't think people are seeing the enormous savings on their taxes that they saw twenty years ago. The only thing that has pushed up the interest paid is the higher cost of housing.

[DemocracyInaction]

3. JD--exactly. So I get the slimy feeling they are up to something

It's idiotic as you pointed out for people with existing mortgages to suddenly have this pulled away. The results would be an economic mess for the country. They are trying to sell the idea that if this wasn't available, people wouldn't spend so much. But the logic is idiotic in that people suddenly hit like this are going to definitely not have one penny to save!!! And for those who have not bought into the housing market yet (younger people), it means they won't for a long, long time if ever and that will collapse the house building industry and real estate prices. So, somewhere someone has their eye on things like snatching up panic-selling in the real estate market, or foreclousers, etc. That's why these slime have to be watched. It's like they have sucked people into the real estate market and now want to pull their property out from under them.

[skids]

2. That depends...

If their objective is to cause the next great depression, then they definitely will.

Sometimes I wonder...

[gizmo1979]

4. Maybe this will help them pay for

their repeal of the minimum tax,So then the rich could have zero tax bill.Let them eat cake.

[dcfirefighter]

5. The Mortgage Interest deduction is REGRESSIVE

It untaxes those with enough money to purchase a house at the expense of those who don't have that much money.

It's especially regressive b/c it allows TWO house & interest payments on up to $1 MILLION on debt.

It'd be much less regressive if it were limited to ONE house, and payments on up to $500,000.

However, there are a number of other tax loopholes that, coupled with artificially low interest rates, inflate the real estate market. Inflated home values displace more secure savings, leaving all income spent.

All these people with their own little slice of the pie virtually guarantee that no one will upset this particular apple cart. Unfortunately, most people's slice is actually very very small.

When the bubble comes, and it will, they'll be out on their ears, and the uber-rich will buy up their real estate at fire sale prices. Nine years later, when markets have recovered, and real estate heats up again, the uber-rich will then sell real estate back to the middle class.

The correct alternative imo, is to deflate the real estate speculation bubble with careful reductions in 'loopholes' while reducing future speculation by taxing land values (and concurrently reducing taxes on building values). (Real estate values are composed of unimproved land values + improved (building) values)
Note that 70% of homeowners pay less under such a plan (because they have well-kept homes on modest lots - highest value land is generally commercial, and commercial tenants already pay for that value to their landlords, who keeps the money. Such a tax inherently comes from the landlord, not the tenant)

[JDPriestly]

6. It should be limited to one house.