Mitt Romney suggests cutting mortgage interest deduction on eve of presidential debate

[barnabas63]

http://www.newsday.com/news/nation/mitt-romney-suggests-cutting-mortgage-interest-deduction-on-eve-of-presidential-debate-1.4066809

First I've heard of this! This should go over like a lead balloon.

[still_one]

1. Right, make the mortgage crisis even worse

[southernyankeebelle]

2. I wouldn't trust Romney/Ryan if their tongues came notarized.

[ecstatic]

3. WTF? Well, thanks for finally providing details

Mitt = asshole.

[bluerum]

4. Yep 90% of US homeowners will go for that.

Asshole.

[ailsagirl]

17. Way to lure people over to your side, dumkopf!!

[magical thyme]

5. well, it's not the first I've heard of it

and it's just one of the details of his economic plans that, until now, he's refused to share.

Amazing that he's releasing it now. I thought for sure it would be deep-sixed until after the election. Trust him.

[Lex]

6. Even less incentive for people to tip-toe back into the real estate market again.

Genius!

[Drahthaardogs]

7. Okay, he's fucking stupid.

Everyone with a mortgage is going to vote against him for this one.

[CTyankee]

21. I feel sorry for Republican real estate agents...

Mitt's talking about killing a whole industry of the U.S. economy...

[Blue Idaho]

8. That's the ballgame folks...

Worst. Politician. Ever.

[HughBeaumont]

20. At this point, I think the worst politician ever is a step up from Mitt.

He's managed to make himself repellent to both center-right moderates AND the hardcore bigoted wingnuts. I don't even know who can be a fan of him out of pity at this point.

[aint_no_life_nowhere]

9. The Etch-A-Sketch is warming up right about now

Throughout the campaign, Romney has said everything on every issue, hoping segments of the voting public would only remember what they want to hear.

[spanone]

10. either he's stupid or they've already stole it.

[Curtland1015]

12. You give them WAAAAY too much credit.

This guy just sucks.

[True Earthling]

11. Good idea... get rid of it... mortgage interest deductions favor the rich

and it would bring in more tax revenue.

The mortgage interest deduction on your federal tax return is intended to encourage homeownership by giving you a tax break on the interest you pay on your house note. There is little question it benefits millions of middle-class homeowners as well as the wealthy. But does it provide a compelling financial incentive to own rather than rent? Not so much.

According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.

You must itemize on IRS Form 1040 Schedule A to claim the deduction. If you do, you can also deduct the interest paid on a second home. The rich do both, but most of the middle class does neither. "For millions of taxpayers, therefore, the mortgage interest deduction provides no added incentive to buy a home," says Hanlon. "It makes no sense in terms of targeting the incentive at the people who need or could use it."

http://finance.yahoo.com/news/5-tax-deductions-help-rich-070035180.html

[fearnobush]

13. I don't think many Republicans will like the idea of losing one of their biggest tax write offs.

I know, they will vote for him anyway. Regardless, Obama will easily frame this as an attack on the middle class.

[True Earthling]

14. and get rid of the charitable deduction while we're at it...

or at the very least get rid of deductions for church donations/tithing. Very little of that money is eventually spent on charitable activities anyway.

Charitable Deduction: Good Cause, Policy Flaws

The charitable-giving deduction effectively operates as a federal matching program: make a charitable donation and receive a tax break. In fiscal 2011, the charitable deduction saved Americans (and cost Uncle Sam) $53.7 billion, according to the U.S. budget.
The problem with the charitable deduction is similar to the mortgage income tax break: The value of the deduction increases with income.

"If I give $1,000 to charity and I'm in a 10% tax bracket, I get $100 back on my taxes," says Wilkins. "But if I'm in a 35% tax bracket, I get $350 back from the federal government."
Plus, you have to itemize on IRS Form 1040 Schedule A to claim the charitable deduction.
"If we're trying to encourage charitable giving, we should be encouraging people with less money than people with more money to make those gifts," Wilkins says.

http://finance.yahoo.com/news/5-tax-deductions-help-rich-070035180.html

[jsmirman]

16. You're missing something important - getting rid of that deduction crushes middle class folks

The analysis you cite completely misses the boat.

And conveniently leaves out households bringing in between $75,000 and $250,000 who are definitively middle class.

That deduction can make a huge difference for people in that range - and that is a much more realistic aspirational range than the over $250k goal.

Screwing those people every month on their mortgage payments? Fuck that.

[True Earthling]

19. The average monthly savings comes out to $44/mo. for those with incomes between $40K and $75K.

If a tax plan is implemented where overall taxes are reduced for those with <$250K income then it will make up for the shortfall. It will also put extra money in the pockets of those who do not own a home and allow them to accumulate savings quicker for a down payment.

When it comes to incentives for home ownership... the interest deduction is way down the list. That's just icing on the cake IMO. It may help keep your payments lower in the beginning but the effect fades over time. Interest rates have more of an impact.. An increase of .5% will raise your monthly payment $57 on a 30 yr $200K mortgage... and that's a constant over the entire life of the loan.

> mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much. <

[jsmirman]

22. You're parroting this BS that leaves out $75,000 to $250,000

And you're telling me that because interest rates fluctuate, I shouldn't care about the deduction???

That's just nonsense.

One is bound up in a complex combination of government action and external market forces (interest rates), while the other is entirely predictable and frankly, has been something homeowners who have purchased homes and taken out mortgages have every right to claim reliance on in entering into those mortgages.

Any tax breaks on top of that would be lovely.

Let me tell you this - in deciding to become a homeowner, I assure you that the mortgage interest deduction was part of my calculation in deciding what the economics looked like.

Flatly, I find the article you are citing to be bullshit. It is cutting up the numbers in a very transparent fashion and trying to use cooked numbers to ignore a tangible reality where the mortgage interest deduction does encourage people to become homeowners.

[eqfan592]

23. Couldn't agree more with you.

[jsmirman]

25. Thanks

I do feel like I'm standing up for the merit of, you know, actual reality here...

[True Earthling]

28. Of course it's part of the calculation...

Mortgage interest deduction was PART of your calculation but the final decision was based on your after tax income including deductions vs. the monthly payment required to service the debt. There are 3.8M households making >$250K and a lot of those own 2+ homes... if $5400 is added back in as tax revenue for each homeowner making >$250K, the tax revenue generated should lower the overall tax rate to bring it back to revenue neutral. If it's structured where the after tax income including deductions remains the same for those making less than $250K...which means you have the same buying power, I don't see the problem. My point was it would be advantageous to do it way because the interest deduction fades away over time. You end up with less net after tax income each year to service the debt... the payment stays the same but your deduction goes down.

[rbixby]

26. As a new homeowner just getting into this, from my calculations, the mortgage interest deduction

will save me about $2400 a year in taxes, I'm not sure where your numbers come from, I guess if you take the average of all mortgages, of all ages (you pay the most interest when you first buy the house, so the savings are a lot bigger initially), then the amount of savings isn't that great, but for me its an extra $200 a month, which is pretty significant.

[hifiguy]

15. The Mittbot has a political

death wish. He has to.

[liberal_at_heart]

18. I don't think I'm going to watch the debates

Romney is pretending to lean to the center and the media is buying it hook, line, and sinker. I know better and am not in the mood to listen to him try to convince everybody that he is now changing his plans.

[DemocratSinceBirth]

24. That's Sure To Help The Nascent Housing Recovery

I hope the president brings it up tonight.

[DonViejo]

27. From the comments section under the article barnabas63 linked to

I was one of the undecided, but now, after this remark, the President will be getting my vote in another 4 weeks!! My mind is now made up!!

[BanzaiBonnie]

29. Not very bright, is he?

Wow! Just WOW!

[hughee99]

30. This is weird, everyone seems to be talking about Romney getting rid of the deduction

but the article doesn't really say that he's proposing that.

From the article...
In an interview Monday night with Denver TV station KDVR, Romney said, "As an option you could say everybody's going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others — your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way. And higher income people might have a lower number."

If I understand this correctly, it sounds like he's proposing a max 17k of deductions, which is probably more than enough to cover anyone in the middle class's (or below) needs but would result in effective tax increases on those with more than $17k worth of writeoffs. I guess no more deductions for dancing horses.

[rustydog]

31. We all know his view of the 47%...Fuck them!

He is giving a message to the billionaires who send him checks and to the "corporations are people" my friend.
Those corporations who can sick riot police on people protesting low wages and slave conditions.

We do not count, we do not exist, except as a pest to be dealt with, and to fight and die in their wars. We are not an interest group to the GOP and their greedy billionaire masters. Our cares, interests and beliefs are anathema to them.

When Mitt Romney can say to 50,000.00 dollar-a-plate Republicon group that he is offended that I believe I am entitled to food, and there is not one recorded dissenting statement, sound or motion to leave the room by the millionaire and billionaires present, then these bastards can go to hell. There are a few Marie Antoinette's in america due for a rude awakening.

[SheilaT]

32. Personally, I have never understood people who claim that the

mortgage interests deduction is hugely important in their decision to purchase a home. When I decided to buy this place three years ago, I just wanted to know that I could afford the monthly payment. And I could.

Plus, with interest rates so low (mine is 4.75% and I'm thinking I should look into refinancing for a lower rate) my tax preparer told me that the deduction that I do get would only be good for about five years.

The idea of phasing out the mortgage interest rate deduction has sort of been out there since the mid-70's, although it's never widely discussed. And if it were to be gotten rid of, it would need to be phased out over a period of years.

Who else here is old enough to remember when, for those itemizing their taxes, all interest payments were deductible?

It's also true that the deduction has played a key part in the rise of home prices, because a lot of people got persuaded to buy as expensive a home as possible because of it. And of course, there were the interest-only mortgages, sold because it was the only way people could "afford" the home they wanted, and after all, the entire payment was deductible and of course housing prices could only go up because they'd never ever gone down. Right?