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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTrump weighs slashing one of the most popular tax deductions
The Trump administration is trying to figure out how to pay for tax cuts, and one of the ways its considering is getting rid of the mortgage-interest deduction for homeowners, Politico reports.
Unlike rent payments, the interest for a mortgage payment can be deducted from taxable income. Its a major benefit of owning a home, and critics have pointed to it as a huge driver in American inequality.
At a White House roundtable, led by National Economic Council Director Gary Cohn, featuring people in the real estate industry, the topic came up. One attendee told Politico that the tax break was on the table, as the administration works on taxes, something Cohn had told Congress before.
As Matthew Desmond, author of Evicted: Poverty and Profit in the American City, wrote in May, its actually one of the main entitlement programs in the United States. But by any fair standard, Desmond wrote in the New York Times, the holy trinity of United States social policy should also include the mortgage-interest deduction an enormous benefit that has also become politically untouchable.
https://www.yahoo.com/news/trump-weighs-slashing-one-popular-tax-deductions-182402330.html
I say go for it, Donnie. What have ya got to lose?
Angry Dragon
(36,693 posts)elleng
(131,028 posts)PoliticAverse
(26,366 posts)raven mad
(4,940 posts)Our income is less than $45k per year. We itemize our taxes, and though the mortgage interest has diminished over the years, it's still a big deduction. No kids at home so no dependent deduction.
I agree that it is a UUUUGE (LOL!) benefit for those more well-off, it still helps us little folk.
hfojvt
(37,573 posts)After all, the standard deduction is $12,600.
I've never been able to reach the standard deduction myself, even when I gave $3,000 to charity.
It might help SOME little folk, but only 10% of those with AGI under $75,000 used it in 2014.
So it is doing nothing for 90% of us.
wryter2000
(46,074 posts)And I'm not even upper middle class. IMHO, this is a way of taking a small amount of money from a huge bunch of little people so he can give it to his friends.
global1
(25,261 posts)I'm sure a lot of his supporters take advantage of this deduction.
Hoyt
(54,770 posts)offset eliminating interest deduction for most home owners.
Admittedly, his supporters won't get it just like they don't get taxes to pay for health insurances would replace premiums and possibly provide net savings.
Yavin4
(35,445 posts)They're basically scared White people who are afraid that being White is no longer a pass into the middle class.
yardwork
(61,678 posts)Consider making this post an OP. In one sentence you've summed up the reason why Trump won.
Until the Democratic Party acknowledges this and makes the obvious change - which is to start making big, audacious, liberal promises to improve people's lives - we will keep losing elections.
Yavin4
(35,445 posts)Capitalism does not create a middle class. It took massive government intervention into the marketplace to make it happen: min. wage laws, OT laws, allowing unions to organize, labor laws, etc.
yardwork
(61,678 posts)Yavin4
(35,445 posts)Liberal economic policies have been branded as helping only Blacks and other minorities.
yardwork
(61,678 posts)The Democrats need to seize this opportunity.
Roland99
(53,342 posts)But there are plenty that benefit from it
Plain stupidity to eliminate it. Congress wouldn't play along.
Warpy
(111,305 posts)because sane people told him it would drop the bottom out of the housing market, which it would have. Interest rates were double digit back then, so getting your tax rate back on your interest payment was a really big deal.
With the low interest today, it's not that big a deal, but anybody who thinks mortgage interest will stay low is smoking something I don't ever want to try.
haveahart
(905 posts)Go ahead and cut it, it'll crush the housing recovery and drive real estate sales right back into the ground.
Discretionary income would dry up because people would need to set it aside for taxes, so the retail sector would be impacted significantly - which would have a negative effect on the economy which he would have to own (but would blame Obama/Congress/deep state).
link to something other than a RW talking point factory to support that?
yardwork
(61,678 posts)Seems like a reasonable thought to me.
Last edited Tue Aug 8, 2017, 02:59 PM - Edit history (3)
you levied the accusation, please explain how it is a right wing talking point?
Taking the mortgage tax deduction away would likely have a crippling ripple effect across the entire U.S. economy. It would make it far more difficult for people to enjoy home ownership, it would drive rental prices up because, well, if you don't own a home, you're more likely to rent, and as rental prices increase thanks to increased demand and lower vacancies, it will push lower income individuals and families into social service programs or into homelessness.
Where did I find this particular talking point? Right outside my front door. The economy of Reno and Northern Nevada in general is disproportionately based on low-paying service industries. You throw a rock, and you're going to hit a casino, a distribution center, a call center, or a staffing agency.
Because the cost of homes have increased significantly and without regard to the low-paying industries in the area, more and more people are seeking rentals. The rental I and my family were in 18 months ago - a two bed two bath apartment in an okay but not great neighborhood was going for $1550.00 per month. That exact same rental today is $1915.00 for a twelve month lease. If you opt for a six month lease, it's $2400 per month. And that's assuming they even have one available.
I work in social and employment services and the number of people on assistance or homeless has increased significantly even as the economy has supposedly improved.
But yeah, because the rich also benefit from the deduction, let's fuck families like mine who are busting our asses to hold on to a small piece of the American dream to teach them a lesson.
bhikkhu
(10,720 posts)which is to say: its only the most popular if you are rich and own a bunch of mansions, or if you're semi-rich and invested in a McMansion. We shouldn't be subsidizing people who don't need subsidizing.
I own a couple properties myself but I don't itemize. I never made enough money to spend enough money to make it worthwhile to have the government subsidize my expenses.
hack89
(39,171 posts)Where I live 2200 square foot houses go for $400k.
pnwmom
(108,987 posts)is now valued at $772K, according to Zillow.
We paid $80K for it.
MoonRiver
(36,926 posts)We've been in the Midwest for 26 years, and housing values barely budge.
pnwmom
(108,987 posts)MoonRiver
(36,926 posts)We have sold two houses after living for 11 and 15 years in them. Didn't make a cent. But at least we didn't lose money. House prices just don't move around here. Buying for us has never been an investment, we just want to be in control of our living arrangements, and, at least in the past, it has been a tax deduction. Can't imagine renting at this point in life.
pnwmom
(108,987 posts)And your children, if you have any, will know where they're going to school.
That's what seems so unfair about the idea in the OP -- to suddenly rip the deduction away from people who had counted on it. I guarantee it would lose the party a lot of voters in high cost areas, if this were a Democratic sponsored idea.
MoonRiver
(36,926 posts)When we bought our second house in the MW, youngest child was in college, so that wasn't an issue. I agree that ending the mortgage deduction is a killer issue for Dems.
Kaleva
(36,318 posts)It's small but comfy.
Barack_America
(28,876 posts)I use it and the money I get back goes right back in to pay my property taxes.
Losing this would be a huge hit to my family; our property value would tank and we'd have to cut our discretionary spending to near zero to pay our property taxes.
bhikkhu
(10,720 posts)but if your discretionary spending is dependent on a tax-break designed to allow wealthy people to afford ever more affluent lifestyles, some more realistic long-term planning may be in order.
dsc
(52,164 posts)and it would cause many to lose value from their houses which is, for many, their largest asset. I rent so I would be better off but I still see that poster's point (other than the property taxes which should go down if the value of the house does).
hfojvt
(37,573 posts)home ownership rate is 64% and yet only 22% of tax filers are using the mortgage interest deduction.
It's kinda funny how the poor and lower middle class are always used to justify tax breaks for the rich.
Barack_America
(28,876 posts)Are you being squeezed by student loans, childcare, starting up retirement savings, college tuition savings, all while trying to afford a decent home in a safe neighborhood with good public schools (which will suffer gravely if property values tank)?
If not, I would ask you keep your judgement to yourself.
Who this move will screw are young families like mine, who bought in at recent higher home prices and are in the phase of their mortgage where all we seemingly pay is interest. We'll be stuck in homes we'll be underwater in with failing, underfunded schools.
Sounds like a great plan for America.
hfojvt
(37,573 posts)then so would your property taxes.
Statistics say that there are very few taxpayers with AGI under $75,000 who are using it.
Massacure
(7,525 posts)In my state, municipalities need to create a referendum to raise the property tax levy by more than the rate of inflation. So if they want to raise the levy from say 100 million dollars in 2017 to 105 million dollars in 2018 but the inflation rate in 2017 is only 2%, they need voters to approve a referendum to raise the levy cap by three million dollars. If the valuation of all property in the municipality goes up by say 8% from 2017 to 2018, they need to lower the mil rate by 5.56% to keep under the 2% cap on the levy increase (or decrease the mil rate by 2.78% if the referendum gets approved in my example)
pnwmom
(108,987 posts)We paid $80K for our first home there, 1200 square feet with a partial basement, and Zillow thinks it's worth $772,000.
Where you live that house might be worth $150,000 or less.
People are already watching their taxes go up every year -- and now you think they should lose their mortgage deductions, too?
hfojvt
(37,573 posts)then you are rich.
If somehow the house I paid $35,000 for in 2001 became worth even $150,000 then I would sell it in a heartbeat, move somewhere cheap and live comfortably on my sudden windfall (and my other savings and my small pension).
pnwmom
(108,987 posts)but I would do anything I could to stay. So would most people who live here. Part of the reason for the rising prices in this area (besides Chinese investors) is that so few people are selling their homes.
And someone with a substantial mortgage on a $700K home isn't RICH, and couldn't live on the proceeds somewhere else without working. And the places with cheap houses tend to have low paying jobs, too.
If you REALLY want to ensure the Republicans keep control of the Presidency and Congress, go ahead and hand that issue to them. Let the people with houses in high cost urban areas know that their concerns about keeping their homes don't matter to Democrats.
hfojvt
(37,573 posts)then I am guessing they need income over $150,000, otherwise how can they afford it?
I have a job that I want to leave.
Of course, I am making closer to $15,000 than I am to $150,000.
Yes, gosh, we might lose the votes of rich people if our party stopped representing them and protecting their tax breaks.
Thank goodness working class people have nowhere else to go. So we can instead raise the retirement age to pay for a "middle class tax cut".
HDSam
(251 posts)and the mortgage tax I pay is the only reason I can itemize - I don't get paid enough to pay enough in taxes to reach the itemization cut-off.
hfojvt
(37,573 posts)Rich people get most of the benefits from that deduction.
Here's the tax stats page https://www.irs.gov/uac/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income
In summary, less than 22% of tax filers itemized mortgage interest (in 2014). Of the 75% with AGI less than $75,000 only 10% itemize 58% of the total benefits of itemized mortgage interest goes to the 17% of tax filers with AGI over $100,000.
Also, it should be noted that the value of the mortgage interest deduction is smaller for those with lower income. It's really only the amount over the standard deduction that gives any benefit at all. Not surprisingly the average deduction for those with AGI under $75,000 is only $6,500 for those with AGI over $500,000 it is more than $18,500.
For more data (if anybody cares) see if I can get a table to work (I doubt it)
2014 mortgage interest - less than 22%
AGI returns % mortgage % value avg % of benefits
< 75,000 112.07 75.4 11.5 10.3 75.05 6.50 26.8
< 100,000 12.8 8.6 5.58 43.6 42.5 7.62 73.2
< 200,000 17.5 11.78 10.9 62.3 100.5 9.22 58.1
< 500,000 4.98 3.4 3.58 71.9 46.9 13.1 22.2
< 1,000,000 .835 0.6 .55 65.9 10.2 18.55 5.4
< 1,500,000 .180 0.1 .107 59.4 2.2 20.56 1.8
< 2,000,000 .077 0.05 .043 55.8 .96 22.32 1.0
< 5,000,000 .10948 0.07 .058 53.0 1.3 22.42 0.6
< 10,000,000 .027 0.02 .013 48.1 .3 23.08 0.17
over .017 0.01 .007 41.2 .18 25.71 0.06
dalton99a
(81,543 posts)Just do it, asshole
smirkymonkey
(63,221 posts)stopbush
(24,396 posts)counts for 95% of your monthly mortgage payment. Over the course of 30 years, you start paying off more of the principle.
It's very important in high COL areas of the country. We certainly took advantage of the deduction when we owned homes in NJ, then CA. But we rent now, so we don't get the deduction, which really isn't at all fair. The landlord gets to deduct mortgage interest on their first and second homes up to a limit of $1.1-million. They can also deduct other costs like property taxes from the income they make from a rental for tax purposes.
I say eliminate it now so it hurts the Rs in the short term.
Sgent
(5,857 posts)can also deduct the interest from any rental -- if he owns 1 or 100.
4139
(1,893 posts)muriel_volestrangler
(101,336 posts)Go to the Politico article they say this came from, and you find:
...
Ive seen proposals that drop it to $500,000, said Rohit Kumar, lead on PricewaterhouseCoopers Washington tax policy team and a former senior staffer to Senate Majority Leader Mitch McConnell, one of the six congressional and administration leaders negotiating tax reform.
...
Brown added that he hadnt seen a sure signal that capping mortgage interest would definitely be in a tax reform proposal, though a $500,000 cap was brought up as an option at the White House, according to those who attended the meeting.
http://www.politico.com/story/2017/08/04/trump-homeowner-tax-benefit-241328
I would think that people with a mortgage over $500k are pretty well off. They wouldn't lose the whole deduction, either - it would just be capped at the interest on the $500k.
Britain got rid of its deduction in the 1990s, by lowering the cap gradually. When it was in place, there was a form of mortgage called an endowment mortgage, largely designed to take advantage of the tax break (it kept the nominal amount owed unchanged, while an insurance policy built up to be able to repay the full amount), of which many turned out to have been badly sold, with the dangers not explained to unsophisticated buyers. Getting rid of it did not adversely affect the housing market.
Lowering the cap to $500k seems like an eminently doable move. It actually makes economic sense too, which will be a first for the Trump regime.
PoliticAverse
(26,366 posts)Dark n Stormy Knight
(9,771 posts)People who can't afford expensive homes don't deserve a break, in the eyes of that wealth-worshiping POS.
no_hypocrisy
(46,146 posts)deduction of municipal and county taxes.
We're talking planned bankruptcies and foreclosures.
Adrahil
(13,340 posts)to finance other investments.
Some real estate agents and loan officers I know who voted for Dump will cry....hard. People who don't have the credit or income to buy a place can't take advantage.
Plus the tax deduction artificially raises property values. Its used as a selling point despite the fact that the deduction won't compensate for the fact it makes it harder to leave for a better paying job, the extra cost in property, the fact that the higher property value and taxes essentially eats up the tax deduction, etc. All in all, its a bullshit subsidy that doesn't subsidize any costs..but robs the federal government of needed money.
Not Ruth
(3,613 posts)I would like to see homes made more affordable by lowering prices.