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Ford Motor Co. Message Board

  • low_mac low_mac Dec 5, 2012 6:58 AM Flag

    Mortgage deduction is popular, but few claim it

    Get rid of it.

    http://www.usatoday.com/story/news/politics/2012/12/04/fiscal-cliff-mortgage-deduction/1737611/

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    • The deduction is priced into houses. The price of houses historically has bounced along just under the max payments people could make. It's an odd market. If the deduction were eliminated now, or rather graduated, it would not be so noticeable since prices are rebounding. Perhaps the price of McMansions would be most affected. They are not really productive investment though many of them are the offices, apartments, B#$%$, etc of tomorrow if building codes are maintained.

      Last I heard a number of years ago, Canada did not have that deduction but they still have housing market booms and busts, expensive houses, and so on.

      We can see that the housing/derivatives/too-big-to-fail Crash took place in a larger context of a more moderate housing bust. House prices had gone up for many years faster than incomes which is a self-limiting process. House prices were an asset bubble, a result, IMO, of Greenspan's negative real interest rates over years. The telecom boom/bust was of similar origins. Politicians of both parties praised him as a finance wizard until the wheels came off. Derivatives and the end of Glass-Steagal were from patiently lobbied for financial deregulation from our Pay-To-Play Congress. The moribund SEC was a result of right-wing ideology gone wrong as well as deregulation.

      By the way, prosecutions of financial crimes in the bust period are few and far between. There were few in the earlier Savings and Loan bust and scandals. So it will likely happen again.

    • New and politicans selling pond #$%$!!
      The mortgage deduction was to help inspire homeownership!Here's part of the USA today article, which side of the mouth is this guy speaking out of?

      "All this criticism I've read that the mortgage interest deduction is just for rich people and all that โ€” we're solidly middle class," she said. "I have an 8-year-old car that's a GMC Yukon. My husband drives a Toyota Camry. We hardly live extravagantly."

      IRS data show that homeowners making $100,000 or more claim almost half of the mortgage interest deducted. (They also pay 73% of all income taxes.) Homeowners making less than $50,000 claim 8% of the deductions.

      Lawmakers have long taken for granted that the mortgage interest deduction makes good policy. By encouraging homeownership, families can build wealth. And homeowners are more likely to take care of their property, get involved in the community and vote.

      A growing number of experts are starting to question whether the deduction is the best tool for encouraging ownership.

      "It does not subsidize homeownership. It does something else," said Andrew Hansen, an associate professor of economics at Marquette University. "It's more valuable for people at the upper ends of the income distribution. They're not at the margin between renting and buying. They're between buying something and buying something bigger."

      Homeowners and the broader housing market have come to rely on it. Even a homeowner who doesn't take the deduction may someday want to sell to someone who does, and the deduction increases the amount the next buyer may be willing to pay.

      "This is going to have an impact on the real estate market, especially as we're just coming out of a recession. It's a particularly bad time to bloody the nose of the home industry again," said Mark Feinroth, a lobbyist for the Maryland Association of Realtors. He helped beat back a proposal last year by Maryland Gov. Martin O'Malley, a Democrat, to cap deductions on state taxes.

      Maryland enjoys a homeownership rate higher than the national average, and the average sale price of homes in the Maryland suburbs of Washington โ€” though battered in recent years โ€” can approach $500,000.

      "It affects everybody, even renters who aspire one day to homeownership. It's going to affect the value of neighborhoods, and it's going to affect prosperity. It filters down," Feinroth said.
      Gregory Korte

 
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