Poll: The mortgage interest income tax deduction…

The mortgage interest income tax deduction...

  • Should not be changed. (20%, 42 Votes)
  • Should have an income threshold. (23%, 49 Votes)
  • Should be converted to a flat benefit or something similar. (5%, 11 Votes)
  • Should be phased out. (26%, 54 Votes)
  • Should be eliminated entirely as soon as possible. (26%, 54 Votes)

Total Voters: 210

This poll was active 08.26.2012 through 09.01.2012


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

24 comments:

  1. 1

    I think two of these choices already exist, at least to some extent.

    1. I’m not terribly familiar with AMT, but I think it has limitations on home interest deductions based on the amount of the loan.

    2. With the standard deduction level at over $10,000 for a married couple, arguably that already is a flat benefit since the $10,000 figure is probably based at least in part on people having interest deductions. Stated differently, if they raised the SD that would make the MID less valuable.

  2. 2
    David Losh says:

    I know this is like a broken record, but Real Estate is a business with it’s own set of deductions. This deduction is aimed at helping small investors, and home owners.

    If this deduction goes away people will need to rethink the ownership strategy they have in place. It’s sounds like nothing to you, and it sounds like renters don’t have that deduction, but renters do benefit from landlords access to as many deductions as they can get.

    Your are talking about housing rather than home ownership.

    Housing is a small business until it gets to be big business, and that is where housing is headed. When you take away a middle class tax break larger companies, and corporations, will step in with a broader set of expenses and take over more, and more of the housing available.

  3. 3

    By David Losh @ 2:

    I know this is like a broken record, but Real Estate is a business with it’s own set of deductions. This deduction is aimed at helping small investors, and home owners.

    If by small investors you mean people who own rental property, there is no talk of taking away their deduction of interest. That would be a business expense, not subject to the standard deduction.

  4. 4
    David Losh says:

    RE: Kary L. Krismer @ 3

    Let’s try this again, the middle class has few deductions from taxes. The middle class has few options to creating wealth. The family home has been encouraged as an asset.

    At the end of an economic life, if the asset has equity it adds wealth.

    So I don’t understand why any one would target the deduction the middle class has when we give billions of dollars in tax deductions to corporations for no return.

    Let’s debate that, let’s debate the value of propping up banks, oil, auto, financial markets, or all the other trickle down industries while we gut the social safety net, and what little the middle class gets in the form of government support.

  5. 5
    whee says:

    Most of the middle class doesn’t earn enough to make itemizing and taking the mortgage deduction worth their while. Or their home is so cheap in cost that the mortgage interest is just not that much to deduct over the life of a 15 or 30 year loan. Or both.

    The deduction isn’t a ‘middle class’ tax break. It’s a tax break for overconsuming upper income folks who aren’t quite in the 1% but definitely in the top 10% or so.

  6. 6
    Passed Doo says:

    Thanks to you two arrogant clowns for hijacking and wrecking another topic.

    Why don’t you two grow up?

    OR

    Just Go Away?

  7. 7
    Peter Witting says:

    I would go with any of the last 4 options, but voted for an income threshold, because I think that is the most likely to have a chance of happening. It is an artifical prop for the housing and bank industry, and provides perverse incentives. However, good luck trying to get rid of it entirely, even if it is a phased departure.

    The mechanisms are already in place to cap the deduction based on income, thus easing the way somewhat. However, business interests would fight any change to their sacred cow, I don’t have much hope for meaningful progress towards this end.

  8. 8
    Lo Ball Jones says:

    RE: David Losh @ 4

    The reality is that 60% of this deduction goes to expensive properties in New York and San Francisco by no means the Middle Class.

    So it’s yet another example of, I take $200 but let you take $40 so you think you’re getting part of the bargain…however on the back end I’ m really stealing $300 from you.

  9. 9
    sofwarenginer says:

    I’m for Mortgage Interest Deductions

    Only if rent is deductable too. Eliminate the standard deduction too.

  10. 10
    whatsmyname says:

    By whee @ 5:

    Most of the middle class doesn’t earn enough to make itemizing and taking the mortgage deduction worth their while. Or their home is so cheap in cost that the mortgage interest is just not that much to deduct over the life of a 15 or 30 year loan. Or both.

    The deduction isn’t a ‘middle class’ tax break. It’s a tax break for overconsuming upper income folks who aren’t quite in the 1% but definitely in the top 10% or so.

    Huh? What do you think constitutes a middle class income?

  11. 11

    By David Losh @ 4:

    So I don’t understand why any one would target the [mortgage interest] deduction the middle class has when we give billions of dollars in tax deductions to corporations for no return.

    No return? You think the level of GDP in this country has nothing to do with corporate output?

    Connecting this up with the discussion of GM, that case provides incredible insight into the bi-polar thinking of President Obama. He goes around bashing corporations, and threatening them with tax increases, but when it comes to GM what does he do? He gives the huge entity (GM) itself take out financing for their bankruptcy, but simultaneously throws thousands of small entities (dealerships) under the bus, forcing them to close. It’s no wonder we have over 8% unemployment in this country. We elected someone who doesn’t have a clue what they are doing.

    But hey, if you’re an Obama supporter, you can always point to Romney having his dog on the roof of the car. Yep, that’s important. /sarc

  12. 12

    RE: Passed Doo @ 6 – It really shouldn’t take multiple posts for Losh to answer a simple question. But it did, and the question went unanswered.

    Sorry about that. If I’d known what a waste of time asking the question was I wouldn’t have repeated it here.

  13. 13

    By sofwarenginer @ 9:

    I’m for Mortgage Interest Deductions

    Only if rent is deductable too. Eliminate the standard deduction too.

    Eliminating the SD would make the income tax incredibly regressive.

  14. 14
    David Losh says:

    RE: Passed Doo @ 6

    I agree.

    This morning, like most every morning, there are a complete set of Kary Krismer comments about other comments.

    You can see one here where Kary Krismer is demanding an answer to a question he has asked me, repeatedly, but I really don’t know what he’s talking about.

    This guy has dominated this site all day every day for years. Doesn’t this bother any one else?

  15. 15

    By David Losh @ 14:

    You can see one here where Kary Krismer is demanding an answer to a question he has asked me, repeatedly, but I really don’t know what he’s talking about.

    Really? You don’t know what I’m talking about when I ask if you’re licensed as a contractor in the state of Washington? That’s not a hard question.

    Although I do note that Passed Do Do wasn’t posting his comment in the thread I thought he was. I’m not sure what he sees as a hijack in this thread. You can’t really talk about removing the MID without talking about other taxes, because no one is suggesting just removing the MID.

  16. 16
    feedback offered says:

    RE: David Losh @ 14

    Actually Kary DOES offend me… Tim… I’ve been a long time reader (a couple of years… never posted) and appreciate the efforts you put into this site. Kary non-stop mutiple blow hard posts have pretty much stopped me from reading this site. I think a limit (to both the length of posts and the number of posts per day) would help…

    David… at times, you are no better than Kary.

    Tim… You probably don’t care, but I thought I’d offer some feedback…

  17. 17
    JoeBlow says:

    SImple way to handle it. You get to use the interest on your primary residence up to $500k in value. Anything over that seems to be throwing money down the drain.

  18. 18
    Lily says:

    Given that landlords can deduct mortgage interest and still get the standard deduction, I don’t support completely removing the deduction for home owners. However, landlords in general have small mortgages on each property and pay higher interest, so rich home owners still benefit more from the deduction than the average landlord.
    I would gradually reduce the $ limit or cap the deduction at 25% (so those in the 28-35% bracket can only deduct 25%).

  19. 19
    Kilen says:

    By Kary L. Krismer @ 11:

    By David Losh @ 4:

    So I don’t understand why any one would target the [mortgage interest] deduction the middle class has when we give billions of dollars in tax deductions to corporations for no return.

    No return? You think the level of GDP in this country has nothing to do with corporate output?

    Connecting this up with the discussion of GM, that case provides incredible insight into the bi-polar thinking of President Obama. He goes around bashing corporations, and threatening them with tax increases, but when it comes to GM what does he do? He gives the huge entity (GM) itself take out financing for their bankruptcy, but simultaneously throws thousands of small entities (dealerships) under the bus, forcing them to close. It’s no wonder we have over 8% unemployment in this country. We elected someone who doesn’t have a clue what they are doing.

    But hey, if you’re an Obama supporter, you can always point to Romney having his dog on the roof of the car. Yep, that’s important. /sarc

    You’re making this argument, seriously? I usually think that you make good points, but this is a failure.

    Please look at this graph, and look at the rates of change:
    http://data.bls.gov/timeseries/LNS14000000
    I don’t blame Bush or Obama for the crisis; the low interest rates along with incentives for banks to blow up a massive RE bubble are more at fault. If anyone, I’d point the finger at Greenspan.

    Furthermore, are you suggesting that letting GM fail would have improved our employment outlook? If so, do you have any studies or evidence to back this assertion up?

    Finally, yes, I do think it’s important to check for sociopathic tendencies in our potential leaders.

  20. 20
    David Losh says:

    RE: feedback offered @ 16

    I agree, it’s my fault, and no one elses. I should have never engaged Kary. I know better, but it’s like watching the after math of a car accident. I want to look away, but it keeps drawing me in.

    I apologize, like I said, after this much time I know better.

  21. 21
    David Losh says:

    RE: Kary L. Krismer @ 15

    I was a licensed contractor for many years. When we convertyed to just cleaning Labor and Industries made it clear we could only do cleaning, no yard work. We are allowed to haul trash in the normal course of cleaning.

    I kept the same level of Insurance, and we are still bonded, in excess of the usual employee theft bond, because we might at some time work for contractors to do construction clean up.

    They require two million in insurance and proof of a bond.

    We do some very high end work, so the insurance limits seem reasonable.

    Bottom line is I’m not required to be a licensed contractor in order to be licensed, insured, and bonded.

  22. 22

    RE: Kilen @ 19 – I’m not sure you’re reading my arguments right. I wasn’t attacking the GM bailout, but noting that it was bi-polar because he simultaneously tried to throw tens of thousands of people out of work by demanding that dealerships close.

    But as to blame, I blame almost all the politicians in DC because very few of them were sending warnings related to what actually blew up the economy. It’s not like we went into the Great Recession because of Bush tax cuts, like some current Democrats (e.g. President Obama), like to claim. I would blame both Greenspan and Paulson also, for not seeing the problem well before it developed.

  23. 23
    Kilen says:

    By Kary L. Krismer @ 22:

    RE: Kilen @ 19 – I’m not sure you’re reading my arguments right. I wasn’t attacking the GM bailout, but noting that it was bi-polar because he simultaneously tried to throw tens of thousands of people out of work by demanding that dealerships close.

    But as to blame, I blame almost all the politicians in DC because very few of them were sending warnings related to what actually blew up the economy. It’s not like we went into the Great Recession because of Bush tax cuts, like some current Democrats (e.g. President Obama), like to claim. I would blame both Greenspan and Paulson also, for not seeing the problem well before it developed.

    I don’t have a problem that dealerships closed; they exist to service demand, which was simply not there at that time.
    I do dislike the fact that the Obama administration exerted influence over which dealerships closed. That should have been a ROI-driven decision, with transparency into its workings.

    The dealerships and GM were in different situations: the industry that exists around GM would have withered should it have disappeared, while the same cannot be said around GM and the closed dealerships. Sure, the government could have spent more money, taken over the dealerships, and kept them afloat… but that would not have been a very efficient use of our money!

    Suppose I should weigh in on the original topic… I’d be in favor of abolishing the deduction over a period of twenty (or so) years. Slowly, steadily get rid of it.
    As a potential buyer right now, I’d love it if the deduction disappeared immediately, but that wouldn’t be kind to those that are struggling to get by.

  24. 24

    By Kilen @ 23:

    By Kary L. Krismer @ 22:

    RE: Kilen @ 19 – I’m not sure you’re reading my arguments right. I wasn’t attacking the GM bailout, but noting that it was bi-polar because he simultaneously tried to throw tens of thousands of people out of work by demanding that dealerships close.

    But as to blame, I blame almost all the politicians in DC because very few of them were sending warnings related to what actually blew up the economy. It’s not like we went into the Great Recession because of Bush tax cuts, like some current Democrats (e.g. President Obama), like to claim. I would blame both Greenspan and Paulson also, for not seeing the problem well before it developed.

    I don’t have a problem that dealerships closed; they exist to service demand, which was simply not there at that time.
    I do dislike the fact that the Obama administration exerted influence over which dealerships closed. That should have been a ROI-driven decision, with transparency into its workings.

    The dealerships and GM were in different situations: the industry that exists around GM would have withered should it have disappeared, while the same cannot be said around GM and the closed dealerships. Sure, the government could have spent more money, taken over the dealerships, and kept them afloat… but that would not have been a very efficient use of our money!.

    I’m not suggesting that the government should have kept the dealerships afloat. It’s the forced closings I have a problem with. I’m not sure how much support GM needs to provide to a dealership to keep it open, but whatever that number it could have been cut and let the dealerships survive or fail on their own.

    Also I would note the timing. I’ve said in the past that passing Obamacare at this point in time was stupid, because it is a drag on employment at a point in time when employment was problematic. The same could be said with cutting GM dealerships at the time. I think there are people who agree GM had too many dealerships (and too many brands), but that was not the time to make a major cut if you’re representing the country (as opposed to the interests of GM). I’m not even sure it was the time to make the cuts if you only represented the interests of GM.

    BTW, I don’t have a problem with cutting the number of brands, but picking Pontiac seemed odd. GM has a problem attracting younger buyers, so why cut a brand that would attract them more? And at the dealership level, if a dealership only had the brand shut down, I would have offered them a new brand (I don’t know whether that was done or not).

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.