Pfffffft

Well, if anyone wanted the alleged housing bubble to be a self-fulfilling prophecy, they just found the guys with the pin: The President’s tax-advisory council is set to recommend limiting the tax deduction on mortgages — just as increased prices forced huge increases in the mortgages people have to pay to afford a home. Just as numbnutty, they are proposed to tax employer-paid health-insurance benefits — just as the cost of those benefits is skyrocketing. The commission was supposed to find a way to replace the revenue from the dreaded Alternative Minimum Tax, which is screwing more and more Americans every year. They didn’t stop screwing up. They just found another orifice.

Once again, this shows the utter lack of strategic vision from Bush. If he had balls and had any political capital left, he would have found a new tax strategy: flat-tax, value-added tax, simplified tax, something. Instead, he just found another way to piss off people.

  • Angelos

    They will always screw the bottom 97%.

    Before they rescind the completely overzealous tax cuts of the last 5 years, they will reduce medicare benefits, food stamps, education budgets, and whatever else they can do to the poor.

    Now, I guess, they’ve taken dead aim at decimating the middle class.

    But at least we’re safer.

  • Andy Freeman

    What fraction of the tax burden should the upper 1, 3, 10% pay? I ask because post-tax cut, they’ve been paying more than they were before.

  • http://www.quantumcatfish.com Jeff Alan

    This is appalling. And it is the worst kind of intellectual laziness–just like the Harriet Miers pick. Bush presumably sends this team off with a bold mission and they come back with this? Well you’re right. He undoubtedly has succeeded in pissing off a huge number of his (now, likely former) supporters. I can only hope that he will fire the whole lot of these boneheads.

  • http://www.rollingdoughnut.com/ Tony

    Bush didn’t send the panel with a bold mission; he sent them with a handcuffed, keep the progressive nature of the tax code mission. Of course, they botched even that and came up with draconian stupidity.

  • gigi

    Why are we subsidizing the financing of second, third homes? Why are we subsidizing the financing of speculative purchases of investment properties? Why are we subsidizing the building of 4000-6000 square foot homes to go along with our formerly subsidized Hummers? Tax incentives do work. (We had a 30 yr old client in here last night, total household income $40k, no kids, current 1500 square foot home won’t do for the two of them. No, they want a stated income product to purchase a 3000 sq foot home – partially subsidized by the mortgage interest deduction.)

    This proposal has surfaced every year and is routinely shot down – the Realtor and Banker lobbies see to that. Personally, I think we should phase out the mortgage interest deduction over the next 30 years. Britain did so and it did NOT send real estate market tumbling.

  • http://www.quantumcatfish.com Jeff Alan

    Gigi:

    “We” aren’t subsidizing anything. Your statement makes the typical socialist argument that my money is really “our” money and when “we” cut “my” taxes, then “we” are giving “me” a subsidy, which of course, is baloney. Second and third homes? I bet the six Katrina evacuees that stayed with me for several weeks wished they had second homes. I think owning property is a wonderful thing; our tax system should reflect that. Who are you to decide what size house your client wants to live in? As long as they can pay the bill, that’s all that should matter, right. As long as they can (and do) pay the bill, it will force them to invest in their future. Hummers? Not an investment anyway, so irrelevant to the argument. And oh God, please don’t use Britain’s economy as an aspiration.

    But the point is, Bushes tax team *should* have been sent off with a bold mission to completely (and courageously) reengineer a Rube-Goldbergian mess, and instead they came back with a cowardly plan to add a grommet there and remove a widget here. Just shameful.

  • Angelos

    That’s good gigi, use the example of maybe .5% of population as a reason for an act that will kill everyone else.

    You get that from the latest RNC Talking Points mailing? Along with the packet of generic “letters-to-the-editor”?

    And gloss right over the health-insurance issue too – smart! Let’s gat that percentage of covered Americans down to 20 or 30. Fuck the sick. Really, who needs them?

    Really, let’s just get this over with. Turn our land over to the Republican Millionaire’s Club, humbly offer our services, and maybe they won’t whip us too much.

    Day is never finished, massah got me workin, someday gonna set me freee….

  • Andy Freeman

    Opponents of the mortgage tax deduction have never bothered to tell us why they think that it should be cheaper to rent than to own.

    Remember, interest is a cost of doing biz, so it’s deductible. If those costs aren’t deductible to owners as well, renting is cheaper.

    You’d think that they’re all apartment-dwellers, sucking up to landlords.

  • Ravo

    Angelos, this will hurt the rich more than the poor…something you love to see…yet still you bitch.

    And still you rant on about how the we tax the poor….which we do not.

    The reality is that the wealthy pay almost all of the federal income tax.

    The top half of taxpayers paid 96.5 percent, bottom half paid just 3.5 percent.

    http://www.humaneventsonline.com/article.php?id=9605

    That bottom half uses the same benefits from living here, protection, roads….infrastructure…than the wealthy who provide most all of it for them….as well as almost exclusively consuming huge social benefits in much greater excess than those providing them.

    It makes a lot more sense to be angry with the non productive who live here and contribute little or nothing but welfare demands, crime and problems to their country.

    and you say: Day is never finished, massah got me workin, someday gonna set me freee….

    Are you talking perhaps about those vote plantations down in New Orleans?

    Funny, New Orleans has been a liberal bastillion for eons. By now there should have been no poverty, everyone living there should have been highly educated, happy and productive, with all the money thrown at them – if you buy into the explanations given by liberals for why people are poor.

    Yet after decades of liberal excess, Katrina revealed the results of liberal thinking…and it ain’t a pretty sight.

  • Ravo

    Remember, interest is a cost of doing biz, so it’s deductible. If those costs aren’t deductible to owners as well, renting is cheaper.

    Andy, you may have hit on something, the more I chew on that.

    Mortgage interest will continue to be deductible, I suppose, for business real estate, no? Could this be an attempt to cool off home buying without breaking the bubble?

  • http://unbeknownst.net KirkH

    If they repeal this it will hurt rich people more than the poor. I’m confused by the left. It seems they’re not worried about the poor, they’re worried about the middle class.

    And instead of just giving the middle class cash, which is seen as distasteful, they push progressive taxes, housing and farm subsidies, protectionism, etc. which make life easier for the middle class in the short run but hurt the poor. The 10-15% unemployed in France and Germany are the poor, they suffer so the middle class can have job security.

    As Ravo points out “The top half of taxpayers paid 96.5 percent, bottom half paid just 3.5 percent.” That fact is the elephant in the room that the left is reluctant to discuss. Any more tax cuts for the lower 50% would mean welfare checks. We can’t lower taxes for the poor much more than they are now.

    People don’t want welfare checks, they’d rather force regulations on business so that welfare shows up on their paycheck. It’s more dignified that way but it damages business, raises prices and ultimately hurts the poor due to higher unemployment, something I used to think the left was opposed to.

  • Ravo

    Kirk…the left USES the poor….and you better believe they want them kept dependent.

  • http://unbeknownst.net KirkH

    Ravo, I wouldn’t go that far. I think most on the left are well meaning and tend to be smart but simply aren’t well versed in economics and assume their intelligence is sufficient to outmanuever the free market system. But as they say, the road to hell is paved with good intentions. I used to be a die hard Democrat and my intentions were only good, but that didn’t make me right.

  • http://marginalizingmorons.blogspot.com/ CaptiousNut

    Some times the level of ignorance here is appalling.

    Bush’s proposal to lower the amount and rate of deductible mortgage interest is a direct assault on the RICH and the RICH only.

    YOU PEOPLE NEED TO READ THE ACTUAL STORIES BEFORE YOU “CUT AND PASTE” YOUR TALKING POINTS.

    Yet the tax cuts that benefitted everyone are framed as only aiding the rich. Unbelievable.

    Home prices are inflated in part because of the mortgage deduction. It was supposed to encourage home ownership but it ended up driving home INDEBTEDNESS.

    Federal subsidies for college loans…..all they do is drive up the cost of tuitions. They DON”T HELP – they exacerbate the problem.

    Federal subsidies for healthcare (Medicare and Medicaid) …..all they have done is drive up the costs of healthcare for EVERYONE.

    How much evidence is needed. Get government out of the economy. Of course many people think that the next government program is the solution.

  • http://geistbear.blogware.com Thomas

    Jeff, do you really think a flat tax or standard value added tax would ever pass? Not if accountants, tax lawyers, or your favorite charity have anything to say in the matter. A simplified structure would hurt charities by stop deductions for donations to the charities and put a number of tax lawyers and accountants out of work. I agree the concept is good but if you think there will be any serious reform (regardless of the party in office), think twice.

  • Ravo

    Kirk, I agree with you that most followers on the left have good intentions, but do not think so about the leaders of the left.

    Why? Because their policies have proven over and over not to erase racism and poverty, but to manipulate it.

    If a magic solution were to become available to instantly rid the country of any possible taint of racism or poverty this minute, it would be the worst possible thing to happen to those leaders. Leftist leaders would virtually s#&%t their pants, as they would instantly lose much of their power.

  • http://marginalizingmorons.blogspot.com/ CaptiousNut

    from this link about mortgage tax deductions.

    http://money.cnn.com/2005/10/11/pf/taxes/mortgage_interest/

    “How fair are they? Those breaks are heavily skewed toward high-income tax payers, said panel member James Michael Poterba, associate head of the economics department at MIT.

    The top 2.2 percent of tax returns claim 22 percent of the benefits from the mortgage-interest deduction, he noted.”

    So Bush makes a direct assault on the rich and you will find no plaudits from the MSM or Jeff.

    It is almost like appeasing terrorists, damned if you do and damned if you don’t.

  • Ravo

    Even when the tax is one hurting the rich, guys like Angelos still grab the class warfare card, and scream anyway. Man, if leftists got completely out of the way for a few decades, and all poverty in the US was eliminated simply by rewarding folks when they made good choices instead of bad, what WOULD leftists do!

    If leftists REALLY wanted to do away with poverty, this [Doing away with the Poor Spoof] is bound to work a lot better than the “kill the country with taxes” stuff they think up now.
    http://chronwatch.com/content/contentDisplay.asp?aid=17242

  • Angelos

    “The top 2.2 percent of tax returns claim 22 percent of the benefits”

    And lost in the picture is everyone else.

    I can thinks of 15 couples, friends, have decent jobs, various combinations of 1, 1.5, or 2 salaries, and 1-5 kids.

    All own nice reasonable homes. Solidly middle class, lower to upper ranges.

    And all would be impacted negatively by this, and by the health insurance issue.

    But in your myopeia, you can only picture McMansion-owning idiots who re-fi every time they want a new car or a bigger TV or a 20K kitchen upgrade.

  • gigi

    I would love to see health insurance decoupled from employment. Unfortunately, health insurance premiums are not an eligible expense under a Health Savings Account. It should be. Individuals should be able to take the tax deduction. While we at reforms, I would like be able to purchase a health insurance policy from any carrier in any state. The State/Fed should tax any individual who cannot show proof of health insurance coverage and subsequently enroll them in a high-deductible plan for the following calendar year. In this day and age, proof of coverage could be as easy as filing a 1098 (Mortgage Interest Statement.)

    The mortgage tax deduction did not create the housing bubble. And a phase out of the deduction over a decade will not pull the rug out from under the real estate sector. The”alleged” bubble is due to 1) extended low interest rates, 2) change in capital gains tax on primary residences, 3) collapse of the tech bubble and the shifting of funds from the stock market to real estate, 4) expanded lending criteria bordering on criminal and 5) a regulatory environment which impedes the ability to build homes quickly and inexpensively. We now face a glut of high end homes and a derth of entry level homes except for a few crappily-built overpriced condos. The “alleged” bubble will deflate for market reasons – higher interest rates and the tightening of lending standards due to an increase in defaults and foreclosures.

    The mortgage interest deduction, like cheap oil, encourages consumption. Those big houses on those large lots require more roads leading to greater urban sprawl. We have a stormwater runoff problem in this state for which local taxes are being assessed to try to clean it up. The biggest source of pollution is the runoff from those roads. We’re also faced with a winter in which homeowner’s will struggle to pay the heating costs on those homes. In order to increase supply of gas, heating oil, electricity, some pristine environment somewhere will need to be despoiled – perhaps in some poor country with lax environmental regulations. As I see it, we offer tax breaks to the middle and upper class which encourages purchasing behavior which is not in our long term interest. I’d just as soon do away with the interest deduction and increase the standard deduction. Restriction can be placed on the deductibility of interest by landlords (England has done so.)

    Sorry for the lengthy twaddle…

  • http://marginalizingmorons.blogspot.com/ CaptiousNut

    Last I checked, “middle class” people don’t have 350k mortgages, nor are they in 35% tax federal tax brackets.

    As to the value of homes, this proposed change would affect every home’s value equally – except of course those homes that have huge mortgages and whose owners in the highest tax bracket.

  • Ravo

    Angelos says: “The top 2.2 percent of tax returns claim 22 percent of the benefits”

    How can you miss that the rich pay more so of course they would get more benefits.

    How do you cut taxes for those who pay little or none?

    The statement should be:

    They pay nearly 50% of the tax burden but ONLY get 22% of the benefits ??? !!!

    I guess you think it would be fairer to give 22 percent of the benefits to those:

    who only pay 3.5% of the entire amount of taxes collected?

    Gee Angelos, is that how they do it in your wonderful Muslim countries?

    Per the info found in the link I provided earlier:

    When Jimmy Carter was president and the top statutory tax rate was 70 percent (versus 35 percent today), the top 1 percent of taxpayers paid only 19.7 percent of all federal income taxes. In other words, although their marginal tax rate has fallen by 50 percent, the tax share of the rich has almost doubled, because the rich now pay over 34%

    We pay a very heavy price for the heavy taxation of saving, investment, corporations and estates. It found that the efficiency cost of the tax system — the output that is lost over and above the tax itself — is between 2 percent and 5 percent of the gross domestic product. In short, we lose between $240 billion and $600 billion every year just because of the way we raise taxes.

  • Jim

    Don’t talk to Bush you idiot, the democratically controlled congresses gave us the AMT and other doofus policies. All part of the soak the rich plan. Not so funny when you find out you are rich is it?? Keep your bias to yourself is you are a true journalist.

  • Ravo

    This article sheds a little light on how our modern media is processing information.

    (Angelos’s comment at the top here“They will always screw the bottom 97%” would fit right nicely into this article.)

    The Bizarro World of the California “Affordable Housing Crisis”
    http://chronwatch.com/content/contentDisplay.asp?aid=17266