Let’s Stop Whining About the Mortgage Interest Deduction

 

man cryingAs congress and the Administration begin considering the new budget, there have been loud cries in opposition to cutting what some consider “sacred cow” programs, such as the mortgage interest deduction, social security, and subsidies to farmers and business.  The whining has already begun. 

 

During the past few months there have been calls to slash government spending, but it seems no one wants cuts made to programs from which they benefit.  However, unless we are collectively willing to “bite the bullet,” and take some pain now, the potential pain we face because of our exploding deficit will be far greater.  It’s time to put aside self-interests and to come together for more than the good of the country—for the survival of our way of life.  It’s time to look beyond “what’s in it for me,” and to consider a possible future burdened with unsustainable debt.

 

Those in real estate related businesses need to seriously consider supporting changes to the mortgage interest deduction.  Contrary to proselytizing and popular belief, making changes won’t cause the collapse of the housing market; the facts fail to support such an argument.  Studies have shown that the MID has far less impact upon home sales than most believe; and other developed countries, such as Canada, have no such housing subsidy.  Yet some of those same countries have similar or even higher rates of home ownership than the U.S.

 

Both NAR and NAHB, which combined spend almost a hundred million dollars a year lobbying congress for legislative favors, are ramping up opposition to modifying the mortgage interest deduction.  Perhaps their monies would be better spent on programs that would promote home ownership or in developing new technologies that could lower construction and operating costs for homes, and thus entice additional buyers.  The housing industry should be self-sustaining, and should not require government subsidies.

 

Finally, for those who interpret my argument as supportive of the efforts of either political party, I find the proposals of both sides to fall far short of the cuts necessary to rescue our country from its slide towards the abyss.  And though we have yet to address the measures required to put our economy on sound footing, opposition grows stronger to any suggestions which might impact entrenched special interests. 

 

The majority of our “leaders,” myopic myrmidons incapable of non-partisan action, are either unable or unwilling to see beyond the next election.  We, however, could set the example by demonstrating our readiness to take our “bitter pill” today, with the awareness that postponing could put our economy in full cardiac arrest.  Let’s stop whining about the mortgage interest deduction.  Addressing the budget crisis is an issue far greater than housing or any other segment of the economy, and it is an issue that will ultimately impact all segments. 

 

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83 Comments on Let’s Stop Whining About the Mortgage Interest Deduction

20 Most Recent Comments Displayed Show All

FEB
16
2011

Perhaps we should not have a government that can take sides and give special favors at all? The problem isn't the MID per se, it is the fact that our gov't can arbitrarily impose more or less taxes on anyone, based on any factor they choose. It also causes the necessity of groups like NAR, and 100's of other special interest groups, to protect our interests from the gov't. The gov't is supposed to protect our right to life liberty and the pursuit of freedom, not take property from one group and give to another based on some supposed need. Just one man's thoughts......
3:26pm • #65

Yep, I meant "pursuit of happiness".
4:01pm • #66
452,806 Points 81 Featured Posts Called Shot Master

Bob - That's why they make Fords and Chevrolets so those who think differently have choices.

J. Philip - I'm not trying to build a following for modifying the MID, and neither am I trying to force my beliefs upon anyone.  What my blog is generally about is informing on issues that are often distorted in the press.  I do take time to look behind the headlines and try to understand topics of interest to the real estate industry and consumers in general. 

And I respect the comments from everyone here on AR.  Do I have all the answers for our current budget crisis?  Of course not, and I've never claimed to have wisdom or special insights, unavailable to everyone else.  There will always be strong feelings surrounding issues of great importance; and I believe this to be one of them.  All I ask of those who disagree is that they study the issue before making decisions.  Our "leaders" in DC are specialists at "shooting from the hip; we need to set a different example. 

As for the links, I'll be back soon and post them.  Thanks.
4:44pm • #67
965,306 Points 60 Featured Posts Outside Blog Called Shot Master

J Philip:  This is how we do things here, from now on.  We find a group of ohhh, let's say... twenty experts who we have found who already agree with us.  Then, whenever we want to "prove" anything we have said, any of us in that group can then point at the other twenty in that group, and say... "well... they all agree with me, so I must be right."

The mortgage interest deduction is one of the few major tax deductions that the middle class has that it can benefit from.  One of the reasons for that MID... was to stimulate and support home ownership.

Many folks who own businesses have deductions that they can take... that lower their taxable income... which obviously benefits them.  So many folks who take the MID... do not have that luxury.  Hitting them where it hurts so badly, which would then have such a detrimental effect on them, and on the housing market, and in turn, on housing values, would be a double whammy on the folks who in this current economic mess... are being hit so soundly.

I fully agree with you.  The MID needs to be left intact.
5:41pm • #68
452,806 Points 81 Featured Posts Called Shot Master

For anyone interested in more info here are some pertinent links:

Tax Policy Center

Fortune: 3 reasons why the mortgage tax break isn't a break.

2 Huge Misconceptions About Killing the Mortgage Interest Deduction

An Unemotional look at the mortgage interest deduction

 
5:58pm • #69
452,806 Points 81 Featured Posts Called Shot Master

Karen Anne - Instead of adding contumelious remarks, why not add to the discussion by providing some links to articles with facts to support your position.  You may prove me wrong, and I'm certainly open to learning something new.
6:06pm • #70
147,643 Points 9 Featured Posts Attended Rain Camp

I like your post, possibly because the premise is one I shared in a post a couple of months ago.  Not sure about the whining part, but I do believe we as Realtors have convinced ourselves that the MID is a big reason why people buy homes.  WE use it as an incentive.  I don't believ the argument that people won't buy houses without it.  What WILL happen, prices will go down.  At least at first.  And, I think it needs to be on new purchases, not taken away..  And, honestly, I think you begin by phasing in the loss of MID by taking it away from 2nd's, then move into primary... phase it in, so the market can plan for it.
6:40pm • #71
452,806 Points 81 Featured Posts Called Shot Master

Virginia - The current proposal is a gradual phase in. Most seem to believe it will just suddenly stop, but that won't be the case. Regarding my describing the reaction as "whining," I was primarily referring to the NAR and NAHB who have already begun loud cries in protest. Thanks for your input.
6:51pm • #72
213,894 Points 10 Featured Posts Outside Blog

John – I agree with you, the MID is not the reason why people commit to homeownership and I see nothing to support the theory that phasing it out would hurt the market.
9:37pm • #73
452,806 Points 81 Featured Posts Called Shot Master

Sue - Don't say it loudly. I don't think I've made any friends today.
9:38pm • #74
965,306 Points 60 Featured Posts Outside Blog Called Shot Master

John:  Giving the four links you provided in comment #69 as proof to support your point of view is like saying the Los Angeles Lakers are the best team in the world, and then giving me links to articles written by Kobe Bryant, Phil Jackson, Jack Nicholson and Jerry West.  I know it may sound silly, but the analogy is a pretty good one.

1)  Your "Unemotional Look" link leads to one of your OWN posts.  Great proof. 

2)  Your "2 Huge Misconceptions" link leads to an article by Morgan Housel... an arch conservative who is a regular columnist on TownHall.com... a far, far right website populated only by over-the-edge conservatives.

3)  Your link from "Fortune: 3 reasons why" leads to an article by Nin-Hai Tseng, a conservative economist.  And when I researched her background, I found links to the notoriously right-wing "Club For Growth" and "The Heritage Foundation"... a conservative "think tank."  Totally "Fair and Balanced"... right ?

4)  And your link to the Tax Policy Center shows full support for the majority of the tax policies the conservative Republicans are trying to jam down the throats offer as parts of the over 400 amendments to President Obama's Continuing Budget Resolution... and the 2012 Budget.

They are all conservative, so of course they agree with you.  Again... they do not prove your ideas, they simply are in agreement with your point of view.

Great job, Mr Guru.
11:46pm • #75
FEB
17
2011
213,894 Points 10 Featured Posts Outside Blog

John it seems like you may have opened a can of worms, but be that as it may, I still agree with your post. 
12:49am • #76
452,806 Points 81 Featured Posts Called Shot Master

Karen Anne - I understand your liberal bias and unwillingness to consider any proposal you believe comes from a conservative, but the proposal I'm supporting comes from our liberal President on the recommendation of his financial commission; and it is also supported by several liberal members of congress. Additionally, the reports I cited present facts, not opinion, and I have yet to see you present anything other than trite attacks on my methodology.  Where are your facts?

And the reason I linked to my previous blog was that it included information from Edward Glazer a Harvard professor, whose findings were printed in the NY Times, another liberal source. I'm not attempting to change your opinion, but do find it bothersome that your only means of supporting your position is to criticize my sources or methods of presentation. 

But I do appreciate your input; it helps to distract from the serious issues our country faces.

 

 

 

 

 
1:07pm • #77
965,306 Points 60 Featured Posts Outside Blog Called Shot Master

John:  It pleases me to no end to know that my silly comments can help provide a "break" for you... from the dreary conservative world you live in.  I'm always glad to provide that service for you.  Take care... and have a Great Thursday.

And concerning "our liberal president"... for me, he was the better choice to vote for than McCain/Palin... although I would have much rather voted for Hillary Clinton.
1:18pm • #78
FEB
19
2011
738,077 Points 231 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

John.. so late to the party... I saw this earlier... in any case, I think your opinion is spot on and I need to go back and check, to see if I had written about this.. lol  But seriously, so many complain, yet they don't understand the basics, that this won't collapse the real estate market... that this won't stop people from buying,.. and that this shouldn't be one of their main reasons to buy. On another note, will you be around tomorrow... we need to catch up for a few reasons. Thanks and again, great post.

jeff belonger
11:56pm • #79
FEB
20
2011
965,306 Points 60 Featured Posts Outside Blog Called Shot Master

Jeff, have you ever thought that your opinion might just have a crack or two in it ?  But no.  Those who disagree with your viewpoint... simply "don't understand."  That's pretty similar to Mr Gugu's position, as well.

But, question... where did anyone say that the MID is one of their "main reasons to buy ?"  And I don't think that the market would collapse without it.  But... it's one of the few breaks that normal, everyday working folk still have available to them.  Perhaps there could be other ways of looking at this than yours.
12:34am • #80
738,077 Points 231 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

@ Karen...  I have never said my opinions are right and should be done. But from my knowledge, how I have broken this specific topic down, and so much more... I do believe that this can be part of a cut back.

To answer your other questions, about those that say this as a main reason to buy... one of the main reasons. I hear realtors and loan officers state the interest write off as one of the main reasons to buy,. Not saying you or everyone, just that I hear many state this. Even when comparing someone buying a lower rate compared to someone having a higher rate, but they also get more of a tax write off with that higher interest rate.

Secondly... some have argued that the market would fall apart. Karen, I don't make this stuff up. I read this stuff in other people's comments... that's where I get this stuff from. thanks

Overall.. sure, it's nice to have this feature as a tax break. But if you look at all the things that costs the gov't money, and where the gov't could reduce the deficit... this is one topic that can be spared and not hurt as many people as one thinks. I wrote about this a month back and I don't want to spam John's post with my link.I wrote my post on 12-11-10 called capital hill or hamburger hill... just search that. But I give the pros and cons.. which might help you better understand that this won't be a bad thing if taken away... And when I look at these issues, I look at it from both sides, hence why my opinions seem to be much stringer once I choose a side. thanks

jeff belonger
9:40am • #81
452,806 Points 81 Featured Posts Called Shot Master

Jeff - Thanks for your comments--I've posted and commented on this topic before also.  And yes, I too, have comments from those who say the MID is the main reason people buy homes, and I've seen comments and posts that claim that losing the MID will cause the collapse of the housing market. 

I sent you an email.  Feel free to call at any time.
2:14pm • #82
738,077 Points 231 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

John.. it was good talking to you... and thanks for allowing me to include my post in this comment stream.

@ Karen.. here is the post that I was talking about... I try and show the pros and cons... and why I come up with my reasoning. And there are some links to some good facts within my post... showing the reasons why killing the MID or changing it up would help.  I would like to see it changed up, not necessarily killed.

Capital Hill or Hamburger Hill - Don't take my MID (Mortgage Interest Deduction) away from me !!! -

jeff belonger
4:49pm • #83
MAR
06
2011
110,832 Points 2 Featured Posts Outside Blog

I would love to see real tax reform, but I honestly don't expect it.  To many political special interests and we have a government that doesn't really want to seriously cut spending. 
4:32pm • #84

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