Fair is foul and foul is fair, so let's kill the mortgage deduction

By
Industry Observer

Shakespeare described the future tactics of our political leaders with the Weird Sisters' chant.  In its never ending quest for something deceptively called fairness, members of the Washington gang of 535 plus one often speak of tax reform.  They say they want to increase revenue by cutting taxes and blah, blah, blah.

They often speak of "eliminating loopholes" while doing their fairness dance.  Sometimes they mention that one of those loopholes is deductible mortgage interest expense.  What is missing from their discussion, at least in public, is that each exception to the tax code was put there to benefit the nation and/or the economy.  There may be some obsolete items, but those are least likely to be significant revenue drains.

Then there's the mortgage deduction, useless to most skin of their teeth first time home buyers and to those who have paid down their mortgage debt.  The banking industry loves the deduction, and one of their lobbyists, the NAR, also loves it.  Without it, some buyers could not afford the same level of debt that they want to take on.  Its cost to the government could be used much more effectively with another strategy to truly encourage home ownership.

The purpose of all tax code, either intended or unintended, is to control (influence if it makes you feel better) the behavior of the citizenry.  The bankers have brainwashed the general population and most real estate professionals to believe that mortgage deductions encourage home ownership.  Of course, they really mean that it encourages debt.

The fairness liars are hunting for revenue, not fairness.  If they were interested in fairness or in encouraging home ownership, the mortgage debt interest deduction would be changed to a home ownership tax credit, able to be claimed regardless of whether or not one uses the standard deduction. 

By offering a mortgage debt incentive, our government is incentivizing people without mortgage debt to sell and become renters.  How does that encourage home ownership for anyone other than an investor?  Fair is indeed foul.

 

 

Posted by

 Mike Carlier  Lakeville, MN

 

612-916-3033

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
Minnesota Dakota County Lakeville
Groups:
The Lounge at Active Rain
"Whacked"!!!
Minnesota Real Estate
Bartender, Make it a Double
Tags:
mortgage interest

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
592,740
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

Eliminate deductions, just don't touch mine!

I agree, except all deductions should be eliminated. A flat tax would be the best course of action and we could get rid of the IRS  (Mostly).

 

Mar 23, 2014 07:26 AM #1
Ambassador
3,079,616
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I like the way you think, Mike.  A home ownership tax credit would be much better than a deduction.

Mar 23, 2014 09:45 AM #2
Ambassador
3,079,616
Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Featured in the group:  BARTENDER, MAKE IT A DOUBLE.

Mar 23, 2014 09:46 AM #3
Rainmaker
3,978,839
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

as long as the politicians have a stake in how they tax us...we will never get a fair shake.

Mar 23, 2014 09:57 AM #4
Rainmaker
682,798
Sidney Kutchuk - Realty Works Temecula Kutchuk - Realty Works Temecula
Realty Works Temecula - Temecula, CA
Realty Works Temecula

Great explanation of the tangled web our government weaves just for us

Mar 23, 2014 12:57 PM #5
Rainer
1,756,848
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Why don't they hunt for ways to cut expenses not increasing the bloated governmental budget.  We have an expense problem not a lack of income issue Mike.

Mar 23, 2014 08:36 PM #6
Rainmaker
522,122
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Than, would you like to have your business expenses taxed, and would it be a reasonable tax? Flat tax sounds good on the outside, but it only looks good on the inside to big spending politicians.

Chris Ann, the greatest difficulty with a home ownership tax credit is that it would discourage high levels of mortgage debt.  That's why the bankers and their shills would fight it.

Bill, fair is foul...

Jane, sometimes I think it's all done to confuse us.  I remember Reagan's tax adulterations, which he fortified with something he called "tax simplification."  They resulted in almost everyone paying more taxes.

Conrad, there are two sets of politicians, those who say they want to raise taxes and spend more, and those who say they want to cut taxes and spend less.  They are really all the same.  Either way and no matter who the "they" are, spending will increase. 

 

Mar 23, 2014 11:51 PM #7
Rainer
308,919
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

When will the Americans realize that your government does not like you. You will keep the person who spends the most money in office and they know it. WE Are the PROBLEM

Mar 24, 2014 12:11 PM #8
Rainmaker
522,122
Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

Jimmy, although I have until now not given a thought to trying to friend government on Facebook, that could be an interesting test of your theory.  You're right about Americans voting for big spending, and there's a simple explanation for that.  All you have to do to win an election is to convince 50% plus one of the voters that the other guy is going to pay.  It's fairly simple if one forgets that things like taxing corporations actually "taxes" even the untaxed. 

Mar 25, 2014 12:41 AM #9
Rainmaker
925,699
Ron Marshall
Marshall Enterprises - Saint Michael, MN
Birdhouse Builder Extraordinaire

Wow....I guess I never thought of it that way.  I just want some credit for all the cash I put into the house!

Apr 30, 2014 06:55 AM #10
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
522,122

Mike Carlier

More opinions than you want to hear about.
Everyone has opinions -- what's yours?
*
*
*
*
Spam prevention