Obama Quote On The Debt

[mobes23]

If I understood the seattle times article right, they'd lower taxes for the wealthy and then hit everyone with higher taxes by shrinking the mortgage deduction. I don't get it from either the R or D persepective. It'll will just make the housing problem worse longer and continue to freeze construction. Looking forward to hearing from the hardcore lefts and rights on this one.

 

[blazerboy30]

If I understood the seattle times article right, they'd lower taxes for the wealthy and then hit everyone with higher taxes by shrinking the mortgage deduction. I don't get it from either the R or D persepective. It'll will just make the housing problem worse longer and continue to freeze construction. Looking forward to hearing from the hardcore lefts and rights on this one.

Depends who you consider wealthy / poor. Theoretically, "poor" people would never have a chance at owning a home, so this tax increase will only hit the "wealthy". According to many liberals on this board, the "poor" are the ones that can't afford any food or healthcare. Surely they won't be affected by a shrinking mortgage deduction.

Tax increases are great when they only apply to people making more than you. It becomes a little more real when the tax increases hit closer to home. (pun intended)

 

[mobes23]

Depends who you consider wealthy / poor. Theoretically, "poor" people would never have a chance at owning a home, so this tax increase will only hit the "wealthy". According to many liberals on this board, the "poor" are the ones that can't afford any food or healthcare. Surely they won't be affected by a shrinking mortgage deduction.

Tax increases are great when they only apply to people making more than you. It becomes a little more real when the tax increases hit closer to home. (pun intended)

Hmmm. I guess I'm a little more focused on the mortgage deduction part of the deal -- does that make sense to anyone?

For what it's worth, the AP/seattle times article I read, said that the biggest beneficiaries of the lowered tax rate would be those with taxable income greater than about $380,000/year. Their tax rate would drop 6 to 12 percent. Probably a lot of ways to look at who's rich & who's poor, but that's an easy one. Again, though, it's the mortgage part that baffles me. I can guess pretty easily where board members come out on taxing rich/poor, but the mortgage deduction cuts a wider swath. And it puts the housing market in an even deeper hole.

 

[blazerboy30]

Hmmm. I guess I'm a little more focused on the mortgage deduction part of the deal -- does that make sense to anyone?

For what it's worth, the AP/seattle times article I read, said that the biggest beneficiaries of the lowered tax rate would be those with taxable income greater than about $380,000/year. Their tax rate would drop 6 to 12 percent. Probably a lot of ways to look at who's rich & who's poor, but that's an easy one. Again, though, it's the mortgage part that baffles me. I can guess pretty easily where board members come out on taxing rich/poor, but the mortgage deduction cuts a wider swath. And it puts the housing market in an even deeper hole.

I'm definitely not in favor of lowering the mortgage interest deduction benefit. But tax increases have a downside of reducing incentive, regardless of where the tax is applied. It just so happens that this one in particular would directly affect you, which is why you don't like it.

Also, you can't just look at what the "tax rate" of the over $380k/year folks would be. You want to focus on the total tax liability. From what I've read, some of those peoples' tax burden would go up and some would go down.

Part of the confusing thing to me, is that these changes are being made under the name of "tax reform". I don't see this tax reform as clearing up any confusion or complications that exist.

 

[mobes23]

I'm definitely not in favor of lowering the mortgage interest deduction benefit. But tax increases have a downside of reducing incentive, regardless of where the tax is applied. It just so happens that this one in particular would directly affect you, which is why you don't like it.

You're off base and making assumptions about what I like/don't like. You have no idea what my own tax situation is or what would/wouldn't impact me. Truly, the impact on my own tax situation is not what I was asking about. I can suss that out on my own.

Taking away the mortgage deduction (or lessening it) directly impacts anyone who has a mortgage and anyone looking to buy a house using a mortgage. If the deduction is less/removed, then the monthly payment essentially goes up. This could well mean further drops in home prices and raises the barrier in owning a home...at a time when that sector has been pretty well pummeled.

My question: does this part of the plan make sense to either the left side or the right side?

 

[blazerboy30]

You're off base and making assumptions about what I like/don't like. You have no idea what my own tax situation is or what would/wouldn't impact me. Truly, the impact on my own tax situation is not what I was asking about. I can suss that out on my own.

Taking away the mortgage deduction (or lessening it) directly impacts anyone who has a mortgage and anyone looking to buy a house using a mortgage. If the deduction is less/removed, then the monthly payment essentially goes up. This could well mean further drops in home prices and raises the barrier in owning a home...at a time when that sector has been pretty well pummeled.

My question: does this part of the plan make sense to either the left side or the right side?

You state above that the increased tax will reduce incentive. I agree that it will reduce incentive to purchase a home / take on a mortgage. It doesn't seem like a good idea.

How is that different than any other kind of tax increase?

 

[mobes23]

You state above that the increased tax will reduce incentive. I agree that it will reduce incentive to purchase a home / take on a mortgage. It doesn't seem like a good idea.

How is that different than any other kind of tax increase?

The way I see it, deductions, loopholes, tax credits, whatever you want to call them give incentives/disincentives depending on the circumstance (we definitely agree on that, I think). The stereotype is that lefties would want to up taxes on the rich and righties would fight it. Left might want higher corporate taxes, right would want lower. Many of the changes that are proposed, I can pretty well guess where people are going to come out. The mortgage deduction possibly seems like one area that neither left nor right would want to be messed with.

From your response, it seems like you're saying you don't like any tax increase and the reduction or elimination of the mortgage deduction is just one of several tax increases proposed. That particular change doesn't bother you any more or less than the other proposals that involve tax increases. Is that right?

I was wondering if it might be one change that is universally disliked. That's all I'm trying to understand.

Personally, I can see reasons for doing it, but the timing seems wrong given the current housing struggle. If they're going to do it, it seems like it should have a long and gradual phase in.

 

[Denny Crane]

In theory, the lower rates would offset the loss of the deduction, so it may not be that kind of disincentive. But considering nearly half the people don't pay taxes at all, the loss of the deduction would hit those on the cusp of paying taxes.

I don't agree that every tax is a disincentive. It's more a matter of depriving people of that money to spend on things in general. And whether the people are better off spending the money they earn as they see fit vs letting the govt. spend it recklessly as it does.

 

[mobes23]

In theory, the lower rates would offset the loss of the deduction, so it may not be that kind of disincentive. But considering nearly half the people don't pay taxes at all, the loss of the deduction would hit those on the cusp of paying taxes.

I don't agree that every tax is a disincentive. It's more a matter of depriving people of that money to spend on things in general. And whether the people are better off spending the money they earn as they see fit vs letting the govt. spend it recklessly as it does.

Yeah, I might've overstated the disincentive/incentive part as a universal truth, but I think it's often true. That said, reducing or limiting tax deductions for mortgages, charitable giving and retirement savings could act as a disincentive.

 

[blazerboy30]

The way I see it, deductions, loopholes, tax credits, whatever you want to call them give incentives/disincentives depending on the circumstance (we definitely agree on that, I think). The stereotype is that lefties would want to up taxes on the rich and righties would fight it. Left might want higher corporate taxes, right would want lower. Many of the changes that are proposed, I can pretty well guess where people are going to come out. The mortgage deduction possibly seems like one area that neither left nor right would want to be messed with.

From your response, it seems like you're saying you don't like any tax increase and the reduction or elimination of the mortgage deduction is just one of several tax increases proposed. That particular change doesn't bother you any more or less than the other proposals that involve tax increases. Is that right?

I was wondering if it might be one change that is universally disliked. That's all I'm trying to understand.

Personally, I can see reasons for doing it, but the timing seems wrong given the current housing struggle. If they're going to do it, it seems like it should have a long and gradual phase in.

IMO, reducing the benefit of the mortgage interest deduction is a bad idea. Not just because it is a tax increase, but because I think it hits in a bad place. A mortgage is the only (not only, but close) way that the normal population can leverage their resources and create an industry, and thus many jobs. It is the only way a single person can create several jobs (at least for a short term).

 

[Klinky]

A mortgage is the only (not only, but close) way that the normal population can leverage their resources and create an industry, and thus many jobs. It is the only way a single person can create several jobs (at least for a short term).

Short-term jobs paid for via long-term debt doesn't seem to be a very sound economic model. Six months worth of jobs, at the cost of 15 - 30 years worth of debt, doesn't sound sustainable. The only time this model lead to widespread economic prosperity was during the last decade, we all know how that turned out.

 

[maxiep]

Short-term jobs paid for via long-term debt doesn't seem to be a very sound economic model. Six months worth of jobs, at the cost of 15 - 30 years worth of debt, doesn't sound sustainable. The only time this model lead to widespread economic prosperity was during the last decade, we all know how that turned out.

Congratulations. You now understand why Obama's stimulus was a crap idea.

 

[Klinky]

Congratulations. You now understand why Obama's stimulus was a crap idea.

Comparing the ARRA to a long term economic model is silly. The ARRA is a stop-gap plan that bridges or adds funding to certain sectors to help "stimulate" the economy. Just because the economy doesn't have a massive woody right now, doesn't mean it's maybe a little less limp than it was before. I think it's too early to tell how good or bad the ARRA has been. For all we know the economy might be sporting a massive inny right about now without the ARRA.

Suggesting that people should go out and "stimulate" the economy by going into debt with mortgages is just setting up a daisy-chain like what we had with the housing crisis. That's a bit different than a once off stimulus package. The housing market can play an important part in the economy, but by no means should be be looking to it to get us out of the mess it created.

 

[blazerboy30]

Short-term jobs paid for via long-term debt doesn't seem to be a very sound economic model. Six months worth of jobs, at the cost of 15 - 30 years worth of debt, doesn't sound sustainable. The only time this model lead to widespread economic prosperity was during the last decade, we all know how that turned out.

You're right... mortgages have only been around for the last 10 years. Until then, everybody bought their house with cash.

Regardless, Mobes asked about the effect on the current housing market. He didn't ask about the effect on the long term economy. Perhaps you're in the wrong thread?

 

[blazerboy30]

Comparing the ARRA to a long term economic model is silly. The ARRA is a stop-gap plan that bridges or adds funding to certain sectors to help "stimulate" the economy. Just because the economy doesn't have a massive woody right now, doesn't mean it's maybe a little less limp than it was before. I think it's too early to tell how good or bad the ARRA has been. For all we know the economy might be sporting a massive inny right about now without the ARRA.

Hello Mcfly... the question was about the current housing market, and short-term economy. You're the only one trying to compare the ARRA to a long term plan.

Suggesting that people should go out and "stimulate" the economy by going into debt with mortgages is just setting up a daisy-chain like what we had with the housing crisis. That's a bit different than a once off stimulus package. The housing market can play an important part in the economy, but by no means should be be looking to it to get us out of the mess it created.

Two things: 1) People have the choice to take on a mortgage or not. People didn't have a choice to be burdened with Obama's spending and massive deficits. 2) Mortgages weren't responsible for the housing crisis. People getting loans they weren't qualified for cause the housing crisis.

 

[PapaG]

The Dems in the Senate (well, three didn't cast a vote, including one GOP) just voted for default, and they won't even debate this bill. Time for them to propose their own plan, and put it up for a vote. Any plan is better than your lack of a plan, Harry Reid.

Senate rejects 'Cut, Cap, Balance'


The Democratic-controlled Senate voted Friday to block a Republican measure that would force Congress to pass a stringent balanced budget amendment and cap spending before increasing the debt ceiling.

The legislation, a conservative priority, never had a chance of passing, but the strictly partisan 51-46 vote to table the “Cut, Cap and Balance” bill highlighted the partisan divide in Washington over how to tackle spending and raise the nation’s $14.3 trillion debt limit.

Before the vote, Majority Leader Harry Reid (D-Nev.) again called the plan “radical” and “one of the worst pieces of legislation to ever be placed on the floor of the United States Senate.”



Read more: http://www.politico.com/news/stories/0711/59661.html#ixzz1SrAip1gd

 

[PapaG]

The Senate Dems have now voted down the following.

Paul Ryan's Budget
Barack Obama's Budget
Cut, Cap, and Balance

all while not offering up any bill of their own. They own the upcoming default at this point.

 

[Draco]

I would be fine with having a lower cap or eliminating the mortgage interest deduction.

I believe tax deductions and credits should be for the minimal non-luxury expenses required to produce income. You don’t tax a business on supplies or materials because those expenses are needed to produce revenue. You tax the business on the net income. Similarly I believe individuals shouldn’t be taxed on the minimal food, shelter, clothing, work transportation, health care, and education required to work a job and live a minimal life. But we should be taxed on all additional expenditures because those are not required to live and work, they are optional and purchased for pleasure.

An individual deducting $25,000 of mortgage interest has a luxury house, they don’t need that expensive of a house to work, they have it because it’s a luxury item they want. Just as having a $80,000 car is a luxury item, or eating a $60 dinner is a luxury item. Those expenses are not required to produce income and thus shouldn’t be deductible.

Why should the government subsidize the cost of housing? If you can’t deduct the cost of food from your income taxes why can you deduct housing? The mortgage deduction does keep real estate prices artificially higher, so that makes owning a home more expensive for some people.

Additionally, I would like the elimination of the capital gain exclusion on selling a primary residence. Instead a rule could allow something similar to the business section 1031 exchange, where you can roll over your basis into a similar property and defer tax impact.

 

[maxiep]

I would be fine with having a lower cap or eliminating the mortgage interest deduction.

I believe tax deductions and credits should be for the minimal non-luxury expenses required to produce income. You don’t tax a business on supplies or materials because those expenses are needed to produce revenue. You tax the business on the net income. Similarly I believe individuals shouldn’t be taxed on the minimal food, shelter, clothing, work transportation, health care, and education required to work a job and live a minimal life. But we should be taxed on all additional expenditures because those are not required to live and work, they are optional and purchased for pleasure.

An individual deducting $25,000 of mortgage interest has a luxury house, they don’t need that expensive of a house to work, they have it because it’s a luxury item they want. Just as having a $80,000 car is a luxury item, or eating a $60 dinner is a luxury item. Those expenses are not required to produce income and thus shouldn’t be deductible.

Why should the government subsidize the cost of housing? If you can’t deduct the cost of food from your income taxes why can you deduct housing? The mortgage deduction does keep real estate prices artificially higher, so that makes owning a home more expensive for some people.

Additionally, I would like the elimination of the capital gain exclusion on selling a primary residence. Instead a rule could allow something similar to the business section 1031 exchange, where you can roll over your basis into a similar property and defer tax impact.

Do you believe we have a revenue problem?

 

[Denny Crane]

I would be fine with having a lower cap or eliminating the mortgage interest deduction.

I believe tax deductions and credits should be for the minimal non-luxury expenses required to produce income. You don’t tax a business on supplies or materials because those expenses are needed to produce revenue. You tax the business on the net income. Similarly I believe individuals shouldn’t be taxed on the minimal food, shelter, clothing, work transportation, health care, and education required to work a job and live a minimal life. But we should be taxed on all additional expenditures because those are not required to live and work, they are optional and purchased for pleasure.

An individual deducting $25,000 of mortgage interest has a luxury house, they don’t need that expensive of a house to work, they have it because it’s a luxury item they want. Just as having a $80,000 car is a luxury item, or eating a $60 dinner is a luxury item. Those expenses are not required to produce income and thus shouldn’t be deductible.

Why should the government subsidize the cost of housing? If you can’t deduct the cost of food from your income taxes why can you deduct housing? The mortgage deduction does keep real estate prices artificially higher, so that makes owning a home more expensive for some people.

Additionally, I would like the elimination of the capital gain exclusion on selling a primary residence. Instead a rule could allow something similar to the business section 1031 exchange, where you can roll over your basis into a similar property and defer tax impact.

The govt. isn't subsidizing anything. The deduction is on the interest you pay but not the principle. They're playing along with you as you leverage the debt into ownership of the asset. When you sell, they get their tax money in the form of capital gains tax.

Your logic about not taxing the supplies or materials needed to realize a profit applies here.

 

[Klinky]

You're right... mortgages have only been around for the last 10 years. Until then, everybody bought their house with cash.

Okay? What does that have to do with anything? Mortgages aren't bad on their own, they're just bad when people obtain them & can't pay them back.

Regardless, Mobes asked about the effect on the current housing market. He didn't ask about the effect on the long term economy. Perhaps you're in the wrong thread?

Then why are you talking as though mortgages are one of the better ways normal people can leverage resources to create jobs. Not every new mortgage equals a ton of jobs? A new mortgage on existing house will create very few jobs compared to someone building a new house. Given that the market is depressed, people are more likely to buy an existing house than build a new one.

 

[Klinky]

Hello Mcfly... the question was about the current housing market, and short-term economy. You're the only one trying to compare the ARRA to a long term plan.

Maxiep was suggesting the ARRA was netting short term jobs at the cost of long-term debt. The ARRA is a bit different than relying on people taking out mortgages to create short-term or long-term job growth.

Two things: 1) People have the choice to take on a mortgage or not. People didn't have a choice to be burdened with Obama's spending and massive deficits.

I'll trust the fed taking on debt to "stimulate" the economy, rather than relying on people taking out mortgages to stimulate the economy.

2) Mortgages weren't responsible for the housing crisis. People getting loans they weren't qualified for cause the housing crisis

This is the reason why...

Fact is, there are much much fewer people who qualify for a mortgage now & there are many many empty properties out there right now. Buying a house is going to enrich a realtor & maybe some inspectors, it's not going to spur much job growth short or long term. The only way it'd have a real effect is if we ramped it up & started another bubble, kind of like what China is doing right now.

 

[Draco]

This is the reason why...

Fact is, there are much much fewer people who qualify for a mortgage now & there are many many empty properties out there right now. Buying a house is going to enrich a realtor & maybe some inspectors, it's not going to spur much job growth short or long term. The only way it'd have a real effect is if we ramped it up & started another bubble, kind of like what China is doing right now.

So we’ve had the government by Freddie and Fanny, qualifying people for mortgages they can’t afford. The government also lowers the cost of home ownership through tax deductions. Both of these interventions cause prices to be far higher then they would be in a free market.

How about getting the government the heck out of the housing market? Let prices fall until it becomes profitable for private investors to be landlords. Then private investors who can afford a bank loan on their own can buy housing and a tenant who cannot afford to own a house can pay rent. If a renter starts making enough money, they can go to a bank and apply for a home loan just as people have to qualify for business loans or car loans or six figure credit card loans.

In college I and many of my friends were broke but some of our friends or friends parents had enough money to buy a house, so they bought houses, let us live there, and charged us rent. I believe that’s a much better housing model then trying to push home ownership on people who aren’t financially ready.

 

[Draco]

Do you believe we have a revenue problem?

No I don’t believe we have a revenue problem in total, I believe a few taxes are too low and many are too high. If I was king of the US and could setup our federal government to my wishes I'd drastically cut spending and push most responsibilities to the states. I'm more of an articles of confederation guy. I believe the majority of issues are better solved locally.

If we reduced the mortgage interest deduction, I would prefer the savings go mostly towards lower tax rates, but some towards higher standard deduction, higher medical expense deductions, or even a food deduction.

 

[PapaG]

Boehner ends negotiations with Obama, says GOP has passed a bill, while Dems haven't even offered a bill.

Obama then had a meltdown on TV as he calls a "press conference" without actually taking questions. Also says he has "special interests" that he needs to listen to, which was simple surreal.

Wow, that was something, wasn't it? Oh, you haven't heard about it? I'm not surprised.

 

[Draco]

The govt. isn't subsidizing anything. The deduction is on the interest you pay but not the principle. They're playing along with you as you leverage the debt into ownership of the asset. When you sell, they get their tax money in the form of capital gains tax.

Your logic about not taxing the supplies or materials needed to realize a profit applies here.

The government doesn’t allow you to deduct interest expense on a luxury car, or a boat, or a diamond. They do allow it on a luxury home. This reduces the cost of carrying a mortgage, which encourages home purchase or a purchase for higher values. I would call this partially “subsidizing” the cost of owning a home but you could call it something else; the point is the government gives favorable debt treatment for personal housing debt comparative to any other personal debt.

If you sell the house at a gain the government doesn’t re-capture the interest; a gain is calculated from the basis of the home which includes purchase price, improvements and additions. Previously claimed interest isn’t deducted from the basis of the home. Also, $250k of the gain is tax free capital gains anyways.

 

[barfo]

Obama then had a meltdown on TV as he calls a "press conference" without actually taking questions.

You think if you just make shit up no one is going to call you on it? He took questions. Here's a transcript.

Also says he has "special interests" that he needs to listen to, which was simple surreal.

Wow, that was something, wasn't it? Oh, you haven't heard about it? I'm not surprised.

Yeah, that doesn't appear in the transcript. No doubt the same government conspiracy that bombed Oslo removed it from the transcript. Or maybe it has the same basis in fact as him not taking questions.

barfo