Just when you thought politicians couldn’t get any dumber, here comes one along from Michigan. Rep. John Dingell, Democrat has proposed a bill that would eliminate or curtail the mortgage interest deduction for a significant number of home owners based upon the size of their property.
Under the proposal, taxpayers owning homes larger than 3,000 sq. feet would lose at least a portion of their mortgage interest deduction and those with residences larger than 4,200 sq. feet would lose the deduction entirely.
The plan is intended to fight “sprawl” and encourage energy efficiency, but the revenue raised through limiting the mortgage interest deduction would be used to expand the Earned Income Tax Credit.
According to the article, an analysis with the National Association of Home builders, says the proposal by Dingell would result in a massive tax increase of more than 13 billion dollars annually for more than 6 million families, eroding the aggregate value of the mortgage interest deduction by more than 16%. All home owners would see downward pressure on home prices, which would be especially acute for nearly 10 million households living in homes exceeding 3,000 sq. feet.
The article goes on to say that Dingell proposed it to save energy. I don’t hate to say this guy is a moron. He shouldn’t be in office. If he can fail to grasp the big picture of how he can further erode our already sensitive economy. The housing market across the nation is in turmoil. Imagine trying to sell a home and the people looking find out they can’t get a mortgage tax break for that 3,100 sq. foot home. Values will drop. I think most people might associate a home this size and up, with rich people and say it doesn’t matter. Folks, I am here to tell you that average priced homes in our area are 3,000 sq. feet. Typical middle class and even lower middle classed families as far as earnings go, are living in homes this big.
It is like driving an SUV. If you need it, you need it. No amount of bills are going to stop you from getting it. But if you are penalized with an extra tax, you might just figure out another way to drive something else. Even though it is not in your best interest as far as needs go.
You would be surprised the amount of bogus bills that are brought forth and we never hear about them. I wish there was a web site that has all bills currently being voted on so we could protest. We have been told that the power is with the people. Really this isn’t true. It takes a bigger voice and it starts with each of us. Write your representatives and try and stay on top of what is going on that might effect you and your family for years to come. Look for more tax bills to come!
Perhaps you should actually analyze the proposal instead of going with your (and the National Association of Home Builders, a real unbiased source by the way) gut feel. This happens to be an enactment of Bush’s Tax Commission recommendation (obviously not a removal of the break altogether as they recommended). See above website. The reality is that the majority of the interest taxs breaks go to the ultra rich and home speculators. Analysis shows that the tax break really just promotes buying bigger houses not home ownership which is what the break is intended to do. You may disagree with where the proposed savings would be spent but I find it strange that you disagree with the premise as it’s actually rather sound.
By: gabe on March 20, 2008
at 11:40 am
Sorry you aren’t doing your own homework. This has nothing to do with gut feel. I am just reporting the news and didn’t offer my opinion, just facts.
You are also wrong about most tax breaks going to the ultra rich. The tax breaks are for “Tax Payers”. If you are self employed you get certain tax breaks that a person working at a 9-5 job isn’t eligible for. People who do well are penalized for doing well.
Home speculators? I have no clue what you are talking about there. There are no extra breaks that anyone else can’t get. Everyone is eligible for them who wants to invest in Real Estate. It doesn’t mean you have to buy multi million dollar homes. A person buying a home for 50,000 gets the same breaks. They are just smaller of course as they are buying a lower priced home. Taxes are relative to what you earn. Self employed pay on income after expenses, just like corporations. They are spending money or losing money to get this deductions. They are legal.
I have a problem with anyone telling me what I can buy and what I can’t buy. I don’t think certain market segments because of income should have better or worse tax breaks. It should be equal.
I suppose you also think that the tax check that is coming now from the IRS is a smart idea? I don’t qualify for it and think no one should get it. It will not fix any problem. But why should someone who is making 12k a year and pays very little tax in compared to me, get it and I don’t receive it? You tell me that is fair? Fair really shouldn’t have to do it. Our government has no business sending out money to certain classes and excluding others. I think the fact is they will fall flat on their face with this one. If I receive it, I would spend it. The lower income people will not spend it. They will save it or use it to pay bill which does nothing for the economy. I am not sure who came up with this bright idea.
Tax breaks should be equal across the board. If it benefits others more because of their income, then so be it. They are paying the bigger share anyway. Sure some of the ultra wealthy don’t pay their fair share. Some of their writeoffs are probably questionable at best. I pay more than I should pay and I don’t complain. If I buy a million dollar home, I should get the same tax write off as anyone.
These knuckle heads that come up with the ideas I was talking about above are so out of touch. Just like in Texas, former Gov Anne Richards, tried to have not only Real Estate agents, but Attorneys and others who work on a fee basis, pay an income tax on commissions. How insane is that? We already pay tax. Why should we pay 2 times? This would effect all sorts of business people and even lower paid people who work on a commission basis. Of course it was shot down and she was not re elected. Imagine specifically targeting Attorneys and thinking they would sit back and let this happen, haha. Well I am glad in this case they were on our and everyone elses side. It has actually come up again recently but didn’t go anywhere. Could it pass? Possibly but it is crazy and makes no sense.
Ok, I have ranted and rambled on as long as I have time for. I do appreciate your comments. Buying a bigger house is the choice of anyone. They shouldn’t be penalized for doing it. There is no way to argue this point as being good. Government control and penalties are not good in most cases in my opinion.
By: Rex Edwards on March 20, 2008
at 2:07 pm
You must not have read the article either. It is good that someone can post correct info as people like you jut rant with no facts. Who subsides mcmansion homeowners? Where did you see that info. You probably pay no taxes at all. Anyway, next time you post, please reply with something intelligent and don’t waste my time.
By: Rex on August 17, 2008
at 3:50 pm