Planet Money's Fake Presidential Candidate:

[Skjellyfetti]

a fucking clue as to the implications of what they were proposing.

FYI: Your candidate supports the elimination of the mortgage tax deduction.

[AZGrizFan]

a fucking clue as to the implications of what they were proposing.

FYI: Your candidate supports the elimination of the mortgage tax deduction.

I'm not just talking about THAT one...FYI.

[kalm]

Sure....but the points being 1) there might be some middle ground between a 91% top marginal rate and a 35% rate. There might also be some room between a 40% effective corporate tax rate and whatever the fuck the pittance is that certain industries now pay after deductions, and 2) higher tax rates don't neccessarily inhibit growth.

Yeah, I hedged that statement...which I find neccessary when discussing economics which is not an exact science. So please go ahead and give me an example of when a tax increase sent us into a deep decline.

[Skjellyfetti]

FYI: Your candidate supports the elimination of the mortgage tax deduction.

I'm not just talking about THAT one...FYI.

Gary Johnson is actually probably the candidate most closely aligned with these proposals. Only one he disagrees with (probably, I haven't checked) is increased tax on carbon emissions. Is that the one you were talking about?

[AZGrizFan]

I'm not just talking about THAT one...FYI.

Gary Johnson is actually probably the candidate most closely aligned with these proposals. Only one he disagrees with (probably, I haven't checked) is increased tax on carbon emissions. Is that the one you were talking about?

That's the one that I think would cause massive upheaval.

[Chizzang]

We've got it ALL BACKWARDS when we start discussing taxation - it confuses the issue and gives the politicians an easy point of argument and draws our attention AWAY from the actual problem

The problem is distinctly NOT Taxes, that's a lark

The real problem is we have a Federal Government that does not respect the Money that it draws from it's citizens. Nor does it look to control or monitor itself in this regard - it simply argues (and creates an ongoing argument) about where and how to get more...

Which is distinctly NOT the point or the problem

Come on... Throw out "tax chat" bullshit and get to the actual problem.. ^

[Baldy]

We assembled five prominent economists from across the political spectrum. We gave them a simple task: Identify major economic policies they could all stand behind.
They did. They gave us five tax proposals — plus one change to the criminal code — based on good economics.

And in the process, they gave us an economic platform that would surely sink any candidate that supported it.

We decided to bring him to life anyway. Here you have him: A political candidate who could potentially fix the economy, but would never win an election.



Get rid of the mortgage tax deduction.
The mortgage tax deduction lets homeowners deduct interest they pay on their mortgage. Gone. After all, big houses get bigger tax breaks, driving up prices for everyone. Why distort the housing market and subsidize people buying expensive homes?

End the tax deduction companies get for providing health insurance to employees.
Neither employees nor employers pay taxes on workplace health-insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health spending overall. The deduction costs the government an estimated $184.46 billion per year.

Eliminate the corporate income tax.
Get rid of it. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people. Just tax rich people.

Shift from income tax to consumption tax.
Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discrouage creating jobs. Not such a good idea. Instead, impose a consumption tax, desgined to be progressive to protect lower-income households.

Tax carbon emmisions.
Yes, that means higher gasoline prices. It's a kind of consumption tax, and can be structured to make sure it doesn't disproportionately harm lower-income Americans. More, it's taxing something that's bad, which gives people an incentive to stop polluting.

Legalize marijuana.
Stop spending so much trying to put pot users and dealers in jail - it costs a lot of money to catch them, prosecutre them, and them put them in jail. Criminilizing drugs also drives drug prices up, making gang leaders rich.

http://www.npr.org/2012/10/17/163104599 ... -candidate" onclick="window.open(this.href);return false;

And, Planet Money is a great podcast if y'all aren't familiar you should listen to a few episodes.

This is interesting, but it doesn't make one bit of sense.

If you eliminate corporate income taxes, there would be no such thing as a "tax deduction companies get for providing health insurance to employees". No corporate income tax = no tax deductions, period.

The same thing goes for the mortgage interest deduction. If we move from an income tax to a consumption tax, there would be no such thing as a mortgage interest deduction.

There might have been some smart people who came up with this...ahem...idea, but whoever put it all together didn't think this thing out.

[CitadelGrad]

We are, but we also recognize that it was government picking winners and losers that led to the housing bubble. It was an egregious mistake that will take many years to correct. There is no point in compounding the error with elimination of the mortgage deduction -- at this time. As I pointed out in a previous post, it's a matter of timing. The deduction should be eliminated, but not now. The damage would be enormous.

So you don't think there would be a negative impact to other non-mortgage related housing that would be harmful to many people for the sake of higher federal revenues? Mortgage interest deductions help people afford purchasing a house instead of renting. This keeps lease rates "competitive" with that factored in. Take it out and lease rates are sure to rise because renters will be less enticed. I don't know the exact economic makeup of renters, but I would guess that most rent because they can't afford to buy. So who gets hurt here in the name of additional federal revenue.
Now, if you say that the deduction should be tweeked, that is a different story. This could probably be done in such a way to increase federal revenue and not impact lease rates.

I would like to see it eventually eliminated as part of a complete overhaul of the tax code. That overhaul would ideally lower all tax rates and reduce the number of brackets, at the same time eliminating a majority of current deductions and the few loopholes that still exist.

[89Hen]

and getting rid of the Mortgage deduction is the stupidest thing I've ever heard

Lots of people support it. I don't expect folks like 89Hen and blueballs to support it, because it would hurt their industry. I mean lives.

FU. This would dessimate the country. Imagine a fixed income homeowner stretching to pay the mortgage as it is. Now take away the interest deduction. Foreclosure rates would SKYROCKET.

[89Hen]

Lots of people support it. I don't expect folks like 89Hen and blueballs to support it, because it would hurt their industry. I mean lives.

Republicans took support for the mortgage rate deduction out of their platform this year. (Doesn't mean they support eliminating it... but, a step in that direction)
Eliminating the mortgage tax deduction was part of George Romney's platform.
A bipartisan panel recommended it this summer.

Interesting read on issue:
http://www.bloomberg.com/news/2012-08-3 ... break.html" onclick="window.open(this.href);return false;


I'm not saying that it is a politically tenable position. But, that's kinda the point of the "fake" presidential candidate. Unpopular issues that would fix the economy.

In a vaccuum. Sure. But the ancillary effects of these actions would cause such a tidal wave of negative effects this country could well fall into a depression.

Me thinks perhaps Jelly is the son of Dodd Frank.

[CAA Flagship]

Yeah, I hedged that statement...which I find neccessary when discussing economics which is not an exact science. So please go ahead and give me an example of when a tax increase sent us into a deep decline.

I can show you where the "threat" of a tax increase has stalled a recovery.

[GSUhooligan]

I'm not just talking about THAT one...FYI.

Gary Johnson is actually probably the candidate most closely aligned with these proposals. Only one he disagrees with (probably, I haven't checked) is increased tax on carbon emissions. Is that the one you were talking about?

You're exactly right. Johnson wants to get rid of all taxes and replace them with a fair tax. Without income and corporate income taxes, you wouldn't need mortgage deductions or insurance deductions. He's for legalizing pot. The only thing on this list he'd be against is the carbon tax.

[89Hen]

You're exactly right. Johnson wants to get rid of all taxes and replace them with a fair tax. Without income and corporate income taxes, you wouldn't need mortgage deductions...

Seems simplistic, but let me say this one more time... if you remove the tax deduction for mortgage insterest it would decimate the housing market like nothing you've seen before.

[kalm]

Yeah, I hedged that statement...which I find neccessary when discussing economics which is not an exact science. So please go ahead and give me an example of when a tax increase sent us into a deep decline.

I can show you where the "threat" of a tax increase has stalled a recovery.

Yeah don't make money today because there MIGHT be a tax increase in the future!

[GannonFan]

I like what Stein has to say on this, but I don't think he's taking into account the fierce international competition US companies face these days. The time period he mentioned really isn't comparable in those terms.

I agree on this point. When people talk about tax rates and what happened historically, they almost always just look at things inside a bubble - i.e. what was the tax rate and what was the economic growth rate. As if those two things are entirely and perfectly connected and nothing else matters. Unfortunately, a whole lot else matters that ends up breaking down that connection. And there are vast differences in the country and the world today than there was in the '50s.

[GannonFan]

I can show you where the "threat" of a tax increase has stalled a recovery.

Yeah don't make money today because there MIGHT be a tax increase in the future!

Oh no, they still make money, just not where we can get to it and tax it. Oh, and not where they take that money and hire more people either. The rich always make out fine, it's the collateral damage (i.e. us) that get hurt in stalled recovery's like this.

[Baldy]

You're exactly right. Johnson wants to get rid of all taxes and replace them with a fair tax. Without income and corporate income taxes, you wouldn't need mortgage deductions...

Seems simplistic, but let me say this one more time... if you remove the tax deduction for mortgage insterest it would decimate the housing market like nothing you've seen before.

When you abolish the tax code and no longer are required to file individual income tax, there are no deductions. You are trying to deduct from 0. The mortgage interest deduction is moot.

[89Hen]

Seems simplistic, but let me say this one more time... if you remove the tax deduction for mortgage insterest it would decimate the housing market like nothing you've seen before.

When you abolish the tax code and no longer are required to file individual income tax, there are no deductions. You are trying to deduct from 0. The mortgage interest deduction is moot.

Currently there is a disparity between a mortgage payment and a rent payment. If you eliminate the advantage of owning vs renting, owning becomes less desirable. Any time you make something less desirable you shrink the demand. What would that do to housing prices?

[CAA Flagship]

I can show you where the "threat" of a tax increase has stalled a recovery.

Yeah don't make money today because there MIGHT be a tax increase in the future!

Corporate taxes. Companies are stockpiling money and not hiring.

[Baldy]

When you abolish the tax code and no longer are required to file individual income tax, there are no deductions. You are trying to deduct from 0. The mortgage interest deduction is moot.

Currently there is a disparity between a mortgage payment and a rent payment. If you eliminate the advantage of owning vs renting, owning becomes less desirable. Any time you make something less desirable you shrink the demand. What would that do to housing prices?

Nothing would be more desirable than giving yourself a 15%-35% raise (not counting the compliance costs) by not having to pay income taxes.

[kalm]

I like what Stein has to say on this, but I don't think he's taking into account the fierce international competition US companies face these days. The time period he mentioned really isn't comparable in those terms.

I agree on this point. When people talk about tax rates and what happened historically, they almost always just look at things inside a bubble - i.e. what was the tax rate and what was the economic growth rate. As if those two things are entirely and perfectly connected and nothing else matters. Unfortunately, a whole lot else matters that ends up breaking down that connection. And there are vast differences in the country and the world today than there was in the '50s.

That might be true. I'm just trying to counter the meme that tax cuts/low taxes are the end all be all of economic growth. This has been pushed, become a plank of, and the answer to all that ails for the Republican party for years now. Fight a war of choice? Cut taxes. Nation in debt? Cut taxes. Entitlements heading into insolvency? Cut taxes. Need a Homeland Security Agency? Cut taxes. Housing bubble on the horizon? Cut taxes. Household debt rising? Cut taxes. Gays want equal rights? Cut taxes. Healthcare reform? Cut taxes. Keeler needs to go? Cut taxes.

Also, see my above response. I'm agreeing with a conk economist who was literally studying this shit while it was happening back in the 50's and has witnessed all of this shit happen for Christ's sake. It's not as if he didn't consider the other factors.

[CAA Flagship]

I agree on this point. When people talk about tax rates and what happened historically, they almost always just look at things inside a bubble - i.e. what was the tax rate and what was the economic growth rate. As if those two things are entirely and perfectly connected and nothing else matters. Unfortunately, a whole lot else matters that ends up breaking down that connection. And there are vast differences in the country and the world today than there was in the '50s.

That might be true. I'm just trying to counter the meme that tax cuts/low taxes are the end all be all of economic growth. This has been pushed, become a plank of, and the answer to all that ails for the Republican party for years now. Fight a war of choice? Cut taxes. Nation in debt? Cut taxes. Entitlements heading into insolvency? Cut taxes. Need a Homeland Security Agency? Cut taxes. Housing bubble on the horizon? Cut taxes. Household debt rising? Cut taxes. Gays want equal rights? Cut taxes. Healthcare reform? Cut taxes. Keeler needs to go? Cut taxes.

Also, see my above response. I'm agreeing with a conk economist who was literally studying this shit while it was happening back in the 50's and has witnessed all of this shit happen for Christ's sake. It's not as if he didn't consider the other factors.

Cut taxes

[kalm]

That might be true. I'm just trying to counter the meme that tax cuts/low taxes are the end all be all of economic growth. This has been pushed, become a plank of, and the answer to all that ails for the Republican party for years now. Fight a war of choice? Cut taxes. Nation in debt? Cut taxes. Entitlements heading into insolvency? Cut taxes. Need a Homeland Security Agency? Cut taxes. Housing bubble on the horizon? Cut taxes. Household debt rising? Cut taxes. Gays want equal rights? Cut taxes. Healthcare reform? Cut taxes. Keeler needs to go? Cut taxes.

Also, see my above response. I'm agreeing with a conk economist who was literally studying this shit while it was happening back in the 50's and has witnessed all of this shit happen for Christ's sake. It's not as if he didn't consider the other factors.

Cut taxes

OK...that's awesome.

[GSUhooligan]

When you abolish the tax code and no longer are required to file individual income tax, there are no deductions. You are trying to deduct from 0. The mortgage interest deduction is moot.

Currently there is a disparity between a mortgage payment and a rent payment. If you eliminate the advantage of owning vs renting, owning becomes less desirable. Any time you make something less desirable you shrink the demand. What would that do to housing prices?

You don't buy a house for the tax deduction, maintenance costs that you save by renting make up for a mortgage tax deduction. The advantage of owning vs renting is that I'm making an investment instead of making someone else rich. The tax deduction is an advantage for those who finance vs pay cash. I'd happily trade 25K in extra income for a 2K deduction (not credit, deduction).

[YoUDeeMan]

Lots of people support it. I don't expect folks like 89Hen and blueballs to support it, because it would hurt their industry. I mean lives.

FU. This would dessimate the country. Imagine a fixed income homeowner stretching to pay the mortgage as it is. Now take away the interest deduction. Foreclosure rates would SKYROCKET.

Grandfather in those who have current deductions...and eliminate the future deductions.

Those in current homes will be able to stay there. New housing prices will fall so those who will buy in the future will get market price (what...no overpriced $400,000 cookie-cutter McMansions anymore...what a shame).

Life will go on.