Planet Money's Fake Presidential Candidate:

[89Hen]

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.

My point exactly. When you put homeowners in a position where they are updide down in their homes, foreclosures go up. This isn't rocket science.

[89Hen]

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).

See my other posts. Housing prices would tank.

[Skjellyfetti]

Housing prices would tank.

Would "tanking" be down to their actual value or would housing prices tank well below their actual value? Honest question. I don't know.

It is interesting to see conservatives, who normally do not advocate for taxation for behavior influence... support the mortgage tax deduction to increase the demand for homes.

[CAA Flagship]

Housing prices would tank.

Would "tanking" be down to their actual value or would housing prices tank well below their actual value? Honest question. I don't know.

It is interesting to see conservatives, who normally do not advocate for taxation for behavior influence... support the mortgage tax deduction to increase the demand for homes.

What is "actual" value?
Build a house on Lot A. It will cost you the price of Lot A plus the labor and materials to build the house.
Build a house on Lob B. It will cost you the price of Lot B plus the labor and materials to build the house.
The biggest variation will be the cost of the lot. The cost of labor will vary but not nearly as much as a lot. Materials are similar if building in the same town. So what is "actual" value?

Existing houses are significantly cheaper in my town now than if you built the exact same house on the exact same lot. I would say that the existing house is below value in that case.

[AZGrizFan]

Would "tanking" be down to their actual value or would housing prices tank well below their actual value? Honest question. I don't know.

It is interesting to see conservatives, who normally do not advocate for taxation for behavior influence... support the mortgage tax deduction to increase the demand for homes.

What is "actual" value?
Build a house on Lot A. It will cost you the price of Lot A plus the labor and materials to build the house.
Build a house on Lob B. It will cost you the price of Lot B plus the labor and materials to build the house.
The biggest variation will be the cost of the lot. The cost of labor will vary but not nearly as much as a lot. Materials are similar if building in the same town. So what is "actual" value?

Existing houses are significantly cheaper in my town now than if you built the exact same house on the exact same lot. I would say that the existing house is below value in that case.

In the greater Phoenix area, if lot A is in Chandler and lot B is in North Scottsdale, the "value" of the house is significantly different than just the cost of the lot.

Example: Lot A (Chandler) costs $50,000, $200,000 to build house, property sells for $350,000. Lot B (Scottsdale) costs $150,000, + $200,000 to build the house, property sells for $600,000. Same house. Same sized lot...but you're paying for that "Scottsdale" address...kind of like paying for a Lexus that's just a glorified Toyota.

[HI54UNI]

Time for the flat tax. Eliminate all deductions. And anybody that buys a house for the tax deduction is an idiot.

[AZGrizFan]

Time for the flat tax. Eliminate all deductions. And anybody that buys a house for the tax deduction is an idiot.

Yeah, it was only a HUGE SELLING POINT for the past 40-50 years.

[YoUDeeMan]

Time for the flat tax. Eliminate all deductions. And anybody that buys a house for the tax deduction is an idiot.

Yeah, it was only a HUGE SELLING POINT for the past 40-50 years.

Tax breaks for homeowners are similar to the low interest rate loans for college...all it does is artificially increase the price of the home.

There could be an argument made that the push to have everyone own a new home has done more damage to our environment and economy than anything else. The push into suburbia and beyond has us now dependant on cars and foreign oil while paving over forests and farmland and building bridges to nowhere...meanwhile, our cities rot from within.

[YoUDeeMan]

My point exactly. When you put homeowners in a position where they are updide down in their homes, foreclosures go up. This isn't rocket science.

Screw them...if they bought a home to live in, instead of for an investment, then they don't need to worry about being "upside down".

[AZGrizFan]

My point exactly. When you put homeowners in a position where they are updide down in their homes, foreclosures go up. This isn't rocket science.

Screw them...if they bought a home to live in, instead of for an investment, then they don't need to worry about being "upside down".

If Americans thought like that we wouldn't be in the CURRENT housing crisis we're in. 60% of foreclosures over the past 4 years were VOLUNTARY because the average American has no moral backbone. Degenerate motherfuckers bailed as soon as their house wasn't usable as an ATM. Imagine that about 10-fold if the interest deduction were removed....housing prices would drop by ANOTHER 35-50%, resulting in another huge wave of foreclosures and entire towns and neighborhoods looking like Detroit and Cleveland, where entire BLOCKS of homes are abandoned.

[AZGrizFan]

Yeah, it was only a HUGE SELLING POINT for the past 40-50 years.

Tax breaks for homeowners are similar to the low interest rate loans for college...all it does is artificially increase the price of the home.

There could be an argument made that the push to have everyone own a new home has done more damage to our environment and economy than anything else. The push into suburbia and beyond has us now dependant on cars and foreign oil while paving over forests and farmland and building bridges to nowhere...meanwhile, our cities rot from within.

I agree, but unfortunately it's like welfare and food stamps. Once it's GIVEN, it's extremely difficult to take it away. It's inherent in our entire economic system, rightly or wrongly.

[HI54UNI]

Tax breaks for homeowners are similar to the low interest rate loans for college...all it does is artificially increase the price of the home.

There could be an argument made that the push to have everyone own a new home has done more damage to our environment and economy than anything else. The push into suburbia and beyond has us now dependant on cars and foreign oil while paving over forests and farmland and building bridges to nowhere...meanwhile, our cities rot from within.

I agree, but unfortunately it's like welfare and food stamps. Once it's GIVEN, it's extremely difficult to take it away. It's inherent in our entire economic system, rightly or wrongly.

Gotta start somewhere.....

[AZGrizFan]

I agree, but unfortunately it's like welfare and food stamps. Once it's GIVEN, it's extremely difficult to take it away. It's inherent in our entire economic system, rightly or wrongly.

Gotta start somewhere.....

Well, unless you're ready for a '30's like depression, that "somewhere ain't there.

[Skjellyfetti]

Gotta start somewhere.....

Well, unless you're ready for a '30's like depression, that "somewhere ain't there.

Again, this is a position your presidential candidate supports. Are you voting for a '30's like depression?

[AZGrizFan]

Well, unless you're ready for a '30's like depression, that "somewhere ain't there.

Again, this is a position your presidential candidate supports. Are you voting for a '30's like depression?

I got news for you: There isn't a presidential candidate with whom I agree 100%. You?

[Skjellyfetti]

I got news for you: There isn't a presidential candidate with whom I agree 100%. You?

If I thought a policy of ANY candidate would cause a "'30's like depression" I sure as hell wouldn't vote for them.



Just so I'm straight... you think Gary Johnson's platform... if implemented... would cause a "'30's like depression"... and you are voting for him?!?

[AZGrizFan]

I got news for you: There isn't a presidential candidate with whom I agree 100%. You?

If I thought a policy of ANY candidate would cause a "'30's like depression" I sure as hell wouldn't vote for them.



Just so I'm straight... you think Gary Johnson's platform... if implemented... would cause a "'30's like depression"... and you are voting for him?!?

Jesus, you're retarded.

[AZGrizFan]

May I remind you?

Obviously there are going to be items that everyone probably disagrees with. I certainly don't agree with everything. But, I could definitely get behind a candidate with a concrete plan like this:

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.

[YoUDeeMan]

If Americans thought like that we wouldn't be in the CURRENT housing crisis we're in. 60% of foreclosures over the past 4 years were VOLUNTARY because the average American has no moral backbone. Degenerate motherfuckers bailed as soon as their house wasn't usable as an ATM. Imagine that about 10-fold if the interest deduction were removed....housing prices would drop by ANOTHER 35-50%, resulting in another huge wave of foreclosures and entire towns and neighborhoods looking like Detroit and Cleveland, where entire BLOCKS of homes are abandoned.

Like I said, screw them...both the people walking out on their mortgages and the banks that lent them stupid loans.

Riddle me this...how many more people would be able to find a new place to live if they abandoned their homes and mortgage lenders would not qualify them for another loan (it should also be hard to rent if you have bad credit, so do they go back home to live with mom and dad)?

I don't believe it would be so bad...the big boys and people in real estate are just bluffing and using scare tactics to continue their profits and control of people through the "American Dream" mindset.

if people aren't spending as much money on their mortgage, then they'd have more money to spend on other things. In theory, the rest of the economy could get a boost.

Furthermore, in the good karma world, the people who behaved and used credit properly would be able to buy a properly priced second home and potentially make rental income.

All in all, I'd rather have everything shake out quickly than drag on for years.

[AZGrizFan]

If Americans thought like that we wouldn't be in the CURRENT housing crisis we're in. 60% of foreclosures over the past 4 years were VOLUNTARY because the average American has no moral backbone. Degenerate motherfuckers bailed as soon as their house wasn't usable as an ATM. Imagine that about 10-fold if the interest deduction were removed....housing prices would drop by ANOTHER 35-50%, resulting in another huge wave of foreclosures and entire towns and neighborhoods looking like Detroit and Cleveland, where entire BLOCKS of homes are abandoned.

Like I said, screw them...both the people walking out on their mortgages and the banks that lent them stupid loans.

Riddle me this...how many more people would be able to find a new place to live if they abandoned their homes and mortgage lenders would not qualify them for another loan (it should also be hard to rent if you have bad credit, so do they go back home to live with mom and dad)?

I don't believe it would be so bad...the big boys and people in real estate are just bluffing and using scare tactics to continue their profits and control of people through the "American Dream" mindset.

if people aren't spending as much money on their mortgage, then they'd have more money to spend on other things. In theory, the rest of the economy could get a boost.

Furthermore, in the good karma world, the people who behaved and used credit properly would be able to buy a properly priced second home and potentially make rental income.

All in all, I'd rather have everything shake out quickly than drag on for years.

Tell you what: you stick to what you know, and I'll stick to what I know. You know...whatever it is you know. I know mortgages. It isn't a "scare tactic". And we're not talking about "stupid loans". We're talking about loans made under a system that has been in place for years and years (since 1913, to be exact). You change the rules midstream and the economic meltdown we saw over the last 4 years would be fucking childs play.

Now, there may be a methodology (not yet outlined) wherein you could slowly phase in the elimination of the deduction, but simply eliminating it in one fell swoop would be catastrophic on a level not seen in 70 years.

[YoUDeeMan]

Tell you what: you stick to what you know, and I'll stick to what I know. You know teeth. I know mortgages. It isn't a "scare tactic". And we're not talking about "stupid loans". We're talking about loans made under a system that has been in place for years and years (since 1913, to be exact). You change the rules midstream and the economic meltdown we saw over the last 4 years would be fucking childs play.

Now, there may be a methodology (not yet outlined) wherein you could slowly phase in the elimination of the deduction, but simply eliminating it in one fell swoop would be catastrophic on a level not seen in 70 years.

Teeth? You must have me mixed up with deathdealer. I've been in marketing, credit, and finance for years (funny how they are all intertwined ).

As I mentioned, I am not in favor of stripping the mortgage deduction for those who have it...people bought their houses with the idea that they'd be getting thousands of dollars worth of tax breaks and it would cause a big problem if millions of people suddenly had to cough up extra large chunks of change to stay in their houses.

But there is little reason the tax breaks could not be cut out for new loans. If you want a 5-10 year phase out, then maybe it would cushion the blow a bit, OK, but it should be done quickly.

And no, the current system really hasn't been in place since 1913...that was a diferent era and you can't make a serious comparison saying that those deductions were for home mortgages. We have, however, continually made it easier to purchase a home and it has gone too far in that people (and banks) used houses for investments instead of homes.

[AZGrizFan]

Teeth? You must have me mixed up with deathdealer. I've been in marketing, credit, and finance for years (funny how they are all intertwined ).

As I mentioned, I am not in favor of stripping the mortgage deduction for those who have it...people bought their houses with the idea that they'd be getting thousands of dollars worth of tax breaks and it would cause a big problem if millions of people suddenly had to cough up extra large chunks of change to stay in their houses.

But there is little reason the tax breaks could not be cut out for new loans. If you want a 5-10 year phase out, then maybe it would cushion the blow a bit, OK, but it should be done quickly.

And no, the current system really hasn't been in place since 1913...that was a diferent era and you can't make a serious comparison saying that those deductions were for home mortgages. We have, however, continually made it easier to purchase a home and it has gone too far in that people (and banks) used houses for investments instead of homes.

Yes, I thought the post was made by DD. That's why I went back and edited the post.

If you eliminate the tax break for new loans, ALL houses will decrease in value....not just "new" purchases, thus the next massive voluntary forclosure wave.

And the "easier to purchase a home and gone too far" is a red herring argument that has little to do with the mortgage deduction, IMHO. A separate, and significant issue, but not necessarily related to the mortgage deduction issue.

[YoUDeeMan]

Yes, I thought the post was made by DD. That's why I went back and edited the post.

If you eliminate the tax break for new loans, ALL houses will decrease in value....not just "new" purchases, thus the next massive voluntary forclosure wave.

And the "easier to purchase a home and gone too far" is a red herring argument that has little to do with the mortgage deduction, IMHO. A separate, and significant issue, but not necessarily related to the mortgage deduction issue.

Of course all houses will lose value...but again, where will the people go? I'd think most people would refi rather than walk...3% mortage rates save a hell of a lot of money over the course of 15-30 years and if they can't purchase another house, then they are out on the streets.

The banks are "losing" money either way (not really, but let's roll with what we have to work with here), by reducing their income from refinanced previously predicted higher interest payments, shorter loan periods, or by not getting payments at all and having to sell houses...oh, and by losing multi-billion dollar lawsuits due to the pack of lawyers at their doors. They're just trying to let the air out slowly for their own sake...certainly not for everyone else.

[AZGrizFan]

Yes, I thought the post was made by DD. That's why I went back and edited the post.

If you eliminate the tax break for new loans, ALL houses will decrease in value....not just "new" purchases, thus the next massive voluntary forclosure wave.

And the "easier to purchase a home and gone too far" is a red herring argument that has little to do with the mortgage deduction, IMHO. A separate, and significant issue, but not necessarily related to the mortgage deduction issue.

Of course all houses will lose value...but again, where will the people go? I'd think most people would refi rather than walk...3% mortage rates save a hell of a lot of money over the course of 15-30 years and if they can't purchase another house, then they are out on the streets.

The banks are "losing" money either way (not really, but let's roll with what we have to work with here), by reducing their income from refinanced previously predicted higher interest payments, shorter loan periods, or by not getting payments at all and having to sell houses...oh, and by losing multi-billion dollar lawsuits due to the pack of lawyers at their doors. They're just trying to let the air out slowly for their own sake...certainly not for everyone else.

There is $10.3 TRILLION in mortgage debt in America. Another 30% correction cannot be absorbed by financial institutions, no matter HOW big they are. And if you don't think banks/financial institutions are "losing" money from this mortgage fiasco, you REALLY aren't paying attention.

[89Hen]

Housing prices would tank.

Would "tanking" be down to their actual value or would housing prices tank well below their actual value? Honest question. I don't know.

It is interesting to see conservatives, who normally do not advocate for taxation for behavior influence... support the mortgage tax deduction to increase the demand for homes.

Define "actual value". I define it as what the house is worth on the open market. As for "support the mortgage tax deduction to increase the demand for homes"... that's not an accurate picture. Think of my position as more like the toothpaste is out of the tube. You can't just fuck all the homeowners who need the tax deduction to pay their mortgage or who would lose value in their homes. I could just as easily say "it is interesting to see liberals, who normally want to protect homeowners... want to screw them"