Severn Hoos wrote:hands11 wrote:How about this for common sense?
End the mortgage deductions for people personal homes. That is all part of overvaluing properties.
End property taxes for personal homes. You can keep them for commercial properties I guess.
Collect the money you need for the state with state taxes
End the child credits
Tax people who sent their kids to public schools
Don't tax those who want to send them elsewhere
It makes no sense to me that a renter with kids is not contributing to the funding of those schools and it makes no sense that someone that owns a house with no kids is.
It also makes no sense to give those that get mortgages for their own a tax write off. This only inflates the house prices and put more money in the banks pockets instead of the government.
The workforce would actually be more mobile is they rented instead of owned.
Hmm, interesting set of proposals, hands. Kinda all over the map politically - enough to make everyone happy, or enough to tick everyone off, depending on how you look at it.
First, ending mortgage deductions AND property tax: Not so realistic, since one is Federal and the other state/local. Probably a decent trade for homeowners, but my hunch is that it would result in a net reduction in tax revenue. Wonder if it'd be an easy find to compare the two totals. Still - you could end the Federal deduction and have no guarantee that the states cooperate, so not sure I'd want to take that risk personally.
"Collect the money you need for the state with state taxes" I assume you mean ending transfers from Federal to state governments? I know it's popular to say that Red states take more from the fed. govt than they pay in, but I bet you'd find a lot of support for that proposal among the knuckle-dragging tea party crowd. I'd sign up for it.
"End the child credits - Tax people who sent their kids to public schools - Don't tax those who want to send them elsewhere"
Hmm, is that a school choice proposal? Again, you'd have lots of support from the Right on that one. I do get tax credits for my 4 kids, but then I don't feel bad about claiming them, if only because we're helping to keep the inverted pyramid Ponzi scheme they call Social Security going. (That's a joke, folks. Sort of.) Now, having said that - there's a pretty compelling argument (via Milton Friedman) that educating children has a significant positive neighborhood effect, and thus justifies asking (i.e., compelling) all members of society to contribute to their education.
But you touch on a different point, in that it's a positive effect for all members, not just homeowners. OF course, renters still end up paying taxes via higher rents if the Landlord has to pay the taxes anyway, so ultimately it's a wash. What really doesn't make sense in that argument, however, is that the benefit is not limited to children educated via the Public schools. Society benefits just as much if that child is educated in a private school as in a public school, maybe more. And especially if that child can receive a better education at lower expense, there's no rationale for not allowing - and even encouraging - school choice.
I agree that the government shouldn't be blindly encouraging home ownership for its own sake, but you almost sound like you'd prefer the government to discourage home ownership. Don't think I'd go there, but definitely don't want to see any more of quasi-governmental agencies helping people get into homes that they can't afford....
Thanks for you well thought out reply. Almost to much for me to get my head around and good stuff to get one thinking. Maybe I wrote to much but if your up for it, give it a read.
First, this really cracked me up.
" Hmm, interesting set of proposals, hands. Kinda all over the map politically -
enough to make everyone happy, or enough to tick everyone off, depending on how you look at it. "
Yeah. I find that kind of thinking to be a gift in some ways because I can find some common ground with most people but it can be a pain not fitting in nicely with a defined group. I have found that once you start to lock yourself into one ideology, you are going to end up missing the right solutions. I believe in capitalism and socialism and libertarianism. I think that is what the founding father I most respected believed in also.
My policy idea are based in trying to balance need with fairness with what is best for the economy and justice. I'm sure a lot of people feel that way about their ideas though. But the post you replied to was me trying to do that. I just feel the way things are currently is out of balance for many reasons and I think the evidence of our situation makes that clear. So on the mortgage topic, I say this.
Home prices and the resulting mortgages are higher than fair value as a direct result of the government subsidizing them via interest write offs to avoid paying taxes at an equable level to an equal income earner. The interest write off makes home owners active participants in a dysfunctional economy that creates asset bubbles based on over leverage/credit card ( debt spending ) The banks don't care because they get to offer higher mortgages and collect more interest. Why would we want banks to make this extra revenue on the backs of tax dollar not collected by the government when compared to another citizen who is renting ? And even if you are simply comparing home owner to home owner, this policy makes home prices more expensive to those who don't want to barrow money from the banks but instead want to pay cash for their properties. It creates an incentive for going into debt which is the exact wrong thing we need for a stable economy. If anything, give people a tax write off on the interest in their saving accounts. Then the banks will have more deposits to make proper loans when needed and people will make their own money to purchase homes that are fairly valued.
If anything, tax incentive policies should lead people to share the burden of a goal that would benefit the country as a whole. Lets say, getting a tax write off to purchase a new vehicle that gets awesome gas mileage and pollutes less because that downstream cost in natural resources, wars, cleaning up the environment, health issues, etc cost the government more than the tax incentives. In the end, you save money and create jobs in a emerging industry which creates a larger tax base. Whoever says government never created a job has no idea what they are talking about. Our government has been key to this countries unique success in so many ways from economic to social prosperity. Sadly, with the wrong politicians and policies, it can be destructive also.
Any back to mortgages. This policy doesn't do that. Instead it, inflates housing prices. It picks home owners over renters when in a tight economy, mobility is very important to get people to the locations that fit the job demand or even the housing they can afford. The supply and demand flow is much better if people are not stuck in homes.
Then consider the bubbles like we just had. The over inflated home prices were just another way of trying to grow our way into a balanced budget with a tax structure that does not collect enough for the services people want. So make people feel rich for doing nothing more than taking on a mortgage. Let them spend every dime they make and then some. I saw houses in downtown Silver Spring go up $100,000 a year for 3 straight years. REALLY. That is more than most people would have saved in a life time if they saved and invested wisely in a normal market. But way bother. We will give you a housing bubble so everyone can be rich by doing nothing more that buying a home. And for kickers, we won't create any new jobs and the government will double it's national debt while it is happening. Now when the market crashes, whos tax dollars are paying more for the bailing out. The ones who paid more and are still paying more in taxes, that didn't/don't get the write offs. Not very fair. The people that participated in creating the bubble get to enjoy the big houses, the refinancing to get their BMW and then when it crashes, they still aren't paying as much in taxes than an equal income earner who rents that didn't even partake in the problem to begin with. Anyone who has uttered the government shouldn't pick winner and looser that supports this stuff is full if it. The policies of profits are yours but loses are ours has to stop. For home owners, banks, Wall Street. Everyone.
Add to this another disadvantage, the advantage of this deduction is an exponential benefit to richer people and it lends to them buying even more expensive house - exponentially. Why? The more you make, the higher your tax bracket, the better your deduction.
When you consider all these effects, the home deduction is a terrible economic policy that blots the system, fools people into taking unnecessary risk when things are good and fools them into thinking they are richer than they are when housing is on a run. The bigger the run, the more they get fooled. And all the while, the banks win and then win again. This is what we just saw.
All that said, I see no reason home owner should be penalized with property taxes or why those taxes should be used to fund things like the school. If you argue the public schools are in everyone interest like roads, then collect that money via state taxes or even federal taxes. If an educated workforce benefits employers, then you better damn sure make corporation pay some damn taxes. Personally, I don't think it is in my best interest to pay for other people kids education. I think you should and/or corporations should but it shouldn't be from property taxes. You own the home and property, it should be yours.
Taxes should not advantage or intensive people to purchase homes or have kids they can't afford and it damn sure shouldn't line the pockets of banks in the process, help create housing bubbles, and help lead to tax policies that don't collect enough money and help get people that need to be mobile stuck in upside down homes.
And if you want to have one income earner so one can stay home and raise your kids and home school or send your kids to private school, you shouldn't have to pay into the public school system. It can be funded in other ways that are more fair. Guess that is the libertarian side of me.

But a damn sure believe in taxing the riches 2% more before cutting food stamps, closing the corporate loop holes and regulating thing and funding to enforcing those regulation. Food, financial markets, etc. Like you said. Enough for everyone to find something they like and something they hate.
