An advisory panel for tax reform recommended a huge reduction in the tax deduction for homeowners, and elimination of state and local tax deductions for federal taxes.
I’m still trying to figure out how this would affect me. I do have a feeling that we are going to get screwed. But then again, I’m not so sure. The places the NYT talks about have housing that is much more expensive than here in Greensboro, so maybe it won’t be so bad.
In any event, these are just recommendations. And I think any politician that endorses this would get attacked as being against home ownership. So I think when it comes down to it, we’ll just see more of the status quo.
What do you think? Do you think that these recommendations will actually be implemented?
bastone.org 
3 replies on “What Tax Cut?”
Good question… I don’t think these will be implemented. Here in the Northeast, where property taxes are through the roof, people would flip out. If you’re going to have any tax, I’ve always been a firm supporter of the income tax; I think income is the best measure of someone’s ability to pay. By essentially raising the cost of home ownership through this type of proposal, you’re driving retirees out of their houses and preventing young people from buying those houses. Home ownership is a proven benefit to society and serves to quell violence and the drug trade in cities, so why should the tax code discourage it?
Nate, good points.
With the current tax system we have, it’s too easy for the very wealthy to pay little or even no tax. But you’re right, the more you make, the more you support the government.
In the past, I thought a value-added tax might be the way to go over an income tax, similar to what is done in Europe. But that would be bad for the poor, who spend more of their money on everyday needs. And taxes in Western Europe are among the highest in the world, and they use the VAT system.
If the deduction on mortgage interest goes away, the immediate effect is going to be a decrease in housing prices. And with people using their home equity like an ATM, that will spell bad news when they find out they owe more on their house than it’s worth.
The tax code, as it is now, does encourage home ownership. But I think it’s also contributing to the housing bubbles (did Greenspan call it “frothy?”) that some speculating are taking place all over the country. I wouldn’t mind seeing some tweaks to the code to address some of this “frothiness.” But I think we also need to keep the ways we have to encourage more people to own homes.
Income tax, use tax, whatever. I say don’t give a break and let the wage earners keep what they surrendered in the first place. We’d be better off and more capable of purchasing a home that way. Why do we need our $$ taken from us, just so we can prove to the government that we should get it back? The government should get out of the consumer purchase “encouragement” business altogether! The main “benefit” the US receives from this kind of thought process is an overly complicated tax system that requires a fortune just to administer!
There are huge benefits to owning one’s residence without a tax break – comfort, sense of pride, captial appreciation, etc. I doubt those who can’t understand things such as these are going to contemplate a purchase on the tax benefit! Those who utilize this break are the middle-class and rich who already understand and aspire to home ownership.
And why should someone’s “ability” to pay taxes be considered at all? It should be everyone paying their “share” of the burden. I agree with Nate on the income tax, but it sounds like he thinks the graduated tax is a good thing. I believe a flat income tax (no “encouragement”, no discouragement) is about as fair and simple as it gets.