David Sirota: Homeownership Support Shouldn’t Be a Mansion Subsidy

[marmar]

from truthdig:



Homeownership Support Shouldn’t Be a Mansion Subsidy

Posted on Dec 13, 2012
By David Sirota


With Congress finally starting to have a serious conversation about our revenue crisis, there are obvious reasons to limit the amount of mortgage interest that Americans can deduct from their taxable income.

First and foremost, current law—which allows homeowners to deduct all interest on mortgages up to $1 million—is extremely expensive for the country. As federal data show, it costs roughly $100 billion a year, making it the third largest expenditure woven into the tax code.

That huge outlay might be justified if the deduction was a widely-distributed, middle-class program. But with only about a third of all taxpayers earning enough to make it worthwhile to itemize their tax returns, just a quarter of all tax filers ever actually utilize the deduction. Add to this the fact that the deduction can be used for second homes, and the result is a write-off that mostly benefits the wealthy. In dollar-figure terms, it is a deduction that, according to the Tax Policy Center, saves $5460 for someone making more than $250,000 a year and only $91 for those making less than $40,000 a year.

As compelling as these facts are, though, the best argument for changing the deduction comes from recounting an obvious—but taboo—truth. Put simply, even in the name of the national goal of homeownership, the tax code does not need to subsidize $1 million mortgages, because nobody requires that large a mortgage to afford an adequate home. ....................(more)

The complete piece is at: http://www.truthdig.com/report/item/homeownership_support_shouldnt_be_a_mansion_subsidy_20121213/

[xchrom]

1. du rec. nt

[Lucky Luciano]

2. Funny, I got a mailer advertising a 2 bed + 1 bath for $900k

in Manhattan. Seemed like a bargain...certainly not a mansion.

[Orrex]

3. Perhaps the point of the article is...

That you shouldn't get to claim the mortgage interest deduction on that mansion if it's your second home.

[JHB]

4. In Manhattan, that can qualify as a mansion

It's just one that trades size for location.

[intersectionality]

5. lol wut?

Sounds like you have never lived in a place where the 1% income for the rest of the country doesn't even break the top 15%. A 2BR in Manhattan for $900k is just like a 2BR in any other place. Definitely not a mansion.

[Orrex]

6. What's your point, exactly?

You appear to be arguing that the article is invalid simply because you can identify an extremely anomalous area in which real estate values are preposterously inflated. Rather that howling about the author's choice of the single word "mansion," why don't you address the actual intent of the article? Do you truly feel that landowners should be able to claim theortgage interest deduction on their second and third and fourth properties? For what possible reason?

Or would you prefer simply to gnash your teeth at the suggestion that $900K would by a mansion in about 98% of the country?

[muriel_volestrangler]

7. But it's in Manhattan; people living there choose it for its advantages

of being close to desirable amenities and high-paying jobs. And, more importantly, someone buying a home there ends up with a huge investment at the end, which they can sell and buy a mansion elsewhere. Which is their right, but there isn't a good reason for taxpayers to subsidise their eventual wealth.

[Thor_MN]

8. A 2BR in Manhattan provides easy commutes to jobs with high wages

which is why it costs so much more. It is not the same as a 2BR in any other place.

Take a house and lot from an inner ring suburb, place the same sized house on a same sized lot 50 miles out of the city, and the price will be cut in half. Location, as they say, matters.

[JHB]

9. Context is everything. In an island of shoeboxes, a 2BR is a near-mansion

And speaking of context, this is about tax breaks, not a semantic debate about what sort of dwelling qualifies for the term "mansion".

The fact is that the write-off in its present form provides a highly-disproportionate benefit to people at the higher end of the income spectrum. Lowering that cutoff should be on the table, at very least as a bargaining chip (as is grandfathering in currently-held mortgages and making a change only apply to mortgages made after a certain date).