which would hurt folks more, losing mortgage ded., or losing health ins?

[salin]

Serious question, as I don't pay a mortgage - so I don't know how this would work (am guessing that if one pays, say $8,000 a year mortgage that one gets to deduct some or all of that from your reported earned income - so that what one pays taxes on is some percentage (tax rate) of all or a portion of $8,000)?

On a thread in LBN there is a discussion about the bushjr tax panel talking about possibly removing this deduction - and folks are furious.

I raised the point that since january this same panel has been promoting ending all tax incentives for employers to offer health insurance - which would result in many employers dropping all coverage. No attention really paid to this point.

As one who has, in the past, had to self-insure - I know that this can cost, for a single person, more than $5,000 a year (double that for a family). This would be a direct hit on most people.

Not understanding how much the financial impact would be of losing the mort. deduction, it would seem to me that the latter (losing health insurance) would be a more serious hit. Am I wrong? Is there some reason that the mort ded is raising more ire than the likely loss of health insurance?

What am I missing?

[bluedawg12]

1. Two parts to it

first the emotional home and hearth v health care.

The primary need for man is: food and shelter.

messing with mortgage attacks primary imperative: shelter.

folks make monthly mortgage payments- few make monthly doctors bill payments.


mortgages are set up that the first years are really paying on the interest of the loan and not principle. For exampe on a 30 year note you are paying interest for the first 7-10 years, about 80% is interest and that is currently tax deductable.

people who have homes and mortgage but no health insurance find ways to go to a doctor and pay on a visit by visit basis (fee for service) sometimes $35-$60/visit ( cost of a Playstation 2 game)
or will go to the E.R. for big problems and pay the hopsital off over time. So most will opt out of insurance for a home as an investment and as a fading rememberance of what we once called the American dream.

[salin]

7. thanks for the explanation

sadly this puts folks at such high risk - unexpected health costs can bankrupt a person/family. But the idea of homeownership is so strong (and as you state, perceived to be a basic need), mixed with the recent conditions that seduce many to buy right up to the edge of what they can afford monthly (e.g., many folks "starter houses" are much more expensive compared to income than used to be the standard case - not just due to higher home costs, but due to a desire for starting with a bigger/fancier home) has, I fear, put people into a position of carrying a perverse amount of debt - that with no insurance puts folks at great financial risk.

What a scary looking storm seems to be brewing on our landscape.

[1932]

10. Also, I understand Alternative Minimum Income Tax d/NOT recapture mortgage

interest deduction.

So you really get that deduction, unlike other deductions (like the child tax credit). Right?

[skids]

2. It impacts debtors more.

If you are towards the end of your mortgage and have a healthy equity cushion, you are paying much more into principal than interest, so the deduction is small and not much of a loss.

If you are at the beginning of a mortgage but it's a second home or a prospective buy, you can probably afford to sell it off, worst case.

But if you are just starting out on a mortgage and most of your payments are principal, it could rival or even surpass your health insurance costs.

America is playing a shell game with its less fiscally aware. It's succeeded in encouraging people to believe they are rich enough to live well beyond their means, when in fact they are poor. Now it wants to yank the rug out and reap a windfall of loan defaults such that the return on the loan underwriting is enhanced, and people are willing to "work like frightened idiots" for their masters. Predatory lending and legalized servitude at its best.

America Eats Its Young. In case you haven't heard.

[Neil Lisst]

3. It's a set-up, a straw man put up to knock down

If there is anything you want to bet on, bet that the mortgage deduction will never be eliminated.

Let's say you are a top end taxpayer, and your next dollar is taxed at 30%, round figures. If you can deduct 10,000 for mortgage payments, you can save $3000 in taxes.

That deduction is central to the value of homes in America. If you remove that deduction, homes in America would drop in value overnight by billions in the aggregate.

When something like this gets floated, it is for one reason only: So someone can come in and kill it, and be the "hero." Look for the right to Schiavo this.

-----
my progressive political cartoon
http://www.webcomicsnation.com/neillisst

[salin]

5. but the right (ala bushco) are the ones forwarding this

thanks for the explanation - btw, helps me to understand it.

When I finally bought my home - I got a sweet, sweet deal and had been saving aggressively - so I didn't buy in debt - I bought outright. So while I understand the impact that ending a deduction for property taxes would have (which ironcially - I pay at a higher rate than I paid for the house - due to said sweet deal) - I had no sense per the effect of the mort deduction.

[Pepperbelly]

4. both are just part of the con war on the middle class ...

no home owners or healthy under-class, please. It only makes them difficult to control.

[salin]

8. PB, I so fear the damage being near permanent

brought by these maniacs. I hated the Reagan years - but they were still constrained by some reality and forced to compromise with a democratic house (I Miss Tip!) I never could have predicted HOW MUCH damage these folks could wreak on our entire social structure - not just our system of govt. Almost as if they know that they can not "rule" forever - so they are going to wreak as much havoc as possible in an attempt to change things long enough (everything takes time to undo) to squeeze huge profits out. It is as if the ruling GOP class looks with envy at banana republics and is intentionally trying to turn us into one.

[Pepperbelly]

11. I found this article interesting ...

http://www.latimes.com/business/la-fi-taxbreak8oct08,0,1112971.story?coll=la-home-headlines

[bluedawg12]

12. Radicalright wing is anti-American

in the same way Hitler was anti-German. he used Germany as a tool to manipulate people- but he ended up destroying that nation and in the end he even said the people should die for failing him-then he committed suicide.

Talk about cool-aid drinkers....see any parallels?

[Neil Lisst]

13. salin, in response to your post ...

You wrote:

thanks for the explanation - btw, helps me to understand it.

When I finally bought my home - I got a sweet, sweet deal and had been saving aggressively - so I didn't buy in debt - I bought outright. So while I understand the impact that ending a deduction for property taxes would have (which ironcially - I pay at a higher rate than I paid for the house - due to said sweet deal) - I had no sense per the effect of the mort deduction.
---------------------------------------------

You paid cash for your home, which is why you got the sweet deal. You made money on the frontend by buying at a good price. Cash does that. Cash is king in real estate deals.

However, the norm is not cash, but debt instruments, mortgages, to be specific. The real estate, banking, mortgaging, and local governments are heavily invested in the value of homes. Any altering of the mortgage deduction would immediately result in loan failures by the millions, followed by foreclosures, and creating a massive real estate recession.

It ain't gonna happen. It's like when they threatened to close that base in South Dakota, so the new guy, Thune, could get credit for "saving" it. Horse apples"!

-----
my progressive political cartoon
http://www.webcomicsnation.com/neillisst

[salin]

15. my post per permanent damage fear - was after reading these

posts - and a few others - and thinking not only of folks crushing debt - but also of the bankruptcy laws that are set to change. Almost as if they are intentionally working to push a whole lot of our population off the cliff.

[bluedawg12]

6. this is truly war on the middle class

if you are wealthy you do not have to choose.

but, if you are near pay check to paycheck and manage your money carefully, these are Hobsons choices.

Soon the radicalright will be asking for us to make Sophie's Choices.

[1932]

9. 71% of American are homeowners. Many of multiple mortgages.

I don't know how many Ameircans have mortgages, or what the average mortgage payment is. 50% have no health insurance.

I guess the anwswer is both would hurt.

[DBoon]

14. let's look at the math..

Our case - we have a $1700/mo mortgage, by paying off some extra principle right now, we are paying about 50% interest, 50% pricipal.

The interest deduction at a 35% tax rate is worth (1700/2)*.35 = 297 /mo

Now if we had to pay for our own health insurance, I'd guess (based on self-employed peers who do so) it would be $700-$800 per month for an individual. A couple may get some discount, but even so it is a LOT more than our interest tax deduction.

If our mortgage were 100% interest, the two might be comparable.

Another consideration - if one of us got really sick, say cancer or some chornic condition, the medical costs would be much more than the remaining balance on our mortgage.

[salin]

16. the scenario you paint was my guess

but the posts here make clear why there is more uproar about the mort ded. folks have gotten used to no insurance (thanks to the Greed is God GOP party) - but viscerally react to a perceived threat to the home (shelter).

Because I don't get the deduction I had nothing to compare it to - but I have, in the past, paid my own insurance and that is a KILLER expense. I can not believe that while the WH tax panel has been referring to this for months (ending business tax relief for providing insurance) that there is almost no discussion or news coverage of what this means from a social policy standpoint and from a family financial standpoint.