Is it true we're about to lose all property tax deduction?

[POORSH]

I heard from my brother in law that if Obama has his ways, we will lose all property tax deduction? I hope it is not true, but if it is, that really sucks! Taxes going up, running out of SS, and now no property tax deductions. Anything else in the Obama camp she should know about?

[look 171]

I think caital gains tax on your property if you were ever to sell. If you own for more then 5 years and live in it for the last 2, them you get a tax break of 250k. 500 if you had a wife. I think you could kiss that good bye soon if he has his way.

[Porsche-O-Phile]

The only upside to this is it will help to rein in future real estate speculation by eliminating one of the core incentives.

Although we absolutely DO need to come up with ways to ensure that another bubble similar to the one we just went through never, ever occurs again, I question whether this is the best way to do it. The phrase "ulterior motives" comes to mind immediately... Follow the money.

[tabs]

Which "BUBBLE" are you refering to? The Stock Market, The RE, The Art, The Collectable Car or the Commodity Bubbles. And what about the Treasury Bond Bubble....

The swings of a capitalist economy often result in Bubbles or excesses in prices this goes all the way back to the 16 th century and the Tulip Bubble.

[Porsche-O-Phile]

Real estate.

"Bubbles" and speculative run-ups are normal in capitalist economies however we simply can't afford another one in real estate like we've just been through. It nearly collapsed our economy. Like it or not, real estate is established as a cornerstone of American household security, largely because of the conservatism surrounding lending practices for it going back almost 100 years.

When people felt the need to tinker with it "just because", bad things happened. You don't go screwing around with foundations once the building is placed on top of them. Things like home mortgages, retirement funds, etc. (which are the primary wealth generators for a large number of Americans - indeed the ONLY wealth generators for many) can't afford speculative run-ups like we've seen recently. That's what made the recent RE bubble so remarkable - that it occurred in a sector that had previously been so stable and trusted - much as the stock market was prior to the 1930s...

This can't be allowed to happen again or it WILL destroy what's left of our economy - if all Zero's borrowing doesn't destroy it anyway (sorry for the political reference, PARF not intended - just had to be said).

[widebody911]

Originally Posted by POORSH

I heard from my brother in law that if Obama has his ways, we will lose all property tax deduction? I hope it is not true, but if it is, that really sucks! Taxes going up, running out of SS, and now no property tax deductions. Anything else in the Obama camp she should know about?

I heard from my ex-girlfriend's sister's vet's cousin that all conservative Bush dead-enders are to report to their assigned reeducation camp immediately. Last names beginning with A-L report to Alabama, M through U report to Mississippi, V through Z report to West Virginia.

[red-beard]

Actually, all I could find on this was elimination of the property tax deduction as the means of eliminating AMT. But that was a suggestion under Bush in 2005. Where did you see anything about elimination of the property tax deduction under Obama?

[Jim Richards]

Originally Posted by widebody911

I heard from my ex-girlfriend's sister's vet's cousin that all conservative Bush dead-enders are to report to their assigned reeducation camp immediately. Last names beginning with A-L report to Alabama, M through U report to Mississippi, V through Z report to West Virginia.

Once it's written it on the Internet, it must be true.

[jyl]

Is this the latest right-wing rumour-mongering? Stupid.

[Rick Lee]

While I know it's politically unpopular, I wish there were zero deductions for anyone. Why should renters subsidize homeowners? Why should I subsidize people who decide to have kids? The tax code should be for raising essential revenue, not rewarding political constituencies and channeling personal behavior.

[red-beard]

John, I can't find anything, anywhere. If this were real, it would be all over the Wall Street Journal.

[look 171]

Originally Posted by red-beard

Actually, all I could find on this was elimination of the property tax deduction as the means of eliminating AMT. But that was a suggestion under Bush in 2005. Where did you see anything about elimination of the property tax deduction under Obama?

No I am just thinking out loud. that could possible because he need or want to pay fot so many things.

[red-beard]

We can speculate on what he will do. I'm more concerned about the Waxman bill. That will tank the economy in the USA.

[jyl]

Originally Posted by red-beard

John, I can't find anything, anywhere. If this were real, it would be all over the Wall Street Journal.

I agree. Somebody's brother-in-law is misinformed or (my bet) doesn't exist.

Rick, in principle, I'm not convinced there should be a mortgage interest deduction, or any other favorable tax treatment for homeowners. For some of the same reasons you mentioned.

In practice, I think the deduction is "untouchable". Favorable tax treatment is built into house prices. For a $400K mortgage at 6%/30 years, the cumulative interest paid is very roughly $470K, assuming 20% effective tax rate and 4% discountr ate the present value of the mortgage interest deduction is very roughly $62K. Eliminating the mortgage interest deduction would cut the value of that house by 15% in theory and probably much more in practice. That would kick the legs out from under tens of millions of American families. They'd be burning politicians at the stake.

[red-beard]

John, I could not agree more. The only way to do this, is a complete change of the tax system. The income tax alone skews things, at least from a business perspective. If the income tax were people only, it would be fine. Deductions and other tax "loop holes" skew behavior.

TANSTAAFL. We the people need to pay for the things we get, directly, not indirectly. We need to see the cost, so we can make the right decisions.

I know most people think a 17-24% sales tax would be tough to swallow. But it is what we are paying now in all the other ways. Make it straight forward and simple. The sales tax is this, and it doesn't skew business models to move elsewhere.

The one thing I would do is to exempt a lot of items from sales tax. Food and clothing, reading materials. Basic day to day needs. But the vast majority of items would need sales tax. And if I'm not clear, this is a retail tax. Just like sales tax today, only the end user pays.

The single worst tax in the world is VAT.

[jyl]

What do you mean by "only the end user pays" - is that something different from typical sales tax that is tacked on at the register? And what is the difference between sales tax and VAT?

[Zeke]

Originally Posted by Porsche-O-Phile

The only upside to this is it will help to rein in future real estate speculation by eliminating one of the core incentives.

Although we absolutely DO need to come up with ways to ensure that another bubble similar to the one we just went through never, ever occurs again, I question whether this is the best way to do it. The phrase "ulterior motives" comes to mind immediately... Follow the money.

You are correct, IMHO. Rolling over profits is one thing, exempting them is another. However, the exemption should be continued for seniors to allow them to properly downsize w/o a penalty.

This may very well keep many seniors from becoming "on the dole." Let's take the path of most economic sense. I'd submit that once someone reaches retirement age as defined by SS and draws SS, they should be able to tap into their equity by selling w/o any penalty, or at least leave the rates as Clinton set them. Those rates are conservative at best when you think of how much it takes to sustain a livable standard.

[red-beard]

Originally Posted by jyl

What do you mean by "only the end user pays" - is that something different from typical sales tax that is tacked on at the register? And what is the difference between sales tax and VAT?

Just like today, as a business, if I resell the product, there is no sales tax. If the sales tax were included each time the product was sold, business to business, it would be just as bad as the present corporate tax issue. Each time a transaction takes place, a little tax is added.

VAT is exactly this. Everytime "VALUE" is added to a product, sales tax is taken on the added value. The tax creeps into the price of the product, the same way corporate incomes do. And it is a headache for the businesses to have to do VAT accounting of the value add for each item, as it is sold.

[onewhippedpuppy]

Originally Posted by red-beard

John, I could not agree more. The only way to do this, is a complete change of the tax system. The income tax alone skews things, at least from a business perspective. If the income tax were people only, it would be fine. Deductions and other tax "loop holes" skew behavior.

TANSTAAFL. We the people need to pay for the things we get, directly, not indirectly. We need to see the cost, so we can make the right decisions.

I know most people think a 17-24% sales tax would be tough to swallow. But it is what we are paying now in all the other ways. Make it straight forward and simple. The sales tax is this, and it doesn't skew business models to move elsewhere.

The one thing I would do is to exempt a lot of items from sales tax. Food and clothing, reading materials. Basic day to day needs. But the vast majority of items would need sales tax. And if I'm not clear, this is a retail tax. Just like sales tax today, only the end user pays.

The single worst tax in the world is VAT.

You and my accountant wife would get along great.

Personally I think the tax code is incredibly difficult by design, it's easier for the govt to manipulate the people if they don't understand that they're being manipulated. A simple higher sales tax rate would make so much more sense, but the govt would lose control of their destiny. We all know how much govt likes to lose control of the people.

[red-beard]

Playing with Tax deductions is like trying to push fingers into a dike that is about to burst.

Wow, that sounds really really bad.