dbowker
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So that election was about...?
Lamont Sanford
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Oooooohhhh yeeaaahhh: people were Mad As Hell about stuff they can't understand because they don't read, and they voted blindly to kick out whoever they could. Turns out it's a big surprise to these voters that a lot of the newly elected were running on a platform of spending cuts.

What? Meet the new election same as the old election. You're the pot calling the kettle black. First, don't believe everything you read so don't knock people that don't read what you read. Second, uh, yes, spending cuts. No surprise. You may find this difficult to believe but some people think the government should spend money on a manageable budget. Just like the rest of us spend our own money we "earn". Except for one thing, if we print money it is against the law.

dbowker
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Why do you think I don't want a balanced budget? Last I recall, when Clinton left we had a surplus. Where did the "small gov," GOP get us anyway? Legalized theft by the financial industry at a scale never seen before.

So I'm totally OK with trimming the fat, starting with entitlements and moving right over to the biggest boondoggle of all time: the bloated military that's obsessed with James Bond gadgets and battleships we don't need.

The mortgage deduction is just another reason why people buy houses they don't need instead of renting, which is what people in countries that save do.

Farm subsidies? That's the oldest socialist BS program in the book! Talk about about anti free market: PAYING people not to work so we can keep prices jacked up and artificially protect our turf.

How about outlawing offshore tax havens? Simplifying the tax code? Closing subsidies for oil companies?

Getting Japan and a lot of other allies to actually pay for all it's military protection we provide?

How's that list for a start? I make it point to live within my means, carrying only short-term low or no interest debt and save. We pay high taxes due to our income bracket, but I don't complain. I actually like what my country and state provides for me and my family and feel it's a small price to pay for what so many seem to take for granted.

Lamont Sanford
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Listen to some Insane Clown Posse. I'm diggin' it!

Elk
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Where did the "small gov," GOP get us anyway? Legalized theft by the financial industry at a scale never seen before.

Which the Democrats resolved by socializing corporate losses.

I like GM as an example as it removes the claims of fraud:
Under our current economic model, GM's profits were treated under capitalism and enjoyed by the few; losses are treated under socialism and are suffered by the many.


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The mortgage deduction is just another reason why people buy houses they don't need instead of renting,

Economists have agreed for years that the mortgage deduction is counter-productive. It artificially raises the price of houses as people can afford more and shifts this cost to the taxpayer.

Unfortunately our current tax code is used to try to influence behavior as much as it is to support the economy. The variety of mixed signals make a mess of things.

The tax code should do neither, but instead should be used simply to raise necessary government revenue.

Re: the question as to what the election was about.

I think it is simple: the public had hoped the Democrats would change things quickly to the better. This hasn't happened. Thus, they are willing to give the other guys a try. The reverse will happen when the GOP cannot magically solve our problems in the next two years.

Unless both parties learn to govern, we are going to continue to experience large shifts of power.

Buddha
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Economists have agreed for years that the mortgage deduction is counter-productive. It artificially raises the price of houses as people can afford more and shifts this cost to the taxpayer.

Good lord, guys.

The interest rate deduction is not a "benefit," it is reduced government theft of our money.

Until Saint Ronald changed things in 1986, all interest on all loans was deductible - even credit card interest!

I don't know how America managed to climb to greatness with that deduction in place until so late in our history.

Even my fellow liberals should not stoop to bemoaning the fact that someone pursuing the dream of home ownership is due to some inappropriate government largesse or misguided aspirations.

Home ownership is a deeply ingrained cultural "freedom" (irony intentional) - the promise of which should not be limited to "landlords."

____

However.....prehaps there is a luxury level, like with other things in life, that one could discuss to move the deduction in a "regressive" fashion, so that above 3 million bucks or so, the deduction is gradually reduced.

But then....

Homes are taxed as property, correct?

You guys want income tax paid on the income we earn and then immediately hand over to the mortgage holder, then pay tax based on the value of the property after that....as I said, good lord. Aren't you Taxed Enough Already?

dbowker
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As a liberal who reads a lot about business and economics, I disagree. The deduction is a problematic incentive to get people into homes you can't afford. Same ball of wax as Fannie and Freddy. Owning is NOT everything. I didn't own a house until I was 38 and life was pretty much OK as a matter of fact. Some people just shouldn't own a home for all kinds of reasons. I recently heard an argument from my own parents no less that despite lowered income, difficulty paying property taxes and their current mortgage, they "needed" to keep the house so they got the tax deduction! It's a negative equation but they can't see the obvious because of this idea you HAVE to own. This is just craziness, and statistics show they are not the only ones who buy this myth. At the very least then all 2nd or 3rd homes after the first should not come with any deductions.

Look at the only country not underwater in Europe right now: Germany. They save, they don't have an irrational romance with home ownership, and don't spend money they don't have. Oh and by the way they actually still have an export economy because they still put a premium on education and investing back into the country. Their CEO's make less than half ours do.

But back to us and the "freedom" to go into debt. Why should the Big Gov. be any different than the vast majority of spend-thrift citizens who want it all and love their entitlements too?

School loan deductions make sense, but what benefit does just owning a big asset actually have for the public at large? After you bought it there is no incentive to keep it up, be a good member of the community or anything. It's just more moral hazard. You can get rewarded for risky behavior and poor accounting. How about a tax deduction for staying healthy? Or being extra productive? Or for volunteering time? Do you know that you can do thousands or more of pro-bono work for charity and not a dime is deductible? Why not incentivize doing good works?

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As a liberal who reads a lot about business and economics, I disagree. The deduction is a problematic incentive to get people into homes you can't afford. Same ball of wax as Fannie and Freddy. Owning is NOT everything. I didn't own a house until I was 38 and life was pretty much OK as a matter of fact. Some people just shouldn't own a home for all kinds of reasons.

I recently heard an argument from my own parents no less that despite lowered income, difficulty paying property taxes and their current mortgage, they "needed" to keep the house so they got the tax deduction! It's a negative equation but they can't see the obvious because of this idea you HAVE to own. This is just craziness, and statistics show they are not the only ones who buy this myth. At the very least then all 2nd or 3rd homes after the first should not come with any deductions.

Look at the only country not underwater in Europe right now: Germany. They save, they don't have an irrational romance with home ownership, and don't spend money they don't have. Oh and by the way they actually still have an export economy because they still put a premium on education and investing back into the country. Their CEO's make less than half ours do.

But back to us and the "freedom" to go into debt. Why should the Big Gov. be any different than the vast majority of spend-thrift citizens who want it all and love their entitlements too?

School loan deductions make sense, but what benefit does just owning a big asset actually have for the public at large? After you bought it there is no incentive to keep it up, be a good member of the community or anything. It's just more moral hazard. You can get rewarded for risky behavior and poor accounting. How about a tax deduction for staying healthy? Or being extra productive? Or for volunteering time? Do you know that you can do thousands or more of pro-bono work for charity and not a dime is deductible? Why not incentivize doing good works?

Well, that's a whole bunch of stuff all stewed together!

By the same logic, your example of education expense being decutible would just encourage people to go to a more expensive school or borrow for their education, encouraging schools to keep making education more expensive - inflating education prices.

The mortgage deduction is not any sort of "gift" from government, it's an exclusion from them being able to take even more.

The real reason your parents "need" to keep their house is likely it is an asset they want to preserve, not an addiction to a decution.

We will just have to agree to disagree.

"School loan deductions make sense, but what benefit does just owning a big asset actually have for the public at large?"

Yes, what good does owning a large asset as one ages do for the public at large? I can't believe you'd ask that. JIMV is gonna get you, socialist!

"After you bought it there is no incentive to keep it up, (preserve or enhance value) be a good member of the community or anything. Dude, that's the same as saying if it weren't for the threat of Hell or promise of Heaven, you wouldn't behave. Do you actually believe that? Drive around and look at the quality of upkeep in a community full of renters vs. owners and get back to me!

It's just more moral hazard. How is that again?

You can get rewarded for risky behavior and poor accounting.

So, as a mortgage holder, I am being rewarded for irresponsible behavior?

How about a tax deduction for staying healthy? Tell us how it would work. Money-wise....Better a health system that allows people to smoke cheaply and die exactly at age 65 if you want real fiscal responsibility. Better we eliminate OSHA before it allows all those aging retirees to steal all our money!

Or being extra productive? That would be called "earning more money."

Or for volunteering time? Do you know that you can do thousands or more of pro-bono work for charity and not a dime is deductible? Why not incentivize doing good works? This has always been a funny thing to me. If Lucien Freud wanted to dontae a painting of his to a charity auction, he would only be allowed to deduct the price of the paint and canvas.

So, how would you arrange a deduction for volunteer time? Would Bill gates get a million dollar per hour deduction based on his usual working income per unit of time, or would we all get the same deduction?

dbowker
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Well, my main point is that, as I think we can all agree, the tax system is so convoluted that hardly any of it makes sense. The more money you have the easier it is to game the system. It's like just to live here you need a personal CPA, lawyer and HR rep for work. They thing about the mortgage deduction is part of a bigger problem.

A lot of my "what if's" were hypothetical- the health one for instance. I don't want a tax right-off I want lower premiums, which I get for being a good driver.

How pro-bono for Bill Gates would work is a good question but not relevant for most folks. Just put a cap on the hourly rate; like nothing above an associate lawyer's rate or a hospital surgeon or something. That would capture most everyone, and even those that bill higher would get more than the nothing they get now!

Elk
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Flat tax. No deductions. All forms of income (wage, capital, etc.) taxed the same. No floor, no ceiling. Charities/churches pay income tax and property tax.

Citizens will whine that their favorite deductions are gone; politicians, social engineering through the tax code eliminated.

Will never happen.

dbowker
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Though I think you DO have to have "floor" if that means a threshold by which you make too little to pay any taxes. The other thing is to stop all the money going into dummy corporations and secret accounts off-shore!

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I've read about Boortz' flat tax and would prefer it to what we have, but I think a consumption tax is the perfect form of taxation. You could exempt some basic items from the tax, but the whole notion of those who are consuming paying more taxes than those who aren't seems immenently fair to me.

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I don't like the idea of a floor, beneath which you pay no tax whatsoever. I agree however that there can be [i]one[/i] rung below which your tax is small, say 1%.

I favor this as we are all in this together, regardless of who you are and income.

i don't like a consumption tax as well. First, it discourages consumption. This may or may not be good on to itself, but it is a value judgment. (Plus, in this economy discourage buying isn't helpful).

A consumption tax strikes me as a use tax. Use the highways more, pay more tax. Use the library more than twice a year, pay more.

Instead, use or not use; they are all public benefits to be used as you choose - without government incentive.

I would like a single fixed "citizen fee" but we cannot do this as some can afford and some could not even begin to pay it. Thus, the tax needs to be progressive to some degree such as a fixed percentage of all income. I dislike the progressive nature, but do not know an alternative.

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