1. Attention: We have put together a thread with tips and a tutorial video to help with using the new software. Please take a moment to check out the thread here: Trapshooters.com Tutorial & Help Video.
    Dismiss Notice

OT/ Obama's mortgage interest rate proposal

Discussion in 'Uncategorized Threads' started by recurvyarcher, Nov 17, 2008.

Thread Status:
Not open for further replies.
  1. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    This is coming (it was posted on his website:

    Lower People's Interest Payments by Creating a New Mortgage Interest Tax Credit: Many middle class Americans do not receive the existing mortgage interest tax deduction because they do not itemize their taxes. Obama and Biden will ensure that middle-class Americans get the financial assistance they need to purchase or keep their own home by creating a 10 percent universal mortgage credit that gives tax relief to 10 million Americans who have a home mortgage.

    If the 10% is a percentage of the mortgage interest that you paid, then most people will see a significant increase in their tax burden.

    Most people that own a home (and make the income needed to sustain it) do itemize their deductions. It seems to me that he is punishing those people who have expensive homes, farms, or anyone who bought housing in high-cost areas (NY, Boston, DC, Cali, Seattle, etc.). If he makes this mandatory and doesn’t give a choice to people, then I expect my tax burden to go up by about $3000 per year.

    This doesn't encourage home ownership at all. Nor will it make sense to borrow against your mortgage.

    Things in America are changing, just like he promised.
     
  2. Chango2

    Chango2 Active Member

    Joined:
    Nov 12, 2007
    Messages:
    3,518
    Please explain, I understand the deduction I take, but don't follow your calculatons right off the bat. Personally, I'd like to see property tax relief; property tax paid is not shared equally depending upon when one buys a home. This is the case in California..the property tax for similiar homes, equal value, next door to each other, can vary wildly. I see this as a regressive tax.

    Anyway, I'm hardly a cpa, but your post is intriguing and worrisome.
     
  3. phirel

    phirel TS Member

    Joined:
    Jan 29, 1998
    Messages:
    9,556
    Chango2- Property tax is strictly a local (city/county)tax. If you need relief, speak with your city commission. The tax differences you cited are illegal in VA and probably many other states.

    recurvy- You and I will be hit. We don't know where or how, but we will be hit.

    Pat Ireland
     
  4. Skeeterzx

    Skeeterzx Member

    Joined:
    Apr 26, 2007
    Messages:
    766
    I got a better one than that for you. I own my home and 50 acres....as in I OWN it. Me an my wife both worked hard and were responsible enough to get out of debt. Now, at 42 years old, I'll be bearing the tax burden for other people's mortgage woes for the rest of my dang life. At least I can sleep at night knowing I'm not hanging on Uncle Sam's tit...
     
  5. Fast Oil

    Fast Oil TS Member

    Joined:
    Jan 29, 1998
    Messages:
    918
    Obama's will get his tax and financial advice from his new appointee, Ben Dover.
     
  6. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    Chango, you cannot follow my calculations without me having to disclose my income, tax bracket, and how much mortgage interest that I pay. I am not going to post that online.

    You can calculate yours and how it effects you.

    Like I said, it effects those of us who have paid high prices for homes (because of high cost of living in our area) and farmers who have purchased large tracts of land, and who make the kind of money that it takes to sustain those properties. It doesn't hurt the person who makes an average income and has paid $100K for his house. It helps those whose income is low enough that they would have very little, if any, tax burden.

    I have a farm, and I paid a high price for that farm because I live near in the Baltimore-Washington region.
     
  7. pendennis

    pendennis Well-Known Member

    Joined:
    Jul 26, 2007
    Messages:
    1,567
    Location:
    Southeast Michigan - O/S Detroit
    The discrepancy in property taxes results from valuations that come as part of the selling/buying process. Most homes are revalued when they are sold. That two similar homes have different taxes is not unusual.

    Contrary to what Chango2 thinks, the property tax is not regressive, since it's ad valorem (i.e. based on the value of the property). Someone in a $100k bungalow doesn't pay as much property tax as someone who owns a $500k colonial.

    State and local governments are seeing decreasing tax revenues, since property values have fallen in response to the sub-prime mortgage mess. When homes are sold at "fire sale" values, many government entities are legally bound to tax at the latest valuation. Lower valuation, lower tax revenue. Folks who live in neighboring homes will seek relief in their valuations, since they have proof of market value changes. And so the dominoes fall.

    Two changes could occur to remove this rise-fall-rise-fall phenomenom:

    First, move completely away from property taxes to raise local revenues. Using sales and/or use taxes at the state level, and allocating to local governments on a per-resident basis, eliminates the necessity for property tax valuation offices, and will remove the possibility of losing ones property to back taxes. The city of 100k people naturally has more structural cost than a city of 50k.

    Second, eliminate the ability of government units to offer rebates and abatements in order to get a company to relocate to a particular geographic area. In their "infinite wisdom", government planners create tax disparities by competition for tax dollars among themselves.

    By using sales and use taxes, governments are put out of the favoritism business, and they can never do the things they do now to inhibit economic activity. Suddenly legislatures and councils are in the business of doing business without the local lobbyist seeking favorable tax treatment for his/her pet business. This would also serve to lower the size and simplicity of government.

    There's no secret as to the cost of services. By and large, police, fire, sanitation, and road services costs are similar in structure. In other words, police and fire protection costs pretty much the same across each state.

    Everyone buys "stuff". Whether it's a new trap gun, clothes, cars, or whatever; everyone pays equally.

    Are sales taxes regressive? No, since those who spend the least, pay the least.

    Would people pay higher sales taxes? Yes. Get used to paying 10%+.

    Would there have to be a change in Federal tax policy to allow deduction for sales taxes? Yes, since those property tax and other ad valorem tax deductions would disappear.

    For those who fear that not enough people help "pull the wagon". It would be a welcome change.

    Best,
    Dennis
     
  8. Finprof

    Finprof TS Member

    Joined:
    May 9, 2007
    Messages:
    167
    For many of us in the sights of the AMT we already lose deductions for property taxes and for state and local income taxes. A national sales tax would be welcome for us.

    Notably the US has a more progressive tax system than France or Canada, even after the Bush tax cuts "for the rich". In Canada there is the GST and in France the VAT, so lower middle class people pay a higher proportion of Federal taxes than in the US.

    For the Obama proposal, if the 10% credit was in lieu of the itemized mortgage interest deduciton then anyone above the 20% tax bracket would lose and anyone in the new 40% bracket Obama proposes would lose big.
     
  9. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    There are a lot of educated Obama yuppies that are going to be really mad...
     
  10. pendennis

    pendennis Well-Known Member

    Joined:
    Jul 26, 2007
    Messages:
    1,567
    Location:
    Southeast Michigan - O/S Detroit
    The following just about sums up this past November 4th -

    "Populus vult decipi - The public is ready to be deceived"

    Best,
    Dennis
     
  11. Gary Waalkes

    Gary Waalkes Well-Known Member

    Joined:
    Jan 5, 2007
    Messages:
    1,402
    Recurvyarcher, I certainly hope your are right. My fear is that some of the educated clowns that voted for team obiden actually believe that they can afford to pay more so they should pay more so people on the bottom will benefit without having to break a sweat. A friend of mine said it well, 52% of the voters are really happy and 48% are scared $hitless.
     
  12. Chango2

    Chango2 Active Member

    Joined:
    Nov 12, 2007
    Messages:
    3,518
    Actually, the property tax in California is based upon the selling price of a home. Hence I pay three times what a home of a similiar value two homes away from me pays. How do I know that? Simple, the other home is worth the same and belongs to a relative. My home is just newer. Hence, IMO, a regresive tax in that the newer buyer is punished. So, ergo, buy early with less down, likely pay less property taxes. Save your bucks, the price of the home goes up when you buy...all else being equal and usual. I don't see how that is fair.
     
  13. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    OK, people are sending me PMs about property tax. If you go back and read the first post, you will see that this is NOT about property tax at all.

    It's about INCOME tax. This is a totally NEW and DIFFERENT way to get money from people who are successful, and give money to people who ALREADY take the standard deduction (so they get their standard deduction PLUS they get a tax credit).

    People like me will take a big hit and have to pay more income tax, while people that did not work as hard as I did in life will be getting more money than before, and this is BEFORE he even raises the income tax rates.

    I hope you all can comprehend that. If things keep going this way, why wouldn't one just give up? Does he really think that people are altruistic enough to work their butts off and sacrifice only so that we can give it to people who don't make those sacrifices? I give a lot to charity, both time and money, but I choose where I give it, and I choose based on who I feel will take the money and use it for the common good. I don't like giving my money to people who waste it!
     
  14. gdbabin

    gdbabin TS Member

    Joined:
    May 15, 2006
    Messages:
    2,461
    Recurvy,


    Many of my service member friends in arms, not to mention tens of millions of hard working citizens who work blue-collar jobs take the standard deduction. I certainly did for years.




    The implication that those as a whole who take the standard deduction are less "successful" and do not "work their butts off" is narrow-minded and narcissistic, in spite of any tax policy.


    According to your implied definition we must have a college education, farm acreage with fat horses, and greater than a 100k house in order to become bonafied. Not all are as privileged and fortunate.



    I'm surprised at your implied tone my friend.



    Guy Babin
     
  15. Skeeterzx

    Skeeterzx Member

    Joined:
    Apr 26, 2007
    Messages:
    766
    You don't have to be a service member or a blue-collar worker in order to take the standard deduction. I'm neither but have absolutely no debt.....hence I take the standard deduction. Pretty hard to itemize with no debt.
     
  16. ou.3200

    ou.3200 Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    1,492
    If you look at Obama's website he is now saying that those making $250,000 will be paying the same or lower tax rates than they did in the 1990s. Not saying he will cut taxes for those under $250,000 as he did during the campaign, surprise surprise. Trouble is the tax cuts under Bush were 2001 and 2003 so those will be gone and taxes will increase.
     
  17. tom berry

    tom berry Active Member

    Joined:
    Jan 29, 1998
    Messages:
    760
    Location:
    Winterset, IA
    Curvey,

    His prospal as stated on the website is not clear whether this is aimed at non itemizers only, leaving itemizers alone to continue to do that. I suspect it is.

    But what I want to point out, and maybe your numbers considered this. The proposal is for a tax credit. We currently get an income reduction. If you figured this, all I have to say is that I'm sure glad I don't have that mortgage payment and kudos to you for a great paying job.

    Tom
     
  18. halfmile

    halfmile Well-Known Member

    Joined:
    Jan 29, 1998
    Messages:
    15,649
    Location:
    Green Bay Wisconsin
    Curvey, my dear, you are wrong about the Schedule A. I and many others just found it not worth the hassle.

    The fact is if you take the standard deduction, you are ahead most of the time. Unless you have a very high interest payment, or lots of medical, charity, and other allowable deductions.

    I did my taxes both ways for a long time, and found it was not worth the effort. Most of the time I was ahead or even with the standard deduction. Once I wasn't, but that was because of a casualty loss which is an unusual happening.

    So this is a good deal for me. I get cred once in the standard deduction and once more from St. Barry. That's a crock, isn't it?

    Anyway, this is not going to happen till 2009 taxes. By then He will have welshed on just about all his campaign promises, and the White House will have bars on the windows and concrete barriers all around.

    HM
     
  19. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    Guy, it was not by privilege or being fortunate (nor narcissism) that I was able to get the things that I have today. I started out in a place that most people could not emotionally or mentally survive.

    It was against all odds and through very hard work, lots of sacrifice, spending wisely, and making careful investments, that put me in my current position. I didn't ask for handouts when I was a single mom. When I was laid off, I worked 3 barn jobs instead of collecting unemployment.

    Don't make me out to be a snobby person. You absolutely know better than that. I would say that I have worked HARDER than blue collar workers, because I also worked blue collar jobs AND studied all night after work for years AND raised a family AND took care of my elders...all at the same time.

    And don't expect me to feel sorry for others who chose a different path in life. They made their choices, and I respect them for those choices. Many of those choices are valid choices. But why should I be expected to subsidize their choices?

    My whole family is military, including 3 of my own sons. They all got VA loans, which I didn't get, for any housing that they have purchased. I am in full support of lower-interest VA loans for our military members. With lower-interest loans, they pay lower mortgage interest, correct? If their interest payments do not add up to enough to make itemizing worth it, then they get the standard deduction. That's why the IRS gives you the option of a standard deduction...because it simplifies taxes.

    The system is fair as it stands. People that have lower-cost houses, or who paid their loans off, don't pay a high amount of mortgage interest. The blue collar workers of which you speak already pay a lot lower percentage of their income to the IRS than do I.

    "According to your implied definition we must have a college education, farm acreage with fat horses, and greater than a 100k house in order to become bonafied." I never said anyone without these things were not "bonafied." I am saying that I am really disappointed that I worked my way out of poverty, with an implied promise (because I was living in America) that I would be able to take what I made and make MY FAMILY's life better (not everybody else's). MY FAMILY needs that money...the elder members of my family are still pretty poor, and rely on Martin and me for A LOT.

    Tom Berry, when I read "a 10 percent universal mortgage credit" then I take the word "universal" to mean that it will apply to everyone. Could you maybe have overlooked that word? And thanks for the Kudos...because I did run my numbers for 2009 both ways...first with the mortgage interest deduction, and then again with the tax credit.

    Ran200, these are proposals that Obama wants to implement. That is why he put them up on his website. This is a proposal about which every one of the pro-Obama people with whom I have talked were unaware. Why do you call it "bitching" when someone takes the time to ensure that people are well-informed? Hell, once the people are informed, almost half of them do not understand the tax implications until it is spelled out for them. Politicians count on such confusion. If one "waits and sees" then it becomes too late to inform and rally the public.

    Ran200, can you tell me why OTHER people would be better at stimulating the economy with the money that I have earned? Why can't I spend it and stimulate the economy with it? I've created jobs (ask everyone in the barn). I've spent money in my community and elsewhere. I've kept my family from needing handouts.
     
  20. recurvyarcher

    recurvyarcher Well-Known Member

    Joined:
    Apr 26, 2006
    Messages:
    6,450
    And yes, I am moving in the summer of '09.
     
Thread Status:
Not open for further replies.