Build your own tax policy!

[Veldan Rath]

Yep, it's another form of crony crapitalism

[GGT]

Yep, it's another form of crony crapitalism

Yep. And 'only' ~ 25% of US tax filers actually use the mortgage-interest tax deduction. It can also incentivize people buying borrowing more house than they need, and pump up housing prices by transactional costs (skewing actual value). That's bubble based behavior.

Either we need to cap that deduction, or get rid of it entirely.

[agamemnus]

We should not get rid of it entirely as it will cause too much of an effective extra tax on the middle class, but capping it: yes-siree. I even found a recent article showing politicians like Obama looking to cap it. (actually 1 month old... can anyone find a newer one?): http://dealbook.nytimes.com/2012/11/...as-vulnerable/

In terms of housing bubbles and/or distorting housing costs, we should also tell the Fed to stop buying mortgage-backed securities, and we should scale back the terribly wasteful and injurious (to nearby houses and cities, in the long run) FHA and state-based low-income housing construction. Cheaply made houses based on a premise of social justice going against all market forces.. what's not to like?

[GGT]

Hi, aggie. If we got rid of the mortgage interest deduction entirely....wouldn't that force housing costs lower, and mostly benefit the middle class instead of the bankers?

I agree that the Fed should stop buying MBS, since that just keeps zombie bankers feeding off consumers. But they're central bankers....

FHA is horribly twisted at this point, so entangled in every home and mortgage (and bank) that it's almost impossible to separate the service from the product, the bank loan from the house, the people from their home.

Also, we don't need new construction to fill the needs for low-income housing in most areas. Vacant buildings abound, especially shuttered factories. They were constructed during boom times, using brick and mortar, steel and concrete. They just need to be retro-fitted for residential housing.

[agamemnus]

Hi, aggie. If we got rid of the mortgage interest deduction entirely....wouldn't that force housing costs lower, and mostly benefit the middle class instead of the bankers?

It will lower housing costs, but the benefits of the current effective subsidy is shared between the homeowner and the bank. It's all about triangles.

Also, we don't need new construction to fill the needs for low-income housing in most areas. Vacant buildings abound, especially shuttered factories. They were constructed during boom times, using brick and mortar, steel and concrete. They just need to be retro-fitted for residential housing.

Those factories probably need to be torn down! The market should decide.

[GGT]

It will lower housing costs, but the benefits of the current effective subsidy is shared between the homeowner and the bank. It's all about triangles.

Higher prices benefit banks (and anyone in the chain) more, since they earn a percentage of the loan amount. There's no incentive to keep prices stable when they make profit on escalating prices or bubbles. Those aren't triangles with equal sides.

Those factories probably need to be torn down! The market should decide.

It's stupid and wasteful to tear down buildings with good foundations and "bones", especially if they're already near other housing clusters. 'The Market' shouldn't mean bankers who'd prefer a tear-down and new construction that can cost more.....simply because they profit by underwriting higher loan amounts.

[Veldan Rath]

Kinda agree with GGT, refurbished factories/mills are great potential for new businesses and residential. Maine has been doing this with its Green Zones. Old unused papermills are converted into multiple businesses and residential units.

[Lewkowski]

Right GGT - because people who own property should not be allowed to do what they want with it. Are you sure you wouldn't want to live in a communist country where the state makes the decisions?

[Veldan Rath]

I don't think that was were she was going with that Lewk. She was pointing out that tearing down perfectly good buildings can be shortsighted. Remodleing them can mean more profit for the owners then going tothe bank and asking for $$$ to tear the whole thing down and start over.

If the owner DOES want to...more power to them.

[agamemnus]

All I'm saying is that it's a cost-benefit analysis that should be based on the economics of the area instead of historical sentiments/politics.

[Veldan Rath]

Quite true.

[GGT]

All I'm saying is that it's a cost-benefit analysis that should be based on the economics of the area instead of historical sentiments/politics.

Did you mean to say economics of the era (not area)?

Repurposing historical buildings isn't just 'sentimental'. It's cost-effective to salvage materials that are now quite expensive to use (marble, slate, copper, solid woods, even brick and concrete block). Almost anything hand-made by Master Tradesmen is more valuable than today's mass produced plastics and veneers.

It's easy for city officials to cave to political pressures to raze-and-rebuild....when Banks are pushing for higher loans, local Chamber of Commerce wants to attract building industries, municipalities need more tax revenue, and people are calling for Jobs that can't be outsourced. But that's the mentality that led to our housing bubble, with so much sprawl, Walmart and big-box stores with massive parking lots, and too many new houses made of flimsy vinyl and toxic Chinese drywall....

[Veldan Rath]

You do know you are agreeing in essence right?

[GGT]

I wasn't sure aggie was using the same definition of "markets" in the decision process. Certain places with high unemployment may want to raze-rebuild just to pump employment in construction/building trades. But that's short-sighted reactionary economics, not really sustainable community planning.

[GGT]

Maybe we're going about this the wrong way.

What would happen if every state and federal legislator was automatically put into the middle-income tax bracket, regardless of their actual legislative paycheck, or other income from wealth assets? Disabused of any income shelter or tax avoidance scheme. Forced to live like everyone else. Family legacies would not be able to use special political status to protect their heirs, at the expense of every working man: not for Rockefellers, Heinzes, Bushes, McCains, Romneys, Bloombergs, Trumps, Kennedys or Kochs.

The minute those multi-generational "wealth" names become part of our political process in the body of --elected-- legislators, they'd have to treat their own legacy fortunes just like every other --working-- family does. No special tax exemptions or exclusions. No loopholes for highly paid, clever tax attorneys to find. No tax haven schemes. No "blind trusts" either.

Would that make our legislators more in-tune with the average electorate?

[Veldan Rath]

Don't give them life long pensions or health care. Make them live by the same laws they pass. They can not vote themselves raises. Only allow the next person to get their seat to get the raise.

Might weed out the career politicians and return us to citizen legislators.

[GGT]

Don't give them life long pensions or health care. Make them live by the same laws they pass. They can not vote themselves raises. Only allow the next person to get their seat to get the raise.

I've proposed that, too. PA legislators gave themselves pay raises, while the state capitol was driving the state toward bankruptcy. When tax payers got wind of this grift and croneyism, all hell broke lose. Too bad it took a scandal to force our legislators to do the "right" thing, and rescind their self-appointed COL raises. But legislators still get paid more than they're worth, with the luxury of tax funded pensions, platinum healthcare, and lifelong benefits.