Originally Posted by mar123
I find the argument that taking a deduction on mortgage interest being government assistance ludicrous.
I am simply keeping the money I have earned in that case, the government is not giving me money over and above what I have paid. Each year, I have paid the government tax money. Doesn't matter how many deductions I take, when all is said and done, I have contributed to the government coffers. I may contribute less, but that is NOT government assistance. They are not giving me anything. I am simply giving them less. They are not helping me out by letting me keep my OWN money, money I have worked hard for and earned.
When someone is on government assistance, the government is giving them something extra over and above what they have contributed. Yes, I used student loans to go to college, but I paid them back. The government didn't GIVE me anything- therefore that is not government assistance. (actually, when I went to college, I didn't use any of the government programs for loans- 30 years ago that was actually possible.)
Actually, if the person is working, they are paying taxes. The majority of people (in the US) pay more in payroll taxes than in federal income taxes. Those who make less money also *statistically* recieve social security for shorter time periods. Additionally, there are a variety of taxes that most people end up paying (local & state taxes, sales taxes, etc...).
And yes, I do consider everyone to "owe" the government the amount of money their tax bracket would suggest they pay. Deductions on top of the standard deduction are, in effect, paid for by the people who are not elligible for them.
Originally Posted by honeybunmom
Bolding mine. And these two highlighted comments conflict. In the first instance, you argue that someone using mortgage interest deductions needs to do so in order to buy more house than they can afford. Then you go on to state that they don't need the deductions. I'm not following. In any event . . .
To me, the glaring flaw in this argument is that it seems to be based on the presumption that people actually consider how much interest they are going to be able to deduct and consider that a determining factor in the consideration of how much house they can afford. This argument is based on the presumption that people are in homes they could not otherwise afford without the ability to deduct their mortgage interest. Something they get to do once a year. When the mortgage payment is due every month - twice a month for some. This just doesn't make sense.
The sad thing is that the abuse of the food stamp program has been highlighted much more than the abuse of tax shelters (considering mortgage deductions a type of shelter for purposes of this discussion). At least it is probably fair to say that the ability to spin the discussion on these issues is more in the hands of the tax shelter users than the food stamp users.
I do not see the contradiction. The mortgage interest deduction allows people to buy more house than they could otherwise afford, often times more house than they *need.* Therefore, from my perspective, they don't actually *need* the deduction--- they could either rent or buy a house they could afford without the deduction.
People should consider the tax consequences of home ownership. I know we did. Even the most basic home-buying books ("Homebuying for Dummies") includes how to calculate if you will be itemizing. I know it has made a big difference for a lot of the people we know (both people with homes in the $1+million range and those who are already itemize due to tithing making *all* of their mortgage interest deductable). I think if you really think through my arguement, you will see it does make sense from my perspective. The people I know who recieve the most from mortgaqge interest deductions do not *need* the money. They're not worrying about the monthly mortgage payment, so it doesn't matter if they only get the money back once a year. Instead, it is just a bonus $5K.
Originally Posted by Mama J Rock
The mortgage interest deduction is not about the government imposing a moral "good" on the idea of home ownership but rather about giving people that own homes and therefore pay real estate property taxes a deduction that puts them more in line with people that have the same income but don't own homes and therefore pay no property taxes.
I disagree. Tax deductions are often about encouraging or discouraging certain behaviors. Our society places a large value on home ownership and tries to encourage people with tax breaks. You don't see tax deductions for interest for buying a $150K car instead of a $10K car because it's not something the "people" have decided is financially worth encouraging.
If it is cheaper to own or rent is based more on location than anything else.
Originally Posted by JesKace
Off-Topic a little...
agreeing with LifewithSage on the mortgage interest..
When we bought our first house 7 years ago, DH and I were only 21.. I had no idea about using the interest paid on your mortgage and real estate taxes as a tax deduction. Nevermind trying to figure that into how much we'd be able to spend on a home. I looked at how much we could afford for a mortgage each month, current interest rates and prices of homes and we bought a house we could afford. Same thing when we sold that house and bought our current house, the tax deduction for the mortgage interest never even crossed my mind. Maybe when you're getting into really high priced homes and working with a financial planner or something you take the interest deduction into consideration and are able to spend more money on the purchase price, but I don't see the average person doing that.
Well, simply by buying a home at 21 you obviously weren't "average."
My initial arguement stands, though--- the government loses $5K of tax money to both families: one for food stamps for a year, the other for each extra $100K (approximately) of value in their home over a certain amount.
Originally Posted by frugalmum
Agreed.... saying that a tax deduction is a handout in the same vein of food stamps doesn't make sense, because the income is yours, in the first place, to deduct. The poster making this comparison seems to think the income somehow "belongs" to the government to begin with, and that by not paying it to the government, you are in fact taking it!
A better comparison would have been public school. This is a handout that is "socially acceptable" and no one is looked down on for expecting the government to fork over 15k+ a year for their child to be educated.
Excellent comparison. As stated before, I do consider each person DOES owe the government a certain amount of money. If you instead do things to pay a lesser amount you *are* taking it from them. Its simply a matter of symantics, though.
Discussions like this always frustrate me because it seems like many people who are so very opposed to food stamps and other assistance programs seem almost... angry (and I am not talking about posters on here, just in general)... about the idea that someone, somewhere is getting something they are not. But, if you *really* think it's such a great thing to have to explain all your finances over and over to strangers, get looked at funny in the store, never have comfortable savings, etc... they can just live that way themselves. Personally, I believe that adequate food is a human right and, as such, should be guaranteed to all.