<p>Many people own their own homes outright. Others have small mortgages compared to the value of their homes. With interest rates so
low, maybe this is the time to get rid of this 100 billion a year deduction. We could lower tax rates slightly and still raise money.</p>
<p>Health care is the big issue, but people like that tax break. That tax
break costs around 100 billion a year.</p>
<p>We want people to save for retirement so there are huge tax breaks in the tax code for this. </p>
<p>There was another poll recently and people don’t really want spending
cut. They probably want their tax breaks. We could do nothing. The
deficit is declining. Health care costs are not rising as fast as they were. This might be due to the economy though. If the decline in health care costs increases isn’t solely due to the economy, deficit projections are too high.</p>
<p>Deductions and tax rates have personal values and economic values.</p>
<p>I would be happy to get rid of most of the deductions and tax breaks except for the muni tax free benefit and I am open to seeing what is proposed. :)</p>
<p>We rented for a bazillion years, so the assorted deductions available to us as homeowners were shocking. Our mortgage, property tax etc. are less than our rent was. We would be fine with a standard deduction. So if the mortgage interest etc. deductions vanish, it would be OK with me.</p>
<p>I’m speaking against my personal self interest, but the home mortgage interest deduction should probably be phased out or scaled back. Subsidizing mortgages for people to buy a home that is a financial reach is partly what got us into the housing bubble/global economic melt-down in the first place. </p>
<p>Other countries don’t give deductions for home mortgage interest and people still buy homes and live to tell about it.</p>
<p>And why isn’t passive income (dividends, interest income) taxed like regular income? Why should Warren Buffet pay a lower effective tax rate on interest on his wealth, than someone who is actively earning a salary? I don’t buy the argument that the principal has already been taxed once so the later earning should be tax-privileged for perpetuity…</p>
<p>It may be that lower tax rates on capital gains, interest and dividends are there to encourage savings. One could also argue that corporations already pay the corporate income tax on their earnings and ask why those earnings should be taxed again to the investor. If you ran a sole-proprietorship, you’d only be taxed once.</p>
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<p>I do not know how Warren Buffet’s income is structured but I think that it wouldn’t be too hard for him to pay very little in taxes. He could just take loans for living expenses with Berkshire stock as collateral. Ordinary folks did the same thing with home equity loans.</p>
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<p>That’s not the argument. Dividends come from earnings, not the principal.</p>
<p>A company earns a profit in a year and it’s taxed to get the net profit. Dividends are paid out of the net profit (this is the idea, I know that some companies borrow money to pay a dividend) and those dividends are taxed again. There are certain types of companies that don’t have to pay corporate taxes because they pay out a high percentage of their earnings out as dividends so the US Treasury gets their cut right away.</p>
<p>@BCEagle91, I sloppily lumped interest & dividends in the same sentence. </p>
<p>The bottom line is that once deductions & goodies for special interests are granted, the deductions & goodies never go away. And now we are stuck w this monstrously complex tax code, and lack of leadership to fix it.</p>
<p>Well, last time the housing bubble burst it was not exactly great for the economy. I guess you could argue we have to once and for all get rid of the ties to the housing market in trying to grow our stupid economy.</p>
<p>You might get burned at the steak by current high mortgage home owners but maybe it just needs to happen.</p>
<p>I dunno.</p>
<p>I say no deductions - flat tax. i think it would even out our states and our voting popiace.Half the country is on one planet, the other on another. And not really over political beliefs, imo. Over housing costs.</p>
<p>Here’s the thing with housing; for the seller, we want the prices to rise and be high so that it’s another leg in the retirement puzzle. For the buyer, we want it to be low so that you can get decent housing on a modest income. I’d rather see it gradually get phased out like credit card interest deduction or with decreasing ceilings for mortgage interest deduction.</p>
<p>If I had to pick one deduction to get rid of, it would be for non-profits who spend their money overseas. If Gates or Buffet want to save the world, that’s great and they can do it on their dime; I’d like to see money sent overseas by foundations to be taxed.</p>
<p>Remember the saying, “If it’s not broke, don’t fix it”? Back in the Clinton era the economy and national finances were working pretty well. Well, we “fixed” that. We lowered tax rates across the board. How about if, instead of eliminating deductions, each of which has defenders and each of which has at least an arguable justification, we just returned tax rates to where they were in 1999? Easy peasy. </p>
<p>I supported deficit spending to dig us out of the recession, starting in 2008. We may not want to abruptly change a lot of stuff, for fear of a “double dip”, but over the long run I honestly can’t think of a good argument for not just going back to the way things were before we “fixed” them.</p>