Homeowners, time to end that deduction

  • Article by: DOYLE MCMANUS , Los Angeles Times
  • Updated: February 8, 2013 - 7:01 PM

It wouldn't actually hurt home sales, and it would help the country.

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pumiceFeb. 8, 13 7:30 PM

From economists at the Mercatus Center, a mostly conservative think tank at Virginia's George Mason University: "Most taxpayers do not benefit from this deduction at all or receive a very small benefit. Its primary effect is to encourage Americans who would have already been able to afford a house to take on even more debt." Echoes of Ronald W. Reagan during whose watch interest deductions were eliminated because interest deductions encouraged Americans to take on more debt than they should take on. So Americans stopped taking on debt and lived happily ever after. Yeh right....

Perhaps Mr. McManus should do some research on why Canadian homeownership continues to rise and on how Canada avoided the credit/mortgage collapse. Hint: It's not because taxpayers don't get a deduction for mortgage interest.

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ti1310Feb. 8, 13 7:34 PM

Que the libs that will scream that ending the mortgage deduction will be a catastrophic blow to the middle class. Even though the majority of the benefits go to higher income households....

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hermajestyFeb. 8, 13 8:08 PM

The mortgage interest deduction is overrated. During the housing bubble, when everyone in the media was proclaiming that everyone should buy a house, I did the math. Since I don't want the trouble of maintaining a yard, and I don't garden, I looked into condos. I found that with even the lowest priced condos, the mortgage interest deduction didn't make up for the added expense of property taxes, mortgage payments, association fees, and possible upcoming assessments for street and sidewalk or utility upgrades. As one expert said, "All the mortgage interest deduction does is make you pay $1 to the bank for the privilege of getting 35 cents back from the government."

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ti1310Feb. 8, 13 8:30 PM

----Perhaps Mr. McManus should do some research on why Canadian homeownership continues to rise and on how Canada avoided the credit/mortgage collapse. Hint: It's not because taxpayers don't get a deduction for mortgage interest.--- Hint pumice its not what you are implying, Canadian banks have full recourse rights meaning the borrower is still on the hook for the loan even after foreclosure. Personal responsibility and not skewing the market with the mortgage deduction make for a stable marketplace. its a still a fact that the mortgage deduction skews the market for finance and it still skews the cost towards a higher price for a home.

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pumiceFeb. 8, 1310:05 PM

National Bureau of Economic Research on Canada's : "The Canadian concentrated banking system that had evolved by the end of the twentieth century had absorbed the key sources of systemic risk -- the mortgage market and investment banking -- and was tightly regulated by one overarching regulator."

What's the benefit of tight regulation? According to the Canadian Bankers Association: "In Canada, the vast majority of mortgage loans are prime," and "[t]here are many high-risk mortgage products in the US that do not exist in Canada. These include: adjustable-rate mortgages, with unrealistically low introductory interest rates that can rise substantially; interest-only payments, where the mortgage principal is never lowered; negative amortization payment schedules, with payments that are less than the interest charged; and no-documentation lending."

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windigolakeFeb. 9, 13 6:03 AM

ti1310: "Que the libs that will scream that ending the mortgage deduction will be a catastrophic blow to the middle class." Why is it necessary to take an economic discussion and turn it into an attack on liberals? A policy dialog without such overt bitterness might be nice once in a while.

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phatcatpatFeb. 9, 13 6:50 AM

Whether it helps or hurts homeowners or home sales is not the point. The point is that we have out of control spending and a government that thinks it deserves more of our money and refuses to make any real cuts. We don't need a bigger government, we need a smaller government. We don't need more taxes we need less taxes. Me paying my bills takes priority over the government taking my money, giving it to others or spending it on wars or trying to convince us that global warming is real.

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phatcatpatFeb. 9, 13 6:57 AM

How did people come to think that the government deserves their money more than their families? Have you looked at how much the government takes from you? Do you really think they need more? The only answer is that you think they should take your neighbors money and not yours. I want good things for my neighbor... why don't you?

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ti1310Feb. 9, 13 7:38 AM

----ti1310: "Que the libs that will scream that ending the mortgage deduction will be a catastrophic blow to the middle class." Why is it necessary to take an economic discussion and turn it into an attack on liberals? A policy dialog without such overt bitterness might be nice once in a while.--- Because every time it is suggested that we eliminate the mortgage deduction liberals scream about it that its going have this huge impact on the middle class homeowner when in fact it never has. Dems have been the ones trying to keep this a sacred cow not conservatives... No need for an economic discussion on the deduction. We already know what it does the the marketplace for housing which is nothing good.

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northhillFeb. 9, 13 8:02 AM

This deduction should only be allowed on first mortgages on your primary residence.No second mortgages,no lake homes or cabins.Also an income cap is needed.

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