Obama Removing Mortgage Interest Deduction - Dumbest Idea Of The Week
You are at:Home»Market Trends, News & Commentary»Obama Removing Mortgage Interest Deduction – Dumbest Idea Of The Week
Obama Removing Mortgage Interest Deduction – Dumbest Idea Of The Week 23
The Obama budget announced this week – in the middle of biggest housing crisis since the Great Depression – seeks to raise tax revenue by removing the mortgage interest tax deduction for those that are in the 33% and 35% income tax brackets.
I can’t count the ways this is bad for housing. The one big reason renters all across this country make the decision to become home owners is the extra incentive the tax code gives them. Sure they have the, “I can paint the walls any time I want without getting permission from anyone” reason, but that is no where near as motivating as $1,000’s they get via the deduction every year.
Obama limiting this to the “wealthy” may think he’s not hurting those home owners in the lower tax brackets, but he’d be wrong. The housing market is a connected market. In other words, what hurts home values at the top eventually spreads lower depressing all home values.
Aren’t home values depressed enough?
Another big problem with this proposal is that those “wealthy” folks buy homes in the areas of the country still getting ravaged by massive foreclosures. Places like Arizona, California, New York, and Florida need this like they need a hole in the head.
These States are still reeling from a glut of homes due to the foreclosure crisis. Many of which are of the “luxury home” variety. I guess Obama forgot that only the rich can afford a luxury home.
Don’t get me wrong, I’m not crying for the rich. I’m crying for the housing recovery. Choking it off before we even get started is just plain dumb.
So Obama and his removal of the mortgage interest deduction wins my “Dumbest Idea of the Week” award.
What are they thinking, Rob?
This coupled with the inability to write off charitable donations and other hair-brained schemes are going to just backfire, I’m afraid.
The wealthy, more than anyone else, will change their behavior based on taxes. If passed, this will backfire in a big way.
March 1, 2009 7:18 pm
Hmmm, this does seem like the wrong move at this point in time. The effect on the individual doesn’t sound promising — I wonder what the long term effects will be. *sigh*
Stanley Sokolow on
March 1, 2009 8:31 pm
The Obama proposal is not “removing the mortgage interest tax deduction for those that are in the 33% and 35% income tax brackets” but rather it is to limit the income tax deduction to the amount it would be if the taxpayer were in the 28% bracket. In other words, high-income taxpayers would no longer get to deduct a higher dollar amount of mortgage interest just because they are in a higher income bracket.
That’s what I understand as well, like what Stanley said, is that the upper tax bracket mortgage deduction is going to be limited, not erased. In essence, it really shouldn’t hurt the high earners that much. Besides, this actually would be a return to an old policy, until it was revised in 2001 and this new itemized deduction rule went into effect 2006.
My next blog post (probably due Saturday) is going to look at the general economic direction of the Obama admin. It is a direction that will be good for some, bad for others, as is always true of economic policy. However, for one class – US (entrepreneurial investors) – it is really going to be bad. Buckle up.
This is a great idea, real estate is not a route to wealth its a place to live. Real estate should be heavily regulated after its role in getting us all in to this mess. The excessive speculation, backed up by tax advantages have contributed to an extravagant binge on debt.
I have to say I disgree with you Rob. I don’t think the mortgage interest deduction is an incentive to home ownership. I think that the mortgage interest deduction gives an incentive to those who will already buy a home to buy a bigger one. A majority of the time that I do a loan for someone–they rarely ask what their after tax cost is–they want to know if they can afford the monthly payment. If the answer is no, they don’t buy. Those who the deduction was designed to help–mainly the middle class and lower middle class–don’t itemize–they take the standard deduction. Besides–Obama is only proposing that the deduction be phased out after the 28% tax bracket which affects those who make over $208,850 and file jointly.
Wayne, I beg to differ with you; you are absolutely clueless in your statement that “real estate is not a route to wealth it’s a place to live”. If that’s the case then we should all just live in government owned apartments. Furthermore, it is not real estate investing that has brought the country to the “mess”. It is the fact that banks were forced by big government to make bad loans. Honest people pay back their real estate loans. I benefit greatly from my mortgage deduction and I pay back my loans without help from the government. WE DO NOT NEED MORE REGULATION in real estate.
WSBowles on
That’s right, Obama making another move to punish the rich, the people who invest in real estate and provide housing for those who can not buy. Typical Liberal who can’t understand that for every action there will be a reaction. Look for less investors in the market, which means less affordable housing, which means the return of government housing and slums.
I think it is a bad move as well. Particularly at this time when they are trying to rev up the economy. The administration should not give incentives to buy houses on one hand and then limit it on the other. It doesn’t make much sense and makes him look like he doesn’t know what he is doing.
Mickey’s last blog post: Illegal immigration without the “illegal” is fine
March 17, 2009 6:14 am
Boy oh boy…Barry Obama has got to be one of the stupidest people walking the planet. Either that or he genuinely hates this country as he basically states in his book..that apparently none of the brain dead that voted for him read!
The mortgage interest deduction is a subsidy to the banks and nothing more. By perpetuating this garbage, you are convincing people to not pay off their mortgages which is the wrong decision for many people.
agree this is truly a bad idea. what about the two working parent families with kids living in new york or new jersey where the cost of living is much higher. people that have bought houses which may already be underwater are now going to be forced to pay more in taxes for owning the home. changing the rules after the game has started seems unfair but hey lets just keep giving the money to car companies and banks and keep mortgaging our children’s future too……good start
April 1, 2009 9:37 pm
Jessica Albarez on
I disagree Rob only if you had more knowledge as in to real estate you would understand more this issue is best to get more in to research on this before making a statement or opinion. I do agree with Steve Heideman.
David Dzidzikashvili on
Look at the overall economic picture… And real estate is a big part of it:
What are the logical outcomes? Unfortunately the outcomes, even the best case scenario looks pretty bad. Take just all facts, hard statistical and economic data, and start looking at the trends, formulas and factors such as unemployment rates, foreclosures, US economic productivity output, etc…
From what I can see right now, and just relying on data – the first 6 months of 2010 (January through June 2010), Americans continue to live in the “unreality”…the period between July and October is when the financial fireworks will begin. It will become impossible for he government to hide unpleasant economic data news and the reality check will cause economic tsunami. The Fed will act unilaterally for its own survival irrespective of any political implications… Great Depression will start to look like a church picnic. Whoever has a stable job now, at this moment, might not enjoy the stability in the 3rd and 4th quarters of 2010. In this case, it’s logical to say that the FDIC will collapse during the second half of 2010. Additionally, to make things even worse, I think there is a more than 75% probability that bond market will crash, especially municipal, sometime towards the final months of 2010. These events should have taken already place in the last months of 2009, but they were delayed, only due to the government’s cash injection and bailouts. The bailouts did not address the root of the problem and in general the systemic issues have been overlooked at, because the government does not want to talk about negative events, in the world of politics, the politicians tend stress their attention on positive developments for PR needs and purposes. But ignorance will have extremely negative consequences… Add to that more than $10 Trillion US debt and record deficits… Logical question – what will happen after this?
July 9, 2010 10:04 am
Nice posts Steve, Wayne, Jessica and David. I’m glad there are people out there still trying to reason with people.
We need to start uniting and working together to solve problems.
Bad mouthing and complaining will accomplish nothing.
Ricky K on
I didn’t know there were so many couples out there making $250,000+ a year out there. From what I can tell, most of you who have posted your anger at this new idea must fall in that category. If not, please read up on things before you jump off the handle. We have extremely wealthy people out there that are writing off millions each year of their interest payments on the huge mansions on the hill. If you are an average person making less that $250,000 a year, you have nothing to worry about. If you’re average, like me, making less that $50,000 a year you may actually be helped with this policy. Is this the rich peoples site??
Kim Peterson on
Great idea its about time someone stopped the rich from sticking it to the working man. If they dont like it they can pay there house off. This effects less than 3% of the country. Get over it people this has nothing to do w/ you. Give the middle class a break and maybe thay can spend some money. This is long over due. Why some one should write off $500K worth of morgage interest is BS. We dont need anymore McMansions.
rhcrest on
Rich people? Most people own homes and most people have mortgages. It is what is called the middle class and is one of the few deductions left to the middle class. I am not sure what planet some of the posters on here are from where they think that only “rich” people have mortgages. What absurdity. Yes i see lot of “rich” people in little ranch homes. LMAO! And by the way,income taxes should be eliminated alltogether. Read about the federal reserve and research for yourself.
“The act created the Federal Reserve System, a name carefully selected and designed to deceive. “Federal” would lead one to believe that this is a government organization. “Reserve” would lead one to believe that the currency is being backed by gold and silver. “System” was used in lieu of the word “bank” so that one would not conclude that a new central bank had been created. In reality, the act created a private, for profit, central banking corporation owned by a cartel of private banks. Who owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York. Did you know that the FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money. Almost everyone thinks that the money they pay in taxes goes to the US Treasury to pay for the expenses of the government. Do you want to know where your tax dollars really go? If you look at the back of any check made payable to the IRS you will see that it has been endorsed as “Pay Any F.R.B. Branch or Gen. Depository for Credit U.S. Treas. This is in Payment of U.S. Oblig.” Yes, that’s right, every dime you pay in income taxes is given to those private banking families, commonly known as the FED, tax free.
This is what is wrong with both income and business taxes. People making important decisions based on the tax consequences and not if it’s a good idea. Phase both of these taxes out and replace them with something equitable across the board.
Obama Removing Mortgage Interest Deduction - Dumbest Idea Of The Week
You are at:Home»Market Trends, News & Commentary»Obama Removing Mortgage Interest Deduction – Dumbest Idea Of The Week
Obama Removing Mortgage Interest Deduction – Dumbest Idea Of The Week 23
The Obama budget announced this week – in the middle of biggest housing crisis since the Great Depression – seeks to raise tax revenue by removing the mortgage interest tax deduction for those that are in the 33% and 35% income tax brackets.
I can’t count the ways this is bad for housing. The one big reason renters all across this country make the decision to become home owners is the extra incentive the tax code gives them. Sure they have the, “I can paint the walls any time I want without getting permission from anyone” reason, but that is no where near as motivating as $1,000’s they get via the deduction every year.
Obama limiting this to the “wealthy” may think he’s not hurting those home owners in the lower tax brackets, but he’d be wrong. The housing market is a connected market. In other words, what hurts home values at the top eventually spreads lower depressing all home values.
Aren’t home values depressed enough?
Another big problem with this proposal is that those “wealthy” folks buy homes in the areas of the country still getting ravaged by massive foreclosures. Places like Arizona, California, New York, and Florida need this like they need a hole in the head.
These States are still reeling from a glut of homes due to the foreclosure crisis. Many of which are of the “luxury home” variety. I guess Obama forgot that only the rich can afford a luxury home.
Don’t get me wrong, I’m not crying for the rich. I’m crying for the housing recovery. Choking it off before we even get started is just plain dumb.
So Obama and his removal of the mortgage interest deduction wins my “Dumbest Idea of the Week” award.
What are they thinking, Rob?
This coupled with the inability to write off charitable donations and other hair-brained schemes are going to just backfire, I’m afraid.
The wealthy, more than anyone else, will change their behavior based on taxes. If passed, this will backfire in a big way.
March 1, 2009 7:18 pm
Hmmm, this does seem like the wrong move at this point in time. The effect on the individual doesn’t sound promising — I wonder what the long term effects will be. *sigh*
Stanley Sokolow on
March 1, 2009 8:31 pm
The Obama proposal is not “removing the mortgage interest tax deduction for those that are in the 33% and 35% income tax brackets” but rather it is to limit the income tax deduction to the amount it would be if the taxpayer were in the 28% bracket. In other words, high-income taxpayers would no longer get to deduct a higher dollar amount of mortgage interest just because they are in a higher income bracket.
That’s what I understand as well, like what Stanley said, is that the upper tax bracket mortgage deduction is going to be limited, not erased. In essence, it really shouldn’t hurt the high earners that much. Besides, this actually would be a return to an old policy, until it was revised in 2001 and this new itemized deduction rule went into effect 2006.
My next blog post (probably due Saturday) is going to look at the general economic direction of the Obama admin. It is a direction that will be good for some, bad for others, as is always true of economic policy. However, for one class – US (entrepreneurial investors) – it is really going to be bad. Buckle up.
This is a great idea, real estate is not a route to wealth its a place to live. Real estate should be heavily regulated after its role in getting us all in to this mess. The excessive speculation, backed up by tax advantages have contributed to an extravagant binge on debt.
I have to say I disgree with you Rob. I don’t think the mortgage interest deduction is an incentive to home ownership. I think that the mortgage interest deduction gives an incentive to those who will already buy a home to buy a bigger one. A majority of the time that I do a loan for someone–they rarely ask what their after tax cost is–they want to know if they can afford the monthly payment. If the answer is no, they don’t buy. Those who the deduction was designed to help–mainly the middle class and lower middle class–don’t itemize–they take the standard deduction. Besides–Obama is only proposing that the deduction be phased out after the 28% tax bracket which affects those who make over $208,850 and file jointly.
Wayne, I beg to differ with you; you are absolutely clueless in your statement that “real estate is not a route to wealth it’s a place to live”. If that’s the case then we should all just live in government owned apartments. Furthermore, it is not real estate investing that has brought the country to the “mess”. It is the fact that banks were forced by big government to make bad loans. Honest people pay back their real estate loans. I benefit greatly from my mortgage deduction and I pay back my loans without help from the government. WE DO NOT NEED MORE REGULATION in real estate.
WSBowles on
That’s right, Obama making another move to punish the rich, the people who invest in real estate and provide housing for those who can not buy. Typical Liberal who can’t understand that for every action there will be a reaction. Look for less investors in the market, which means less affordable housing, which means the return of government housing and slums.
I think it is a bad move as well. Particularly at this time when they are trying to rev up the economy. The administration should not give incentives to buy houses on one hand and then limit it on the other. It doesn’t make much sense and makes him look like he doesn’t know what he is doing.
Mickey’s last blog post: Illegal immigration without the “illegal” is fine
March 17, 2009 6:14 am
Boy oh boy…Barry Obama has got to be one of the stupidest people walking the planet. Either that or he genuinely hates this country as he basically states in his book..that apparently none of the brain dead that voted for him read!
The mortgage interest deduction is a subsidy to the banks and nothing more. By perpetuating this garbage, you are convincing people to not pay off their mortgages which 
is the wrong decision for many people.
agree this is truly a bad idea. what about the two working parent families with kids living in new york or new jersey where the cost of living is much higher. people that have bought houses which may already be underwater are now going to be forced to pay more in taxes for owning the home. changing the rules after the game has started seems unfair but hey lets just keep giving the money to car companies and banks and keep mortgaging our children’s future too……good start
April 1, 2009 9:37 pm
Jessica Albarez on
I disagree Rob only if you had more knowledge as in to real estate you would understand more this issue is best to get more in to research on this before making a statement or opinion. I do agree with Steve Heideman.
David Dzidzikashvili on
Look at the overall economic picture… And real estate is a big part of it:
What are the logical outcomes? Unfortunately the outcomes, even the best case scenario looks pretty bad. Take just all facts, hard statistical and economic data, and start looking at the trends, formulas and factors such as unemployment rates, foreclosures, US economic productivity output, etc…
From what I can see right now, and just relying on data – the first 6 months of 2010 (January through June 2010), Americans continue to live in the “unreality”…the period between July and October is when the financial fireworks will begin. It will become impossible for he government to hide unpleasant economic data news and the reality check will cause economic tsunami. The Fed will act unilaterally for its own survival irrespective of any political implications… Great Depression will start to look like a church picnic. Whoever has a stable job now, at this moment, might not enjoy the stability in the 3rd and 4th quarters of 2010. In this case, it’s logical to say that the FDIC will collapse during the second half of 2010. Additionally, to make things even worse, I think there is a more than 75% probability that bond market will crash, especially municipal, sometime towards the final months of 2010. These events should have taken already place in the last months of 2009, but they were delayed, only due to the government’s cash injection and bailouts. The bailouts did not address the root of the problem and in general the systemic issues have been overlooked at, because the government does not want to talk about negative events, in the world of politics, the politicians tend stress their attention on positive developments for PR needs and purposes. But ignorance will have extremely negative consequences… Add to that more than $10 Trillion US debt and record deficits… Logical question – what will happen after this?
July 9, 2010 10:04 am
Nice posts Steve, Wayne, Jessica and David. I’m glad there are people out there still trying to reason with people.
We need to start uniting and working together to solve problems.
Bad mouthing and complaining will accomplish nothing.
Ricky K on
I didn’t know there were so many couples out there making $250,000+ a year out there. From what I can tell, most of you who have posted your anger at this new idea must fall in that category. If not, please read up on things before you jump off the handle. We have extremely wealthy people out there that are writing off millions each year of their interest payments on the huge mansions on the hill. If you are an average person making less that $250,000 a year, you have nothing to worry about. If you’re average, like me, making less that $50,000 a year you may actually be helped with this policy. Is this the rich peoples site??
Kim Peterson on
Great idea its about time someone stopped the rich from sticking it to the working man. If they dont like it they can pay there house off. This effects less than 3% of the country. Get over it people this has nothing to do w/ you. Give the middle class a break and maybe thay can spend some money. This is long over due. Why some one should write off $500K worth of morgage interest is BS. We dont need anymore McMansions.
rhcrest on
Rich people? Most people own homes and most people have mortgages. It is what is called the middle class and is one of the few deductions left to the middle class. I am not sure what planet some of the posters on here are from where they think that only “rich” people have mortgages. What absurdity. Yes i see lot of “rich” people in little ranch homes. LMAO! And by the way,income taxes should be eliminated alltogether. Read about the federal reserve and research for yourself.
“The act created the Federal Reserve System, a name carefully selected and designed to deceive. “Federal” would lead one to believe that this is a government organization. “Reserve” would lead one to believe that the currency is being backed by gold and silver. “System” was used in lieu of the word “bank” so that one would not conclude that a new central bank had been created. In reality, the act created a private, for profit, central banking corporation owned by a cartel of private banks. Who owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York. Did you know that the FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money. Almost everyone thinks that the money they pay in taxes goes to the US Treasury to pay for the expenses of the government. Do you want to know where your tax dollars really go? If you look at the back of any check made payable to the IRS you will see that it has been endorsed as “Pay Any F.R.B. Branch or Gen. Depository for Credit U.S. Treas. This is in Payment of U.S. Oblig.” Yes, that’s right, every dime you pay in income taxes is given to those private banking families, commonly known as the FED, tax free.
This is what is wrong with both income and business taxes. People making important decisions based on the tax consequences and not if it’s a good idea. Phase both of these taxes out and replace them with something equitable across the board.