Bill would end interest-tax break on houses over 3,000 square feet

[musicman]

Amid a severe housing market slump, Rep. John Dingell is raising eyebrows with a proposal to eliminate interest-tax deductions for owners of big houses.

The Michigan Democrat says doing so would discourage excess energy consumption and lessen emissions linked to climate change.

Dingell said Friday he plans to introduce legislation next month that would eliminate the tax deduction on mortgage interest for owners of so-called "McMansions"

[jm1fd]

I'd say its a good idea, although I'd structure it in such a way that the size of your family would determine the size of the house that would cause you to lose your deduction. Say for example you'd get a base 800 sqft automatically plus an additional 300 sqft per person.

[CDeb]

Typical class warfare disguised as environmentalism.

[mrfootball]

This bill is absolute BS.

[pineda]

background on Dingell from wikipedia

from the article:

Dingell has opposed raising mandatory automobile fuel efficiency standards, which he helped to write in the 1970s. Instead he has indicated that he intends to pursue a regulatory structure that takes greenhouse gas emissions and oil consumption into account.

In July of 2007, Dingell indicated he planned to introduce a new a tax on carbon usage in order to curtail greenhouse gas emissions. This was seen as an honest, commendable move by many considering the recent strong criticisms of the politics of global warming; primarily the fact that if proponents were so serious about the issue, they would enact policies that would have a direct, tangible effect, such as a carbon tax. Rather, many in Washington have opted toward relatively ineffective policy measures that seem productive and efficient ostensibly, but in reality shift cost burdens onto businesses who then indirectly pass those costs onto their customers. This has been observed as a craven political scheme to exploit the potentially serious issue of global warming while not actively addressing the problem since it may require new policies that voters, contrary to polling numbers, may not be willing to pay for. The recent changes to automobile efficiency standards are a perfect example of such convoluted legislation as they will not yield any substantial reductions in greenhouse emissions and they place an unfair burden on the automotive industry, of which many of Rep. Dingell

[ProHouston]

I'd say its a good idea, although I'd structure it in such a way that the size of your family would determine the size of the house that would cause you to lose your deduction. Say for example you'd get a base 800 sqft automatically plus an additional 300 sqft per person.

So you would cut 4 person families off at 2000 sq ft? I think the 3000 idea is misguided, but 2000? If such a plan were to ever fly they'd have to structure it so all houses get the deduction for up to 3000 sq ft of living space. Then anything over is not included.

This idea won't fly though.

[KatieDidIt]

So you would cut 4 person families off at 2000 sq ft? I think the 3000 idea is misguided, but 2000? If such a plan were to ever fly they'd have to structure it so all houses get the deduction for up to 3000 sq ft of living space. Then anything over is not included.

This idea won't fly though.

Considering the size homes the Reps and Senators live in, not to mention thier vacation homes, this will never pass.

[jm1fd]

So you would cut 4 person families off at 2000 sq ft?

Absolutely. I was in a 4 person family growing up and we had a ~1300 sqft house. That was plenty of space. 2k sqft is MORE than enough space for 4 people. If it isn't then you've got too much crap.

[MidtownCoog]

Absolutely. I was in a 4 person family growing up and we had a ~1300 sqft house. That was plenty of space. 2k sqft is MORE than enough space for 4 people. If it isn't then you've got too much crap.

Oy vey. And before that an entire family of 8 lived in a one room log cabin.

All my PC equipment takes an entire room. In your world I'd have to sell it and use a laptop on the kitchen table.

[ProHouston]

Absolutely. I was in a 4 person family growing up and we had a ~1300 sqft house. That was plenty of space. 2k sqft is MORE than enough space for 4 people. If it isn't then you've got too much crap.

Then by all means, let's limit Americans to what you deem necessary <sarcasm>...

According to the National Association of Home Builders, the average home size in the United States was 2,330 square feet in 2004, up from 1,400 square feet in 1970.

Going on your self imposed "too much crap" rule, the average American homeowner would lose their interest deduction. Once again, this won't fly.

[jt16]

so much for the american dream

[CyKat]

Absolutely. I was in a 4 person family growing up and we had a ~1300 sqft house. That was plenty of space. 2k sqft is MORE than enough space for 4 people. If it isn't then you've got too much crap.

I think we should tax people who put stupid pictures of cats in their sig.

Actually it's none of your business how much "crap" I have.

Although....................maybe we need to notify the Humane Society or PETA about cats being tortured by persons on this forum. Anonymously, of course.

CyKat

[jm1fd]

I think we should tax people who put stupid pictures of cats in their sig.

That's fine. If that becomes law I'll just remove it.

Actually it's none of your business how much "crap" I have.

I completely agree, that's why I don't feel that I should have to subsidize your crap habit.

Although....................maybe we need to notify the Humane Society or PETA about cats being tortured by persons on this forum. Anonymously, of course.

Of course that's horrible. So, who's the cat torturer?

[Scharpe St Guy]

The general idea behind this idea is to tax consumption. If you believe that to be a good idea then you should consider the flat tax proposals that will do exactly that tax upon consumption. If Person A chooses to purchase 2 homes and 4 cars and 8 TV's and ..... then they will get taxed upon each purchase, if Person B chooses to purchase 1 home and live with 1 car and 1 TV then they will get taxed accordingly upon the initial purchase.

It's that simple folks and think of all the money and time we and the government could save by not having the IRS, audits, filing deadlines, time saved, trying to find receipts, etc...

Scharpe St Guy

[CyKat]

That's fine. If that becomes law I'll just remove it.

I completely agree, that's why I don't feel that I should have to subsidize your crap habit.

Of course that's horrible. So, who's the cat torturer?

Regarding your interest in my "Crap Habit"- I hear Russia, N. Korea, and even Cuba all have openings for "Senior Socialist Citizen". Although when Hilary gets elected, maybe you could apply w/ her instead.

CyKat

[Pumapayam]

This bill is absolute BS.

I can see lots of 2999 square foot homes being built.

[jm1fd]

The general idea behind this idea is to tax consumption. If you believe that to be a good idea then you should consider the flat tax proposals that will do exactly that tax upon consumption. If Person A chooses to purchase 2 homes and 4 cars and 8 TV's and ..... then they will get taxed upon each purchase, if Person B chooses to purchase 1 home and live with 1 car and 1 TV then they will get taxed accordingly upon the initial purchase.

It's that simple folks and think of all the money and time we and the government could save by not having the IRS, audits, filing deadlines, time saved, trying to find receipts, etc...

Scharpe St Guy

I am all about the consumption tax, or fair tax or flat tax or whatever you want to call it....it just makes good sense. Unfortunately, I don't think most people are ready to accept the concept.

[TheNiche]

I am all about the consumption tax, or fair tax or flat tax or whatever you want to call it....it just makes good sense. Unfortunately, I don't think most people are ready to accept the concept.

I think you'd be surprised at how many would jump at the opportunity not to have to do a bunch of paperwork or hire accountants.

The problem is not so much tied to popularity as it is to the fact that it would wreak havoc upon the accounting industry, and they're a more powerful lobby than you might think...when they want to be.

[Subdude]

I think the broader concern with consumption taxes are that they are regressive. In actuality, the vast majority of taxpayers don't use accountants or have to file reams of paper. Even if a common national VAT were implemented, an income tax would be retained to keep a degree of progressivity in tax rates. All this idea is doing is adding progressiveness of a sort to the mortgage deduction. It's just a political call if taxpayers should subsidize purchases of very large houses, as opposed to other means of adjusting tax preferences.

[CyKat]

I think you'd be surprised at how many would jump at the opportunity not to have to do a bunch of paperwork or hire accountants.

The problem is not so much tied to popularity as it is to the fact that it would wreak havoc upon the accounting industry, and they're a more powerful lobby than you might think...when they want to be.

What do you all think would be a "fair" tax rate and what items would be exempt. And WHO would be exempt. Also...do you think this might create big black or underground market for goods and services?

Excellent idea bu not as simple as you might think.

CyKat.

"I still don't think my "crap habit" is anyones business."

[KatieDidIt]

Consumption, or consumption of crap , fuels the American Economy. This is another case of too much government envolvement in the private sector. Honestly, if I wanted to live in a communist society or answer to Big Brother, I'd live in Cuba. I DID leave The Woodlands after all. >

10% or 15% flat tax sounds great to me. Along with getting rid of the death tax.

[CyKat]

Consumption, or consumption of crap , fuels the American Economy. This is another case of too much government envolvement in the private sector. Honestly, if I wanted to live in a communist society or answer to Big Brother, I'd live in Cuba. I DID leave The Woodlands after all. >

10% or 15% flat tax sounds great to me. Along with getting rid of the death tax.

Is that 10 or 15% on top of the current 7-8% sales tax we now have?

I am all for a flat tax or consumption tax, I get giddy just thinking about it. I don't see it happening though. Talk about upsetting the apple cart. IRS as we know it gone, no more H&R Block commercials, personal savings going thru the roof, dog and cats sleeping together........................

CyKat

"I still don't think my "crap habit" is anyones business."

[CyKat]

Absolutely. I was in a 4 person family growing up and we had a ~1300 sqft house. That was plenty of space. 2k sqft is MORE than enough space for 4 people. If it isn't then you've got too much crap.

BTW, China has their own version of this. It's a "one child per family rule".

What gives you the right to dictate how much "space" and how much "crap" I have. Maybe someone will come along behind you and say that the litthe 1300 sqft home you are so proud of is too much.

This is America you know, it's still the land of the free and the home of the brave. Remember?

This kind of thinking really chaps my behind. Too much of this crap is going on in D.C.

I could go on and on, but..........

How anyone even has the gall to make a comment like the one above is wayyyyyyyy beyond me.

CyKat

[TheNiche]

I think the broader concern with consumption taxes are that they are regressive. In actuality, the vast majority of taxpayers don't use accountants or have to file reams of paper. Even if a common national VAT were implemented, an income tax would be retained to keep a degree of progressivity in tax rates. All this idea is doing is adding progressiveness of a sort to the mortgage deduction. It's just a political call if taxpayers should subsidize purchases of very large houses, as opposed to other means of adjusting tax preferences.

For the purposes of tax collection, KEEP IT SIMPLE STUPID is a good rule to live by. It doesn't waste a lot of time, is hard for people to screw up (which usually defeats the purpose of all the complicated mechanisms and either screws the taxpayer or all the other taxpayers), and is harder for people to cheat on.

If we must redistribute income to satisfy society's voting theives, it would be far more preferable to just give each and every household a monthly check that reflects a base amount for each household unit plus some other amount for each individual member of the household; give less for minors and dependents to keep from encouraging poor people to have children as a way of collecting more income than they absolutely need just to feed and clothe the child.

My personal view is that because different people value different kinds of consumption, we ought not influence their decisions by limitations, consumption quotas, or by providing monetary incentives or disincentives in the vast majority of cases. Where that kind of influence is genuinely in the social interest, such as that all people have access to preventative medicine, the government should offer an incentive for private industry to provide the service. In a state of competition between providers, the benefit to providers is passed on to consumers. This also causes the service provider to process all the paperwork, which they are typically able to do more efficiently on account of high volume than individual consumers looking for a tax deduction would ever be able to do (if they know to do it).

Insofar as some basic standard can be met such that most people are not living below subsistence, a gap between the poor and the wealthy is desireable in society so as to provide an incentive for those that are highly productive in our society to produce. If they are not producing, not only can they not be taxed, but the price per unit of output of goods that would be produced by such people will go up relative to income, resulting in diminished wealth throughout our society.

[Subdude]

Good grief. Talk about hyperbole. This isn't communism, or in the least comparable to Cuba or China. Nobody is dictating how much space anyone should have. The bill simply would end tax subsidies for large houses. If anyone can equate that with communism they are in need of a history lesson. Our tax system is already progressive. This is just one way of tweaking it. I'm not sure if I agree or disagree with the proposal, but I can at least see that there is a valid argument for taxpayers not to subsidize large houses for others.

My personal view is that because different people value different kinds of consumption, we ought not influence their decisions by limitations, consumption quotas, or by providing monetary incentives or disincentives in the vast majority of cases.

This is why some economists have argued against the mortgage interest deduction. On the other hand, it is popular and is believed to provide a social good in encouraging owned housing.

For the purposes of tax collection, KEEP IT SIMPLE STUPID is a good rule to live by. It doesn't waste a lot of time, is hard for people to screw up (which usually defeats the purpose of all the complicated mechanisms and either screws the taxpayer or all the other taxpayers), and is harder for people to cheat on.

Efficiency never has been, and likely never will be, the primary goal behind designing tax policy. As with the mortgage interest example, a primary consideration is encouraging behavior deemed socially useful. You may consider progressivity to be "satisfying voting theives" but bear in mind that almost all national tax systems are progressive. Don't jump to the extreme position - this isn't intended to eliminate the gap between rich and poor, but only to mitigate it. The trick is in striking a balance between eliminating incentives to be rich and ending up with an overly stratified and unstable society.

Btw, this topic is not Houston-related so moved to the way off topic area.

[TheNiche]

This is why some economists have argued against the mortgage interest deduction. On the other hand, it is popular and is believed to provide a social good in encouraging owned housing.

Efficiency never has been, and likely never will be, the primary goal behind designing tax policy. As with the mortgage interest example, a primary consideration is encouraging behavior deemed socially useful. You may consider progressivity to be "satisfying voting theives" but bear in mind that almost all national tax systems are progressive. Don't jump to the extreme position - this isn't intended to eliminate the gap between rich and poor, but only to mitigate it. The trick is in striking a balance between eliminating incentives to be rich and ending up with an overly stratified and unstable society.

I am on board with that line of reasoning about eliminating it altogether. The argument in favor of home ownership is that it is a mechanism by which the common man can safely accrue equity and save money. If that is truely the case, then there are more effective means of bringing about that outcome and doing it more equitably with less risk.

Frankly, I could care less that almost all national tax systems are progressive and inefficient, though. Poor policy should not be emulated. I am fully aware of what can happen in too stratified a society; this is why I am a big advocate of vastly improved economic education. That kind of thing would be the end of Lou Dobbs and anyone the least bit like him.

[CDeb]

Part of that economic education should address this toxic notion that keeping more of your earned money is a "subsidy."

[Subdude]

I am on board with that line of reasoning about eliminating it altogether. The argument in favor of home ownership is that it is a mechanism by which the common man can safely accrue equity and save money. If that is truely the case, then there are more effective means of bringing about that outcome and doing it more equitably with less risk.

Frankly, I could care less that almost all national tax systems are progressive and inefficient, though. Poor policy should not be emulated. I am fully aware of what can happen in too stratified a society; this is why I am a big advocate of vastly improved economic education. That kind of thing would be the end of Lou Dobbs and anyone the least bit like him.

Actually, the usual argument for the mortgage deduction isn't that it helps the common man accrue equity and save money. This may well be a beneficial outcome, but it also presumes that properties will grow in value, which of course isn't the case. The reason I've always heard is that homeowners are better neighbors. Unlike renters, they have a stake in the community and therefore in behaving well and keeping up appearances. I agree with the point, which is why I've always worried about Midtown becoming a neighborhood of rental units.

Poor policy should not be emulated, but that presupposes that tax progressivity is poor policy. One's call on that simply comes down to a view on social fairness. I have an easier time with progessive taxes than regressive, such as social security or sales taxes. If I had my druthers, we would have a progressive tax on non-saved income. More confusing than the current system, but perhaps incorporating better economic objectives.

[TheNiche]

Actually, the usual argument for the mortgage deduction isn't that it helps the common man accrue equity and save money. This may well be a beneficial outcome, but it also presumes that properties will grow in value, which of course isn't the case. The reason I've always heard is that homeowners are better neighbors. Unlike renters, they have a stake in the community and therefore in behaving well and keeping up appearances. I agree with the point, which is why I've always worried about Midtown becoming a neighborhood of rental units.

That argument is applied with great frequency to local issues, but federal policy tends not to focus on that. Very few voters are against apartments being built somewhere in their country...they just want them in the next town over and never their own. People without class are abundant. They gotta live somewhere, and they aren't likely to clean up their act just because there's an incentive to buy a trailer home instead of leasing a Class C apartment unit.

Poor policy should not be emulated, but that presupposes that tax progressivity is poor policy. One's call on that simply comes down to a view on social fairness. I have an easier time with progessive taxes than regressive, such as social security or sales taxes. If I had my druthers, we would have a progressive tax on non-saved income. More confusing than the current system, but perhaps incorporating better economic objectives.

My original point is that if voters embrace some absurd notion that morality must be endorsed and enforced by the government (in this case by redistribution of wealth), then there are more efficient, effective, and transparent ways to accomplish the goals you have in mind.

Btw, any tax on non-saved income is a consumption tax.