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Removing the MID would make middle-to-upper-middle-class people poorer, and so reduce inequality that way, but would it help poor people at all? The net monthl
by kemiller 9y ago
Removing the MID would make middle-to-upper-middle-class people poorer, and so reduce inequality that way, but would it help poor people at all? The net monthly cost of housing would stay the same, just shift the proportion of your payment that goes to the government vs the bank. It's true that it's regressive, but I'm skeptical that's a huge factor.
I think it would just help landlords, who would retain the ability to deduct mortgage interest as a business expense, and who would suddenly have both an influx of people kicked back into the renter pool and cheaper properties.
The real issue is lack of supply due to zoning and planning issues, and probably the cultural preference for single-family. Also the crazy-low rates.
Edit: To be clear, I'm not saying the MID is a great thing. If it didn't currently exist, I wouldn't be in favor of introducing it, and it was a huge windfall to whomever owned property when it was introduced. But what's done is done, and it would be pretty punitive to impose a negative windfall on every homeowner in America now. Maybe grant a one-time benefit when you change the tax code and let things sort themselves out from there?
- accountyaccount 9y agoI think adding an upper limit to MID would serve everyone well.
- hkmurakami 9y agoAlready exists.
- deleted 9y ago[deleted]
- tanderson92 9y agoIt is currently in-place at $1m of mortgage debt, and this fact was mentioned numerous times in TFA. It was mentioned in the article that Rep. Keith Ellison wants to move that number down to $500k.
- accountyaccount 9y agoNo, I mean remove it entirely. If you're buying a $1m property you don't qualify for any MID. From the first $1 on.
- tanderson92 9y agoAh! It's a good thought. I would be concerned that it's regressive in a different way. As it is you already see people unable to afford certain cities. This will only compound the effect since regional differences in real estate markets trump the difference within. It might work, but that is my reservation.
- dustingetz 9y agothe article says that the MID causes upward pressure on prices, which you acknowledge in the edit but not in your first sentence
- kemiller 9y agoThat's why it would make them poorer. Removing upward pressure on their largest asset makes them poorer as the price falls.
- strictnein 9y ago> "it was a huge windfall to whomever owned property when it was introduced" It is my understanding that all interest used to be tax deductible and college and home mortgage are the last ones remaining.
- kemiller 9y agoThat's not what TFA said as I read it.
- thescriptkiddie 9y agoThe proposal I have seen elsewhere is to replace the mortgage interest deduction with a refundable tax credit capped at some fraction (perhaps 40%) of the median housing cost. That way it would be equally valuable to the rich and poor, and would not encourage people to take out high-interest mortgages. It would still be a distorting force pushing housing prices up, but it could be phased out gradually (perhaps over 30 years) if necessary. I also very much agree with your point that the main cause of high housing costs in the US are poor planning and zoning.