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> spend direct stimulus on things our society actually needs (on this topic, housing). When governments put money into a thing, that thing will have insanely h
by theandrewbailey 3y ago
> spend direct stimulus on things our society actually needs (on this topic, housing).
When governments put money into a thing, that thing will have insanely high prices. Why would sellers lower prices when they know that Uncle Sam will pay any price? Didn't you notice that high housing prices are a big part of the problem we already have? And you suggest a solution that will make it worse?
5% interest rates will change things for the better, and maybe we can phase out the mortgage interest tax deduction, too.
- mindslight 3y agoMy suggestion to spend on housing is obviously to build more supply, not to bid up existing stock. Bidding up existing stock is exactly what the profligate monetary policy of the past two decades has done. Yes, the prices of construction materials will go up. This is called a price signal, indicating that more of a thing is needed. I personally will not be happy about higher prices. But the pain created by this is due to economic damage that has already occurred and needs to be realized, rather than continuing to kick the can down the road as it has been. I'm ambivalent about the mortgage interest tax deduction. People act like it's some amazing cut-from-whole-cloth subsidy, but from a business context it's just a regular straightforward deduction of a customary expense.
- lotsofpulp 3y ago> I'm ambivalent about the mortgage interest tax deduction. People act like it's some amazing cut-from-whole-cloth subsidy, but from a business context it's just a regular straightforward deduction of a customary expense. Then why isn’t there a deduction for everything else we buy? It is a handout to real estate owners and lenders, and has zero reason to exist. If the government wants to help people who do not have enough money, the government should give them cash. Or a home, if that is the goal.
- lotsoweiners 3y agoMost homeowners use the standard deduction now for about the past five years. This is a result of a tax policy change by the Trump administration.
- lotsofpulp 3y agoStandard deduction is incomparable to a specific deduction. A standard deduction is simply lowering tax rates for everyone.
- mindslight 3y agoPhilosophically, I think W2 workers should be able to deduct all of the expenses that are necessary and proper to earn one's income - commuting, professional clothes, a portion of food and housing, etc. What makes it a pragmatic non-starter is that it pushes individuals into even more accounting minutiae, which is its own form of horrible. Also keep in mind that interest on a loan is being reported as income elsewhere, so it is being taxed. It's just being taxed one less time. Politically, I don't see the point of singling out people who aren't short housing (aka they own one home) but still have a mortgage. Remember with rental properties all expenses are straightforwardly deductible (or depreciable), because revenue that pays expenses is distinct from income.
- scotty79 3y agoAlso progressively tax holding the large amounts of existing stock. Government has so many tools to absolutely screw over the incumbent freeloaders. It won't because it consists of and is paid by incumbent real estate freeloaders. Don't you wonder why almost nobody nowadays heard about land value tax despite it being super prominent idea century ago or so?
- brewdad 3y agoThe SALT cap means the mortgage interest tax deduction is largely worthless anyway. Only buyers of more expensive properties and/or early in their mortgages even see the benefit of itemizing anymore.
- scotty79 3y agoBuild and sell below costs. Government was never supposed to make money. That's what taxes are for.