Food Stamps and the $41 Cake (1 Viewer)

[Sweet J]

Please tell me how a federal employee "earns" his matching retirement payments from the federal government? I'll hang up and listen.

You're just making it worse.

Please, enlighten me.

It's already been answered- your matching retirement payments are part of the benefits you receive for working. Same with salary, health benefits, etc.

Fair enough. You are welcome to tackle Mortgage Deduction and SS payouts (getting paid more than you put in). Unless you are advocating cutting people off from SS at some point. And good luck with that, by the way.

1. Mortgage deduction is part of our insane tax code where we try and influence behavior. I'd prefer to get rid of it, but that would crush the already weak housing market.2. People can get more out of SS than they put in because it's a pool based on life-expectancy- some get out more than they put in, some less. Your benefits are based on your contributions though.3. These things are all very different from food stamps (and I'm not advocating getting rid of them by the way).

1. Does not make it any less of a "handout" than food stamps. For a million reasons, it isn't going anywhere. It is free money. There are plenty of reasons why it is or isn't a good idea, but it is free money nonetheless.2. Yes. So a person can get more money than they put in. Money for nothing. 3. Yes they are different, but I don't think as different as people would like them to be.

 

[Hang 10]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

 

[Sweet J]

Low interest student loans seem like a handout. Anybody disagree with that one?

If they are I hope we get an ROI. At the very least, I imagine the better educated you are the less likely you are to need food stamps.

Food stamps are a ROI: Healthy, nutritious children contribute better to society. But I understand your point: it is easier to quantify something like "education."

 

[Wrighteous Ray]

Low interest student loans seem like a handout. Anybody disagree with that one?

If they are I hope we get an ROI. At the very least, I imagine the better educated you are the less likely you are to need food stamps.

Food stamps are a ROI: Healthy, nutritious children contribute better to society.

Yum, nutritious children.

 

[Sweet J]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

 

[Chaka]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

Does the owner of the rented building get a tax break?

 

[Sweet J]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

Does the owner of the rented building get a tax break?

Good question.

 

[Captain Quinoa]

2. Yes. So a person can get more money than they put in. Money for nothing.

and chicks for free?

 

[Hang 10]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

So if I pay less than 100% income tax I'm getting a handout?

 

[Hang 10]

Tax deductions are among the biggest government handouts. It's not even really debatable.

The government can't handout what's not theirs to begin with.

 

[cosjobs]

I still disagree no matter what fictitious scenario that you throw at me.If she can afford to waste 41 dollars on a cake she is receiving too much money. If she can't afford to waste the money and sacrifices nutrition for herself or anybody else then she is making a poor decision with money that is not hers and was not intended for that purpose.I have zero issues with extremely strict standards regarding any public assistance. Whether it be welfare, social security disability, or whatever other forms.On a side note, I like the way you have approached this thread.

We give old people money simply for being old. We give Federal employees money simply for paying into their retirement accounts. Two "handouts" that I think about just off the top of my head. Do those differ from other types of "public assistance"? Do we really want to get in the business of telling old people that they can't spend money on bacon becuase it is bad for them? I thought you guys were the Small Government guys?

Uh, the old people are getting back the money they paid in (ie Social Security).But the fact that you do not see the difference here is not surprising at all.

So you are saying that people should ONLY get what they paid into it, and nothing more?Is that how it works? No minimum payments? No "payments run out at age 93 because we've used up your kitty"? Are you sure about that?

No, I'm trying to point out that you are an idiot. Is that simple enough?

You're better than this Joe.

 

[parasaurolophus]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

Why doesn't the renter buy then, if it is so easy and worth so much money in handouts? I mean obviously there are no other factors at play here right? In your scenario people are actually paying into the system, which makes it impossible to be considered a handout. Pretty silly to compare it to food stamps.

 

[parasaurolophus]

Tax deductions are among the biggest government handouts. It's not even really debatable.

You are correct. Just not in the way you think.Look at how many poor people get more money back than they put in.

 

[djmich]

Tax deductions are among the biggest government handouts. It's not even really debatable.

The government can't handout what's not theirs to begin with.

They set the rates. You would owe them $X. If they choose to give you a deduction/tax break off of that $X, that's them handing you money.

They set the rates AND they set the deductions. I'm paying what they say I owe them regadless of how stupid the tax code they created is.

 

[pittstownkiller]

Low interest student loans seem like a handout. Anybody disagree with that one?

If they are I hope we get an ROI. At the very least, I imagine the better educated you are the less likely you are to need food stamps.

Food stamps are a ROI: Healthy, nutritious children contribute better to society.

Yum, nutritious children.

Healthy, nutritious, children fattened up on ice cream cake no less!

 

[Captain Quinoa]

Tax deductions are among the biggest government handouts. It's not even really debatable.

The government can't handout what's not theirs to begin with.

They set the rates. You would owe them $X. If they choose to give you a deduction/tax break off of that $X, that's them handing you money.

They also set the deductions. It's not like everyone pays thier taxes and then the government says "ok this year we're giving $1000 back to everyone who owns a red car." That would be a handout.Not paying any taxes, and then having additional money given to you, is a handout. Having to pay less of what you earned is most certainly not a handout.

 

[Zow]

Low interest student loans seem like a handout. Anybody disagree with that one?

My bank account does.

 

[bostonfred]

Tax deductions are among the biggest government handouts. It's not even really debatable.

The government can't handout what's not theirs to begin with.

tell me your thoughts on corn subsidies, especially for ethanol.

 

[Zow]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

Because you are being rewarded for taking the risk of home ownership.

 

[cosjobs]

A tax deduction isn't a handout either.

That's rich. I mentioned earlier in the thread, and it went unanswered. Two neighbors, one rents, one owns. One pays thousands less in federal taxes than the other. Call it what you want. It's free money.

That money isnt free because i earned . It seems your implication is that the government is entitled to all my money and tax deduction is some gift. I don't agree. It sure is hell isn't welfare.

Why are you more entitled to that money than your neighbor who rents?

Because you are being rewarded for taking the risk of home ownership.

And the poor are being rewarded for the risk of being impoverished.

 

[humpback]

Please tell me how a federal employee "earns" his matching retirement payments from the federal government? I'll hang up and listen.

You're just making it worse.

Please, enlighten me.

It's already been answered- your matching retirement payments are part of the benefits you receive for working. Same with salary, health benefits, etc.

Fair enough. You are welcome to tackle Mortgage Deduction and SS payouts (getting paid more than you put in). Unless you are advocating cutting people off from SS at some point. And good luck with that, by the way.

1. Mortgage deduction is part of our insane tax code where we try and influence behavior. I'd prefer to get rid of it, but that would crush the already weak housing market.2. People can get more out of SS than they put in because it's a pool based on life-expectancy- some get out more than they put in, some less. Your benefits are based on your contributions though.3. These things are all very different from food stamps (and I'm not advocating getting rid of them by the way).

1. Does not make it any less of a "handout" than food stamps. For a million reasons, it isn't going anywhere. It is free money. There are plenty of reasons why it is or isn't a good idea, but it is free money nonetheless.2. Yes. So a person can get more money than they put in. Money for nothing. 3. Yes they are different, but I don't think as different as people would like them to be.

You obviously aren't going to change your mind, but this is a losing battle for you.

 

[Slapdash]

A couple of random thoughts after reading this thread:2 - Threads like this are a prime example of why means testing should never happen with Social Security.

 

[Zow]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

 

[Sweet J]

You're better than this Joe.

I actually think he's right on that one. I used a bad analogy without thinking it through, and he caught it. I don't begrudge him. I could do without the histrionics, but whatever.

 

[Chaka]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

 

[Wrighteous Ray]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

A Brief History of the Mortgage Interest Deduction

I keep finding very poor or misleading reporting on Housing in the US. Some of this is sloppy or lazy reportage; others reflect reporters being suckered by Think Tank spin and political narratives.

Lately, the area seems to be misreported the most is the coverage of the Mortgage Interest Deduction. The misleading impression created by some reports is that this deduction is the result of a specific policy designed to encourage home ownership. That is a false narrative, belied by history of the Federal Income tax.

Let’s take a quick look at facts so that people understand it better.

The first Federal Income tax in the US was passed in 1894, and subsequently struck down by the Supreme Court. This led to the passage of the Sixteenth Amendment (ratified in 1913), that empowered Congress “to lay and collect taxes on incomes, from whatever source derived.”

With this new power, Congress imposed the first taxes. Rates started at 1%, and rose to a whopping 7% for taxpayers with income in excess of $500,000. This applied to relatively few people, with less than 1% of the US population paying any income tax.

As an offset for the taxes, any interest paid (for any reason) was deducted. These were considered business expenses. Indeed, taxes on rents from real estate was a large revenue source. The financing costs of purchasing such rent producing property — a/k/a interest payments — was a ordinary cost of doing business, and hence, deductible.

Keep in mind that during the pre-WW1 period, there was very little interest expenses paid by individuals. Home owners typically owned their houses outright (except for farmers, who either financed or leased the land). There were no credit cards, HELOCs, revolving credit, or student loans.

The deduction on interest was never intended to be a salve to the middle class. It was not designed to encourage home ownership. Indeed, when the interest rate deduction was first considered, home financing was non-existent, and home ownership was not thought of as a public policy. It is not part of any grand scheme of social engineering, as some have called it. It simply has existed since the Federal Income tax came about a century ago.

Indeed, the entire home mortgage deduction is little more than a historical anachronism, a carry over from when all interest payments were deductible.

Now you know . . .

I'll admit I didn't know any of this until I googled it earlier today as a result of Matthias's posts.

 

[Chaka]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

The mortgage interest deduction is an anachronism left over for when income taxes were first levied. They allowed people to deduct all the interest they paid on debts. And at the time, homes weren't even purchased on credit. They were bought outright. Fast forward a century and homes are being bought on credit, there's enough of a residue of the interest deduction there that homebuyers benefited from it, and it becomes too popular (and too built-in to home prices) to get rid of.In short, it has everything to do with interest. It has nothing to do with home mortgages (other than maybe making it too widespread and popular of a benefit to cut).

Cool. Thank you.

 

[Ursa M]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what foodstuffs can be bought, and the price of them? $41 cake? Too much. $32 cake? Well.....no. How about......yeah, it's ludicrous. It's a fixed income amount, deal with it.

Good grief, imagine the bureaucracy necessary to classify every type and size and price of food so that the little food stamps card only works for what a bureaucrat dictates is right.

 

[parasaurolophus]

Because you are being rewarded for taking the risk of home ownership.

False. Please read back a few pages before repeating a debunked theory.

Because you said so? You didn't even link a scrap of literature on the subject.

 

[humpback]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

The mortgage interest deduction is an anachronism left over for when income taxes were first levied. They allowed people to deduct all the interest they paid on debts. And at the time, homes weren't even purchased on credit. They were bought outright. Fast forward a century and homes are being bought on credit, there's enough of a residue of the interest deduction there that homebuyers benefited from it, and it becomes too popular (and too built-in to home prices) to get rid of.In short, it has had everything to do with interest. It has had nothing to do with home mortgages (other than maybe making it too widespread and popular of a benefit to cut).

It may not have been the original intent, but it absolutely plays a role in keeping it around.

 

[Bottomfeeder Sports]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what...

What makes the needy needy? Lack of cash. Just give them cash and don't worry about what they do with it. Free to Choose:We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

Capitalism and Freedom:The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash.

What business is it of any of us how the poor utilize their limited resources? If they cannot be counted on to be rational actors then the entire "small government" belief system fails anyway.

 

[Bottomfeeder Sports]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

The mortgage interest deduction is an anachronism left over for when income taxes were first levied. They allowed people to deduct all the interest they paid on debts. And at the time, homes weren't even purchased on credit. They were bought outright. Fast forward a century and homes are being bought on credit, there's enough of a residue of the interest deduction there that homebuyers benefited from it, and it becomes too popular (and too built-in to home prices) to get rid of.In short, it has had everything to do with interest. It has had nothing to do with home mortgages (other than maybe making it too widespread and popular of a benefit to cut).

It may not have been the original intent, but it absolutely plays a role in keeping it around.

There is a home owners lobby on K Street?

 

[parasaurolophus]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

The mortgage interest deduction is an anachronism left over for when income taxes were first levied. They allowed people to deduct all the interest they paid on debts. And at the time, homes weren't even purchased on credit. They were bought outright. Fast forward a century and homes are being bought on credit, there's enough of a residue of the interest deduction there that homebuyers benefited from it, and it becomes too popular (and too built-in to home prices) to get rid of.In short, it has had everything to do with interest. It has had nothing to do with home mortgages (other than maybe making it too widespread and popular of a benefit to cut).

It may not have been the original intent, but it absolutely plays a role in keeping it around.

http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

 

[parasaurolophus]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what...

What makes the needy needy? Lack of cash. Just give them cash and don't worry about what they do with it. Free to Choose:

We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.

A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

Capitalism and Freedom:The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash.

What business is it of any of us how the poor utilize their limited resources? If they cannot be counted on to be rational actors then the entire "small government" belief system fails anyway.

Nobody is talking about their resources.

 

[Captain Quinoa]

Tax deductions are among the biggest government handouts. It's not even really debatable.

The government can't handout what's not theirs to begin with.

They set the rates. You would owe them $X. If they choose to give you a deduction/tax break off of that $X, that's them handing you money.

They also set the deductions. It's not like everyone pays thier taxes and then the government says "ok this year we're giving $1000 back to everyone who owns a red car." That would be a handout.Not paying any taxes, and then having additional money given to you, is a handout. Having to pay less of what you earned is most certainly not a handout.

I don't see how the split chronology is that meaningful. Say the effective marginal rates were set in 1980. And they keep on for 32 years. In 2012, legislation passes to give a $4,000 tax deduction for everyone who has a car that has a fuel efficiency greater than 38 mpg.I'm not seeing a meaningful difference between this and your red car example. At least not any more than the government saying if you make <$X/yr or are completely disabled or .... we'll give you money. The government is setting conditions. People are meeting them or not. If they meet them, they collect. If they owe taxes, instead of collecting money, they offset it against what they owe. But they still gained $X because the government decided they qualified for whatever.

it's not so much about the chronology as it is about "giving" versus "not taking". If you come to school and I give you a dollar to buy lunch, that's a handout. If you come to school with lunch money, and I don't beat you up and take it, I didn't give you a handout.

 

[bostonfred]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what...

What makes the needy needy? Lack of cash. Just give them cash and don't worry about what they do with it. Free to Choose:We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

Capitalism and Freedom:The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash.

What business is it of any of us how the poor utilize their limited resources? If they cannot be counted on to be rational actors then the entire "small government" belief system fails anyway.

I was wondering how long it would take for you to come by with this. Im a fan in theory.

 

[Captain Quinoa]

I don't find this distinction really meaningful. A significant amount of the complexity within the tax code doesn't have anything to do with taxes. It's just incentivized behavior.

So likewise we give food stamps to incentivize poverty?

 

[humpback]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

The mortgage interest deduction is an anachronism left over for when income taxes were first levied. They allowed people to deduct all the interest they paid on debts. And at the time, homes weren't even purchased on credit. They were bought outright. Fast forward a century and homes are being bought on credit, there's enough of a residue of the interest deduction there that homebuyers benefited from it, and it becomes too popular (and too built-in to home prices) to get rid of.In short, it has had everything to do with interest. It has had nothing to do with home mortgages (other than maybe making it too widespread and popular of a benefit to cut).

It may not have been the original intent, but it absolutely plays a role in keeping it around.

Maybe this was too small.But I'd still argue that it sticks around now not for some vague, "to reward home ownership" goal but rather because lots and lots of people like it and it would severely disrupt housing prices to discontinue it.

Not too small, just not nearly as definitive as you seem to think it is. They repealed most of the other interest deductions, left and then expanded the mortgage interest one, and you think it has nothing to do with mortgages or encouraging home ownership?

 

[Zow]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

A Brief History of the Mortgage Interest Deduction

I keep finding very poor or misleading reporting on Housing in the US. Some of this is sloppy or lazy reportage; others reflect reporters being suckered by Think Tank spin and political narratives.

Lately, the area seems to be misreported the most is the coverage of the Mortgage Interest Deduction. The misleading impression created by some reports is that this deduction is the result of a specific policy designed to encourage home ownership. That is a false narrative, belied by history of the Federal Income tax.

Let’s take a quick look at facts so that people understand it better.

The first Federal Income tax in the US was passed in 1894, and subsequently struck down by the Supreme Court. This led to the passage of the Sixteenth Amendment (ratified in 1913), that empowered Congress “to lay and collect taxes on incomes, from whatever source derived.”

With this new power, Congress imposed the first taxes. Rates started at 1%, and rose to a whopping 7% for taxpayers with income in excess of $500,000. This applied to relatively few people, with less than 1% of the US population paying any income tax.

As an offset for the taxes, any interest paid (for any reason) was deducted. These were considered business expenses. Indeed, taxes on rents from real estate was a large revenue source. The financing costs of purchasing such rent producing property — a/k/a interest payments — was a ordinary cost of doing business, and hence, deductible.

Keep in mind that during the pre-WW1 period, there was very little interest expenses paid by individuals. Home owners typically owned their houses outright (except for farmers, who either financed or leased the land). There were no credit cards, HELOCs, revolving credit, or student loans.

The deduction on interest was never intended to be a salve to the middle class. It was not designed to encourage home ownership. Indeed, when the interest rate deduction was first considered, home financing was non-existent, and home ownership was not thought of as a public policy. It is not part of any grand scheme of social engineering, as some have called it. It simply has existed since the Federal Income tax came about a century ago.

Indeed, the entire home mortgage deduction is little more than a historical anachronism, a carry over from when all interest payments were deductible.

Now you know . . .

I'll admit I didn't know any of this until I googled it earlier today as a result of Matthias's posts.

Learn something new everyday I guess

 

[parasaurolophus]

Not too small, just not nearly as definitive as you seem to think it is. They repealed most of the other interest deductions, left and then expanded the mortgage interest one, and you think it has nothing to do with mortgages or encouraging home ownership?

I think it has to do with it's a program that is almost universally popular and if you killed it, it would cut home values and equities by 20-30%.

So it would cut home prices by 20-30%, but it doesnt reward home ownership or encourage it? You just basically contradicted yourself.

 

[Chaka]

A lot of non-home owners might like to see a 20-30% reduction in home prices.

 

[Wrighteous Ray]

Not too small, just not nearly as definitive as you seem to think it is. They repealed most of the other interest deductions, left and then expanded the mortgage interest one, and you think it has nothing to do with mortgages or encouraging home ownership?

I think it has to do with it's a program that is almost universally popular and if you killed it, it would cut home values and equities by 20-30%.

So it would cut home prices by 20-30%, but it doesnt reward home ownership or encourage it? You just basically contradicted yourself.

He didn't contradict himself. He said the purpose of the law at the time it was enacted was not to reward or encourage home ownership. That just turned out to be an unanticipated result of the law.

 

[parasaurolophus]

Not too small, just not nearly as definitive as you seem to think it is. They repealed most of the other interest deductions, left and then expanded the mortgage interest one, and you think it has nothing to do with mortgages or encouraging home ownership?

I think it has to do with it's a program that is almost universally popular and if you killed it, it would cut home values and equities by 20-30%.

So it would cut home prices by 20-30%, but it doesnt reward home ownership or encourage it? You just basically contradicted yourself.

He didn't contradict himself. He said the purpose of the law at the time it was enacted was not to reward or encourage home ownership. That just turned out to be an unanticipated result of the law.

He did contradict himself. The current law was written in 1986. It reduced the benefits that owners of rental properties got and increased it for homeowners. Why do you suppose they did that?

 

[Wrighteous Ray]

Not too small, just not nearly as definitive as you seem to think it is. They repealed most of the other interest deductions, left and then expanded the mortgage interest one, and you think it has nothing to do with mortgages or encouraging home ownership?

I think it has to do with it's a program that is almost universally popular and if you killed it, it would cut home values and equities by 20-30%.

So it would cut home prices by 20-30%, but it doesnt reward home ownership or encourage it? You just basically contradicted yourself.

He didn't contradict himself. He said the purpose of the law at the time it was enacted was not to reward or encourage home ownership. That just turned out to be an unanticipated result of the law.

He did contradict himself. The current law was written in 1986. It reduced the benefits that owners of rental properties got and increased it for homeowners. Why do you suppose they did that?

How did the 1986 law increase the benefit to homeowners?

 

[Bottomfeeder Sports]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what...

What makes the needy needy? Lack of cash. Just give them cash and don't worry about what they do with it. Free to Choose:We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

Capitalism and Freedom:The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash.

What business is it of any of us how the poor utilize their limited resources? If they cannot be counted on to be rational actors then the entire "small government" belief system fails anyway.

I was wondering how long it would take for you to come by with this. Im a fan in theory.

I tried to avoid this thread. I didn't read any of the 8 pages other than the OP. I assume it filled a bunch of nonsense from all over the political spectrum.The "theory" works only if the beliefs economist have in the basic free market principles of economics is well founded. While lots of economic policy in practice seems to be "faith based" to me and built around "religious" ideas such as "economic status is a function of virtue" or "tax cuts increase revenue", I think the actual building blocks at the base are a lot sounder. So I agree with the vast majority of economists and their idea - not mind. I'm just the FFA cheerleader.

 

[Captain Quinoa]

It's not even maintained for that purpose really unless you call not actively cratering a market trying to reward/encourage people in it.

It's not really a handout unless you call not actively taking money from someone equal to rewarding them with a gift.

 

[Bottomfeeder Sports]

Is it just me that finds it hugely ironic that the small government brigade want to have government dictate exactly what...

What makes the needy needy? Lack of cash. Just give them cash and don't worry about what they do with it. Free to Choose:

We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need, while doing as little harm as possible to their character, their independence, or their incentives to better their own conditions.

A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

Capitalism and Freedom:The advantages of this arrangement are clear. It is directed specifically at the problem of poverty. It gives help in the form most useful to the individual, namely, cash.

What business is it of any of us how the poor utilize their limited resources? If they cannot be counted on to be rational actors then the entire "small government" belief system fails anyway.

Nobody is talking about their resources.

Once it is transferred from your hands to theirs it is their resources. Whether "their" is a defense contractor, a government employee, or someone that is poor. But this is only a rebuttal worthy of discussion if you truly believe that the government can efficiently and effectively manage how the poor utilizes your resources. Otherwise you are just paying twice.

 

[Tchula]

I was talking with a coworker about this yesterday. He told me he once picked up a receipt in the grocery store parking lot. It showed that someone had bought about $350 worth of food with their food stamp card and still had over $1000 on the card for the month? How much per month are we wasting on these deadbeats? Damn use your welfare money for some of that food. He wold me about another time when a guy tried to buy dog food with food stamps. When they told him he had to pay for that with cash, he put it back and grabbed 5 lbs of ground beef instead. It is true social injustice when dogs of people on welfare eat better than working class people.

 

[Ned]

Okay so they are being rewarded for the societal benefit of owning property. Either way the are doing something which cost them time or money.

Wrong again.

The thread is 8 pages would you please restate the right answer?

A Brief History of the Mortgage Interest Deduction

I keep finding very poor or misleading reporting on Housing in the US. Some of this is sloppy or lazy reportage; others reflect reporters being suckered by Think Tank spin and political narratives.

Lately, the area seems to be misreported the most is the coverage of the Mortgage Interest Deduction. The misleading impression created by some reports is that this deduction is the result of a specific policy designed to encourage home ownership. That is a false narrative, belied by history of the Federal Income tax.

Let’s take a quick look at facts so that people understand it better.

The first Federal Income tax in the US was passed in 1894, and subsequently struck down by the Supreme Court. This led to the passage of the Sixteenth Amendment (ratified in 1913), that empowered Congress “to lay and collect taxes on incomes, from whatever source derived.”

With this new power, Congress imposed the first taxes. Rates started at 1%, and rose to a whopping 7% for taxpayers with income in excess of $500,000. This applied to relatively few people, with less than 1% of the US population paying any income tax.

As an offset for the taxes, any interest paid (for any reason) was deducted. These were considered business expenses. Indeed, taxes on rents from real estate was a large revenue source. The financing costs of purchasing such rent producing property — a/k/a interest payments — was a ordinary cost of doing business, and hence, deductible.

Keep in mind that during the pre-WW1 period, there was very little interest expenses paid by individuals. Home owners typically owned their houses outright (except for farmers, who either financed or leased the land). There were no credit cards, HELOCs, revolving credit, or student loans.

The deduction on interest was never intended to be a salve to the middle class. It was not designed to encourage home ownership. Indeed, when the interest rate deduction was first considered, home financing was non-existent, and home ownership was not thought of as a public policy. It is not part of any grand scheme of social engineering, as some have called it. It simply has existed since the Federal Income tax came about a century ago.

Indeed, the entire home mortgage deduction is little more than a historical anachronism, a carry over from when all interest payments were deductible.

Now you know . . .

I'll admit I didn't know any of this until I googled it earlier today as a result of Matthias's posts.

Pretty interesting stuff.

 

[urbanhack]

I was talking with a coworker about this yesterday. He told me he once picked up a receipt in the grocery store parking lot. It showed that someone had bought about $350 worth of food with their food stamp card and still had over $1000 on the card for the month? How much per month are we wasting on these deadbeats? Damn use your welfare money for some of that food. He wold me about another time when a guy tried to buy dog food with food stamps. When they told him he had to pay for that with cash, he put it back and grabbed 5 lbs of ground beef instead. It is true social injustice when dogs of people on welfare eat better than working class people.

great story. thanks for sharing.