Current Compromise on Tax Cuts

[Balta1701]

exactly. at the minimum sending $10,000 to every American could really spark the economy

We basically did that...except instead of giving it to every american, we gave it to about 35 guys in Manhattan.

[Jenksismyhero]

They should consider a 2 year freeze on federal student loan payments. If I had an extra 1200 (what my wife and I spend collectively every month), i'd sure as hell be spending a lot more on goods/services. I'm guessing such a plan would be hugely expensive for the government though.

Edited December 20, 2010 by Jenksismybitch

[southsider2k5]

They should consider a 2 year freeze on federal student loan payments. If I had an extra 1200k (what my wife and I spend collectively every month), i'd sure as hell be spending a lot more on goods/services. I'm guessing such a plan would be hugely expensive for the government though.

 

You guys spend a million dollar a month on student loans?

[Texsox]

We basically did that...except instead of giving it to every american, we gave it to about 35 guys in Manhattan.

It will trickle down to us in no time at all . . .

[NorthSideSox72]

They should consider a 2 year freeze on federal student loan payments. If I had an extra 1200k (what my wife and I spend collectively every month), i'd sure as hell be spending a lot more on goods/services. I'm guessing such a plan would be hugely expensive for the government though.

The big hot topic right now is the possibility of removing the mortgage interest deduction on taxes. Seems to me that's a pretty stupid move, I'd rather they got away from the deduction on other things first that wouldn't do as much direct damage to the economy. For example, the health care cost deductions - the demand curve is nearly inflexible anyway, and you don't necessarily want to encourage its use.

 

[Jenksismyhero]

You guys spend a million dollar a month on student loans?

 

lol, oops.

[StrangeSox]

The big hot topic right now is the possibility of removing the mortgage interest deduction on taxes. Seems to me that's a pretty stupid move, I'd rather they got away from the deduction on other things first that wouldn't do as much direct damage to the economy. For example, the health care cost deductions - the demand curve is nearly inflexible anyway, and you don't necessarily want to encourage its use.

 

One idea was to remove the credit for mortgages over $500k.

[Jenksismyhero]

The big hot topic right now is the possibility of removing the mortgage interest deduction on taxes. Seems to me that's a pretty stupid move, I'd rather they got away from the deduction on other things first that wouldn't do as much direct damage to the economy. For example, the health care cost deductions - the demand curve is nearly inflexible anyway, and you don't necessarily want to encourage its use.

 

Not that people should plan for that deduction, but that's kind of significant for most folks I would think. Why penalize people who are contributing to the economy by being a homeowner (and all that goes with it).

[Balta1701]

The big hot topic right now is the possibility of removing the mortgage interest deduction on taxes. Seems to me that's a pretty stupid move, I'd rather they got away from the deduction on other things first that wouldn't do as much direct damage to the economy. For example, the health care cost deductions - the demand curve is nearly inflexible anyway, and you don't necessarily want to encourage its use.

Technically the catfood commission proposed getting rid of both of those deductions. You kinda have to if you want to cut the top tax rate to 20% and still balance the budget.

 

On the policy, I think it'd actually be a reasonably good one overall, but it's bomb-throwing if you do it rapidly. A $700k mortgage at 5% pays $650k in interest over the lifetime of the loan. At 15% tax rates, that means that the government is picking up over $100k of the tab of that mortgage, which is kinda silly for the government to do if you can already afford a big home. A $300k home, with a 15% tax rate, the government only pays about $45,000 of the price, so there's a fairly sizeable distortion towards bigger homes at the top end of the tax rate in that proposal.

 

But yeah, you get rid of it instantly, you put another knock into housing prices and housing sales right now, and push a fair number of additional folks into foreclosure, etc.

[NorthSideSox72]

One idea was to remove the credit for mortgages over $500k.

I could go with that. People who are in that Jumbo loan (>417k) territory aren't going to rent anyway for their primary residence, so you have no real discouragement factor or lowering of demand. Maybe would make people near the margin use more cash to buy, but that's ultimately healthier for the economy anyway.

 

[Y2HH]

I pay 3800 a year in properly taxes, not being able to write that off would suck.

[kapkomet]

I pay 3800 a year in properly taxes, not being able to write that off would suck.

 

 

Right there with you... and I have a feeling your home value is WAY more then mine, yet I still pay $4000 a year.

[StrangeSox]

Right there with you... and I have a feeling your home value is WAY more then mine, yet I still pay $4000 a year.

 

I have a feeling both of yours are way more than mine, but I'll still be paying more in property taxes. Lousy western suburbs.

[kapkomet]

I have a feeling both of yours are way more than mine, but I'll still be paying more in property taxes. Lousy western suburbs.

 

 

Well, this is just a result of no state income tax. One way or another, every state will get the revenue.

[lostfan]

I'm not sure what my property taxes are but they aren't as high as anyone in Illinois. My income taxes suck ass.