SENATE BILL: Residential Taxation Reform Act of 2014 (Law'd)

[Southern Senator North Carolina Yankee]

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Sponsor: DC al Fine

[Southern Senator North Carolina Yankee]

The sponsor has 24 hours to begin advocating for this.

[DC Al Fine]

It's simple really. The interest deduction encourages people to take on too much debt. Replacing the interest deduction with a principal residence exemption from capital gains taxes is a much better way to encourage home ownership.

[TNF]

I each Nix's comments. If anything, we should make renting more affordable, rather than giving homeowners yet another add on in the tax code.

[🐒Gods of Prosperity🔱🐲💸]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

[Fmr. Pres. Duke]

My only fear here is, we'd create yet another housing bubble by encouraging house flipping, etc.

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

My only fear here is, we'd create yet another housing bubble by encouraging house flipping, etc.

Possibly, but a capital gains exemption is too far off to affect the average Joe's mindset. An interest rate deduction is immediate.

FTR. This is more about eliminating the interest rate deduction more than anything else, so if someone wants to come up with an amendment, I'm open to compromise.

[🐒Gods of Prosperity🔱🐲💸]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

Sorry, I meant decrease.

As in: the average dude relying on the interest deduction is going to get the money back at tax time, not over the course of the year.

[🐒Gods of Prosperity🔱🐲💸]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

Sorry, I meant decrease.

As in: the average dude relying on the interest deduction is going to get the money back at tax time, not over the course of the year.

But doesn't the mortgage interest deduction benefit a person for as many years as they are paying the mortgage?

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

Sorry, I meant decrease.

As in: the average dude relying on the interest deduction is going to get the money back at tax time, not over the course of the year.

But doesn't the mortgage interest deduction benefit a person for as many years as they are paying the mortgage?

I'm not sure what you're arguing. Could you elaborate?

[Fmr. Pres. Duke]

There are all kinds of things people do or try to do to avoid the capital gains tax on the sale of property already through like-kind exchanges, gifts, donations to charities, 1031s, etc. You already are tax exempt from up to $500,000 in gains in your primary residences as it is. Eliminating all of the taxes would just benefit the top earners.

Additionally, I am not really in favor of doing away with the deduction for interest payments, at least not all at once. I'm not sure how that helps people. Most are taking on less debt today because down payment requirements are so high anyway, and for other forms of debt like student loans, etc, it only hurts. People will take our debt regardless of whether they can write it off on taxes or not in most cases because they see it as necessary.

[🐒Gods of Prosperity🔱🐲💸]

I'm not sure what you're arguing. Could you elaborate?

I mean I don't think that most people who are benefiting from the mortgage interest deduction would get the same benefit or anything close to it if it were switched to a capital gains deduction.  And so this change could be hard on people financially, since we are talking about something that affects people who have already made the decision to take on a mortgage.

[Southern Senator North Carolina Yankee]

So does anyone have any thoughts about a delayed implementation scheme?

[Simfan34]

Is home ownership really something that we should encourage? Germany and Switzerland seem to be doing fine with home ownership rates of barely 50%. Doesn't renting encourage people to make better investments and allow for more workforce mobility?

And besides, do we really need a tax exemption that will disproportionately benefit the affluent - i.e. those who have already taken the most expensive houses? It seems to me that we'd be better off removing the interest deduction without replacing it with anything.

Of course we should encourage home ownership. The People in this country have different social desires... than elsewhere. I am surprised, in particular, to see Senator TNF advocating for more rentiership. One would think that he'd be disinclined to have The working People beholden to landlords. Of course, I'm assuming we'd all be living in public housing if he had his way... but the fact is that it is good economic sense to give common People a nice, appreciating financial asset. Renting is simply unrecoverable money.

[🐒Gods of Prosperity🔱🐲💸]

So does anyone have any thoughts about a delayed implementation scheme?

How about removing the mortgage interest deduction for future purchases, plus some sort of monetary limit?

[Fmr. Pres. Duke]

Why do we want to get rid of the mortgage interest deduction? I just don't understand this line of reasoning.

[TNF]

Is home ownership really something that we should encourage? Germany and Switzerland seem to be doing fine with home ownership rates of barely 50%. Doesn't renting encourage people to make better investments and allow for more workforce mobility?

And besides, do we really need a tax exemption that will disproportionately benefit the affluent - i.e. those who have already taken the most expensive houses? It seems to me that we'd be better off removing the interest deduction without replacing it with anything.

Of course we should encourage home ownership. The People in this country have different social desires... than elsewhere. I am surprised, in particular, to see Senator TNF advocating for more rentiership. One would think that he'd be disinclined to have The working People beholden to landlords. Of course, I'm assuming we'd all be living in public housing if he had his way... but the fact is that it is good economic sense to give common People a nice, appreciating financial asset. Renting is simply unrecoverable money.

Public housing for all would be the best of all worlds. I'm all for nationalizing the land and giving everyone the right to a home, free of charge, administered by a housing co-operative authority.

[H.E. VOLODYMYR ZELENKSYY]

I'm not an expert on the nitty-gritty
So I'll leave all the details to my friends
Like Zell Miller and Mr. TNF,
And withhold judgment on this bill so far
Except to state that if you want
To sell a house, then do it on your own.
I don't see why the fed'ral government
Should subsidize the selling of your house.
Though please ignore me if I've made a fool
Of myself or my political views.
And one more thing. Sir DC, there's a flaw
In your autocorrect or spelling skills:
It's "principal" not "principle" when dealing
With items that are named as number one
Among their peers, like in this case a house.

[Fmr. Pres. Duke]

Generally most are right in that this change would overwhelmingly benefit the wealthy, as I explained above (already gains are exempt for first $250k/$500k jointly).

I don't want to stomp on this bill, but I also don't want to give the super wealthy another tax break.

[DC Al Fine]

I'm not an expert on the nitty-gritty
So I'll leave all the details to my friends
Like Zell Miller and Mr. TNF,
And withhold judgment on this bill so far
Except to state that if you want
To sell a house, then do it on your own.
I don't see why the fed'ral government
Should subsidize the selling of your house.
Though please ignore me if I've made a fool
Of myself or my political views.
And one more thing. Sir DC, there's a flaw
In your autocorrect or spelling skills:
It's "principal" not "principle" when dealing
With items that are named as number one
Among their peers, like in this case a house.

[DC Al Fine]

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Sponsor: DC al Fine

Offering an amendment since most of the resistance is related to the capital gains exemption

[H.E. VOLODYMYR ZELENKSYY]

I shall support the new, amended bill.

[Fmr. Pres. Duke]

What is the rationale behind eliminating it? It favors the wealthy? We need the revenues?

[President Tyrion]

Wait.

If you're currently locked into a 30-year mortgage, then the deduction going away would increase costs rather considerably for those people who budgeted for the former legislation. We should grandfather in existing mortgages. If the goal is to change investment habits, grandfathering wouldn't effect the end goal.