Reducing Private debt while promoting home ownership.

March 22nd, 2009 by Carlos Diaz (cradiaz)

If the Federal Government were to replace the existing mortgage tax deduction with a “ownership tax deduction,” the incentive to maintain a mortgage is eliminated and the motivation would exists to pay off one’s primary mortgage.   Interests paid on mortgages each year by the large masses is money that can not be spent to save, or increase ones quality of life. 

Basing the tax deductions on ones assessed property value, (or similar means) would eliminate the benefit of paying the banking industry interest for one’s mortgage.  Currently, many Americans needlessly re-finance their mortgages to take advantage of a greater tax deduction.

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6 Responses to “Reducing Private debt while promoting home ownership.”

  1. skeptic Says:

    that sounds like a better idea than a mortgage deduction. for sure, for just that reason.

    But where is it written that home ownership needs to be subsidized at all? Probably too late to change that now.

    Also, yours would have been a good idea if things had started out that way, but to be revenue-neutral you’d have to increase taxes on people who have mortgages overall (though the tax would be based on value), in order to give some tax-deductibiltiy to people who have already paid off their mortgages. It’s the ones with the mortgages who are creating the problems for the economy now

  2. wherearethegoodideas Says:

    Your site has fallen off — the ideas used to be much better. where did the good ones go? This was a must-read site for anyone interested in economic policy and now it seems like you are putting up ideas that don’t meet your own criteria

  3. alewis Says:

    good question. I am “democratizing” the site and posting more ideas from others than I used to, partly because one tends to thnk one’s own ideas are the best. So I would read other ideas and think they aren’t that good but then think, “Maybe I only feel that way becasue they aren’t mine.” Yours was the second comment today saying other people’s ideas are a bit uninspired, the other being someone who listened to my NPR radio interview and said the people who called in had pretty lame stuff.

    But you should see what I DON’T publish. Someone wanted the government to subsidize a permanent World’s Fair in Syracuse.

  4. deb Says:

    I read your site regularly — you should be refocusing from coming up with new ideas to getting the best ones implemented because the best stuff here is better than the best stuff anywhere else. no point coming up with more good and not-so-good stuff if the other ideas aren’t getting “out there” like the pennies did last month, which was great to see

  5. cradiaz Says:

    I hope my post was not the sole reason for ‘wherearethegoodideas’ comment regarding that this site has fallen off. I could further elaborate on my post but I chose to keep it short and sweet to grab people’s interests without boring them with the grim details. Some background is that I was raised in a middle class family and was always taught by my father that a mortgage was the only tax shelter left for the ‘average’ family. He constantly kept refinancing his mortgages every few years to maximize his tax deduction. All that he has now is a pension from an aerospace company and a house that he is so upside down in, he was able to rent it for only a $400 loss a month.

    Additionally we all new a true hands off economy by the government does not completely work, and since the housing industry has such a far reaching impact throughout our economy, giving a (tax deduction/tax incentive/tax cut) to a citizen that is able to afford one, then encourage it.

  6. alewis Says:

    I can’t speak for the previous commenter, but I wouldn’t have posted your idea if I didn’t think it had merit. Your basic contention is that subsidizing mortgages causes debt to look cheaper than equity. That is an excellent point and I have no doubt trhat if it had been thought of long ago we wouldn’t have had the subprime debacle. My only big concern is how to get from here to there at this point

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