The worst things that happened in the past decade for the budget were the Medicare Part D and the Payroll Tax Cut. Even moreso than the Bush tax cuts and the wars. Because by passing these, each party became more nearly like the other, and will be able to accuse each other of wanting to take away welfare benefits or raise taxes, and the death spiral has begun. Of course, a temporary bout of political sanity in the next decade might resolve this, but I’m not optimistic.
Context matters sometimes.
The idea is to use the payroll taxcut as economic stimulus to help the current lack of demand. There isn’t any point in making them permanent, since (hopefully) demand will return to previous levels once consumer debt has been unwound.
Deficit reduction isn’t really the issue here. The payroll tax cuts or no payroll tax-cuts aren’t going to balance the budget or not.
“Banks shall be required to differentiate between primary mortgages on a new property purchase, HELOCs opened on the equity in a property which has an attached mortgage, and HELOCs opened using a property whose title is already held by the consumer.” Pretty easy if you ask me–a HELOC and a mortgage can be pretty easily distinguished.
Of course, you could just as easily ply me with tales of loopholes in wording that could be exploited in that reasoning, after which I refer you to the next response.
Depends entirely on whether you view “have to” as a mere legal obligation to pay the minimum you can squeeze through or as an ethical obligation to abide by the spirit of the laws that are helping you prosper in the first place.
Obviously I believe the latter. If you don’t like the tax structures here, I hear it’s always sunny in Somalia. Obeying the letter while violating the spirit of a law that isn’t unethical on its face is itself unethical.
One issue I see here is that the story confuses income with net income. They aren’t the same and that could mean you’d have to add in an even bigger tax, though on fewer people.
Sure a tax cut is a tax cut, although this won’t change anything really.
Let’s get this straight: you specifically said that “To make up $1500 a year, that would require a tax increase of $750,000/year on each of the top 300,000.” By saying “a tax increase of $750,000/year,” you aren’t just implying, you are outright stating, that rich people will have to pay three-quarters of a million dollars in 2012 to offset the payroll tax holiday in 2012. Whether that’s what you mean or not, that statement is not true.
The type of debt is completely different. I know of no household that can issue bonds to investors which are guaranteed to be paid back because of the highest law in the land, the US Constitution. Conversely, I know of no time at which the Federal government has received loans from commercial banks to finance its operations. Bonds are completely different than mortgages and personal debt.
This seems to imply that the government finances debt by printing more money. Again, factually false. Bonds are financial instruments, but they are not cash.
Of course. And that is exactly what both Democrats and Republicans are doing right now. But you keep comparing apples to oranges in the same deceptive way that car dealers do: “You can own this $75,000 car for just $250 a month!” Oooh! Sounds like a good deal until one realizes that one has to pay $250 a month for 15 years. “It takes $750,000 in tax increases on the rich to pay for a $1,500 tax cut!” Oooh! Sounds like a terrible deal… except that the $1,500 will be “paid” out in one year to 130 million people, and the $750,000 will be collected from 300,000 people over ten years. Plus, if the tax holiday helps kick-start the economy, everyone is going to end up richer.
Are you aware that the rates on US bonds are set at issue, and once issued are not subject to renegotiation like an ARM? Come to think of it, are you aware that buyers of US bonds cannot “call in” their debt and force Uncle Sam to make good? I’m asking because you keep reverting to these scare scenarios that may have happened to individuals, but they simply cannot happen to the government.
No one is pretending anything, and it has no relation to not declaring income or faking losses. You are comparing apples to skyscrapers.
Your wording does not address the issue, which is my point.
So if I am sitting on a jury, and the judge directs me to disregard some evidence because it is excluded, I can ethically ignore his instructions and convict.
And defaulting on a mortgage when you are upside-down and owe more to the bank than the house is worth (but can still pay) is unethical. Right?
Regards,
Shodan
Faking gambling losses in order to cheat on your taxes is also illegal.
How so? Grant that I’m not a lawyer, but it is not a difficult concept to say “There is a difference, for tax purposes, between an initial mortgage on a primary residence and all other kinds of mortgages, including HELOCs.”
Laws/instructions that exclude evidence are not prima facie unethical, so this example isn’t relevant to anything I said. Let me repeat myself:
Violating the spirit of a law while obeying the letter of it is unethical, unless that law is itself unethical.
This includes things like “taking out a HELOC on your primary house to pay off your vacation cottage to get a mortgage interest tax break because it’s your primary residence”.
I actually don’t have any problem agreeing with this. Unless you were lied to in the process of signing the mortgage, you signed it.
Mind you, as long as we’re not prosecuting the rich guy who cheats the system to get tax breaks on buying a vacation house, we also shouldn’t be prosecuting the guy who walks away from his mortgage.
Stating the concept is not difficult. What is difficult is putting it into legislation such that tax lawyers can’t find loopholes.
Neither is the tax deduction for mortgage interest. Therefore it would seem to me to be applicable.
The spirit of the laws against the various crimes is certainly to punish the guilty and protect the innocent. Therefore, to ignore evidence on a judge’s instructions, and thereby to acquit the guilty, is to obey the letter of the law in violation of its spirit. QED.
There isn’t any cheating involved. The law allows a tax deduction for mortgage interest on a primary residence. That is exactly what happened.
You can’t prosecute somebody who doesn’t break the law.
Regards,
Shodan
I’d just like to mention that I find it very telling that Grover Norquist claims that letting this expire would not constitute a tax hike, but letting the bush tax break on the top brackets would be.
The law also allows a deduction for a second home, so I am not sure why your father did what he did:
Maybe he rents out his lake cottage, which would disallow some of his mortgage deduction if he had a mortgage on that home.
Presumably, that’s why I’m paying with my tax dollars for legislative aides with legal training.
You are wrong.
The letter AND spirit of the law are aligned in punishing the guilty *while *preserving the most fair environment to do so.
The mortgage interest deduction on primary home purchases is clearly intended to help (relatively) lower-income families while continuing to maintain higher taxes on families well-off enough to own multiple homes.
“I’m going to juggle my finances to make it appear I’m paying a mortgage on my primary home, even though the purpose of those financial actions was to purchase a second home” sounds like cheating to me.
I agree that it’s not prosecutable. I was merely explaining that, in your example, a person who takes out a HELOC on his primary house to buy a vacation home while getting the income tax deductions for a primary home mortgage is morally equivalent to a person who walks away from a mortgage that they’re underwater on. Both are morally wrong, even though they are technically legally in the clear.
The very poor rent. The relatively lower-income don’t have enough deductions to itemize at all.
The mortgage interest deduction is to benefit middle and upper classes…
I agree. Let all the Bush tax cuts expire and everyone’s tax bill will go up. THEN pass another bill that would reinstate some of the tax cuts for the lower income groups. See how THAT vote goes.
That has to be mostly medicare and social security. Its not chump change but it amounts to a little over 1% of the deficit.
non-military federal workforce payroll is about $100 billion/year. You could fire the entire federal workforce and it wouldn’t be enough.
I’d rather subject all earned incoem to the payrollt axes than cut the benefits for those we think are too rich. Why not stop police protection to wealthy neighborhoods that can pay for their own private security. Why not close down schools in wealthy neighborhoods where people can afford private school. Do we really want medicare to be a broader version of medicaid and social security to be a more broad based version of SSI?
There is currently a cap at $1,000,000. This would not permit you to extend that cap over two homes. In theory I am OK with the notion of non-deductibility of a mortgage on a second home a lot of folks these days cannot match the timing of the sale of their home to the purchase of a new home and carry two mortgages for a few months during transition. I would be OK with extending a second home mortgage deduction (within the million dollar cap) for former primary residences that are not being rented out.
Alternatively you can limit the mortgage deduction to mortgages that exceeed the conforming loan cap ($n17,000 in most places and uop to $725,000 in high COLA places).
Depends on how it gets spun. Most of the nation was agaisnt the estate tax because they were somehow convinced that it would apply to them even though it only applied to estates over $3.5 million.
Why should we means test the deductibility of mortgages on priamry homes again? It seems to me that Shodan’s dad isn’t doing anything that someone who rolls their credit card bills into their Home Equity Line of Credit does. BUt like I said you can currently deduct the mortgage interest on your second home so i don’t know why Shodan’s dad did what he did (although the interst rate on the primary home mortgage versus a vacation home mortgage would probably have saved him some money).
I don’t doubt you but do you have a cite?