Is this the right TL;DR of this article? "Homeownership leads to inequality". "Inequality is bad". Therefore, "Home ownership is bad". Therefore we should make home-ownership as hard as possible. So when nobody owns a home, everybody is equal. Sounds about right.
How Homeownership Became the Engine of American Inequality
71–80 of 222 posts
Re: How Homeownership Became the Engine of American Inequality
#72So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…
It's a massive bet on a local employment market in an increasingly volatile economy. It's not an unalloyed good incentive.
What about the inevitable growth in telecommuting? Surely owning a home with plenty of space for a semi-isolated home office would be a good thing?
Re: How Homeownership Became the Engine of American Inequality
#73When I crunched the numbers for the mortgage interest deduction it really didn't seem that compelling. It replaces the standard deduction so the first 12,500$ in mortgage interest does nothing for you. After that it's just a minor reduction in taxable income and your tax burden is only reduced by a fraction of your mortgage interest. Not enough to cover the costs of maintaining a home and the tendency to consume more…
The MID barely cancels out my property taxes. Imagine if your investment accounts had to pay 1% tax every year based on its current worth even if you didn't realize any profits.
Well, if you rent, you're paying the owner's property taxes anyway, and you're definitely not going to realize any profits.
Re: How Homeownership Became the Engine of American Inequality
#74Earlier quoted context omitted.
Even if you have debt, you should be taking full advantage of your employer 401k match if one is available to you. In almost every case you will come out ahead even if you withdraw the money early. So many of my coworkers do not contribute to their 401K at all, which is literally just leaving free money on the table.
Are there employers that still match? I'm only half joking.
Yes.
Re: How Homeownership Became the Engine of American Inequality
#75Removing the MID would make middle-to-upper-middle-class people poorer, and so reduce inequality that way, but would it help poor people at all? The net monthly cost of housing would stay the same, just shift the proportion of your payment that goes to the government vs the bank. It's true that it's regressive, but I'm skeptical that's a huge factor. I think it would just help landlords, who would retain the ability…
I think adding an upper limit to MID would serve everyone well.
Already exists.
Re: How Homeownership Became the Engine of American Inequality
#76So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…
Regarding 2: I cannot wait to pay off my debts (scheduled in September!) and start putting money in IRA and 401(k) :) Every time someone asks me if I'm using the 401k I always feel sheepish answering "no... because I have debts with a higher interest rate than I'd get on the return..." Nobody seems to buy it but I've run the math again and again, it's just true.
how much was your loan interest?
Re: How Homeownership Became the Engine of American Inequality
#77This article is incredibly misguided for several reasons...
1.) If you truly are "rich," then you pay for your home in cash. You do not take out a mortgage on your house. Look at a distribution of loan amounts, the vast majority are around $600k. Very few are are >$1M [0]. Home loans are a product for middle-class Americans.
2.) A lot of rich people don't really pay income taxes like middle class people do. This is something a lot of people fail to understand. For example, you can be multi-billionaire and make $0 in given year and still be a multi-billionaire.
3.) If you're rich, do you really care about the $20k deduction you get every year? Probably not.
4.) Interest rates are so low that the deduction is becoming less relevant. For example, if you take out a 3.75% loan on $600k, your deduction really isn't that much, you get to deduct a whopping ~$20k, which even if the highest tax bracket, you'll get back ~$10k The deduction argument holds a lot more weight when interests rates are high.
But glad to see more attacks on the "bourgeoise middle-class" from the trusty NYTimes.
Re: How Homeownership Became the Engine of American Inequality
#78So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…
It might make more sense to kill the tax break on properties north of $1m and shift that to relief for renters under a certain income threshold. You'd leave in place the break for the majority of middle-income wealth builders, close yet another loophole for the wealthy, and enrich lower income renters. It would never ever happen with our current political climate (money is influence), but I feel like it would make se…
It sucks to be in the bay area, where houses start from 1.XM$.
Re: How Homeownership Became the Engine of American Inequality
#79So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…
Regarding 2: I cannot wait to pay off my debts (scheduled in September!) and start putting money in IRA and 401(k) :) Every time someone asks me if I'm using the 401k I always feel sheepish answering "no... because I have debts with a higher interest rate than I'd get on the return..." Nobody seems to buy it but I've run the math again and again, it's just true.
Does your company offer a 401k matching program? If so, that is basically an instant 100% return. If they are not matching, then you might be right, but if their is a match on the table, it probably makes sense to max that out.
Re: How Homeownership Became the Engine of American Inequality
#80So this article advocates for the removal of the mortgage interest tax deduction, because subsidizing home ownership leads to a larger economic divide between owners and renters. As a renter, I appreciate the intent, and I also appreciate any measure to simplify the tax code. That said, I also see compelling arguments in the deduction's favor. The sad truth is that most Americans are terrible at saving and in very po…
It's a massive bet on a local employment market in an increasingly volatile economy. It's not an unalloyed good incentive.
Totally. All else being equal, socking away your money in broadly-diversified index funds within a tax-advantaged account is a more reliable strategy for wealth building than buying a single house in a random market. But human psychology gets a much bigger kick out of owning your own home than owning very small slices of profitable companies in 191 countries, and when public policy and human psychology collide, human psychology wins. :) It's better to incentivize people to save in the way they're willing to save anyway than have people not save at all.