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How Homeownership Became the Engine of American Inequality

nytimes.com

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Re: How Homeownership Became the Engine of American Inequality

#181

Post by lotsofpulp »

ww520 wrote: post #171
lotsofpulp wrote: post #85

Earlier quoted context omitted.

Property taxes. Can count on it being at least 1.5% to 2.5% in high cost of living areas. On an $800k house, that's in the $15k to $20k region per year.

I see. Isn't property tax collected by the counties go up to the state? I thought municipal taxes are the ones collected by the cities and used by the cities.

I'm assuming that shados was using the term "municipal tax" to refer to property taxes. If not, then I'm not aware of any other type of large common tax that could referred to as municipal tax relevant to this discussion.

Property tax is also for local use, such as schools, police, and city/county departments. Taxes for the state are mainly state income tax and state sales tax.

Re: How Homeownership Became the Engine of American Inequality

#182

Post by chadgeidel »

microdrum wrote: post #95
spaceflunky wrote: post #77

This 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 s…

This, 1,000x. There are a lot of families making $1 million gross ($500K net) in income. They live in SF and NY. Both parents work 10 hour days. They live in an uncomfortably small house and have a $1 million mortgage. They can barely save for college after paying for childcare costs and the mortgage. But they're "rich." Yeah, right.

Not sure about your numbers here. A million dollar mortage today represents just under $5k per month or $60k per year. that's well under the recommended 30% for a $500k income. I have a hard time believing "They can barely save for college after paying for childcare costs and the mortgage" - I have no idea what childcare costs are, but I would be shocked if they were in excess of $300K-$400k per year.

Re: How Homeownership Became the Engine of American Inequality

#183

Post by jjt-yn_t »

ProfessorLayton wrote: post #156

Removing the mortgage interest deduction is the third rail of politics. Until most people are renters, I realistically don't see it ever going away, and is one of the few major benefits widely available [1] to the middle class. The US is still reeling from a strong racial divide, particularly in regards to homeownership. As stated in the article, banks would literally redline neighborhoods that weren't white enough a…

eh, until most young people who bear the brunt of not being able to save by home ownership also are politically represented wholesomely in some manner... [ not negating your statement... ]

Re: How Homeownership Became the Engine of American Inequality

#184

Post by hectorr »

npongratz wrote: post #179
spaceflunky wrote: post #77

This 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 s…

> 1.) If you truly are "rich," then you pay for your home in cash. You do not take out a mortgage on your house As a counterpoint, Mark Zuckerberg paid for his home with an adjustable rate mortgage, as reported in 2012: http://www.sfgate.com/business/article/Mark-Zuckerberg-s-mor...

Depends on the interest rate and your opportunity costs.

Re: How Homeownership Became the Engine of American Inequality

#185

Post by callalex »

mikekij wrote: post #169

It seems many of these articles see tax deductions as the government giving money to tax payers, instead of the government agreeing to forcibly take less of a tax payer's income. It's an important distinction I rarely see made by the NYT.

What practical difference does this actually make?

Re: How Homeownership Became the Engine of American Inequality

#186

Post by twoodfin »

kcorbitt wrote: post #147
naravara wrote: post #131

Earlier quoted context omitted.

>And empirically, a home mortgage is perhaps the most successful mass-market forced-savings program in American society today, with much higher participation than tax-deferred retirement accounts[2]. You just made an argument for a forced-savings program, not for a home mortgage deduction. Moreover, I think the issue with savings is a service problem, not an impulse control problem. Tax deferred accounts are complica…

Yes, I am also in favor of auto-enrolled savings programs. I would be happy from a public policy perspective if we replaced the MID with some sort of automatic savings program that was difficult and annoying to opt out of (maybe intentionally overtax everybody and then stick the tax refund in an IRA by default, and require annoying paperwork to actually get your money back in cash?).

Unfortunately, that scheme would probably create an industry of folks who would do the annoying paperwork to get your money back at a fee. Not unlike today's "consumer" tax prep firms.

Re: How Homeownership Became the Engine of American Inequality

#187

Post by [deleted] »

pc86 wrote: post #141
rb808 wrote: post #92

Earlier quoted context omitted.

> "no... because I have debts with a higher interest rate than I'd get on the return..." Sorry to tell you now but this is the wrong way of looking at it. The 401k will save you from paying tax the next 50 years. The first few years you might be a little behind but its worth it because later you'll have your contributions throttled. (assuming you can pay that much in)

This is the financial planning equivalent of optimizing your MVP for 3 million concurrent users.

[deleted]

Re: How Homeownership Became the Engine of American Inequality

#188

Post by accountyaccount »

tanderson92 wrote: post #116
accountyaccount wrote: post #61

Earlier quoted context omitted.

I think adding an upper limit to MID would serve everyone well.

It is currently in-place at $1m of mortgage debt, and this fact was mentioned numerous times in TFA. It was mentioned in the article that Rep. Keith Ellison wants to move that number down to $500k.

No, I mean remove it entirely. If you're buying a $1m property you don't qualify for any MID. From the first $1 on.

Re: How Homeownership Became the Engine of American Inequality

#189

Post by accountyaccount »

acchow wrote: post #144
accountyaccount wrote: post #69

Earlier quoted context omitted.

Right, I'm saying if a property requires a loan of $1m+ you'd kill MID entirely — including the first $1m.

These step-wise functions cause all sorts of weird, undesirable distortions.

What we have now are weird undesirable distortions from like, WWII-era politics. The best government seems to be able to do is shift distortions to relevancy.

Re: How Homeownership Became the Engine of American Inequality

#190

Post by pg314 »

spaceflunky wrote: post #77

This 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 s…

The point of the article is that the upper middle class is profiting disproportionally from the MID, while the poor don't. From the article:

> What this means in aggregate is that households with at least six-figure incomes receive more than four-fifths of the total value of mortgage interest and property-tax deductions.

Your arguments about the "rich" and multi-billionaires miss the point.

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