Would Detroit benefit from my crazy right-wing pipe dream?

**nain rouge** · February-01-13, 03:29 AM

Originally Posted by Bham1982

People aren't avoiding Detroit because of mortgage interest deductions.

I think what you'll find is that, for the most part, people are avoiding or trying to avoid anything old, except for a few well-designed exceptions. And that's because most of the designs sucked. Shiny, new developments trick people at first, but the flaws become apparent after awhile, like you see with a cheap piece of furniture. The problem with stuff like the mortgage-interest deduction is that it has encouraged people to keep building new crappy designs instead of fixing the broken developments we already have.

**nain rouge** · February-01-13, 03:49 AM

Let's be honest here: one of the main motives behind suburban design is that it builds a virtual moat around communities. As long as there is adequate funding for the police, you can basically keep crime out of your city. However, we've seen time and time again that most suburbs fail to generate enough tax revenue to support the necessary level of police once the initial growth period is over. And once this tipping point is reached, a slow, terminal decline is almost inevitable.

We've reacted to this by builder bigger and bigger moats. It works well, except that it's incredibly expensive and creates environments that are physically unhealthy and ridiculously car-dependent. Only the truly rich can afford to support a exurb long-term, and that's not much of the population.

Urban cities only failed in the sense that our society socially failed. For one reason or another [[and we could debate the exact causes forever), we've created a gigantic class of disenfranchised people prone to criminality. You can try build around this with suburbs - distancing yourself from the problem - but ask the inner ring suburbs how well this works.

We were most productive and most exuberant when we lived in urban cities. I think it's high time we figured out how to get back to that point, and I think to do that, we have to somehow enfranchise the disenfranchised. Most people that left Detroit didn't leave because they hated how it was planned. You'll usually hear them say how it was a great place to live before the crime/riots/the usual. But somehow we've gotten the narrative all mixed up.

**Hermod** · February-01-13, 05:41 AM

Originally Posted by nain rouge

I think what you'll find is that, for the most part, people are avoiding or trying to avoid anything old, except for a few well-designed exceptions. And that's because most of the designs sucked. Shiny, new developments trick people at first, but the flaws become apparent after awhile, like you see with a cheap piece of furniture. The problem with stuff like the [/COLOR]mortgage-interest deduction is that it has encouraged people to keep building new crappy designs instead of fixing the broken developments we already have.

The mortgage interest deduction has encouraged people to buy residential real estate. By itself, the mortgage interest deduction encourages the purchase of a trendy flat in a downtown building just as much as it does an "estate" in Clarkston. It is the choice the buyer exercises in deciding how to apply the deduction. Without the deductions for mortgage interest and real estate taxes, renting a dwelling might be more attractive for some than purchasing and the rate of home ownership would definitely be lower nationwide. Somewhere along the line, there was a political consensus that encouraging home ownership was a "good thing".

**p69rrh51** · February-01-13, 09:42 AM

Originally Posted by nain rouge

Sure. But the mortgage-interest deduction wasn't really exploited until the 1950s, when it was to help push bigger, suburban homes, pushing investment away from urban developments. In addition, the mortgage-interest deduction doesn't apply if you take the standard deduction on your income tax, which your average person does because it's generally more cost-effective [[in fact, roughly 66% of people - including, I'm sure, most Detroiters - take the standard deduction). Therefore, it's usually the exurban homeowners that are benefiting from the mortgage-interest deduction, because it's very much in their interest itemize deductions.

Home ownership in the US is about the same as it is in other advanced Western countries that luck such a deduction - the only difference is that our homes tend to be larger, and this is directly related to the mortgage-interest deduction. If a wealthier person can basically scratch the interest of off their mortgage, they'll often use some of the money they save to get a bigger house.

I hate having to spell everything out like this, but I can see that a few you of you really love to exploit any ambiguities you find, creating meaningless abstractions from the holes to support your desired viewpoint [[and yes, I'm aware that at least one of you are going to point that statement back at me).

Nain in a few burbs that may be true but where I live that does not hold water. The average home age is around 50 years old with most of the very large homes built before WWII. In fact most of the largest homes built in the CoD and the metro area pre date WWII and mortgage deductions, although many predate income taxes[[I will concede McMansions and the big foot homes). Most of the homes built since the 1950's have been around the average size of the homes in the 5 cities making up my home area. Yes there have been large homes built but most are similar in size to surrounding homes. Mortgage deductions have benefited the banks more than any city in the metro area. Although Mortgage deductions cause home owners around my home to try to keep the homes prices in the area up which does lead to actions that bother some on DYes.
As for the freeways I remember driving along I-75 when it was under construction near the 9 Mile curve and asking my parents why they were tearing down all the buildings to make a big hole in the ground. Also something that never gets mentioned is that most of the freeways in Detroit were obsolete the day they opened. We discussed how outdated the freeways were in my classes at WSU in the early 80's and somehow that has been lost over time. Unfortunately between planning and construction the population the roads were meant to serve had already moved on, but the holes left in the city did destroy the fabric of the CoD that has been discussed ad nauseum on this forum. For example 94 should be around where 696 is and 696 should have been built somewhere in the 23 Mile ish area.
Also people moved to where the jobs were and the jobs started leaving the city very early in the history of the auto industry. Just look at Highland Park as an example Ford moved there in 1908 to avoid paying taxes in the CoD. While we were strong pre 1950 a fair amount of the city is made up of suburbs annexed/stolen by the CoD in the late teens through the late 1920's. Some of the areas annexed are not very dense in an urban sense. Warren is another example look at the housing built up around the GM Tech Center. Also look at all the development near the Groesbeck Tool shops.
We were moving out before the turn of the 20th Century just look at the movement along Woodward and East Jefferson. Indian Village was a suburb when development started in 1895.
While some of your comments might be true, when it comes to the CoD there is no way to put it neatly into one point of view. To many forces make that impossible!

**nain rouge** · February-01-13, 12:24 PM

Originally Posted by Hermod

Somewhere along the line, there was a political consensus that encouraging home ownership was a "good thing".

Actually, if you read this New York Times article, you'll see that the mortgage-interest deduction came about accidentally as a unintentional loophole. It was never consciously designed to benefit the average person or encourage intelligent developments, and so the result is that the deduction often does neither. Wealthy people have often used their influence to block any intelligent reform of the mortgage-interest deduction because as it stands it benefits them greatly.

Originally Posted by p69rrh51

Nain in a few burbs that may be true but where I live that does not hold water. The average home age is around 50 years old with most of the very large homes built before WWII. In fact most of the largest homes built in the CoD and the metro area pre date WWII and mortgage deductions, although many predate income taxes[[I will concede McMansions and the big foot homes).

Well Detroit has its own very unique in this regard. The banks in Detroit were some of the first to give home loans to the "average" person - the average person of course being a white male factory worker [[remember, back then, banks were free to discriminate on any grounds). That, coupled with restrictive housing covenants, allowed what were essentially regular people to push development in favor single-family homes. As you see, we already had some unnatural factors at work.

Given the massive influx of people moving to Detroit, such developments were a mistake. The city needed appropriate high-density developments to prevent overcrowding [[which is essentially density that was inadequately prepared for), and there simply wasn't enough of it. Consequently, through discrimination blacks and poor people in general were pushed into extremely overcrowded conditions, which of course led to tensions. The overcrowded people wanted out and the people in single-family home neighborhoods had to deal with such forces constantly breathing down their necks.

That all said, Detroit still had better density than the suburbs, so I prefer it in that sense. Any metro areas needs some good single-family homes, but they should be built primarily in the inner ring suburbs. The outer rings should be developed on only in special instances to keep regional infrastructural costs in check.

**Hermod** · February-01-13, 12:26 PM

Originally Posted by Goose

next thing we will be reading that the federal income tax refund is somehow a subsidy....

Naw, it is a generous gift bestowed upon you each year by a munificent gummint.

**nain rouge** · February-01-13, 12:29 PM

Oh, c'mon guys. Clearly the federal income tax refund is a direct refund on money you paid for taxes, whereas the mortgage-interest deduction is a tax refund based on money you paid towards your house. There's a clear difference.

Shollin · February-01-13, 01:07 PM

40% of Americans don't pay federal income taxes. A majority of Detroiter's don't pay income taxes. These non tax paying citizens of Detroit also live in section 8 housing subsidized by the federal government. You're going to sit there and whine about people in the suburbs who do pay taxes, who bought there homes and pay property tax, and get a little bit back on their mortgage interest? The lengths people go to to blame the suburbs for Detroit's issues.

**jt1** · February-01-13, 01:09 PM

We were moving out before the turn of the 20th Century just look at the movement along Woodward and East Jefferson. Indian Village was a suburb when development started in 1895.

True but we were moving out due to population growth. Over the last twenty years we have expanded our developed area at a ridiculous pace but there has been a decline [[or very limited growth) in population.

Expanding for population growth is logical. Expanding during population loss or stagnation is unsustainable and idiotic.

**nain rouge** · February-01-13, 01:11 PM

Originally Posted by Shollin

You're going to sit there and whine about people in the suburbs who do pay taxes, who bought there homes and pay property tax, and get a little bit back on their mortgage interest? The lengths people go to to blame the suburbs for Detroit's issues.

The mortgage-interest deduction costs $100 billion a year, more than the budget for the ENTIRE DEPARTMENT OF HUD. But keep moving the target. It's cute.

**jt1** · February-01-13, 01:13 PM

Originally Posted by Shollin

40% of Americans don't pay federal income taxes. A majority of Detroiter's don't pay income taxes. These non tax paying citizens of Detroit also live in section 8 housing subsidized by the federal government. You're going to sit there and whine about people in the suburbs who do pay taxes, who bought there homes and pay property tax, and get a little bit back on their mortgage interest? The lengths people go to to blame the suburbs for Detroit's issues.

It's not necessarily blaming the suburbs for Detroit's ills, it is pointing out that other areas get just as much, if not more subsidies than the city.

Funny everyone bitches about welfare and food stamp use in poor cities but nobody ever worries about the larger number of people in rural areas that receive the same benefits.

But, back to the original theme of this, people always want to impose some type of draconian measures on poor, and predominately black areas, but ignore the other areas that have issues, are heavily subsidized , etc.

Maybe you should find a similar site to this that is about rural America and continue your finger pointing and illogical bitching.

Shollin · February-01-13, 01:13 PM

Originally Posted by nain rouge

The mortgage-interest deduction costs $100 billion a year, more than the budget for the ENTIRE DEPARTMENT OF HUD. But keep moving the target. It's cute.[/COLOR]

And people in Detroit qualify for the same deduction.

Shollin · February-01-13, 01:19 PM

Originally Posted by jt1

It's not necessarily blaming the suburbs for Detroit's ills, it is pointing out that other areas get just as much, if not more subsidies than the city.

Funny everyone bitches about welfare and food stamp use in poor cities but nobody ever worries about the larger number of people in rural areas that receive the same benefits.

But, back to the original theme of this, people always want to impose some type of draconian measures on poor, and predominately black areas, but ignore the other areas that have issues, are heavily subsidized , etc.

Maybe you should find a similar site to this that is about rural America and continue your finger pointing and illogical bitching.

I know rural areas get welfare. I don't have a problem with subsidies for poor people. What I do have a problem with is Detroit crying they don't get enough subsidies and that the suburbs get more and have some ridiculous reason like mortgage interest which is the same in the city of Detroit.

**nain rouge** · February-01-13, 01:21 PM

Originally Posted by Shollin

And people in Detroit qualify for the same deduction.

Hello? I already addressed this earlier. Nearly all lower-income people take the standard deduction on their income taxes, which EXCLUDES them from the mortgage-interest deduction.

**nain rouge** · February-01-13, 01:28 PM

When you give higher-income earners the same kinds of breaks you're giving low-income earners, you're just encouraging the chasm to stay as wide as ever. The only difference is higher-income earners mystically believe they deserve subsidies [[and are offended that they are even called such) and that lower-income people are getting stuff they don't deserve. I assure, directly or indirectly, lower-income people are putting plenty into the system, too.

Shollin · February-01-13, 01:42 PM

Higher income earners can buy homes in the city of Detroit. People in these expensive lofts and condos and can claim the mortgage interest.

**Bham1982** · February-01-13, 01:48 PM

Originally Posted by nain rouge

The only difference is higher-income earners mystically believe they deserve subsidies [[and are offended that they are even called such) and that lower-income people are getting stuff they don't deserve.

High earners don't qualify for the mortgage interest deduction.

Individual filers earning at least 250k, and joing filers earning at least 300k, don't qualify for any mortgage interest deduction.

And the folks making less than 250k but more than [[I forgot but something around 85k) get a reduced mortgage interest deduction.

And I wouldn't call that cohort of people "rich", even if they are comfortable. In many parts of the country, a family of four making something in that range is pretty middle class.

**Bham1982** · February-01-13, 02:02 PM

And re. the deduction itself, I don't think it has anything to do with sprawl.

Sprawl, in my anecodal experience, is caused by a particularly American desire for supersize living and everything new. In order to get this American dream, you need to "drive to qualify". The further out, the more you get for your money, because land is cheap and commutes are long.

So let's say John and Sally professional newlywed want to buy a nice McMansion in a good school district.

They could buy in a rich, close-in suburb like Bloomfield/Birmingham, but big new construction homes start at a million. Then the next option is Rochester Hills/Northville/Novi, which are outer suburbs and not as convenient, but really nice. Here the big homes are 300k-450k. After that, it's off to Lake Orion, Macomb Township, and South Lyon, where the bigfoot homes are 200k-300k. If that's too much, it's off to Livingston County, Romeo and the like where 150k will get you something nice and new.

**nain rouge** · February-01-13, 02:12 PM

Originally Posted by Bham1982

Sprawl, in my anecodal experience, is caused by a particularly American desire for supersize living and everything new. In order to get this American dream, you need to "drive to qualify". The further out, the more you get for your money, because land is cheap and commutes are long.

I agree. We would have sprawl no matter what, but somehow I think the $100 billion spent yearly giving out mortgage-interest deductions helps, don't you think? In the New York Times article I linked to, the author admits to buying a sprawling suburban mansion with an "'interest only' mortgage, a big attraction of which was that the payments [[all interest, no principal) were entirely deductible." We're talking about funding the most exurban of developments here.

And in discussing the mortgage-interest deduction, we've lost sight of all the infrastructural costs for the suburbs and exurbs that the government absorbs. The less dense the area that demands the infrastructure is, the less cost-effective it becomes. Again, it's simple math.

Shollin · February-01-13, 02:25 PM

I work in the mortgage and my company service 400,000 mortgages. Interest only mortgages are not very common. Besides, people in Manhattan can buy a condo with an interest only loan just as well as someone in the suburbs.

**nain rouge** · February-01-13, 02:57 PM

Not very common, but still a shocking example of largess and corruption as the suburbs continue to live above their means [[to use the rhetoric we commonly see applied to Detroit)!

Sure, such people COULD buy a condo in Manhattan, but either way, you're making an uneconomical situation unnaturally affordable. Excessive gentrification is not an ideal outcome for a city - even though it is definitely preferable to decay and blight - just as exurban developments are not an ideal outcome for our suburbs.

**ismoakrack** · February-01-13, 03:35 PM

True but we were moving out due to population growth. Over the last twenty years we have expanded our developed area at a ridiculous pace but there has been a decline [[or very limited growth) in population.

Expanding for population growth is logical. Expanding during population loss or stagnation is unsustainable and idiotic.

Hasn't the population of the metro been stagnant since the 70s??

**Bham1982** · February-01-13, 03:49 PM

Originally Posted by ismoakrack

Hasn't the population of the metro been stagnant since the 70s??

Yes, but the number of households has grown quite a bit, because of smaller household sizes. Some housing growth makes sense, even with a stagnant population [[and that's discounting the fact that much of the existing housing stock is in locations where folks with choices won't consider).

**jt1** · February-01-13, 04:22 PM

Originally Posted by Bham1982

High earners don't qualify for the mortgage interest deduction.

Individual filers earning at least 250k, and joing filers earning at least 300k, don't qualify for any mortgage interest deduction.

And the folks making less than 250k but more than [[I forgot but something around 85k) get a reduced mortgage interest deduction.

Completely incorrect.

**Bham1982** · February-01-13, 04:37 PM

Originally Posted by jt1

Completely incorrect.

What specifically is incorrect?

The Wall Street Journal seems to agree 100% . They give the exact same income ranges as I gave- 250k for single filer and 300k for dual filing. Above that, deduction is 0.

http://online.wsj.com/article/SB1000...195921128.html