Tax bill effects on homeownership.

[ABetterDetroit]

From a macro perspective, it still doesn't make sense to have a deduction. As stated before, when sellers know you have a "coupon" for x% off the price of a house, everyone raises the price of the house by x%. It isn't making houses more affordable. The profit from the increased price of the house gets eaten up by realtor and mortgage fees, the seller is usually lucky to see a point or two.

Whenever these rollbacks are talked about in congress, the realtor and mortgage lobbies kick into high gear. Do you think that's because they are defending affordable housing, or their profit margin?

Michigan has been a perfect example of terrible economic performance for many decades. Why even entertain an ideological or text book debate on how to correct this state’s economy for the long term? Because it’s the latest fad of talking heads on cable TV? It’s all bullshit. They sell their books or content and cash the checks and go home.

There are 49 other states. Look hard at the top 10 strongest economies and steal, rob and copy from them what works. We have been losing for far too long to wait for a classroom experiment.

It is moronic to get wrapped up in ideological victories in fixing this state’s economy. Waiting for California to "fall into the ocean" is not a good enough answer. Making fun of Montana, Wyoming or any rural state is equally a failure and doesn’t fix anything here.

A housing market that is robust, appreciating and most critical, that has enough value for NEW construction to happen most everywhere [[not just a few select communities) is absolutely necessary. New subdivisions and malls in farmland doesn’t cut it anymore, it is not enough capital investment to carry the entire state.

[JBMcB]

There are 49 other states. Look hard at the top 10 strongest economies and steal, rob and copy from them what works. We have been losing for far too long to wait for a classroom experiment.

So that's what these economists have done. They look at the effects of policies before and after they have been enacted, analyze profit margins and costs, to figure out what effect they have.

It's not an ideological argument. Anyone who looks at the data - republican, democrat, libertarian, socialist - comes to the same conclusion. The mortgage deduction doesn't make housing more affordable for most people. It costs the government a bunch of money.

This isn't rocket science level economics. If you want something to be cheaper you make sure supply keeps up with demand. If you want cheaper housing you make more housing. Trying to fix the price problem without fixing the supply problem doesn't fix anything - it just creates other problems.

[Scottathew]

Nothingburger. The article quotes Snyder:

I agree with your perspective on this topic, but I would encourage you to avoid the use of "nothingburger".

I mostly associate it with right-wing propaganda that is trying to dismiss the mounting evidence of the Trump campaign's wrong-doings.

When you say "nothingburger" it will have the effect of making me disregard anything else you're going to say.

Perhaps I'm unique in this feeling, but I suspect I'm not.

[Jimaz]

... Perhaps I'm unique in this feeling, but I suspect I'm not.

You're not alone.

Lake Superior State University’s 43rd Annual List of Banished Words

[Richard]

I agree with your perspective on this topic, but I would encourage you to avoid the use of "nothingburger".

I mostly associate it with right-wing propaganda that is trying to dismiss the mounting evidence of the Trump campaign's wrong-doings.

When you say "nothingburger" it will have the effect of making me disregard anything else you're going to say.

Perhaps I'm unique in this feeling, but I suspect I'm not.

The word has been around from the 1950s by a newspaper guy meaning a story that has no content,,anything else you want to add to the list of avoidable words,or maybe a few books that may contain words we do not agree with?

[Wesley Mouch]

I agree with your perspective on this topic, but I would encourage you to avoid the use of "nothingburger".

I mostly associate it with right-wing propaganda that is trying to dismiss the mounting evidence of the Trump campaign's wrong-doings.

When you say "nothingburger" it will have the effect of making me disregard anything else you're going to say.

Perhaps I'm unique in this feeling, but I suspect I'm not.

Sure. I don't think I've ever used the word before [[nor since).

I know words these days offend a lot of people. Judgements abound. And we would like to keep the conversation about ideas, and their impact on our fine City -- and not on whether this or that word is a dog-whistle.

Meanwhile, I'm gonna have a something-burger for dinner.

[Canadian Visitor]

While I'm unclear on the specific effects this particular bill will have on home ownership levels....

I would like to point out something I don't think many posters here are aware of.......

That U.S. levels of home ownership are already not particularly high.

More Canadians, Beligians, Swedes, Italians and Spaniards all own their homes.

The national rate of Home Ownership in the U.S. is just over 63%.

This compares with Canada at 67%.

It puts the U.S. at #35 in the world.

Point being....if all these measures [[interest deductiblity, state and local tax deductibility) etc. were suppose to create robust home ownership levels, then I would suggest they failed.

What measures might work better is a different discussion.

****

That said, I would gladly accept any argument that people who have made important life choices such as buying a home, based in part on how those tax measure affect the affordability of given purchase, ought not to have the rug pulled out from under them w/no notice.

We could debate what fair notice would be, seeing as government, as with business is free to modify its prices [[taxes) from time to time.

But surely the notice period should be greater than a few weeks.

[Cincinnati_Kid]

I agree with your perspective on this topic, but I would encourage you to avoid the use of "nothingburger".

I mostly associate it with right-wing propaganda that is trying to dismiss the mounting evidence of the Trump campaign's wrong-doings.

When you say "nothingburger" it will have the effect of making me disregard anything else you're going to say.

Perhaps I'm unique in this feeling, but I suspect I'm not.

I wouldn't use anything associated with that "......" in the Oval Office.

[oladub]

Map showing that Michigan residents' average SALT tax payments are lower than the national average. In 2015, the average amount claimed under SALT was $9,600 in Michigan compared with $18,400 in California, and $22,200 in New York. The SALT tax changes amount to a tax on the rich. The rich will be paying more taxes. Democrats used to support progressive taxation. Maintaining the status quo, allowing the rich continued housing subsidies, is instead a form of trickle down economics.

https://www.zerohedge.com/sites/default/files/inline-images/salt%20states%201.jpg

[313WX]

Bear in mind that SALT includes income or sales and property taxes combined. So the average number doesn't necessarily reflect the tax burden with owning a home [[which is likely much lower).

[Wesley Mouch]

While I'm unclear on the specific effects this particular bill will have on home ownership levels....

I would like to point out something I don't think many posters here are aware of.......
That U.S. levels of home ownership are already not particularly high.
More Canadians, Beligians, Swedes, Italians and Spaniards all own their homes.
The national rate of Home Ownership in the U.S. is just over 63%.
This compares with Canada at 67%.
It puts the U.S. at #35 in the world.
Point being....if all these measures [[interest deductiblity, state and local tax deductibility) etc. were suppose to create robust home ownership levels, then I would suggest they failed.

As you know, Canada does not allow deduction of primary home mortgage interest. You have a higher rate of ownership than the US. QED.

What measures might work better is a different discussion.

And another discussion would be whether high levels of single-family home ownership are beneficial to anyone.

That said, I would gladly accept any argument that people who have made important life choices such as buying a home, based in part on how those tax measure affect the affordability of given purchase, ought not to have the rug pulled out from under them w/no notice.

You no doubt have also notice that Canadian Finance Minister and all-around poor guy [[ha!) Bill Morneau and his royal cuteness Justin Trudeau are implementing significant new tax policies targeted at small businesses such as Doctors, Lawyers, Farmers, and Plumbers. Being put into effect immediately, and retroactively for the 2017 tax year, if I'm not mistaken.

The US changes seem [[not sure here) to be going into effect only for the 2018 tax period, so the US is granting a much longer phase-in than Canada. [[Maybe the thinking is that small businesses in Canada can take the hit easier than wealthier homeowners in the US).

We could debate what fair notice would be, seeing as government, as with business is free to modify its prices [[taxes) from time to time.

Businesses cannot generally retroactively increase prices. Government seems to be free to do so.

But surely the notice period should be greater than a few weeks.

I mostly share your thoughts that it shouldn't be put into effect so quickly. And in fact it is a half-hearted measure that does allow mortgages in the $750k-$1m range to continue to be subsidized by the taxpayer. The full-throated approach would have been to fully kill this unfair deduction.

A side note... this deduction is somewhat like the Michigan tax-exemption for public pensions. It was also a distortion of tax policy to benefit select individuals [[pensioners get taxpayer cash tax-free!). I'm sure there's much to dislike in this tax change, but there will never be a tax-deduction that isn't held dear by somebody. Canadian small businesses thought it was wise to invest their profits into other businesses and grow the economy. But the government thinks its a loophole and is going to tax unrelated business income. Both sides are right. Small businesses feel betrayed.

[Canadian Visitor]

As you know, Canada does not allow deduction of primary home mortgage interest. You have a higher rate of ownership than the US. QED.

And another discussion would be whether high levels of single-family home ownership are beneficial to anyone.

You no doubt have also notice that Canadian Finance Minister and all-around poor guy [[ha!) Bill Morneau and his royal cuteness Justin Trudeau are implementing significant new tax policies targeted at small businesses such as Doctors, Lawyers, Farmers, and Plumbers. Being put into effect immediately, and retroactively for the 2017 tax year, if I'm not mistaken.

The US changes seem [[not sure here) to be going into effect only for the 2018 tax period, so the US is granting a much longer phase-in than Canada. [[Maybe the thinking is that small businesses in Canada can take the hit easier than wealthier homeowners in the US).

Businesses cannot generally retroactively increase prices. Government seems to be free to do so.

I mostly share your thoughts that it shouldn't be put into effect so quickly. And in fact it is a half-hearted measure that does allow mortgages in the $750k-$1m range to continue to be subsidized by the taxpayer. The full-throated approach would have been to fully kill this unfair deduction.

A side note... this deduction is somewhat like the Michigan tax-exemption for public pensions. It was also a distortion of tax policy to benefit select individuals [[pensioners get taxpayer cash tax-free!). I'm sure there's much to dislike in this tax change, but there will never be a tax-deduction that isn't held dear by somebody. Canadian small businesses thought it was wise to invest their profits into other businesses and grow the economy. But the government thinks its a loophole and is going to tax unrelated business income. Both sides are right. Small businesses feel betrayed.

Bit off-topic.

But for edification.

Changes are not retroactive.

They won't even be passed until budget 2018; and will only affect passive-income on a go-forward basis.

They are also exempting the first $50,000 of passive income.

They did butcher the PR on that one....

https://www.theglobeandmail.com/repo...ticle36661170/

[Baselinepunk]

I agree with your perspective on this topic, but I would encourage you to avoid the use of "nothingburger".

I mostly associate it with right-wing propaganda that is trying to dismiss the mounting evidence of the Trump campaign's wrong-doings.

When you say "nothingburger" it will have the effect of making me disregard anything else you're going to say.

Perhaps I'm unique in this feeling, but I suspect I'm not.

Nope, your're not alone. We've been sitting back for a while now watching the "Wes account" babble on and on. While good ole Wes states he has not use it, he has at least a few times in the past.

The record correctly reflects that Wes is just another one of "those" Republicans who try to come across as independent or "moderate" only to try and sway the crowd toward their gross and failed Republican ideals.

All hat and no cattle . . .

[Wesley Mouch]

...snip...
Changes are not retroactive.
They won't even be passed until budget 2018; and will only affect passive-income on a go-forward basis.
They are also exempting the first $50,000 of passive income.
They did butcher the PR on that one....
https://www.theglobeandmail.com/repo...ticle36661170/

True that its not retroactive. Its just to be effective 1/1/2018.

The details you cite are newer proposal put forward after small businesses rightly complained. I recall that the original proposal was for it to be effective in Budget 2017, when it initially proposed in early 2017. But I must be wrong here.

It wasn't just bad PR. It was [[and is) bad policy. Canada seems to have forgotten that small businesses are often group efforts by entire families. Formerly, small businesses could allocate income to family members, to recognize that they rise and fall as a unit. These changes are making it harder to recognize family contributions to a business, unless it meets a detailed list of requirements to be enforced by their version of the IRS.

But yes, Visitor, you are correct. Thanks for the correction.