Musings on Interest Write Offs and Property Taxation
Over at Seeking Alpha reader Mike Holt suggests:
"Since reducing government spending is illusive, I would keep an eye out for higher taxes. Although the US government generates most of its revenue from individual income taxes, I expect new forms of taxes to be introduced since higher marginal income tax rates would attract too much attention. These include a VAT tax, a gasoline tax, and reform of the corporate tax system intended to capture a larger share of overseas profits by US corporations, and the elimination or reduction of many important tax breaks such as the deduction of mortgage interest on loan balances of up to $1.1 million."
The Nattering one muses... Rather than a protectionist VAT, perhaps a luxury goods tax, let those who can afford to spend, do so.
Gasoline tax? Nope, already too high at a Federal and State level. This acts as a consumption tax which hurts those who need it most, the middle class to poor.
Elimination of the mortgage interest deduction up to a loan balance of $1.1 million? This should be selectively capped. According to NAR, highest median housing price in the nation as of Q4 2014, the Western region = $294K
All commercial, corporate and non owner occupied (investor, rental) property should be excluded from any mortgage interest or property tax deductions. On owner occupied property (primary domicile), all loan balances up to $300K can deduct interest expense. Write offs on any interest payments on loan balances above $300K are excluded. The median family would benefit, investors, landlords and the privileged would pay, as should be their privilege.
A similar approach on property tax needs to be adopted as well. Under the current system, the American dream is exactly that, a dream and a fantasy. The reality is NOBODY EVER really OWNS their property. When you pay off the mortgage or buy cash, try not paying the property tax bill and see how long you OWN your property. This is what is referred to as a feudal system under which the "Dukedom" of government MUST be paid. This is not the "Ownership" society but the "Sharecropper" society as we referred to in these pages, almost 10 years ago.
Far too many corporations and investors pay little to no property tax, while the average Joe gets screwed. i.e. California has never recovered from 1978's Jarvis Gann Prop 13 as public services and education (during the 1960s California had been ranked nationally as among the best and have decreased to 48th since 1978) have suffered ever since its inception.
What many in the public don't know... Corporations often avoid reassessment by limiting the portion of ownership by purchasing in groups where no single party owns more than 50%. For example...
"In 2002, wine barons EJ Gallo purchased 1,765 acres of vineyards in Napa and Sonoma from Louis M. Martini. But the deal avoided a reassessment, because 12 Gallo family members individually obtained minority interests." Since land trusts and corporations do not re title as per the Prop 13 legislation, their property tax base has remained at 1% of the original purchase price (1975 ad valor um).
In California, non public or private lands are 55% of total lands (45% are federally owned). Corporations and trusts own over 90% of those "private" lands. In other words, the "tax payer" revolt of 1978, really benefited the wealthy and corporations, at the expense of John Q. Public.
All owner occupied primary domiciles should be excluded from property taxes. Property tax would be assessed at 1.5% of the original purchase price on all commercial; non owner occupied (investor, rental). For owner occupied multi unit, the non rental portion (your domicile) is excluded.
In all cases, if you refinance, you get reassessed, could go up, could go down. This discourages making your home an ATM, rather than a place to live and/or raise a family. In all cases, if you can afford to borrow above $300K on a primary residence or buy investment property, you can afford to pay property tax or be excluded from writing off the interest expense above $300K on your primary residence.
From Quantum of Solace: "Homes are sticks and bricks where people live their lives and raise families. If you lived in the home for an extended period and it appreciates, that's one thing. Homes should not be chattel for serial flippers or landlords. Seek margin in video games or cars or stereos or durable manufacturing, not financial instruments tied to the necessities of life. When you turn your own backyard into a major source of wealth, that's when the trouble starts."
As for reform of corporate tax for repatriation or in any shape or form? Good luck on that one, our whores on the hill (the corporate prostitutes known as politicians) will never do that.
"Since reducing government spending is illusive, I would keep an eye out for higher taxes. Although the US government generates most of its revenue from individual income taxes, I expect new forms of taxes to be introduced since higher marginal income tax rates would attract too much attention. These include a VAT tax, a gasoline tax, and reform of the corporate tax system intended to capture a larger share of overseas profits by US corporations, and the elimination or reduction of many important tax breaks such as the deduction of mortgage interest on loan balances of up to $1.1 million."
The Nattering one muses... Rather than a protectionist VAT, perhaps a luxury goods tax, let those who can afford to spend, do so.
Gasoline tax? Nope, already too high at a Federal and State level. This acts as a consumption tax which hurts those who need it most, the middle class to poor.
Elimination of the mortgage interest deduction up to a loan balance of $1.1 million? This should be selectively capped. According to NAR, highest median housing price in the nation as of Q4 2014, the Western region = $294K
All commercial, corporate and non owner occupied (investor, rental) property should be excluded from any mortgage interest or property tax deductions. On owner occupied property (primary domicile), all loan balances up to $300K can deduct interest expense. Write offs on any interest payments on loan balances above $300K are excluded. The median family would benefit, investors, landlords and the privileged would pay, as should be their privilege.
A similar approach on property tax needs to be adopted as well. Under the current system, the American dream is exactly that, a dream and a fantasy. The reality is NOBODY EVER really OWNS their property. When you pay off the mortgage or buy cash, try not paying the property tax bill and see how long you OWN your property. This is what is referred to as a feudal system under which the "Dukedom" of government MUST be paid. This is not the "Ownership" society but the "Sharecropper" society as we referred to in these pages, almost 10 years ago.
Far too many corporations and investors pay little to no property tax, while the average Joe gets screwed. i.e. California has never recovered from 1978's Jarvis Gann Prop 13 as public services and education (during the 1960s California had been ranked nationally as among the best and have decreased to 48th since 1978) have suffered ever since its inception.
What many in the public don't know... Corporations often avoid reassessment by limiting the portion of ownership by purchasing in groups where no single party owns more than 50%. For example...
"In 2002, wine barons EJ Gallo purchased 1,765 acres of vineyards in Napa and Sonoma from Louis M. Martini. But the deal avoided a reassessment, because 12 Gallo family members individually obtained minority interests." Since land trusts and corporations do not re title as per the Prop 13 legislation, their property tax base has remained at 1% of the original purchase price (1975 ad valor um).
In California, non public or private lands are 55% of total lands (45% are federally owned). Corporations and trusts own over 90% of those "private" lands. In other words, the "tax payer" revolt of 1978, really benefited the wealthy and corporations, at the expense of John Q. Public.
All owner occupied primary domiciles should be excluded from property taxes. Property tax would be assessed at 1.5% of the original purchase price on all commercial; non owner occupied (investor, rental). For owner occupied multi unit, the non rental portion (your domicile) is excluded.
In all cases, if you refinance, you get reassessed, could go up, could go down. This discourages making your home an ATM, rather than a place to live and/or raise a family. In all cases, if you can afford to borrow above $300K on a primary residence or buy investment property, you can afford to pay property tax or be excluded from writing off the interest expense above $300K on your primary residence.
From Quantum of Solace: "Homes are sticks and bricks where people live their lives and raise families. If you lived in the home for an extended period and it appreciates, that's one thing. Homes should not be chattel for serial flippers or landlords. Seek margin in video games or cars or stereos or durable manufacturing, not financial instruments tied to the necessities of life. When you turn your own backyard into a major source of wealth, that's when the trouble starts."
As for reform of corporate tax for repatriation or in any shape or form? Good luck on that one, our whores on the hill (the corporate prostitutes known as politicians) will never do that.
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