Share good ideas and conversation.   Login, Join Us, or Take a Tour!
comment by blackbootz
blackbootz  ·  410 days ago  ·  link  ·    ·  parent  ·  post: How homeownership became the engine of American inequality

This was fascinating. I couldn't stop reading.

I've heard in a few economic circles about the scope of largesse that is the MID. But Jesus. $71 billion a year. And pretty much mostly for rich people.

    In providing millions of middle-class families stealth benefits, the American government rendered itself invisible to those families, who soon came to see their success as wholly self-made. We forgot because we were not meant to remember.

It makes my head spin to think of how secure I am because I was approved for a homesteader's credit that put me into a home with an affordable mortgage. I hope that not only do I pay all of it back in taxes, but that we look into this:

    President Barack Obama’s 2017 budget proposal estimated that it would take $1 billion a year over the next 10 years to eliminate family homelessness in America — not decrease it or slice it in half, but end it. That’s less than 1 percent of what we currently spend on homeowner subsidies. And yet a bill designed to provide every child in America with a home was pronounced dead on arrival in Congress. Up to this point, bills proposing modest reforms to the mortgage-interest deduction have met the same fate.

What low hanging fruit. Instead we're gutting $800 billion from Medicaid to pay for a tax cut for rich people.

Desmond's Evicted has been recommended to me a few times. This was a great introduction.

kleinbl00  ·  410 days ago  ·  link  ·  

Shit. Now I'll have to read it.

My first introduction to the radical imbalance imparted on the American landscape by real estate came from Elizabeth Warren's first book. Among other things, she points out how the system of paying for schools through property taxes basically silos poor people in perpetual poverty while overvaluing houses for everyone else - she goes as far as arguing that single-earner households no longer exist because we've grown accustomed over three generations to having both parents work in order to stretch in order to get to the neighborhood that has the school. She profiles a neighborhood where the rumor of a new charter school going in a "bad" neighborhood (in Delaware? I think?) drove up property values by like 100% in 18 months.

I've voted for those Seattle levees mentioned in the article. I vote for mass transit. And I had to leave NextDoor because it was all about people bitching about how expensive their car tabs were now "and they never ride the bus or anything!" No shit. 'cuz you don't have to. It's funny how many people I know in LA that aren't even aware that LA has rail.

Of course you're unaware. You're white.

Don't feel guilty that you've got a house now. Just don't feel entitled.

ButterflyEffect  ·  410 days ago  ·  link  ·  

I've completely given up trying to have conversations with (white) people out here who refuse to understand that their car tabs are subsidizing transit for people who can't afford a new Subaru, new Mercedes, or, you know, reliable private transit in general.

b_b  ·  409 days ago  ·  link  ·  

    I've heard in a few economic circles about the scope of largesse that is the MID. But Jesus. $71 billion a year. And pretty much mostly for rich people.

I'm not sure I agree it's "for" rich people, even if only well-off people can claim it . It's for banks, really. The benefit isn't really so much to the people claiming the credit, but to the banks who are charging the interest. That is because we calculate tax savings into any reasonable calculation about how much house we're willing to pay for. If you know you're going to "save", say, $4,000 per year on your taxes, then you might also think that's $250 more per month to put toward that mortgage (which is all interest in the beginning). That $4,000 is money that the government is taking from everyone and giving to mortgage bankers. I hate the MID. It's a scam (and I say this as someone who qualifies for it). I would love to see it destroyed. A mortgage is a product, and I should no more get a deduction for buying a house than for a car, a computer, or a lap dance.

blackbootz  ·  409 days ago  ·  link  ·  

You're right. I hadn't considered that it's such a boon to lenders. Tax (or deduction) incidence is an interesting rabbit hole. It almost makes tax law really interesting.

There's a thought piece that I come back to often. It's an episode on Planet Money called The No-Brainer Economic Platform. In it, six economists that span the political spectrum present six policy changes they'd make to the economy. Importantly, it's six policy ideas they all agree on. And first on that list? The MID. But the other ideas are great, too.

It's revealing that all of them are political non-starters.

b_b  ·  409 days ago  ·  link  ·  

I'll go a step further: If you live in a house that you couldn't afford if you lost your MID, then you can't afford it now.

kleinbl00  ·  409 days ago  ·  link  ·  

You're missing the fundamental problem: no one can afford their houses. And they all know it.

Not only that, but the MID is really only useful to those who can afford their houses otherwise. Did you itemize? Did I? Do you know anyone who did? For everyone who is actually strapped by paying for their house, the MID is a fantasy. For everyone who is reallocating this that or the other in order to sustain their lifestyle, the MID is a factor.