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comment by b_b
b_b  ·  349 days ago  ·  link  ·    ·  parent  ·  post: How homeownership became the engine of American inequality

    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  ·  349 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  ·  349 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  ·  349 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.