Mortgage interest deduction on the table

[Armchair Operator]

Alright, here's a more clear example for those who don't understand the difference.

A manufacturer hires an IT consultant to keep the computers running smoothly. They transfer money to the consultant in exchange for his services. His services result in greater productivity for the manufacturer and therefore more of their product being produced. Net wealth is increased.

A manufacturer hires a tax accountant to handle their taxes. They transfer money to the accountant in exchange for his services. His services do not result in greater productivity and net wealth is not increased because nothing tangible is created as a result of the effort that he expends.

This is not an argument against accountants. They serve a purpose that is of value to the people who hire them. It's a very legitimate type of employment. This is an argument of economics. The fact that a person's services are valuable to someone does not mean that it creates wealth overall. It transfers wealth from one person to the next.

Since I currently work in IT for a mid-sized accounting firm that mostly focuses on business taxes and financial planning I was surprised at how much difference a good accountant/tax professional makes. When they would get a new client, almost every time they were able to reduce their tax liabilities to the point where they would safe them a boat load of money. This is especially true when it comes to a family owned business where owners have lots of kids and grand kids and start "gifting" to them each year. If done properly those large gifts cannot be taxed fully by the IRS but again, you'll need a good tax/accountant professional to do that.

Again, I don't think that this practice is fair but that's how things are. Rich just get richer I suppose.....

 

[Classic]

Alright, here's a more clear example for those who don't understand the difference.

A manufacturer hires an IT consultant to keep the computers running smoothly. They transfer money to the consultant in exchange for his services. His services result in greater productivity for the manufacturer and therefore more of their product being produced. Net wealth is increased.

A manufacturer hires a tax accountant to handle their taxes. They transfer money to the accountant in exchange for his services. His services do not result in greater productivity and net wealth is not increased because nothing tangible is created as a result of the effort that he expends.

This is not an argument against accountants. They serve a purpose that is of value to the people who hire them. It's a very legitimate type of employment. This is an argument of economics. The fact that a person's services are valuable to someone does not mean that it creates wealth overall. It transfers wealth from one person to the next.

In this example the accountant helps the company avoid a cost and in so doing the company has a higher profit margin.

 

[hornadylnl]

Alright, here's a more clear example for those who don't understand the difference.

A manufacturer hires an IT consultant to keep the computers running smoothly. They transfer money to the consultant in exchange for his services. His services result in greater productivity for the manufacturer and therefore more of their product being produced. Net wealth is increased.

A manufacturer hires a tax accountant to handle their taxes. They transfer money to the accountant in exchange for his services. His services do not result in greater productivity and net wealth is not increased because nothing tangible is created as a result of the effort that he expends.

This is not an argument against accountants. They serve a purpose that is of value to the people who hire them. It's a very legitimate type of employment. This is an argument of economics. The fact that a person's services are valuable to someone does not mean that it creates wealth overall. It transfers wealth from one person to the next.

This. I work in maintenance at a factory so I'm still considered overhead to a point. They'd rather the equipment not break down and have me producing product. In a perfect factory, there'd be no employees that don't have a direct hand in producing the product. Maintenance is a necessary evil.

 

[hornadylnl]

Taxes already are hidden in the cost of goods and services.

Yes, taxes a corporation pays are an expense just like material and labor. It's figured into the cost of the product.

 

[steveh_131]

Since I currently work in IT for a mid-sized accounting firm that mostly focuses on business taxes and financial planning. I was surprised at how much difference a good accountant/tax professional makes. When they would get a new client, almost every time they were able to reduce their tax liabilities to the point where they would safe them a boat load of money. This is especially true when it comes to a family owned business where owners have lots of kids and grand kids and start "gifting" to them each year. If done properly those large gifts cannot be taxed fully by the IRS but again, you'll need a good tax/accountant professional to do that.

Again, I don't think that this practice is fair but that's how things are. Rich just get richer I suppose.....

In this example the accountant helps the company avoid a cost and in so doing the company has a higher profit margin.

Listen, guys. I am not minimizing the value that a good accountant offers to their employer. Yes, a good accountant can bring a company a higher profit margin.

This is not wealth that is created. This is wealth that already existed that is being retained instead of given to the government.

 

[hornadylnl]

Since I currently work in IT for a mid-sized accounting firm that mostly focuses on business taxes and financial planning I was surprised at how much difference a good accountant/tax professional makes. When they would get a new client, almost every time they were able to reduce their tax liabilities to the point where they would safe them a boat load of money. This is especially true when it comes to a family owned business where owners have lots of kids and grand kids and start "gifting" to them each year. If done properly those large gifts cannot be taxed fully by the IRS but again, you'll need a good tax/accountant professional to do that.

Again, I don't think that this practice is fair but that's how things are. Rich just get richer I suppose.....

In this example the accountant helps the company avoid a cost and in so doing the company has a higher profit margin.

And if it were not for such a confusing and ridiculous tax code, accountants and tax attorneys would not be necessary to find these deductions, loopholes, etc.

 

[CarmelHP]

Taxes already are hidden in the cost of goods and services.

Therefore, let's hide them ALL in the cost of goods and services. This makes sense to you?

 

[hornadylnl]

Therefore, let's hide them ALL in the cost of goods and services. This makes sense to you?

Corporations should not have to participate in the whole tax sham as they are already passing if off on the consumer. Why should I pay their tax cost and their cost of compliance? Eliminate the charade altogether.

 

[hooky]

Therefore, let's hide them ALL in the cost of goods and services. This makes sense to you?

Who said we should hide more of them in goods? Are you talking about a VAT? I hear National Sales Tax and I immediately think Fair Tax.

 

[griffin]

I pay more taxes than my friend just because he has three kids and a big house. I just don't see the fairness in this.

Those same deductions are available to you, so how is this not fair? Go buy a big house if you want the deductions for a big mortgage.

 

[hornadylnl]

Those same deductions are available to you, so how is this not fair? Go buy a big house if you want the deductions for a big mortgage.

There's a saying that goes like this. If you want more of something, subsidize it. Why do we want more people in homes they cannot afford? If your mortgage deduction makes the difference of being able to make your payment or not, you either borrowed too much or had no business buying a house in the first place.

 

[Classic]

Corporations should not have to participate in the whole tax sham as they are already passing if off on the consumer. Why should I pay their tax cost and their cost of compliance? Eliminate the charade altogether.

You are so right. You can't tax corporations. I wish more people understood that. Busimesses have to pass the tax along to consumers. Some form of flat tax would ne more efficient but every time the subject is brought up it gets shot down for one reason or anotjer.

 

[Tsigos]

You are so right. You can't tax corporations. I wish more people understood that. Businesses have to pass the tax along to consumers. Some form of flat tax would ne more efficient but every time the subject is brought up it gets shot down for one reason or anotjer.

I agree with you that corporate taxes are passed onto consumers. However, only those consumers of the corporation's products and services pay the tax. In this way, corporate income taxes are more like sales taxes than income taxes.

As an example, you could tax car companies $10 Billion and the car companies will add such expense to its sales prices. The person that walks to work and does not buy a car doesn't share in the corporation's tax burden.

 

[downzero]

Why do we want more people in homes they cannot afford?

The same reason that many businesses borrow and some businesses fail despite their best efforts: debt promotes economic activity. Bad debt is part of the cost of making loans, but it does not follow that because one needs to borrow to finance something that he "cannot afford" it. If that was the case, some of our largest and most successful corporations might not even be able to turn a profit, because they are presently financed, in large part, by debt.

I do think we should abolish the mortgage interest deduction, but not for the reasons cited in this thread. I think it artificially drives up home prices and subsidizes housing for wealthy people who do not need a tax expenditure. I also think it's pretty unlikely it'll be repealed, because it is one very popular tax expenditure, especially for people with income similar to yours.

You are so right. You can't tax corporations. I wish more people understood that. Busimesses have to pass the tax along to consumers. Some form of flat tax would ne more efficient but every time the subject is brought up it gets shot down for one reason or anotjer.

Actually, that's not entirely true. Corporations DO pay taxes, and the costs are shared between consumers of their goods and services AND the shareholders, depending on how responsive consumers are to prices.

I don't think it's a sound decision to tax investment, but it does not follow that corporate taxes are paid 100% by consumers and 0% by the equity shareholders. In the real world, there's probably not a single example of that, and the fact is that for every company, some large proportion is borne by both sides.

I also think that the flat tax idea would never work, because any rate high enough to generate sufficient revenue would be crippling to nearly everyone who isn't extraordinarily wealthy, even with huge government cuts. It might be great for a society not so addicted to public services as ours, but it'd be utterly impractical for today's United States. Nobody could make the math work with our current economy, even if they do talk some big talk.

 

[hornadylnl]

I agree with you that corporate taxes are passed onto consumers. However, only those consumers of the corporation's products and services pay the tax. In this way, corporate income taxes are more like sales taxes than income taxes.

As an example, you could tax car companies $10 Billion and the car companies will add such expense to its sales prices. The person that walks to work and does not buy a car doesn't share in the corporation's tax burden.

And the government still gets to pick winners and losers in your scenario. Corporate donations to political campaigns do nothing more than buy political influence. Give me $1 million and I'll work to give you a $10 million dollar tax break or punish your competition.

 

[hornadylnl]

The same reason that many businesses borrow and some businesses fail despite their best efforts: debt promotes economic activity. Bad debt is part of the cost of making loans, but it does not follow that because one needs to borrow to finance something that he "cannot afford" it. If that was the case, some of our largest and most successful corporations might not even be able to turn a profit, because they are presently financed, in large part, by debt.

I do think we should abolish the mortgage interest deduction, but not for the reasons cited in this thread. I think it artificially drives up home prices and subsidizes housing for wealthy people who do not need a tax expenditure. I also think it's pretty unlikely it'll be repealed, because it is one very popular tax expenditure, especially for people with income similar to yours.



Actually, that's not entirely true. Corporations DO pay taxes, and the costs are shared between consumers of their goods and services AND the shareholders, depending on how responsive consumers are to prices.

I don't think it's a sound decision to tax investment, but it does not follow that corporate taxes are paid 100% by consumers and 0% by the equity shareholders. In the real world, there's probably not a single example of that, and the fact is that for every company, some large proportion is borne by both sides.

I also think that the flat tax idea would never work, because any rate high enough to generate sufficient revenue would be crippling to nearly everyone who isn't extraordinarily wealthy, even with huge government cuts. It might be great for a society not so addicted to public services as ours, but it'd be utterly impractical for today's United States. Nobody could make the math work with our current economy, even if they do talk some big talk.

I'm not against anyone getting a mortgage to buy a house. If the deduction is the difference in keeping my head above water, I borrowed too much.

 

[Zoub]

Listen, guys. I am not minimizing the value that a good accountant offers to their employer. Yes, a good accountant can bring a company a higher profit margin.

This is not wealth that is created. This is wealth that already existed that is being retained instead of given to the government.

A good Tax Accountant to a Businessman is like Batman to Commissioner Gordon. If you eliminate evil, neither is needed.

Meanwhile the mild mannered cost accountant just keeps on pissing everybody off but if he saves money, he has value, even in a crime free utopia where everyone rides white unicorns to work.

 

[Zoub]

What really pisses me off, is the Earned Income Credit. People actually have a net tax GAIN, yes the Fed pays them every year. I would be happy if everyone had to throw something in the pot, so to speak.

I think this is another good example of what CarmelHp is talking about. In a sense it is hidden because the only people who see it in action are the ones getting the checks from the Feds.

What this really is does not soak in unless you see it in action. It is out of sight out of mind for most tax paying citizens because it is not logical, but there it sits, hiding in plain sight. No one is talking about it, at least not that I have heard lately.

 

[hornadylnl]

I think this is another good example of what CarmelHp is talking about. In a sense it is hidden because the only people who see it in action are the ones getting the checks from the Feds.

What this really is does not soak in unless you see it in action. It is out of sight out of mind for most tax paying citizens because it is not logical, but there it sits, hiding in plain sight. No one is talking about it, at least not that I have heard lately.

EIC buys votes just like public hunting grounds and ranges.

 

[hooky]

The current income tax code is about buying votes with favorable tax laws and attempting to control behavior.