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Importance of the standard deduction

Importance of the standard deduction

PaysTax | Dec 5, 2012 12:59 PM ET "Of course it needs to be phased in. An average mortgage is held less than 7 years, so phase out the allowed deduction over 5-7 years. Set the baseline on each taxpayers 2012 mortgage interest claimed on Schedule A of their federal tax return, and reduce max amount each year until it is zero." Great point. Most people either move or refinance in less than 7 years.

Floretta | Dec 5, 2012 01:08 PM ET First, eliminate mortgage deductions for second homes. If you can afford two (or more) houses, you can afford to forego the deduction. Then allow interest deduction on primary residences for the first 10 years - after that the value of the deduction declines anyway.

iaeaoe | Dec 5, 2012 01:09 PM ET Note the importance of the standard deduction. Suppose you have an $11,900 standard deduction, $12,000 of mortgage interest, and $4,000 of other itemized deductions. Taking away the mortgage interest deduction only cuts your deductions $4,100 (down to the standard deduction), not $12,000. Thus the benefit of the deduction is generally exaggerated, as is the pain of taking it away. In the "PaysTax" example, the Maryland taxpayer is getting only $1,300 of beneficial deduction, out of a $13,200 deduction. The latter figure may seem like a big deal, but the former figure shows that this is small potatoes. The realtor selling you the house, the banker negotiating your mortgage, and their political friends probably do not make this point.

giofls | Dec 5, 2012 01:10 PM ET @PaysTax, You forgot property taxes as well. In NY, they can exceed 2% of the value of the home. So in an example of a $250K home with a $200 mortgage (20% down), you`d have to add $5,000 in property taxes to the equation. You`re now up to nearly $20K in deductions, and that`s before any charitable contributions.

Glenn1954 | Dec 5, 2012 01:12 PM ET MBAstylethinking; Your comment seems valid. The mortgage deduction is a gift to bankers, brokers and other special interests.

madashellhomeowner | Dec 5, 2012 01:15 PM ET Its a stupid idea, even with the Socialist Clown we have in our WH, and a discouraging economy, for this tax deduction to be removed. It will never be removed ! Why-- because if its removed I walk ! And who gets hurt-- B. of A. ! Theres millions of us ! Smoke that, libs !

tradereye | Dec 5, 2012 01:16 PM ET The mortgage deduction issue is moot: The deduction comes off an individual`s 1040 gross....and presumably these people make a hefty income (over the 250K threshold anyway)...which washes out the deductabity issue. I don`t know to what extent the figures have been worked to see how much a percentage displacement exists.

indifferent07 | Dec 5, 2012 01:25 PM ET MBA...... That is why it is so hard to get rid of all these deductions. The "benefit" of the mortgage deduction has already been baked into the price of the house. Lose the deduction, property values fall and the homeowner essentially prepaid a tax. That usually doesnt make for a happy voter. The mortgage deduction is small fries compared to the same problem with farm land values at the Department of Agriculture.

geraldvaughn | Dec 5, 2012 01:26 PM ET That`s right sell these PIG insurance companies stock as its going no where quick. These are the WORST BAD FAITH INSURERS IN AMERICA**AIG/21st Century Auto/21st Century/New Hampshire Indemnity/Zurich/Allstate/Esurance/All AIG insurance companies/Farmers/State Farm/USAA/Geico/American International Group/Frontline/Progressive/First Protective/The Hartford/Nationwide/National Grange,Citizens out of Florida and Metlife,Cigna. Got any insurance with these corrupt PIGS then cancel it now and get another carrier. Not had your claim paid then sue your insurer. Contact your senator and congressmen as the insurance industry needs heavy regulation to protect us the consumer from insurers constant fraud and scams. Sue any insurance company who refuses to pay you at all or what they owe you in full. Sell all stock in any of these co

TRUTHmin | Dec 5, 2012 01:49 PM ET "The National Association of Home Builders conducted a public poll showing 73% opposed to any changes in the deduction. " But yet only 26% of tax payers even use it. I think people are just afraid of a deduction getting axed when asked about it. Hell, maybe people don`t even realize they don`t file with it.






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Importance of the standard deduction

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