No landing! I've seen the tax code change dramatically over the last 30 years and investors seem to adapt. Rising rates will have more of an impact on the housing market than somebody losing $5,000 in tax benefit. Even the belief that rates are going to be higher will place an over hang of the housing market.

Which is why the House budget resolution last week passed to let them increase deficit spending by 1.5 trillion?

Yeah wake me up when the Republicans actually behave like the deficit hawks they pretend to be.

I don't have a problem with all deductions going away. Every earner needs to have some skin in the income tax game, in my opinion.

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"Politics is just show business for ugly people."

And don't forget social engineering.

Want to encourage home ownership? Mortgage Interest Deduction.

Want to encourage having kids? Child Tax Credit.

Want to encourage savings/investment? Lower capital gains tax.

Want to try to screw rich people? Estate tax.

Your analysis and math are pretty poor. 30-year rates are ~4%. The impact on a $1M loan would be 20K right there. Take a $1.25M house with $1M mortage. 2% property tax would create a deduction of 25K, but the limit will be 10K. Lost another 15K there (35K total). Pricey home, so assume that your marginal rate was 33. Tax hit is ~$11550/year (possibly higher, because many folks in this bracket are getting pushed from 33% to 35% in the new plan, a weird quirk in the bracket-cutting). It's about $1000/month.

Now, complaints about "fair" usually devolve into basic geographic/class envy. The basic nuts and bolts of this is that the $1000/mo. allowed a prospective buyer who could afford only $4K/month to afford $5K/month. The result is a fairly massive 20-25% reduction in housing values at the high end (not very high end, because the economics for multi-millionaires is different). That means a large amount of the economy is misallocated, and there will be a whole lot of extremely bad loans, and a significant recession in economic sectors tied to housing.

That's why major shifts should be done carefully and with some view toward creating a soft landing. I don't think this "plan" has much chance of passing. It seems to be a massive gain for large estate owners, folks making ~1M/year, corporations that don't presently avoid taxes aggressively. Otherwise, it is a small re-arranging of deck chairs for most folks in the middle, paid for on $1.5T line of credit, with a wan hope that this doesn't crash the housing sector.

Fixed it for you.

Want to encourage kids?
Want to encourage marriage?
Want to encourage hedge-fund managing?
Want to encourage renewable energy?
....

Complain about it or not, this "plan" only changes things a small amount.

While I might have exaggerated on the marginal impact and left out the property tax part of the analysis, I think you went the other way. Most of the people who have that high a property tax and in the tax range you are talking about tend to be in the AMT. I've never seen property values change because someone fell in the AMT and they lost their deduction.

Also, what percentage of people where real estate values are high relative to income have adjustable rate loans at less than 4%. Not sure how many are paying 4% for a 30 year mortgage? Haven't shopped mortgages in a long time.

Like I said before, rising interest rates will do more damage to housing prices than a change in the deduction amount.

You guys crack me up. Y'all sound like a bunch of rich white folks. ;-)

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"Politics is just show business for ugly people."

Now that's funny. We probably both don't have a mortgage, lived in the same house for 20 years, 0% bracket because we hold $5.0 million in muni bonds and all our equities are in retirement accounts that we haven't tapped yet. Typical white rich guys. Funny.

My kids already bleed me dry and now they are getting rid of personal exemptions so looks like my taxes are going up. This tax cut doesn't favor the middle class with large families at all.

I thought there was going to be some sort of family tax credit for earners making up to $230,000?

One thing this plan's going to do -- at least on the surface -- is whack folks in high-tax states (California, Massachusetts, New York, especially) pretty hard, as well as those with severe medical expenses.

Not saying he or the Republicans would stoop to such a thing (because he's a completely honorable guy, believe me ;-) but it almost looks like the Orange-Haired Wonder and his confederates in the House decided to throw the so-called high-tax "blue states" right under the 18-wheeled, double-decker super-turbocharged bus, maybe as payback for last year's election?

Hey, it's a thought. ;-)

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"Politics is just show business for ugly people."

Same thing they tried to do with the last iteration of their health care reform. Is anyone surprised?

Trumps plan is 1000 times better then the monstrosity of a tax code we have today

I'm a tax accountant in Canada and our Income Tax Act is worse than the U.S Tax Code but if you think Trump's cursory plan is going to make it smaller and less complex, you haven't been paying attention for the last 100 years or so. Every election in every country in the world has the same BS with politicians cryiing for simplicity, a return to common sense, less regulations and a system that is fair for everyone.

And in every country on earth, the tax systems get more complex, harder to understand and weigh far more in favor of the wealthy. It's just the way things go. Trumps beautiful tax plan that is being rushed through so they can get at least something passed, isn't going to be any different.

Of course not, folks don't "fall into the AMT", their overall income rises, such that they may have to pay it. BTW, the cost of the AMT for my household is ~$120/month. It is a mere fraction of the amounts that we are discussing (YMMV).


... which is why rates have moved so slowly, right? The point is not whether to change the laws, it is to do so in a way that isn't unnecessarily disruptive and recessionary.

This plan wouldn't impact my taxes much at all. It would have a huge impact on housing prices moving forward in the short and medium term, and that should scare folks who care about prosaic things like GDP and growth and the deficit.

Watch who you are calling white, Amigo.

I haven't seen a family tax credit. There are six exemptions in my household so this adds up quick at $4050.

Your getting confused...the tax code and what we spend are two different issues. We have a deficit because of entitlements that are built on every increasing demographics which stopped working 20 years ago and EVERYONE knew we were running up against a BRICK FUCKING WALL. And everytime someone suggested we reform these, they were crucified. They have to change if you want to balance the budget.

AND/OR you have to grow the economy which is one of the goals of this tax reform plan.

Don't buy into the lie.

I agree on the "move slowly" because after almost 10 years if the Fed upsets the apple cart and raises rates too fast, overvalued assets from real estate, stocks, bonds, etc are going to make a small change in CA housing prices seem like a blip.

I still believe your tax example impacts a small percentage of people who have shoe horned into a house too big for their income. First, the 4% is not an interest only loan and a portion is principle, lowering your example. Second, I see lots of CA returns and nobody I know is paying 2% of their home value in property taxes. For example, Atherton home pays $60,000 in property taxes and its well over $10.0 million in value.

Are you saying you believe this tax plan, if passed in its present form, would be revenue neutral due to increased GDP growth?

To me that's the biggest lie amid all the BS surrounding it.

I am talking about the principle's of the plan, but your right, after everyone whines (States with enormous state income taxes and high property taxes and then the Real estate lobbyists who want their business subsidized, etc, etc) then they keep a little here and a little there and before you know it, its not so simple anymore.

But as the outline of the plan was shared and even with changes, its better than our current tax structure.


Lets figure the right tax rate by income group and be done with it.

I'm not confused at all. It's the Republicans who keep going on about "but how are we going to pay for {whatever}". And then next thing you know they have a tax reform which *reduces the revenues going to the treasury* that you just mentioned and does not cover that reduction with corresponding program cuts. Instead they want to go with more deficit spending like they always do. And believe me, the only reason that 1.5 trillion number isn't higher is because of the reconciliation rules needed to get a 50 vote threshold in the Senate.

Now if you want to get into WHICH programs / entitlements to cut, sure, that's great. Too bad they aren't.

As for growing the economy, that's great too, but tax cuts for corporations and the wealthy never have this effect as much as people would like them to. Point to me one time in oh, the last 100 years, where tax cuts boosted the economy enough to go break-even without deficit spending or program cuts. Good luck. Trickle down economics is a farce that people need to stop falling for.

Okay, gringo. ;-)

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"Politics is just show business for ugly people."

Well said. And what's your platform for corps.?

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"The great pleasure in life is doing what people say you cannot do."

Fair Tax, baby. :-)

Replaces all existing income taxes as well as payroll taxes with a single consumption tax. Pay a 30% tax on purchases of all new goods and services, excluding certain necessities, due to a "prebate." That's like a refund and it's offered at the beginning of each month so that certain purchases are essentially tax free.

1. Eliminates taxes on payroll and income.

2. Taxpayers get to keep their entire paycheck.

3. Taxpayers are taxed on consumption of goods and services.

4. ALL taxpayers are subject to the tax.

5. Retailers would collect and remit taxes to the Treasury.

6. IRS is eliminated.

I can live with that. LOL!

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"Politics is just show business for ugly people."