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SportySaturn t1_it84f6m wrote

Read the other comments. Might not explain why, but you can see that it does.

EDIT: Hah. Actually, the resentful comments have been deleted after I posted. It's because the framing of the paper casts helping and incentivizing people to become homeowners as welfare making it sound like a wealth giveaway to wealthy people.


pmmbok t1_it86sl9 wrote

The government subsidizes, through the tax deduction for interest payment, the provision of shelter for those who can afford to buy a home. It does NOT subsidize shelter for renters. My view. Do both, or do neither.


HarriettJohnson t1_it876wr wrote

Wait until you figure out what we do for "family farmers."


marigolds6 t1_it8m76d wrote

The catch is that it is much more difficult now to take the mortgage interest deduction and lower your taxes, thanks to the changes in the standard deduction combined with the principal caps on the mortgage interest deduction itself. It's down to under 18% of home owners now who can actually take the deduction and lower their taxes.

The real subsidy, which is what the paper is referring to, is the tax exemption for imputed rent. When you pay rent, your landlord pays income tax on that rent you pay. A homeowner pays no tax on the imputed rental income of the house, which they functionally pay to themselves by owning the home.


Smooth_Imagination t1_it8swy8 wrote

Ah, thanks.

I don't think renters would find it so hard to get their own home if there were less landlords so it would be more the solution to tax landlords to pay to construct affordable housing for local workers, than to give the landlord a tax break on their owning extra houses. I don't see the argument that it would be 'fairer' to anyone to tax homeowners on a hypothetical income if they were renting.


Drisku11 t1_it9wzhp wrote

Imputed income is a nonsense concept that seeks to destroy natural incentives to invest in tangible, concrete ways to make one's life sustainable and affordable. It's morally the same as taxing you for raising your own children instead of sending them to daycare, or plunging your toilet instead of calling a plumber. It's essentially a tax on agency and non-participation in ultra-consumerism.


pmmbok t1_it8qjsn wrote

You inspired me to read more of the article. My unschooled opinion is that taxing imputed rent takes away all, or most of the motivation for owning. I guess that is the point. The same logic can be applied to cars. I own a home because I can't get what I have by renting. And it's a cost of housing stabilization system. I hate home ownership. It's a pain. I suppose, if I paid taxes on imputed rent, I would be able to deduct all of my repairs.

I am glad to hear that mortgage susidies have declined.


grundar t1_it9n2la wrote

> When you pay rent, your landlord pays income tax on that rent you pay. A homeowner pays no tax on the imputed rental income of the house

Sure, but the homeowner also does not get to deduct operating expenses or depreciation in the way a landlord does.

Looking only at imputed rent as untaxed income without looking at building maintenance as offsetting expenses is fundamentally misrepresenting the comparison between homeowners and landlord+renter pairs.

> It's down to under 18% of home owners now who can actually take the deduction and lower their taxes.

Yup, and even that 18% are seeing a much smaller benefit than before.

Previously, an expensive ($1.5M) house could increase overall deductions by $40k+:

    • $40k/yr for mortgage interest
    • $15k/yr for real estate tax
    • $13k for standard deduction
      Net: +$42k

Now, even an expensive house like that might get 1/10th the benefit from itemizing:

    • $25k/yr for mortgage interest (capped)
    • $5k for real estate tax ($5k space already filled by state income tax)
    • $26k for standard deduction
      Net: +$4k

The tax changes in 2018 more-or-less killed the mortgage interest deduction in the USA. (Which isn't necessarily a bad thing.)


Smooth_Imagination t1_it8sba8 wrote

Do you mean that the renters should get the interest component of their rent, assuming the landlord is mortgaged on that property, deducted from their tax?

I kind of think landlords should not be able to borrow just for buy to let and maybe their should be rent controls. I could be confused about what they mean here, especially with imputed rent.


pmmbok t1_it9pm3w wrote

I don't have a plan as to what the renters subsidy be. It would be tricky.

As far as imputed rent goes, it's hard for me to imagine.


Massey89 t1_itc9zt4 wrote

who lets them borrow and how?


if it's that easy you go do it


Smooth_Imagination t1_itjdt2n wrote

I think they borrow to buy other properties using other ones as collateral.

But there are individual home owners who have bought a second home to rent out so that the renter essentially is paying off the mortgage.


Massey89 t1_itll6vb wrote

i was under the impression you get smashed with taxes though on anything after your first home


SportySaturn t1_it963i5 wrote

The government incentivizes home ownership, making it more affordable to buy and hold onto a home.


>It does NOT subsidize shelter for renters. My view. Do both, or do neither.

The point isn't subsidizing shelter, it's incentivizing and enabling home ownership. That's a good thing for everyone, in some respects even the people that don't own experience benefit.

Does homeownership reduce crime? A radical housing reform in Britain

Closing the Gaps: Building Black Wealth through Homeownership


Whether non-owners should get their shelter subsidized is a worthy and important discussion (cliff notes: my answer is yes and there are lots of palatable options to me including UBI). But it's not the same discussion and lumping it in with home ownership is missing the important differences between mere shelter and ownership in people's lives.


pmmbok t1_it9p6kb wrote

There are important differences beyond just the money.

Some people buy a home cheaply as a labor of love. They see a transformed environment largely through their sweat, and in three years, their home is worth 3 times what they Paid for it. Well, their imputed rent goes up. I guess they would get to write off the cost of materials. And the labor. What rate will they get?

I am not economist enough to say whether this makes sense intellectually. It's a practical nonstarter


mechanab t1_it8n9pq wrote

Because when the word “welfare” is used in the US, people associate that with transfer payments. Tax incentives are not considered “welfare” by most people because the government is not sending you a payment, you are just keeping more of your own money.


Smooth_Imagination t1_it9w7r3 wrote

Because calling something welfare, or subsidy, is a politically loaded thing, claiming that one benefits at anothers expense.

By way of example, if I point out that children's school books are subsidised, when I am referring to them being VAT free with that word, subsidy, that's an odd way to frame it. As if they are getting help they don't deserve, especially as no rational person can define the absence of tax as subsidy, which has always been referred to simply as a tax break, for example.

Whereas in this case it seems pretty clear that renters need help, not that home owners don't.

There's no direct connection to home owners getting help and renters not getting it. The shortfall, if one wants to consider it that, comes from the general pot. You could just as easily, and more appropriately, point out legal tax avoidance loopholes where people aren't paying any or very little taxes through off-shore tax havens and various ways of hiding things in trusts, or the tax-free foundations of Billionaires, which have everything as much to do with the tax burden on the renters to make up the shortfall, if not more, because that is the class accumulating properties pushing up demand, which feeds onto the house sale price, which loops back around to the average rents that landlords can charge even on a property that long ago paid for its purchase.


ffa500gato t1_it8r9bf wrote

So all economic incentives are welfare?

This is a silly stretch of the definition to make it look bad.

That will cause resentment.


JuliaHelexalim t1_itayzl8 wrote

Yes all economic incentives are welfare. Its not the fault of the rest of the world that america hates poor people.