Cohousing-L Mailing List: Re: Class and cohousing

[David G Adams (dadams]

David Mandel says:

> Take even the vaunted mortgage interest tax deduction that so many people
> describe as a populist measure that enables home ownership for the masses. 
> really another form of redistribution of wealth -- from the poor to the ric
> The obvious part is that anyone who doesn't own a home gets no benefit from
> The less obvious is that the more expensive your home is, the more interest
> pay on your loan and the more you benefit. 

I've had a number of conversations with self-identified Libertarians who want 
to radically revamp the tax system, but who consider the mortgage interest 
deduction sacred and inviolate. They seem to feel that it's okay for Uncle 
Sam to meddle in the real estate market.  It's pretty easy to run circles 
around them logically...

David (I'm certainly not accusing David of being a Libertarian) Makes valid 
arguments, but doesn't consider the impact this tax policy has on the price 
of homes.  The mortgage interest deduction encourages folks to borrow at the 
limit of their ability (or sadly, past), thus making more dollars "available" 
to buy housing, thus making the going rate for housing significantly more 
expensive.  Think about it.  When you go to buy a house, you figure out what 
you can afford based on calculations which include the interest deduction as 
a core assumption.

Everyone, especially renters, end up paying more.  Everyone pays mmore 
interest or more rent, and the money ends up in the pockets of Ginny Mae 
bondholders.  If Uncle Sam ever has the guts to remove this handout (which 
everyone thinks goes to the middle class), the net effect will be to transfer 
capital from new homeowners (who get caught holding properties that will drop 
in value) to the priviledged and powerful (whose properties rose in value 
during the era of the interest deduction).  That's part of the reason I'm 
deathly afraid of buying any real estate in the 90's.  This tax deduction has 
done more to help real estate empires and banks (both of whom benefit from 
overpriced, overleveraged real estate) than it has done to help _any_ 
homeowners, even the wealthier ones.

I have no answers.  What's the responsible thing for a communitarian 
socialist cohouser to do?

Dave Adams


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  |\/\/\/|  David G. Adams              |  Homebrewer
  |____  |  U4 Consulting               |  Cohousing Wannabe
 OO    ) |  Arlington, MA               | "I used to be indesicive,
 (       |  dadams [at] world.std.com        |  but now I'm not so sure"
  |      | http://world.std.com/~dadams |    -- Matt Johnson
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