Submitted by smurfyjenkins t3_y9veul in science
Reply to comment by HighKingForthwind in Many countries have a "hidden welfare state" for incumbent homeowners, as governments subsidize homeowners through the tax system. The homeownership welfare state is strongest in the US and other Anglophone countries, but weakest in the Scandinavian countries. by smurfyjenkins
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.
Wait until you figure out what we do for "family farmers."
More context on those poor and struggling "family farmers".
https://www.heritage.org/agriculture/report/what-you-should-know-about-who-receives-farm-subsidies
The Purdue family, the Tyson family, the Jimmy Dean family...
They are just barely gettin' by folks.
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tell me more
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.
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.
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.
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.
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> 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+:
Now, even an expensive house like that might get 1/10th the benefit from itemizing:
The tax changes in 2018 more-or-less killed the mortgage interest deduction in the USA. (Which isn't necessarily a bad thing.)
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.
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.
who lets them borrow and how?
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if it's that easy you go do it
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.
i was under the impression you get smashed with taxes though on anything after your first home
The government incentivizes home ownership, making it more affordable to buy and hold onto a home.
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>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.
https://www.midcityredevelopment.org/blog/increasing-homeownership-decreases-violent-crime
Does homeownership reduce crime? A radical housing reform in Britain
Closing the Gaps: Building Black Wealth through Homeownership
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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.
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
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