And? Why is that artificial increase a problem. Every law on the books is an artificial act.
I don't see many people wringing their hands over the mortgage interest deduction, another of those artificial changes to the economy.
Laws do have to take into account things like physics and economics. The latter is the study of scarce resources that have alternative uses and specifically addresses things like the cost of labor and the affect of artificially manipulating it.
From a practical standpoint, it feels like for a time that capitalism seeking local-optima was perfectly ok in that the efficiencies gained were lifting society all around - and it still seems that way in the world at large.
However, in more mature economies it seems like a different discussion needs to be made because the business actions seem to be divergent from the interests of society - optimizing on the same financial metrics seems merely a shell game of keeping a larger share of the production -- to the point that there is little to no growth in value to most of society.
Economics is not even remotely similar to physics in any respect.
Whether or not you agree with that answer, shouldn't that answer be the part you respond to, instead of deliberately misrepresenting what the poster you were responding to was saying?
That doesn't mean the work (the individual is capable of) is valuable enough to justify the position, in the locality.
A basic income provides the opportunity for people to find healthy, fulfilling things that do not pay money.
I'm absolutely OK with some types of paid work going away entirely. Our society leans too heavily on the ability to pay someone else to do something at a rate that is usually more than we would like to pay and less than we would like to make. It is essentially a way of saying that we are more important than other people and that's lame.
Food delivery, for instance, is convenient, I take advantage of it, but I tip far more heavily than most people, and I could live without it. Some people who deliver for a pay service today may end up, with basic income, volunteering for meals on wheels. That's a better allocation of society's potential energy than to bring me a burrito when I don't feel like leaving the house.
These are all tradeoffs that we decide to make.
The difference in popular discourse is threefold: the mortgage interest deduction is less of a blue/red team tribal marker; it isn't as morally charged an issue (the arguments against it are more economic in nature than moralistic); a disproportionate number of the people who would be complaining about it are homeowners themselves and therefore heavily incentivized to keep it around, regardless of its economic effect.
I actually prefer zero deductions for anything, for all people and entities. Here's the rate: pay it. If you're below the line we draw, you don't have to pay.
What if your business worked in such a way that a single employee wouldn't even produce $15 of revenue in an hour? You can't lose money on every sale and make up for it in volume.
The artificial increase is a problem because it goes against supply and demand, which is a natural law of economics.
The difference between renting and owning is income, savings rate, and lifestyle. If you can't afford to buy, you either don't make enough or don't save enough. It's the down payment that separates a lot of renters and buyers. If you are arguing homes are expensive, I'd argue that $15 minimum wage isn't helping.
Mortgage interest deductions may be bad policy, but it doesn't "tax renting." That's asinine.
That those other buyers are willing to pay a higher price affects the comparable sales, the appraisal, the "Zestimate [haha]", the willingness of the seller to select your offer, etc.
Then, assuming you did have a mortgage and qualified for the deduction (most people with one home do), you paid less (net) for the loan than you would have otherwise.
A quick google search doesn't produce results that suggest that removing the deduction would reduce housing prices to the point that people in this thread are saying. Here is just one example that states it would reduce prices by 0.3%: http://www.taxpolicycenter.org/taxvox/what-changes-mortgage-...
Reading two sentences further from that same article you linked: "completely eliminating the mortgage interest and property tax deduction—a drastic change that probably would only happen if accompanied by a new tax preference for housing—would cause housing prices to fall by an average of 11.8 percent in the 23 cities studied. Estimated price declines would range from 10.3 percent in Seattle to 13.8 percent in Milwaukee."
I'm not using the tax deduction as a "strategy for paying my mortgage". I did figure the savings from the tax deduction in modeling my budget, the effective cost of housing, all of which influenced my bid(s).
I'll try a different tactic for the explanation: What effect do you think the mortgage deduction has? Does it increase your disposable income?
Also, if a self-employed business traveler knows one can deduct the cost of hotel, flight, and meals (partially) spent during a business trip from income for calculating income tax, does that affect how much that traveller is willing to pay versus similar categories while not traveling for work?
If you are suggesting that mortgage interest rate deductions are fueling another housing bubble, then we are about to witness another amazing sub-prime real-estate crash.
Considering I just purchased a new home under the new underwriting rules / regulations, I can assure you that this marginal deduction is not qualifying a huge number of home buyers to the point it makes a difference on the price in comparison to the rest of the home market environment.
I am merely pointing out that a subsidy that applies to everyone in a market naturally drives up the price by a similar amount. It wouldn't fuel runaway growth, but neither does it help 'affordability'.
I suppose that means I don't trust you?
It's very, very, very, very simple. You could afford $500k without the interest deduction. Let's say the deduction helps you afford a monthly payment on a $550k mortgage. Now you can afford $550k. The same is true of all other potential buyers of the same property. Guess what, a $500k property just became a $550k property.
I didn't ask you to trust me, I didn't say anything about "more recent trends," I didn't cite it as a cause of the bubble, I didn't mention dinosaurs.
I merely said I don't see how the mortgage interest tax deduction actually helps anybody, because it causes prices to rise accordingly.
You would prefer $7/hr instead of $3/hr, but you would prefer $3/hr instead of $0/hr.
I would prefer that my employer met the minimum (non-US) legal requirements for salaried employees, but the literal threats of violence and permanent unemployment should I complain to the government, have kept me on up to $5/hour less than minimum wage - without meal breaks, public holidays, and weekends - all in breach of the law.
Unethical law-breaking employers abound in my country, and many of the wealthiest have political contacts that mean they can get away with a lot. Having a minimum wage gives them something to dance around but if that disappeared things would get a lot worse: I would most likely find myself working for something nearer to $5 an hour.
This (small) city alone has a median wage that sits about 25% under minimum wage on paper, but if you started really looking into it you'd find that the paid hours don't match the hours worked.
No matter what your theories about minimum wage and the market say, you'll find that pragmatic side of having a minimum wage has a major positive impact on employees by providing some restriction to what employers can get away with.
If your situation is so extreme as to involve threats of violence, then it is non-negotiable that you need to remove yourself from it, even if it means facing grave and dire financial hardship. The psychological damage of an employer threatening you is worse than the damage of financial ruin or uncertainty.
Also, on one hand you are claiming that minimum wage laws are beneficial, but then you're also saying that the political favoritism of your country allows those laws to be basically ignored (as in your case) with no consequence.
To me, your comment is much more about ensuring legitimacy of government and enforcement of laws overall, and is very much unrelated to minimum wage at this point. Only after the enforcement of those laws is legitimized can you then begin to ask questions about what is the actual human effect of the law.
Finally, I'd like to point out that I already said this type of reasoning (the argument that minimum wage denies opportunity to those who would agree to work for less) is overstated. I understand the economic rationale in the ideal case, and I was explaining that case just to clarify for the OP that I commented on ... not positing it as a robust defense or anything.
Here's my other comment if interested: < https://news.ycombinator.com/item?id=11424743 >.
Conditional welfare perpetuates it also because people are afraid to take a job and then lose it.
I'm ambivalent about a minimum wage. I think the arguments about the imbalance in negotiating power have some merits, but the GP answered your question about why it is a problem with their next sentence, it likely makes some productive tasks uneconomic.
I think it's important to try to characterize the actual economic impact of a minimum wage though, just pointing to the expected negative marginal effect isn't a very useful argument.
I feel like a lot of the people who think economics is all terrible nonsense start off with macroeconomics (and maybe never get to microeconomics because of it).
Same with the availability of cheap loans and grants for colleges - it only really serves to increase the price of an education.
>it's no longer worth it to an employer to hire a low-output employee