Fwiw I don't really care what the technical reason is, it's a rhetorical question to add to the ways the credit system holds back the poor.
https://www.telegram.com/story/news/local/worcester/2007/03/...
I guess Reagan's friends at that point wanted more money for Wall Street to gamble.
The deduction on mortgage interest now mostly only affects the well-off because the standard deduction for married filing jointly is so high.
Many people didn't math the interest deduction correctly - only the amount over the standard deduction should be counted, as you'd get the standard deduction anyway. Can vary depending on SALT and charity donations.
For a long time I would read money saving tips articles and a tip that frequently came up in these and in pro real estate pieces was that paying a single extra mortgage payment per year would let you pay your mortgage off 12-15 years early.
When you did the math you realized it was bogus. As near as I can tell, this actually was true for one brief period in the 1980s when mortgage rates were at their zenith. Articles were written about this amazing tip well into the 1990s before the BS was transcribed to the internet and then repeated well into the super low interest rate era where it wasn't even close to being true.
Of course it wasn't even really true in the 1980s either. Once interest rates went down you'd have been wise to refinance at the newer lower rates instead of prepaying the mortgage as it would improve your cash flow and lock in the savings. So in reality, it would have only made sense if interest rates had stayed at that same high rate for the whole length of the mortgage!
Ironic in hindsight; every monetary and fiscal policy as of late seems to be designed to punish savers and reward debtors.
Only about 10% itemize.
https://www.taxpolicycenter.org/briefing-book/what-are-itemi....
I think it's reasonable to say that the folks with the largest mortgages are the ones most likely to itemize mortgage interest, even if they are capped.
Once rich people figured out how to get poor people to be angry about things like higher marginal tax rates for rich people and “death taxes”, we raised taxes on the suckers to benefit the richer people.
AFAIK it's a carve out specifically for houses. Car loan interest isn't deductible despite being "secured".
maybe you rent, but renters DGAF about the local community the way that homeowners do.
home (property) taxes also fund a lot local services, schools, etc. you want prices higher and stable, and not dominated too heavily by mega-corps that will weasel out of paying said taxes.
Renters absolutely care about the local community.
I wish the tax code had more a more positive slant per your point, but lobbying seems to be a bigger driver.
HELOC interest is rarely deductible either. First, you now must be able to itemize deductions, which the recent tax changes have made very unlikely. Less than 12% of tax returns are able to itemize:
https://www.irs.gov/pub/irs-soi/soi-a-inpre-id2303.pdf
In addition, even if you are in that ~11% who can itemize, HELOC interest is only deductible if you use it to work on the same house being used to get the LOC. Any other use is not deductible.
It would be good to understand this better. Doesn't everyone use a credit card? Not just the poor? Who are the poor in this case? Are tax deduction rules anything to do with the credit system?
My comment is to show another way this is perpetrated. People saddled with CC debt could dig themselves out faster if they could write off interest.
Well, some places add on a fee, but yes, agreed, some places apply a blanket charge. I don't see how this relates to the tax deduction.
> Even a cash paying poor person who cannot get a CC is paying for this
This is about a tax deduction. Are you saying someone who can't get a credit card is going to be meaningfully affected by a tax deduction?
> People saddled with CC debt could dig themselves out faster if they could write off interest.
This is true, but also the giant number of people who just chose to get into credit card debt would be paying less tax. If you want to make credit cards into effectively interest-free loans then that might cause issues.
Earlier you asked me to explain how credit cards harm the poor. I showed you, and now you complain that it doesn't pertain to a tax deduction. It's not about a singular thing. The singular thing was one token example of a larger theme that for some reason you refuse to acknowledge.
Same reason Medicare (old people) pays healthcare providers more than Medicaid (young and poor people).