President Obama wants to raise taxes on the wealthy. President Obama wants to fix the housing problem since growing jobs depends on that. President Obama does not cross-check any of his ideas.
Here’s proof of that. When he made his big speech that Israel needed to give back land just prior to Benjamin Netanyahu’s visit to America, he didn’t look down the road and realize that he and all Democrats would lose much of the Jewish vote the party had enjoyed since Roosevelt took on the Nazi’s.
Part of his plan to rape the rich is to adjust the residential real estate interest tax deduction for those making over $200K a year. Or, couples make over $250K.
Let’s see what the impact of that might be on the housing market. Biff and Buffy own a house. They run a business and are raising a family. The house is now worth less than they paid for it 5 years ago. The business is suffering since the recession. Their mortgage is $400K for a house that was once worth $500K and is now worth $350K. They can’t get it refinanced since it is worth less than the mortgage. Their interest rate is 6%. They pay $10,000 a year in taxes on the house. While the house has lost value, the taxes have gone up, since the community is in financial trouble. They deduct $34,000 a year in taxes and interest on the house. Those deductions are the only reason to keep the house.
When Obama reduces that deduction by whatever amount King Obama decides Biff and Buffy must pay him to hit their fair share under the Buffet plan, they will have a decision to make. He plans to tax them in other ways as well. So this won’t be the only hit to their cash flow. He will reduce their deductions to the church and other charities. He may raise their tax rate.
One option is to just walk away from the house after the average 42 months it now takes under the extended Obama foreclosure period. Pay nothing in mortgage payments or taxes for that period.Bank that $150K. Let Obama have the house. The hit to the credit rating won’t affect their business. They can pay cash for goods they purchase. They will get back the $80K they put down on the house, plus another $70K in free rent for 42 months.
How many Biff’s and Buffy’s are there in this country? I know a few. You know a few. But, Obama doesn’t know any. He won’t even consider them on this big plan to tax the rich and get their fair share. In this case if they walk away from their house, he gets more in net taxes since they have no deductions. The city gets another vacant house. The city got no taxes for four years. The bank gets another foreclosure in 4 years while Biff and Buffy live there and pay neither their mortgage nor their real estate taxes. Another bank has another foreclosure to handle. Freddie or Fannie has another bad loan they insured. So, the only one really stiffed when all the dust settles is Obama. He did get a little more new tax revenue but he got another hole in his budget he has to fill to cover the Freddie or Fannie loss on this whole mess.
Unintended consequences. Guess Biff and Buffy weren’t millionaires or billionaires like Warren Buffet after all. By the way, all you millionaires and billionaires who own Buffet’s Berkshire-Hathaway stock, what do you think of the Buffet rule? The guy who sold you the stock wants you to pay higher taxes on the dividends from the stock. Sounds a lot like AARP and ObamaCare all over again.
