Money Minute: Yet Another Data Breach; Popular Tax Deduction Threatened?

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Another warning for millions of consumers about a possible breach of their credit card information.

Officials in California are trying to determine whether credit card data were stolen from the state's Department of Motor Vehicle computers. There are 24 million licensed drivers in the state. It's not certain yet how many files were accessed, if any, and what information may have been stolen.

American homeowners claim about $70 billion a year in federal tax break for interest paid on home mortgages. But momentum is picking up to eliminate or reduce that tax deduction. And now, a new report from a conservative research group finds that the tax benefit primarily helps wealthier people -- mainly by encouraging them to buy large homes. At the same time, the study says the mortgage deduction doesn't significantly encourage home buying by people with incomes of less than $100,000.
Both President Obama and a leading House Republican have proposed plans to cap the mortgage interest deduction.

Good news for people who cheat on their taxes. They're less likely to be caught. The IRS audited five percent fewer tax returns in 2013 than it did the year before. That's because the agency's budget was slashed by $1 billion, and the number of employees fell by about 10,000. However, audits increased of taxpayers with incomes of more than $1 million.

Here on Wall Street last week, the Dow Jones industrial average (^DJI) and the Standard & Poor's 500 index (^GPSC) rose about 1.5 percent, while the Nasdaq composite (^IXIC) gained 0.7 percent.

Get ready for a crush of initial public offerings, including King Digital Entertainment, maker of the hugely popular Candy Crush game. In all, 14 companies are lined up to go public this week. Some bears say that's a sign the market is too frothy and set for a significant pullback.

-Produced by Drew Trachtenberg.


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33 Comments

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moretrorun

The mortgage interest deduction does, or at least did encourage people earning under 100K to buy too large of a home. Recent foreclosures are evidence of that. Besides, buying a home instead of renting is a personal decision and to be considered as commuting to work, parochial school, and cosmetic surgery by the tax code.
I am in favor of eliminating the mortgage interest deduction from the tax code. It doesn't belong along with so many other deductions and credits.

March 24 2014 at 2:42 PM Report abuse rate up rate down Reply
theycallmeroy3

The biggest hike in housing prices are for homes over 750. Up 13%. While homes in the 250 range remain flat.

March 24 2014 at 11:38 AM Report abuse rate up rate down Reply
theycallmeroy3

Canada, Australia and the UK don't have mortgage deduction, and they still buy homes and pay lower amount of their income for housing.

March 24 2014 at 11:32 AM Report abuse rate up rate down Reply
1 reply to theycallmeroy3's comment
tru_liberal

Paying a lower portion of their income for housing is the key here.

This is the de facto evidence that goon interferences in markets drive up prices.

Economics is ALL about the allocation of SCARCE resources. And price is the markets mechanism for ensuring equilibrium between supply and demand.

In combination, what this means is that subsidizing the purchase of homes stimulates artificial demand beyond that which naturally exists when citizens freely determine how much of their personal resources should be dedicated to housing. And this artificial demand is then reflected in price.

The goons have done this to housing, education, and health care. Everyone suffers, save the goons who benefit from peddling their ill-begotten increase in power and influence

March 24 2014 at 2:27 PM Report abuse +1 rate up rate down Reply
J Grace

So the idea is to cut the opportunity for larger homes being bought by reducing the amount of interest a buyer can claim on their tax deductions? And the result would then be fewer larger homes being built, which would result in lowering the revenues for homebuilders, which would result in shorter terms for home building, which would result in fewer hours required for a home to be built, which would then require fewer hours for construction people building those houses, and fewer dollars and fewer then fewer workers needed to complete those houses. Yep, that's how the government thinks. Just can't get past their nose. Let's get more tax money so we can continue to pay unemployment benefits and put laws into action that will continue to diminish workers hours and thus their income. Maybe they haven't learned that two wrongs still don't make a right. Just thinking.

March 24 2014 at 11:24 AM Report abuse +2 rate up rate down Reply
2 replies to J Grace's comment
tru_liberal

Don't forget more resources that are no longer misdirected toward the overconsumption of housing being available to redirect toward consumption of other goods and services, creating jobs in countless other industries.

March 24 2014 at 11:38 AM Report abuse rate up rate down Reply
sam54ct

Pay attention, it was the far right leaning "R" think tank that came up with the facts, the deduction does nothing to stimulate housing purchases by those earning under 100K yearly. Those it benefits the most are the upper 5% with homes over $750K. These details are in today's Wall Street Journal. The motive, we need to find a better way to get lower income people into home. They are the majority, not the top 5% where not enough people make purchases to drive the construction industry.

March 24 2014 at 2:09 PM Report abuse -2 rate up rate down Reply
1 reply to sam54ct's comment
tru_liberal

There's a very simple way to get lower income people into a home.

You can just purchase homes for low income people.

Except, of course, you're too greedy.

March 24 2014 at 2:18 PM Report abuse +1 rate up rate down
crazy ray

Yeah, cap the deduction and steal even more money from tax payers to line the pockets of you and your friends. Time to put that gullotine up on the steps of the capital building.

March 24 2014 at 11:22 AM Report abuse +3 rate up rate down Reply
theycallmeroy3

The mortgage deduction subsidy is progressive. Half of the middle class doesn't even receive it.
And then its at a lower rate on the dollar. The more income one makes and the more their house cost, then they receive around 35 cents on the dollar.
If one makes around 50 grand a year, they get 15 cents on the dollar.
Obama is calling for a cap at 28 cents. Others are calling for a credit.

March 24 2014 at 11:22 AM Report abuse -1 rate up rate down Reply
2 replies to theycallmeroy3's comment
jj2301

It's not a subsidy when you're the one paying the taxes in the first place.

March 24 2014 at 11:31 AM Report abuse +1 rate up rate down Reply
2 replies to jj2301's comment
sam54ct

Go back to school, this time pay attention in Logic 101, because it is a subsidy on the taxes paid for home ownership.

March 24 2014 at 2:10 PM Report abuse -1 rate up rate down
jj2301

Sorry there, USN, but when what I pay in taxes far outstrips any benefit I receive from "da gubbermint", I'm not getting a subsidy.

Go back to school and learn some basic math.

March 26 2014 at 9:41 AM Report abuse rate up rate down
tru_liberal

Total elimination is the right choice.

Of course, coupled with a commensurate reduction in income taxes.

March 24 2014 at 11:39 AM Report abuse rate up rate down Reply
1 reply to tru_liberal's comment
jj2301

Agreed, but I support a distribution across the entire populace, via a VAT or other consumption-based tax. Want to avoid it? Go off the grid, plant your veggies and barter. That gives the ultra-poor the means to avoid taxation altogether, while giving everyone else some skin in the game. It also has the benefit of eliminating loopholes for the wealthy.

March 26 2014 at 9:45 AM Report abuse rate up rate down
tjstieg

Our government is broke. Our gov't also knows that taxpayers won't march on DC or riot so BOHICA folks. The only thing that will get the attention of the gov't is rioting in the streets when the money and then the benefit/entitlements disappear--that will get their attention--not a bunch of carping from taxpayers.

March 24 2014 at 11:14 AM Report abuse +1 rate up rate down Reply
bchrist751

If the home mortgage deduction is lost there are no other deduction to offset your income tax rate... What you will then have is a flat tax without the tax rates being reduced....

I thought that the Democrat party was the party of the Middle Class?

March 24 2014 at 10:43 AM Report abuse rate up rate down Reply
Will Hinkley

Owning our house for 38 years, we paid off our mortgage years ago. Now that we are taking the standard deduction, it doesn't even make sense to donate to charities, but we still do. The standard deduction really does simplify things. I can do our taxes with a piece of scratch paper and a hand calculator

March 24 2014 at 10:38 AM Report abuse +1 rate up rate down Reply
c21marybisig

this administration has a problem with the middle class making ends meet....they tax us more everytime that you turn around......that is war on men and women.....but they keep getting away with it

March 24 2014 at 10:32 AM Report abuse +2 rate up rate down Reply
1 reply to c21marybisig's comment
rostra

Pay attention, according to the Wall Street Journal, and the right wing "R" Institute, the welthiest 5% gain the most from the mortgage deduction, it does little for the poor and middle class.

March 24 2014 at 10:37 AM Report abuse -1 rate up rate down Reply
8 replies to rostra's comment