Why does our government insist on giving tax dollars away to fools? As I noted before, it's funny that a foreclosed mortgage creates taxable income, but why should the government take my money by force to give it to people foolish enough to get themselves into that mess?
The House passed this bill that is intended to provide tax relief to the increasing amount of people who have lost their homes due to foreclosure. Debt that is forgiven after a mortgage foreclosure or renegotiation is considered income for tax purposes under current law, creating a tax burden for people who can no longer afford to own a house. The bill excludes the amount of debt forgiven from income if the house was a primary residence and extends the deduction for private mortgage insurance into 2014. Proponents of the bill believe it will help alleviate the national problem with foreclosures.
How about giving a tax break to those of us who make smart financial decisions?
Proverbs 17:16Of what use is money in the hand of a fool, since he has no desire to get wisdom?
Handing out money doesn't do much to actually solve problems, but our society is so crippled by political correctness that we're unwilling to call out fools when we see them and point them towards wisdom.
Why...
Beacuse they want the votes next election.
Well, I'm not sure I agree with the deduction for mortgage insurance. But I don't think the guy who lost is house is the right person to hit for extra tax, as you say is currently the case.
(I got the impression from your previous blog post that you thought that debt-forgiveness as taxable income was silly?)
It's not like bad things never happen to smart people. You don't have to be a fool to loose your house. We're all just one major crisis away from total financial ruin and homelessness.
jez: He isn't be hit for "extra" tax, he's being hit for the same income tax we all pay. I think that rate is too high for everyone, but that doesn't mean I support special exemptions for foolish people.
And yes, anyone can be struck by financial disaster, but the problem this legislation is trying to address is directly due to foolish decisions by borrowers and lenders.
I don't feel much pity for the borrowers. Heck, they're the winners! They got big loans for which they weren't qualified, lived beyond their means for a couple of years, and now they'll end up economically back where they probably should have been in the first place. I hear that banks don't routinely chase after borrowers if the foreclosure won't pay off the loan. And even if some people are stuck with residual debt, they can probably shake it off in bankruptcy.
It's as if somebody loans me a billion dollars, and I live like a billionaire for a couple of years. Then the lender realizes that I can't pay the loan back, so they kick me out of my house, take away my fancy cars, etc. Do I deserve pity for having lost the lifestyle that I never should have had in the first place?
BB: Good analogy. When's someone going to loan me a billion?
Well, that analogy is so outlandish.
The reality is some guy winds up without a place to put his kids to bed.
You concentrate on the prodigal son style of borrower. I don't know what kind of universe you live in where everybody gets exactly what they deserve and no worse, but it's not mine. Careful borrowers can mess up too.