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October 05, 2008

Promote savings

I’ve been in the mortgage business in since 1978, so the following will astound my friends. It will also enrage two million real estate agents. They’ll adjust.

  1. Congress should repeal the income tax deduction for mortgage interest. Phase it out over three years to wean the housing industry away from this subsidy. People don’t borrow money to buy houses for the interest deduction, anyway.
  2. Congress should immediately eliminate the income tax on FDIC-insured savings accounts. This isn’t a big incentive but it sends a good message. Everyone should save a little more and spend a little less. For the long-term health of our economy, we need more savers.

We tell our kids they should save some of their paycheck for a rainy day. The grownups (at home and in Washington, D.C.) spend and borrow and spend some more. What kind of example is that?

The credit markets are tight because the lenders no longer believe our promises to repay. The rapidly rising number of defaulted loans and credit cards confirms their suspicion.

It is time to move from a spending society to a savings society — starting now. Call your representatives.

Steven B. Chase
Overland Park

Comments

Rogue

No Steve the answer is to get the government out of your business. You should be able to underwrite your own risks, not pass on everything because it is "government gurarnteed."

T. Hanson

"People don’t borrow money to buy houses for the interest deduction, anyway."

Speak for yourself.
I bought a house because it was better than throwing money away in an apartment. Having tax deductable interest helps offset the expenses of home ownership.

In fact since I bought my house I have bought quite a bit of expensive things I would have not done in an apartment (i.e. HVAC system, tree removal, fence, garage door openers, and almost all new appliances.)

Also what are you trying to accomplish by doing this? Most people that defaulted on those loans may not even pay taxes or even paid their mortgage therefore would not have paid into the interest. Therefore would have not been able to claim it on tax returns.

I will call my reps, but if you sound like an idiot you deserve to be passed to voicemail.

 
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