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Andrew Cuomo should listen to his father

A budget is a moral document. And his excuses are bullshit. He’s making political choices to benefit himself. Yes, I’m sure the Masters of the Universe will all move to Hong Kong if they’re taxed.


Cut it

It’s not often that I agree with the IMF (in fact, this might be the first time), but yes, the mortgage interest deduction is a regressive tax, and it should be phased out. This is also a good way of checking housing inflation, and if we’d cut it years ago, we wouldn’t have had such a huge housing bubble. Should it happen right this minute, when the housing market is still so fragile? No. But it should happen, and we should plan for it now:

The U.S. should consider capping or cutting the popular tax deduction for mortgage interest as it prepares to debate what should replace mortgage giants Fannie Mae and Freddie Mac, the International Monetary Fund said Wednesday.

The IMF, in an analysis of housing finance systems around the world, said an Obama administration paper released earlier this year makes progress toward needed changes in the U.S. mortgage system. But the report criticized the U.S. for not tackling the popular tax deduction for mortgage interest, which the report termed “expensive and regressive.”

The U.S. government’s support of the housing market “has been pervasive but has not yielded many of the expected benefits to prospective or existing homeowners,” the report said. “It is clear that an overhaul is needed.”

“As a first step, we would very much recommend that the U.S. would at least cap the mortgage interest deductability,” said Ann-Margret Westin, an IMF senior economist and one of the authors of the housing report. She approved of the recommendation by the U.S. fiscal commission to halve the mortgage limit for deductions and to let it apply only to private residences, but the IMF said any such move would have to be undertaken over time.

Why is this a good idea?

It’s a $131 billion break for the wealthy. That’s the White House’s official estimate of the 2012 revenue cost of the mortgage interest deduction. A study that looked at proposals to reform the mortgage deduction put out by the Tax Policy Center at the Urban Institute points out that sum is “much more than the total of all outlays by the Department of Housing and Urban Development ($48 billion).” And studies show that most of the benefit goes to taxpayers in the top 20 percent of the income distribution ladder. Significantly, you need to itemize your deductions to claim the break, a step that only about one-third of Americans take. According to the Tax Foundation, for the 2008 tax year, just 26.8 percent of tax returns claimed the mortgage interest deduction. Among the returns that claimed the deduction, the average amount was $12,221.

The Catfood Commission proposal exempts houses under $500,000, in case you were hyperventilating. In most places, for all practical purposes, this will only affect the well-to-do. And in areas that saw extreme bubbles, we can use tax credits to protect those homeowners.

All for the want of a horseshoe nail

As Ron, the reader who sent me this asked, is it really cheaper not to pay for infrastructure? I wonder what it would have cost to fix the road. Maybe this young mom would be alive now:

(AP) MONTGOMERY, Ala. – The state of Alabama has paid $1 million to relatives of a South Carolina mother of two who was killed by a chunk of concrete from a pothole that flew through the windshield of a vehicle on a bumpy, crumbling section of Interstate 20 almost a year ago, officials said Thursday.

The family was paid even though they had never sued the state.

Two state officials confirmed to The Associated Press that the money was paid to compensate for the death of Jo Maureen Fisher in the freak accident, which occurred as the 33-year-old woman was traveling through the state with her husband and two young children on their way home to Goose Creek, S.C. The officials spoke on condition of anonymity because they were not authorized to speak publicly about the settlement.

Following a review, the state’s Division of Risk Management made the payment for the Alabama Department of Transportation in a negotiated settlement with the family without any lawsuit or administrative claim being filed. State law limits such payments to a maximum of $1 million.

The state attorney general can approve such settlements when it’s obvious a lawsuit is inevitable and there’s a “serious risk” of the state losing, one of the officials told AP.

They’re fixing the road now. Better late than never, I guess.

Divorce song

It’s harder to be friends than lovers, and you shouldn’t try to mix the two
‘Cause if you do it and you’re still unhappy, then you know that the problem is you.

Liz Phair:

The married men

Phoebe Snow and Linda Ronstadt:

This time I know it’s for real

Donna Summer:

He’s a runner

Laura Nyro:

Why try to change me now

Fiona Apple:

Until you come back to me

How about a little Aretha?

No daylight

Between Boehner and the tanning bed!

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