Saturday, August 11, 2007

Tax on 3000 sq.ft. homes?

Did anyone else hear about Rep. John Dingell's (D-Dearborn) brilliant idea to remove the mortgage tax deduction for people who own homes larger than 3,000 square feet?

According to this press release, Dingell plans to introduce such legislation on September 1.

NOVI, Mich., Aug. 8 /PRNewswire/ -- Longtime builders of country estates in Oakland County say U.S. Rep. John Dingell, D-Dearborn, is ill informed and misguided in his call to eliminate mortgage tax deductions on homes larger than 3,000 square feet.

At an August 7th town hall meeting in Ann Arbor, in an effort to combat global warming, Dingell called for a 50-cents-a-gallon tax on gasoline and elimination of mortgage tax deductions on what he called "McMansions." Dingell plans to introduce the measures September 1.


Unfortunately, I couldn't find any reference in Census Bureau data to say how many homes in Lucas County this might impact. In 1973, the average square footage of a new home in the Midwest was 1,615 sq. ft. By 2006, it had increased to 2,290 sq. ft. According to the National Association of Home Builders, the size of the average home has increased over the past 35 years - but is expected to be between 2,300-2,500 by 2015 as baby boomers look for smaller homes, but with different styles.

The Association predicts the elmination of living rooms in favor of larger dens, kitchens and baths...higher ceilings and accessibility are also among the growing trends.

But the backlash against larger homes is not new. According to this article from MSN Real Estate, "more governments have started imposing stricter building limits and even temporarily halted new construction while they try to get a handle on the explosion of these 4,000- to-10,000-square-foot homes, sometimes sneeringly called "garage mahals," "Hummer houses" or "starter castles.""

As someone who lives in a 3,130 sq.ft. home, I can tell you that bigger is not always better. But, we didn't pick the house, built in the 1950's, because of it's size - in fact, the size was a considerable 'con' in our evaluation. We picked it because of it's location and view - sacrificing our desire for a right-sized home for our needs in favor of the location and our expansive view of the Maumee Bay and Lake Erie.

However, what's right for me and my family might not be right for others. I believe that the market demands will make many of these "McMansions" undesireable in the future - and the housing market is certainly quick to respond to market demands. I don't see the need for government to try and influence the market by means of taxation.

Further, I resent the government trying to tax things it believes may contribute to global warming. Aside from the fact that it is still a matter of contention whether or not humans have anything more than a minor influence on the global temperature of the earth (versus the normal heating and cooling cycles of the planet along with the impact of solar cycles and sunspots), such a taxation theory will do little to impact the temperatures while giving the government more money to spend (they certainly don't save it, after all!)

If, however, you are one who believes in such a process, I'd have to ask - isn't it better to offer tax INCENTIVES for doing something else, rather than tax DIS-incentives to try and stop the natural desire people have for more space? (It seems to be working for ethanol production.)

I'm interested in your thoughts on this...

7 comments:

Brian said...

No one need look any further than John Dingell to figure out why Michigan is moving down the toilet faster than any state in the Union. His whole mind set is endemic of the citizens of Michigan.

No one need look any further than John Dingell to figure out why Michigan is moving down the toilet faster than any state in the Union. His whole mind set is endemic of the citizens of Michigan.

Doing a quick mirror check for Ohio, we should ask ourselves if we think the same way. I dear say at times that we holding on to Michigan’s shirt tails.

Hooda Thunkit said...

Maggie,

The congress has no clue on offering incentives, they don't understand them.

They'd much rather do the tried and true, tax and spend, tax and spend.

That's the Socialist mindset and, these days, it infects pretty much everybody in Washington.

You don't expect them to allow us to keep and spend (or invest/save) our own money when there are so many votes and voters that they still need to buy. . .

I grew up thinking that I was the best judge of how to spend/save/invest my money, and giving it to politicians for THEIR priorities certainly wasn't ever high on that list.

Their idea of helping the poor is giving them just enough of my/our money to keep them poor, uneducated and looking for the next check.

They don't really want to stop us building "Mc Mansions," they just want another method to further Socialize/Communize our formerly free country.

rick948 said...

Those who refuse to learn from history are destined to repeat it! Does anyone on Capitol Hill remember the basis for the American Revolution? Was it not because of excess, ridiculous or just plain unpopular taxes that the American Colonists had no voice in? Taxation without representation? Granted, we have "elected" representation in Congress, but exactly who are they representing? Also, reference the French and Russian Revolutions and the basis for them as well. When will leadership learn? NO NEW TAXES!!!

Luke said...

Dingell is a bonehead. First, 3000 sq. ft. homes are NOT mansions. Second, a 50-cent per gallon tax on gasoline is a sure fire way to not get elected again.

I just came back from Canada this weekend and had to fill up along the 401 (queens highway). The sticker on the pump said that 34% of the price of fuel was from taxation (only 3% was profit). So, on my $40 purchase, just over $13 was taxes. I can't wait for this to come to America!

Ben said...

people would just have to wreck a few feet of their homes to avoid the tax......

Matthew said...

You say we should build tax incentives into the system rather than dis-incentives. This could be translated as: “I want subsidies for certain things and not others”. “Tax incentive” is a euphemism. Dingell’s plan is to remove a government subsidy. And a huge chunk of this $400 billion subsidy goes to the top 5% income earners. The bigger the house the more of a tax break. If you earn more than $200,000 than you should be against removing this subsidy, if you earn less than that you should support Dingell’s plan. Why give billions of dollars away to people who, if they weren’t subsidized, would mean they would have to forgo one less piece of designer furniture? What a cut in their quality of life!!! Meanwhile the savings from removing this subsidy could go towards research in energy efficient appliances and building materials that would benefit everyone.

Another point: There is nothing “natural” about wanting more space. Our system is subsidized in a way to encourage everyone to want more and bigger houses, cars, etc. The “naturalness” of this desire is an utter illusion.

Maggie Thurber said...

Well, Matthew - you've completely misinterpreted my idea of 'incentive' versus 'disincentive'. You seem to assume that the only 'incentive' is when government subsidizes. That's not correct.

Government can provide an incentive by NOT taxing items. That act, alone, provides an incentive for investment or purchase as there is no 'penalty' in the form of a tax.

Incentives do not always equate to subsidies. And since the rest of your comments are based upon this false assumption, I'm not going to rebut them.

Additionally, I'm about fairness. It's not fair to allow some to have a mortgage deduction and prohibit others from having that same deduction.

Further, I don't believe in subsidies, as I can find nothing in the constitution which permits our government to take our money in order to give it (in one way or another) to others. But I apply this belief across the board...everything from farms/agriculture, to business, to income (as in most welfare programs) or even deciding to 'subsidize' ethanol production to try an encourage alternative fuels. In all of these instances, the government interference in the free market (or in what used to be a free market) doesn't make things better - it makes things worse by encouraging dependence upon the government for such 'support.' And in many instances, puts the government in charge of picking winners and losers...rather than letting us - the market - do so.

As for your concept that it is unnatural to want more 'space' ... I think I'd have to disagree. Exploration and the move of many to America - and then into the west - indicates that there is a natural desire for one's own space. Even today, families want space (i.e. yards) for their kids and pets to play and I see nothing unnatural, or illusionary, in such a desire.

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