No Mortgage Interest Deduction in KS?

[kcjen24 0]

Not that it affects a lot of you on here, but I need to vent...

http://www.kansas.com/2013/01/16/2638013/brownback-budget-would-eliminate.html

The numbers I've found indicate Governor Brownback has the 75th richest county (Johnson) in the entire United States (out of 3,141). Imagine the tax base the state gets from those lovely folks there.

Oh, but the way... it sits on the state line, right next door to Missouri. The entire population of that county lives within a 15 minute drive of Missouri. Why not just move across the state line?

I don't live in that county, but I'm close enough to Missouri I'd sure be tempted - along with a helluva lot of other people.

I can almost hear the politicians in Jeff City (MO) rubbing their hands together, hoping like hell this goes through.

[rhaig 0]

I have a lot of relatives in the area. Several live in Johnson county and work on the other side of state line road. It's interesting to note that property on the KS side of the line isn't going up in value like the property on the MO side of the line. People ARE moving.

--
Rob

[wmw999 2,534]

Many economists, when asked, generally agree that the mortgage interest deduction is not a good idea.

Quote

On March 9, 2012, PBS aired an episode of its show Need to Know in which a bipartisan panel discussed tax reform. The panel, which consisted of former Democratic politician Eliot Spitzer, tax law professor Dorothy A. Brown, Reagan domestic policy advisor Bruce Bartlett, and libertarian economist Daniel J. Mitchell, unanimously opposed the federal mortgage interest deduction.

I heard that show, and those are not the only economists who feel that way.

Wendy P.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[DougH 270]

Neither does CT or a whole lot of other states. CT starts with AGI from line 37. which is before schedule A (itemized deductions)

"The restraining order says you're only allowed to touch me in freefall"
=P

[DrewEckhardt 0]

Quote

Not that it affects a lot of you on here, but I need to vent...

http://www.kansas.com/2013/01/16/2638013/brownback-budget-would-eliminate.html

The numbers I've found indicate Governor Brownback has the 75th richest county (Johnson) in the entire United States (out of 3,141). Imagine the tax base the state gets from those lovely folks there.

Oh, but the way... it sits on the state line, right next door to Missouri. The entire population of that county lives within a 15 minute drive of Missouri. Why not just move across the state line?

Because it will cost more.

In Johnson county the median home value is $212K which makes for about $7K in interest on a new conventional 30 year loan at 4% with 20% down.

Median household income is $75K which puts those people in the 6.45% bracket for a $451 tax increase assuming a new mortgage.

Missouri only has a 6% marginal tax rate, but it starts at $9000 with no standard deduction so that couple would be paying $4275/year in taxes with the mortgage deduction if they moved there versus the $3892 they'd pay without it in Kansas (Assuming no children or other deductions - I just dumped the numbers into online calculators. Obviously assuming that income earned in Kansas would still be taxed at the Missouri rate).

Including depreciation and assuming a typical 10 company holidays plus two weeks of vacation the driving costs at the standard IRS rate (It could be accurate - when I did the math I arrived at a $0.54 incremental cost for each mile I drove assuming I got 150,000 of my own miles out of my car and sold it for a few thousand in parts value) will run $4000.

$383 more in taxes + $4000 in driving costs = $4383 more.

This ignores transaction costs (6% split between listing and selling agent) which will run $12,700 on that median house which is more than the total tax savings over the life of the loan in nominal dollars (much more once you take the time value of money into account).

It also ignores non-monetary costs. Averaging a legal 65 MPH, 15 miles one-way to work will cost them 111 hours a year more in their cars. I can get a _lot_ done in my workshop in that time and would consider it about the same as an extra three weeks at the office each year or 75% drop in vacation time in the hypothetical 10 holiday 2-week situation.

Just be thankful you're not yet paying a 9.3% marginal rate like you would in California (plus 1% state disability insurance up to the cap).

Eastern Kansas is almost Missouri and starting from Missouri (I grew up outside St. Louis) I'd move to Colorado (spent 15 years there from age 18 on) which charges residents 4.63% of their Federal taxable income and doesn't make up for the moderate income tax with high property taxes (I was paying $1500 a year on a property I sold for $266,000 when I moved out which is 0.6%). The climate and snow sports are _much_ better.