Fed Bailout Bill: Any Piece of That Pie for New Yorkers?
The Times has a piece today entitled “Housing Bill Has Something for Nearly Everyone” that talks about how the multi-billion (how much exactly? no one knows) housing bailout bill isn’t just pitched at people with mortgage woes and troubled lenders. Aspects of the bill will probably have modest benefits for New York-area borrowers who don’t…
The Times has a piece today entitled “Housing Bill Has Something for Nearly Everyone” that talks about how the multi-billion (how much exactly? no one knows) housing bailout bill isn’t just pitched at people with mortgage woes and troubled lenders. Aspects of the bill will probably have modest benefits for New York-area borrowers who don’t have mortgage trouble. The bill, for example, is supposed to help first-time buyers, who’ll be eligible for a federal tax credit of $7,500 or 10 percent of the home purchase price (whichever’s smaller). The catches: single people earning $95,000 or more, or married couples earning $170,000 or more aren’t eligible for the credit. Another break comes for people who take standard deductions on their taxes: They’ll be eligible for an additional tax deduction of $500, or $1,000 for married couples. The aspect of the bill that might have the most impact on pricey New York is the one that allows Fannie Mae or Freddie Mac to buy bigger loans (none over $625,500, however) in areas with higher housing costs, a measure that’s aimed at lowering interest rates for people who take big loans.
Housing Bill Has Something for Nearly Everyone [NY Times]
Photo by Rikx
I just don’t get how naive Americans can be about how tenuous their position is in the global economy.
All of the press lately around Fannie and Freddie collapsing has been about “how do we prevent home prices falling and help out sub prime mortgagees”, not a single news story I’ve seen lead with the statement;
“Maybe sub prime mortgagees should have been given loans they couldn’t afford in the first place”.
Or
“WTF do we do when the Chinese ask for all their USA treasury guaranteed securities back?”
….. And I’m yet to meet an American who understands the concept that if their house goes up in value…they have to work harder and longer hours to pay for the next one.
Could just be me or could be the lack of their news coverage.
Cheers,
Dean
When you’re pushed into the Alternative Minimum Tax as many high income New Yorkers are, you begin to lose the full benefit of many of your itemized deductions.
mr. joist: yes, the bailout is a huge wealth transfer to financial institutions and their shareholders. no, the bailout won’t do much (if anything) for the average homeowner in terms of direct tangible benefits. but those aren’t the real rationales for a housing bailout anyway — it’s because a collapse of the u.s. housing market and related financial institutions could cause serious damage to the u.s. (and global) economy as a whole. see, e.g., http://www.nytimes.com/2008/07/14/opinion/14krugman.html
Theres more of a phase in – those with smaller mortgages who don’t itemize can’t take advantage of it. Generally not so much of a problem in NY with prices they way they are though.
bxgirl:
1) You asked why, from a purely financial point of view, I think things will get MUCH worse for middle-class and above New Yorkers if Obama is elected. One word: TAXES. Obama will tax the crap out of New Yorkers. There is no such thing as a “cost of living” adjustment for taxes so a guy making $175,000 supporting a wife and kids is going to have his taxes go WAY UP even though this is a solidly middle-class family income in New York.
2) You disagreed with Boerum Hill who said: “You could also make the case that tax payers have been subsidizing renters for over 60 years. All those renters with stabilized and rent controlled leases generate below market rent …” I agree with bxgirl here. Nationally this has close to zero impact. Taxpayers are not meaningfully subsidizing stabilized and rent controlled renters. However, tax-paying renters ARE subsidizing the mortgage interest tax break for owners (I’m a homeowner btw). Our government has decided to make this transfer payment to owners for sociological reasons that I will not get into. That said, you can’t deny that renters get left out of this benefit.
Also, Boerum Hill, there is no phase-out of the mortgage interest tax deduction based on income … Warren Buffet gets it too.
boerum Hill- really, no offense taken- I was just using your post as an opportunity to- er…further express my view. But question re the Bush tax cuts. yes- I think the cuts were good but knowing what we do now, and the extent of the Bush administration’s gross negligence of nearly everything in life , do you think they should remain in place? I certainly benefited from them, but even when he enacted them, and everything else was heating up, I remember thinking we are so going to be screwed in a few years because I truly believe Bush has no rudimentary understanding of basic economics, and I think he was willing to do what his wealthy friends wanted. All the things that are helping to crash the economy, he either helped foster, or looked the other way. I’m sure there are many who disagree with me, but I can only speak for myself.
Bxgrl,
I didn’t mean to give offense and I don’t think anything I said involved looking down my nose at renters. I was a renter for almost 20 years and likley will be one again someday.
My comment about the subsidies that some renters get was aimed at specifically at NYC and not the country as a whole. You’re right that for the U.S. overall, renters do not recieve a subsidy since there are so few regulated markets. In New York however, approximately 50% of apartments are regulated. Renters of these apartments are significantly subsidized and to a very large extent that subsidy is not means tested. This is less true if you’re a homeowner where the value of your interest expense deduction gets phased down at higher income levels. High income renters however, pay 0% tax on the value of their rent subsidy.
With regard to your 1:39 PM post, while I always vote democratic, as New Yorker I think the Bush tax cuts have been great for the City. New Yorkers, like residents of other expensive cities such as San Francisco and Los Angeles, pay a disproportionate share of federal taxes because the federal tax code does not make any adjustment for cost of living variances around the country – i.e. people in cities often have higher levels of income but their cost of living (housing etc) is also significantly higher.
As mentioned on this thread, there are plenty of places in this country where $125K-$150K will buy a really nice house. You could have family income of $40-$50K and afford that. At an income level of $40K-$50K, you’re going to be paying little to no income tax. In NYC, an “affordable house” might cost $400K-$600K. You’re going to need family income of $125K-$150K to afford that. At that income level, you will be a significant federal income tax payer.
the majority of renters are not subsidized, rent-controlled or rent stabilized in this country. Nor do we get tax breaks, abatements or anything else homeowners,landlords and developers do. So you could say that we are doubly subsidizing them in good times and in a bailout. bear in mind the majority of renters pay taxes, in that sense paying for some part of their “subsidy.”
It’s not my intention to start a tenant/landlord war of words- I simply stated that those who look down their noses on renters shouldn’t be so quick to do so.
http://coldwellbanker.com/servlet/PropertyListing?action=detail&ComColdwellbankerDataProperty_id=13553770&page=property&brand=CB
Lots of properties in Arkansas for decent prices that aren’t in shitholes. Most people would argue that I live in a ginormous crime-infested filthy shithole in Brooklyn compared to the rest of the planet. And even I would grant them partly right compared to where and how I lived several years ago in the south. I still own property there and its nice, clean, open, and you can walk the streets at night without worrying about some crazed machete maniac is out there like here in Williamsburg.