[Vinnl]

I think it's relatively widely recognised as a bad idea now, but the challenge is that people have made long-term financial plans based on it, and if you were to suddenly cancel it altogether, lots of people would probably get in trouble. They're imposing further restrictions on it in the Netherlands, but it's all gradual and slooooow.

Disclaimer: I don't know much about this.

[KSteffensen]

We have the same problem in Denmark.

It doesn't have to be cancelled suddenly, it could be removed over a period of 25 years or even more. Similar to what happens with public pensions.

[Vinnl]

Yeah, I think that's what's going on over here. (Likewise for the retirement age.)

[MrDresden]

I'm intrigued, what are you referencing in regards to public pensions in Denmark?

[KSteffensen]

Denmark is in the process of raising the retirement age. This is done gradually to allow people to properly plan for it. This means that the retirement age is based on year of birth. For people born before 1. january 1954 the age is 65.5. For people born in 1996 or later the retirement age is 74. There is a scale between these two points, I was born in the early 80es and my retirement age is 72.

The argument behind this is that the current level of income/taxation can not support people on pension for more than ~12 years on average and as the life expectancy rises the retirement age must rise with it.

There is a fairly big debate happening on 'graduated pensions'. Should a bricklayer who has carried heavy loads all his life be forced to work to the same age as an academic who has spent a large amount of time behind a desk in an office?

[jopsen]

Does it matter now that we have negative interest rates?

[KSteffensen]

No, and that means this is the best time to get this done. The least amount of people will be affected.

The interest rate will go back up at some point and we would have a fairer house market without this tax deduction. It's basically a tax break for people with enough resources to buy their house. And it drives up the housing prices making it harder for first-time buyers.

[alkonaut]

It means it’s the perfect time to phase out the deductions, because they are very low at the moment.

[statstutor]

> the challenge is that people have made long-term financial plans based on it, and if you were to suddenly cancel it altogether, lots of people would probably get in trouble.

This could be solved by just cancelling it. People taking advantage of this scheme:

a) had no reasonable expectation that it would be long-term, and,

b) had to be wealthy enough to initially access the scheme to benefit from it, and have since continued to benefit.

Handling any exceptional cases (which would be relatively very few) would be a lot more effective, in every sense, than continuing the scheme.

Besides, the Netherlands already has a Mortgage Guarantee Scheme which protects people with mortgages and changed circumstances.

[Vinnl]

People who recently got one might have some reasonable expectation that it wouldn't be long term (although often their mortgage advisor would probably have given them the impression that it would be), but there are still many home owners who would reasonably have believed so. And even the ones who do expect it to not be long-term, would not have expected it to be cancelled overnight.

I would certainly love to be rid of it sooner rather than later, but I do acknowledge that that's going to be disadvantageous to a lot of people, and will have to take them into account as well.

The mortgage guarantee scheme doesn't really apply here, I think: it raises the buying power of people with low incomes, but once you've bought a house, it only means that their bank gets paid if you're forced to sell it - but you'd still be forced to sell it.

[statstutor]

> And even the ones who do expect it to not be long-term, would not have expected it to be cancelled overnight.

I find this argument really strange.

Budgets can (and do) change and cancel categories of benefits for poor people overnight.

But benefits that accrue to wealthy people must not be changed overnight?

This is a function solely of power.

[Vinnl]

Is that so? Like which? Generally, I wouldn't be in favour of suddenly significantly cutting people's benefits without some compensation or other either. Luckily, I don't think that happens a lot.

For example, whereas we need to raise the retirement age, we don't suddenly increase it with a couple of years. It is raised slowly in increments, and less for people who are closer to the retirement age and thus have had less time to plan for it.

[LudwigNagasena]

> the challenge is that people have made long-term financial plans based on it, and if you were to suddenly cancel it altogether, lots of people would probably get in trouble

This can be solved with a grandfather clause.

[mattmanser]

Which would make even more brutally regressive and unfair.

[Vinnl]

Possibly, but that means houses would suddenly become much more expensive for those not ushered in.