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SHARMINI PERIES, TRNN: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

And we’re unpacking some economic mythologies here with Michael Hudson who joins us in our Baltimore studio. Thank you so much for joining us Michael.

MICHAEL HUDSON: Good to be here.

PERIES: Michael has a new book out, J Is for Junk Economics: A Survivor’s Guide to Economic Vocabulary in an Age of Deception. Michael, so let’s continue our discussion about the various myths that are out there that we need to be aware of in order to understand the economy. Part of the problem is ordinary people, partly some because of this terminologies that you described so well in your book is led to feel that the economy is so abstract, its removed from them. They’re not engaged in it. It’s all about the stock market or the housing market or what the big banks are doing. But we are very active agents in the economy everyday. So in that sense, the real estate market is the only thing that seems to be somewhat real for people because people do buy and sell their house and sometimes its foreclosed on them and they have to move out. They have to then rent somebody else’s house that’s owned by somebody else. So, let’s talk about the real estate market and how it’s mythologies for us.

HUDSON: People have the idea that when house prices go up, somehow everybody’s getting richer. And it’s true that the entry to the middle class for the last hundred years has been to be able to own your own home. From about 1945 to mid-1980, families were able to ride a wave of rising house prices. They thought they were all getting richer. Then prices went even higher up between about 2001 to 2008 as Allan Greenspan flooded the economy with money – that is, credit (peoples’ debt to the banks). People still had the idea that just like their parents got rich off of rising housing prices and were able to put them through school and give they a better life, now they’re getting richer.

What they don’t realize is that the reason house prices go up isn’t simply because population grows or nature makes them go up. There are two factors. One, the public sector pays a lot of money on infrastructure. It builds new schools and parks and roads and sewer systems. Every time it builds a new transportation system, property goes up. When New York City built a subway in on 2nd Avenue, property prices are going up there. So, you have the public sector spending money on transportation. Taxpayers have to pay but the landlords all benefit and their taxes don’t go up.

But most of all, think what a house is worth. It is worth whatever a bank is going to lend against it. The fact is that none of us have enough money to pay down cash for a house. All of us have to take out a mortgage and how much we can pay and whether we can outbid the next guy who’d like that house would be, who’s going to borrow the most money?

When I became an adult in the 1960’s there was a rule of thumb. Families could borrow up to where the mortgage would absorb 25% of their income. They would get a 30-year mortgage that, at the end of 30 years, would pay itself off and they would owe nothing. Then, when they left the job market after having worked for 30 years, they would own their home outright, free and clear.

By 2008 matters had changed drastically. Banks were lending 99% and even 100% mortgage. So you could get a house for nothing. Just sign the 100% mortgage, and in many cases you didn’t even have to pay any interest, or take any of your income for 3 years. That is why housing prices rose. It wasn’t because property was worth more. It wasn’t because people were earning more and population was rising. Housing prices were going up because banks were making junk mortgages. It was all on credit.

Was this really making home buyers richer? Was it helping create a middle class? The proportion of the population owning their homes did rise – but after 2008 it plunged back down when foreclosure time arrived and the Obama Administration re-negged on its promises to write down junk-mortgage debts to realistic prices and carrying charges that reflected actual rental values.

The result was that instead while house prices were going up, they didn’t think about the fact that their debt was going up proportionally. All their increased house price was matched by the increased debt that people were taking on. Instead of paying 25% of their income on the mortgage, which was the rule in 1960’s, the government today, in 2016, will provide a Federal Housing Authority guarantee for mortgages that absorb up to 43% of the borrower’s income. That’s a huge, historically unprecedented ratio, 43%. It’s made the bank rich, not homeowners.

In Germany where I was last month, the average rent is between 10 and 15% of family income. There are very low prices there, for historical reasons. So ask yourself how can you expect American factory workers to compete with German factory workers, when you have to pay 43% of your income for a mortgage and they have to pay only 15% of their income. There’s no way you can compete. So instead of making the U.S. economy richer by housing prices going up, it’s actually made the economy less competitive, leading to more unemployment.

Of course there’s one other facto that makes housing prices go up. That’s property tax cuts.

ORDER IT NOW

This is a radical change, and it has helped banks much more than homeowners. Every economy in the world before about 1800 used to depend primarily on the land tax. Ever since the Stone Age, Bronze Age and classical antiquity, the land tax was what was the basis of taxation. That was the criterion for citizenship in Greece and Rome. Governments financed themselves by taxing the land. After William the Conqueror conquered England in 1066, a few years later he had the Domesday Book written up to calculate how much rent tax everyone had to pay on their land.

Water, all of this tax was privatized. The Revolt of the Barons sought to privatize the rent tax instead of making land a public utility.

Fast forward to today. In the United States since the Reagan administration, there’s been a steady cut in the real estate tax. At first glance, many homeowners think that this saves them money and helps the middle class get richer. What they don’t realize is that when the real estate taxes are cut, that leaves more rental value of the land available for new buyers to pledge to pay the banks in interest. The basic principle is that rent is for paying interest. This is true in commercial real estate as well as residential real estate.

Bankers know that every time there’s a property tax cut, they can make a larger mortgage loan against that property. The result is that instead of paying taxes, new homeowners pay interest to the bank. The higher interest payment absorbs the tax cut.

Meanwhile since they’re not paying taxes on real estate, the government – local governments especially – find themselves in a budget squeeze. They’re not getting the real estate tax revenue as before, especially California with its Proposition 13. So, they have to find the tax revenue elsewhere – for instance, by sales taxes on what con summers buy. Some cities and states impose an income tax on labor. But they don’t tax dividends or Wall Street.

The result is that if you are a wage earner, they tax your wage withholding, impose excise taxes and sales taxes on the things people buy. Not houses, not stocks and bonds, not the things that rich people buy, but the things that the middle class and the working class buy. They end up with the tax burden. And landlords get richer, especially commercial property owners.

What this tax shift means is that housing prices have been pushed up by shifting taxes off real estate, off the Donald Trumps of the world, onto homeowners, renters and consumers – the people who are not millionaires. But most people don’t realize why prices for real estate are going up. Most of all, they don’t realize that they’re not really better off if the price housing goes up, if their debt goes up even more. They didn’t anticipate that in 2008, housing prices would plunge and the debts would remain in place. Suddenly many families found themselves in what economists call negative equity. That’s the position that 10 million American families were in when they were foreclosed upon after 2008.

And just now, as soon as the election was over in November, foreclosure rates have gone up sharply. It’s as if Wall Street has said, “Okay, we got the suckers to vote, now we’re going to slam and begin foreclosing on them like anything. That’s exactly what’s happening in New York where I live. Foreclosure rates way up. You’re seeing a transfer of property from debtors to creditors.

PERIES: And Donald Trump in his interview on 60 Minutes on Sunday with Lesley Stahl said the first thing he’s going to do, he has a bill waiting which is going to cut taxes. So what does he mean by this,and what will it mean for us?

HUDSON: Nobody knows what it means because we don’t know whether he’s just going to turn the presidency over to the Republican Party’s lobbyists to write the bill. The implication is that when he talks about cutting taxes, being a narcissist he means cutting taxes for himself. He doesn’t mean cutting taxes on most people. There may be a small token tax cut for other people, but a big cut in the taxes on the highest wealth brackets. So, you can be sure that his constituency is going to get the biggest tax cuts. Not your constituency that watches this show.

PERIES: Here you’re talking about Wall Street getting more tax cuts?

HUDSON: Right.

PERIES: All right Michael, thank you so much for joining us.

HUDSON: Good to be here.

PERIES: And thank you for joining us on the Real News Network

(Republished from TRNN by permission of author or representative)
 
• Category: Economics • Tags: Real Estate, Taxes 
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  1. As a corollary of the Classical Theory of subsistence wages, it was taken for granted that less than subsistence wages were not possible, though there were qualifications.

    Not altogether playfully, one theorized that in the 1990′s the Bankers and Finance Capitalists had finally devised a structure, through debt credit, in which a good part of the Unitedstatesian population, and that mostly the so-called “middle classes”, were, without knowing it, working for less than subsistence. That was not just mortgages on residential real estate, naturally, but the whole debt credit game. Step by step, what seemed an absurd proposition was realized, through Clinton and to Bush, culminating in August 2008.

    The amusing part was that it was exactly Bush’s so-called “middle class” supporters who were hit the hardest.

    There is more than a bit of atavistic crypto-Calvinism involved in this aspect of the present Capitalism, to wit, the concept that workers ideally should be able to live not only on nothing but less than nothing.

    This is, by an underground passage, also connected to the interest in robots.

    Kucinich saw it, in lucid moments, as a new version of the “Company Store”. But it was much more subtle than that.

    Even more amusing is that, since Bush and through Obama, the negative income working classes still have not figured out what hit them, and their children, and grandchildren born and unborn. Meanwhile the discoverers of this new economics bailed themselves out and are trying to resume the game.

    The idea that Señor Trump is going to do anything constructive in this mess is as absurd as the idea that Señora Clinton would have done same.

    There was some truth to “Magical Negro” theory, but that truth, contra Limbaugh, was in fact a set up by the same owners of the duopoly that engineered Clinton and Bush.

    Stay tuned for the “Magical White Man” narrative coming to your local unrecovered real estate markets soon. And keep hoping and praying for the loaves and fishes to materialize soon among “white people”–(& after Liddy just for good measure), SUCKERS!

    Read More
    • Replies: @Wally
    So IOW, your side lost the election. LOL!!
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  2. The fact is that none of us have enough money to pay down cash for a house.

    Speak for yourself. I’ve laid down cash for many houses.

    Read More
    • Replies: @Alfred1860
    Hudson means buying a house with cash (as opposed to a mortgage), not simply a cash down payment. If you've bought many houses outright for cash, congratulations, you're in the 0.1%.
    , @Kristen
    Ridiculous.

    Where I live -- Denver -- a hefty percentage of homes are bought with cash. Many of these homes become rental properties. Furthermore, a third of all homes in Phoenix, too, are bought "cash." So, your entire argument about mortgages seems a bit misplaced.

    There's an interesting sidebar to home prices here, in Denver, which will quickly spread to Vegas and all the towns/cities in CA since both these states have de-criminalized marijuana. Here the profits from growing and selling pot cannot be put into banks because of federal issues relating to the War on Drugs, so this money is put into the housing market. Many houses in Denver are bought with cash from the drug "industry." This has artificially inflated housing prices in Denver, a pattern I would expect to find in the states which voted to allow the sale of marijuana a few weeks ago.

    Expect to see a quick and government-induced increase in housing prices in Calif and Nevada.
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  3. @Cloudbuster
    The fact is that none of us have enough money to pay down cash for a house.

    Speak for yourself. I've laid down cash for many houses.

    Hudson means buying a house with cash (as opposed to a mortgage), not simply a cash down payment. If you’ve bought many houses outright for cash, congratulations, you’re in the 0.1%.

    Read More
    • Replies: @Kyle McKenna
    One out of three homes in the USA is owned free and clear.
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  4. No mention of massive 3rd World Immigration depressing American workers’ wages. No mention of massive job losses caused by offshoring.
    No mention of massive immigration resulting in increased demand for housing and therefore higher prices.
    No mention that lending money to people who couldn’t afford to buy their own homes was government directed.
    No wonder the average American is struggling with the cost of housing.
    As ever, Prof Hudson is partial and disingenuous in his arguments. Stuff like immigration he doesn’t want to talk about, he purposefully omits.

    Read More
    • Replies: @Anonymous
    The home ownership rate in the US was slightly lower in 1960, before massive 3rd World Immigration and offshoring, than it is now:

    https://en.wikipedia.org/wiki/Homeownership_in_the_united_states#Historical
    , @E. A. Costa
    The rest is pertinent but this is wrong, although it is the myth that the bankers themselves would have you believe:

    "No mention that lending money to people who couldn’t afford to buy their own homes was government directed"

    The banking industry itself was the main propellant of lending anything to anyone and indeed they were also the main pressure behand new risk analysis models, designed so that they could make riskier and riskier loans, including under CRA.

    No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices. Period.
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  5. Anonymous says: • Disclaimer
    @Verymuchalive
    No mention of massive 3rd World Immigration depressing American workers' wages. No mention of massive job losses caused by offshoring.
    No mention of massive immigration resulting in increased demand for housing and therefore higher prices.
    No mention that lending money to people who couldn't afford to buy their own homes was government directed.
    No wonder the average American is struggling with the cost of housing.
    As ever, Prof Hudson is partial and disingenuous in his arguments. Stuff like immigration he doesn't want to talk about, he purposefully omits.

    The home ownership rate in the US was slightly lower in 1960, before massive 3rd World Immigration and offshoring, than it is now:

    https://en.wikipedia.org/wiki/Homeownership_in_the_united_states#Historical

    Read More
    • Replies: @Verymuchalive
    Homeownership was lower in many other ( industrialised/de-industrialised ) countries in 1960 than now, for example UK, Republic of Ireland, Australia. The common factor is governments getting banks to push mortgages at people, many who ultimately couldn't afford them. This was at variance with traditional lending practices.
    In these countries, the percentage who owned their homes outright - no mortgages- would be considerably higher in 1960 than today
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  6. @Anonymous
    The home ownership rate in the US was slightly lower in 1960, before massive 3rd World Immigration and offshoring, than it is now:

    https://en.wikipedia.org/wiki/Homeownership_in_the_united_states#Historical

    Homeownership was lower in many other ( industrialised/de-industrialised ) countries in 1960 than now, for example UK, Republic of Ireland, Australia. The common factor is governments getting banks to push mortgages at people, many who ultimately couldn’t afford them. This was at variance with traditional lending practices.
    In these countries, the percentage who owned their homes outright – no mortgages- would be considerably higher in 1960 than today

    Read More
    • Replies: @Anonymous
    I don't know that the Republic of Ireland qualified as an industrialized country in 1960. It was poor, mostly agricultural, and a huge percentage of the population had emigrated during the 50s. Most industry was in Northern Ireland. The fact that there were more poor farmers around back then who owned their tiny thatched roof cottages outright back then is kind of meaningless. You can get dirt cheap shacks in the middle of nowhere in the US today, but nobody wants to.
    , @unpc downunder
    Exactly, governments have been stocking up the demand for housing, while doing little to stimulate the building of more houses. The inevitable result is expensive housing and or more people indebted to the banks. Australia used to have one of the world's most affordable housing markets, now it has one one the world's most expensive.

    As far as taxes increasing, this is largely because of the removal of import tariffs. In the past tariffs were an important source of revenue, and that short fall in revenue from cutting tariffs has to be made up by increasing taxes elsewhere.

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  7. @Verymuchalive
    No mention of massive 3rd World Immigration depressing American workers' wages. No mention of massive job losses caused by offshoring.
    No mention of massive immigration resulting in increased demand for housing and therefore higher prices.
    No mention that lending money to people who couldn't afford to buy their own homes was government directed.
    No wonder the average American is struggling with the cost of housing.
    As ever, Prof Hudson is partial and disingenuous in his arguments. Stuff like immigration he doesn't want to talk about, he purposefully omits.

    The rest is pertinent but this is wrong, although it is the myth that the bankers themselves would have you believe:

    “No mention that lending money to people who couldn’t afford to buy their own homes was government directed”

    The banking industry itself was the main propellant of lending anything to anyone and indeed they were also the main pressure behand new risk analysis models, designed so that they could make riskier and riskier loans, including under CRA.

    No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices. Period.

    Read More
    • Replies: @Verymuchalive
    "No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices."
    Weasel words.
    No doubt it is true that no government has ever forced a bank , but if the government guarantees a bank loan, the bank will generally give it. Fannie Mae and Freddie Mac are recent examples of such schemes.
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  8. Anonymous says: • Disclaimer
    @Verymuchalive
    Homeownership was lower in many other ( industrialised/de-industrialised ) countries in 1960 than now, for example UK, Republic of Ireland, Australia. The common factor is governments getting banks to push mortgages at people, many who ultimately couldn't afford them. This was at variance with traditional lending practices.
    In these countries, the percentage who owned their homes outright - no mortgages- would be considerably higher in 1960 than today

    I don’t know that the Republic of Ireland qualified as an industrialized country in 1960. It was poor, mostly agricultural, and a huge percentage of the population had emigrated during the 50s. Most industry was in Northern Ireland. The fact that there were more poor farmers around back then who owned their tiny thatched roof cottages outright back then is kind of meaningless. You can get dirt cheap shacks in the middle of nowhere in the US today, but nobody wants to.

    Read More
    • Replies: @Montefrío
    Maybe "nobody" needs to learn that no one gives a hoot about what he or she wants. No latte bars and nail salons? Too bad. If that's what's wanted, then accept debt-slavery and let the cottage crowd go about keeping out of debt and scratching out a life. They have or had far more dignity than those who become 30-year-indentured servants to dwell in a fiberboard box within striking distance of the mall.
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  9. Michael Hudson

    Absolutely true….Donald Trump’s tax plan was hatched in the cryogenically frozen severed head of the late Julian Simon……Julian’s severed cryogenically frozen head goes by the name of Steven Moore….

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  10. Alden says:

    Correction: Rents of 10 to 15 percent income in Germany applies only for tenants in government housing.

    Tenants in private housing pay much higher prices. As everywhere else in the world, rents and housing prices depend on location

    Munich has one of the highest rents in Europe.

    With such a major mistake about low rents in Germany it is difficult to believe that anything else in the article is true.

    I lived in Frankfort Germany, another high rent city for 5 years. I’m familiar with the cost of private sector rents in Germany. And it’s not 10 to 15 percent of income.

    Read More
    • Replies: @Wally
    And German taxes are sky high.

    Not to mention the lack of free speech.

    http://forum.codoh.com/

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  11. Wally says:

    No mention of the fact that west of the Mississippi 50% of the land is ‘owned’ by government. Yep.
    Add in the huge increase in US population in the last fifty years and you have a formula for increased home costs due to scarcity.

    That huge population increase also drives down wages meaning there are less people with enough income to even contemplate buying at house at just about any price.

    Wake up, Hudson.

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  12. Montefrío says: • Website
    @Anonymous
    I don't know that the Republic of Ireland qualified as an industrialized country in 1960. It was poor, mostly agricultural, and a huge percentage of the population had emigrated during the 50s. Most industry was in Northern Ireland. The fact that there were more poor farmers around back then who owned their tiny thatched roof cottages outright back then is kind of meaningless. You can get dirt cheap shacks in the middle of nowhere in the US today, but nobody wants to.

    Maybe “nobody” needs to learn that no one gives a hoot about what he or she wants. No latte bars and nail salons? Too bad. If that’s what’s wanted, then accept debt-slavery and let the cottage crowd go about keeping out of debt and scratching out a life. They have or had far more dignity than those who become 30-year-indentured servants to dwell in a fiberboard box within striking distance of the mall.

    Read More
    • Replies: @Anonymous
    The "cottage crowd" today have easy access to the internet, cheap entertainment via the internet, and global supply chains via Amazon et al. They're not exactly "scratching out a living" like the rural communities of the past.
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  13. And keep hoping and praying for the loaves and fishes to materialize soon among “white people”–(& after Liddy just for good measure), SUCKERS!

    You write fine comments. Trump will not deliver on many, if any, of his campaign promises to the middle classes, not that Hillabeast was in any way preferable as you already noted.

    In fact, the main, if not only, positive from the circus is that the Hag won’t be sitting in the oval office. Little else will change for the better.

    Read More
    • Replies: @E. A. Costa
    Apart from any issues, it is also very positive, and perhaps more important in the long run than now appears, that the mainstream media was so wrong, or better, deliberately fraudulent. Anyone who was paying close attention realized that the effort to hand the election to Señora Clinton, by polls and other means, was utterly absurd and that at the very least it would be close.

    Also it is clear that other channels of communication, besides the mainstream mediatics on television, "newspapers" on the internet, and so forth were significant for the Trumpists. Finally, as was never emphasized in the same mainstream, Señor Trump was already a non-political celebrity and media star. This meant that his mannerisms were already well known and part of his celebrity.

    How to evaluate all this is still an open question. Very early on, as someone who had read P. T. Barnum's autobiography, one made an identification of Señor Trump as P. T. Barnum Redidivus--that is, the showman and impressario whom the rubes glory in being fooled by. One was surprised to learn that two American historians, also familar with Barnum, had made the same identification independently a few months earlier. Indeed, Señor Trump himself may have made it--his "I am so popular I could shoot people in the street" (or whatever the exact quotation is) was the essence of the Barnumesque. Also interesting is that the two American historians, like oneself, did not see the identification as showman and conman as something that would decrease his popularity--just the reverse.

    As perhaps a not completely trivial aside, one recalls a Southron writer, whose name one forgets, writing an article during Señor Clinton's first run or office, identifying him as a classic Southron "scalawag", and thus a popular folk figure in the South. It was a brilliant insight and similar to the Barnum angle, but only a Southerner or someone knowing the South could understand it. With Barnum it was more universal. Also interesting is that both Barnum and Trump were centered in New York City, but radiated their identity over the rest of the country, especially the MidWest.

    But all this just scratches the surface.
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  14. polistra says:

    Hudson is tricky. Part of his diagnosis is good. Focusing the economy on housing is destructive. No argument there.

    But his facts are not so good. Property tax was NOT the major source of revenue in America. Tariffs were the major source, because our government wanted to encourage self-sufficiency in production. When we switched to income tax as the major source, things started to go downhill.

    Hudson skips the role of manufacturing entirely. The loss of manufacturing is exactly why the middle class got poor. I don’t think people in Akron were fooled by rising house values. The cities with rising values were already rich, already devoted to banking and software instead of manufacturing. That’s why house prices rose in those cities.

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    • Replies: @War for Blair Mountain
    The Native Born White Working Class got poor because of nonwhite legal immigrants+their US born nonwhite geneline=a massive oversupply of labor in US labor markets=Globalization of US Labor Markets with a vengeance.


    Who cares if Trump brings back factory assembly jobs from China...The Chinese can keep them.


    It's Asian Legal Immigrant scab labor that's the problem....among other things


    Trump's regressive tax cuts interacting with nonwhite legal immigration will cause the regressive property tax to kick in with a vengeance. When the 1965 Immigration Reform Act was passed....they should have thought about this.
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  15. @Alfred1860
    Hudson means buying a house with cash (as opposed to a mortgage), not simply a cash down payment. If you've bought many houses outright for cash, congratulations, you're in the 0.1%.

    One out of three homes in the USA is owned free and clear.

    Read More
    • Replies: @Alfred1860
    And your point is? I would hope that anyone over the age of 55 owns their home free and clear. That's a far cry from having paid cash for multiple homes, unless of course you have a job that requires you to move every two or three years as a senior consultant or something.
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  16. @E. A. Costa
    The rest is pertinent but this is wrong, although it is the myth that the bankers themselves would have you believe:

    "No mention that lending money to people who couldn’t afford to buy their own homes was government directed"

    The banking industry itself was the main propellant of lending anything to anyone and indeed they were also the main pressure behand new risk analysis models, designed so that they could make riskier and riskier loans, including under CRA.

    No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices. Period.

    “No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices.”
    Weasel words.
    No doubt it is true that no government has ever forced a bank , but if the government guarantees a bank loan, the bank will generally give it. Fannie Mae and Freddie Mac are recent examples of such schemes.

    Read More
    • Replies: @E. A. Costa
    Not weasel words at all. To qualify for government guarantees various risk models must be satisfied.

    The pressure to make those models and loans riskier and riskier came not from the government but from retail banking, which is most of United Statesian banking right now.

    And yes, anything with a Federal guarantee will likely result in a loan--from a retail bank. What do they care--they will sell the paper immediately.

    You obviously know very little about US banking. What do you suppose the Wells Fargo affair is about? Yes, illegally proliferating accounts but on a deeper level--lack of imagination.

    This because the offenders were not high enough up the hierarchy and had to bet on blind eyes among management. They were right of course about the blind eyes but at a certain level it is much safer simply to change the structure to make whatever is profitable legal.

    Thus also the bailouts, jeje.
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  17. It is a monumental crime…a great theft….to give the thieves Bill Gates….Steve Balmer….Mark Zuckerberg…..and Michael Bloomberg a massive tax break. Their wealth should be confiscated.

    These greedy cockroaches are single handedly responsible for the economic and racial dispossession of The Historic Native Born White American Working Class….we are talking about genocide!!!!…And they boast about our genocide publicly….

    They deserve the Vlad The Impaler treatment!!!!

    Behind every Great Fortune is a very great Crime!!!

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  18. @polistra
    Hudson is tricky. Part of his diagnosis is good. Focusing the economy on housing is destructive. No argument there.

    But his facts are not so good. Property tax was NOT the major source of revenue in America. Tariffs were the major source, because our government wanted to encourage self-sufficiency in production. When we switched to income tax as the major source, things started to go downhill.

    Hudson skips the role of manufacturing entirely. The loss of manufacturing is exactly why the middle class got poor. I don't think people in Akron were fooled by rising house values. The cities with rising values were already rich, already devoted to banking and software instead of manufacturing. That's why house prices rose in those cities.

    The Native Born White Working Class got poor because of nonwhite legal immigrants+their US born nonwhite geneline=a massive oversupply of labor in US labor markets=Globalization of US Labor Markets with a vengeance.

    Who cares if Trump brings back factory assembly jobs from China…The Chinese can keep them.

    It’s Asian Legal Immigrant scab labor that’s the problem….among other things

    Trump’s regressive tax cuts interacting with nonwhite legal immigration will cause the regressive property tax to kick in with a vengeance. When the 1965 Immigration Reform Act was passed….they should have thought about this.

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  19. Kristen says:
    @Cloudbuster
    The fact is that none of us have enough money to pay down cash for a house.

    Speak for yourself. I've laid down cash for many houses.

    Ridiculous.

    Where I live — Denver — a hefty percentage of homes are bought with cash. Many of these homes become rental properties. Furthermore, a third of all homes in Phoenix, too, are bought “cash.” So, your entire argument about mortgages seems a bit misplaced.

    There’s an interesting sidebar to home prices here, in Denver, which will quickly spread to Vegas and all the towns/cities in CA since both these states have de-criminalized marijuana. Here the profits from growing and selling pot cannot be put into banks because of federal issues relating to the War on Drugs, so this money is put into the housing market. Many houses in Denver are bought with cash from the drug “industry.” This has artificially inflated housing prices in Denver, a pattern I would expect to find in the states which voted to allow the sale of marijuana a few weeks ago.

    Expect to see a quick and government-induced increase in housing prices in Calif and Nevada.

    Read More
    • Replies: @bluedog
    The same here in N.Y. as they are busy buying up and building rental property but the question is who's buying up and building the rental property one guess and its not John Q. public but corporations after all they are the only ones left with the money to do it.!!!
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  20. Kristen says:

    Regarding property taxes (an interest of mine now that I’m looking to buy a larger piece of property … a forever home):

    There’s a huge variation in how home properties are taxed in the various states (I’m in the West, so my interest is here). Texas, which has almost no income or sales tax, has high property taxes. AZ has lower property taxes, but higher income/sales taxes. Colorado is like AZ except they extract more from everyone. CA is an utter rip-off.

    So, it seems that taxation, on a state level, is three-pronged (income, sales and property) and states have to decide on how much weight they want to give to each form of taxation. But, be certain that they’ll find a way to extract money from their citizens … somehow. Few states cut expenses: they raise revenues instead. And those revenues have to come from somewhere.

    Property taxes are, in an odd way, a fair way to tax as everyone pays something. After all, we all live somewhere. Renters pay property taxes indirectly through raised rents; homeowners pay more directly. In states with a large number of illegal aliens working underground in a cash economy, thus avoiding taxes, emphasizing real estate taxes makes sense — it captures their income for the taxman through rent.

    Read More
    • Replies: @War for Blair Mountain
    Property taxes have morphed into an utterly regressive tax. In 2016, the White Working Class is taxed as if they were multimillionaires....Which I suspect is the reason why Noam Chomsky....nice multimillion $$$$ estate on Wellsfleet Cape Code....is an enthusiast for the property tax.
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  21. Hudson simply does not get it. Yeah, Trump is rich, but he is not and never has been one of the Elite in crowd. The ones who really benefited from the things he describes are New York hedge fund people and stock market swindlers. A big difference.

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  22. Barnard says:

    So you could get a house for nothing. Just sign the 100% mortgage, and in many cases you didn’t even have to pay any interest, or take any of your income for 3 years. That is why housing prices rose.

    No payments for three years? I have never heard of a loan structured like this during the housing bubble. There were interest only loans where no principal was paid, but what bank was making a mortgage with no payments at all for three years?

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  23. Wally says:
    @E. A. Costa
    As a corollary of the Classical Theory of subsistence wages, it was taken for granted that less than subsistence wages were not possible, though there were qualifications.

    Not altogether playfully, one theorized that in the 1990's the Bankers and Finance Capitalists had finally devised a structure, through debt credit, in which a good part of the Unitedstatesian population, and that mostly the so-called "middle classes", were, without knowing it, working for less than subsistence. That was not just mortgages on residential real estate, naturally, but the whole debt credit game. Step by step, what seemed an absurd proposition was realized, through Clinton and to Bush, culminating in August 2008.

    The amusing part was that it was exactly Bush's so-called "middle class" supporters who were hit the hardest.

    There is more than a bit of atavistic crypto-Calvinism involved in this aspect of the present Capitalism, to wit, the concept that workers ideally should be able to live not only on nothing but less than nothing.

    This is, by an underground passage, also connected to the interest in robots.

    Kucinich saw it, in lucid moments, as a new version of the "Company Store". But it was much more subtle than that.

    Even more amusing is that, since Bush and through Obama, the negative income working classes still have not figured out what hit them, and their children, and grandchildren born and unborn. Meanwhile the discoverers of this new economics bailed themselves out and are trying to resume the game.

    The idea that Señor Trump is going to do anything constructive in this mess is as absurd as the idea that Señora Clinton would have done same.

    There was some truth to "Magical Negro" theory, but that truth, contra Limbaugh, was in fact a set up by the same owners of the duopoly that engineered Clinton and Bush.

    Stay tuned for the "Magical White Man" narrative coming to your local unrecovered real estate markets soon. And keep hoping and praying for the loaves and fishes to materialize soon among "white people"--(& after Liddy just for good measure), SUCKERS!

    So IOW, your side lost the election. LOL!!

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  24. Wally says: • Website
    @Alden
    Correction: Rents of 10 to 15 percent income in Germany applies only for tenants in government housing.

    Tenants in private housing pay much higher prices. As everywhere else in the world, rents and housing prices depend on location

    Munich has one of the highest rents in Europe.

    With such a major mistake about low rents in Germany it is difficult to believe that anything else in the article is true.

    I lived in Frankfort Germany, another high rent city for 5 years. I'm familiar with the cost of private sector rents in Germany. And it's not 10 to 15 percent of income.

    And German taxes are sky high.

    Not to mention the lack of free speech.

    http://forum.codoh.com/

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  25. aandrews says:

    Has J Is for Junk Economics been released? I can’t find it on Amazon (or anywhere, for that matter).

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  26. @Kristen
    Regarding property taxes (an interest of mine now that I'm looking to buy a larger piece of property ... a forever home):

    There's a huge variation in how home properties are taxed in the various states (I'm in the West, so my interest is here). Texas, which has almost no income or sales tax, has high property taxes. AZ has lower property taxes, but higher income/sales taxes. Colorado is like AZ except they extract more from everyone. CA is an utter rip-off.

    So, it seems that taxation, on a state level, is three-pronged (income, sales and property) and states have to decide on how much weight they want to give to each form of taxation. But, be certain that they'll find a way to extract money from their citizens ... somehow. Few states cut expenses: they raise revenues instead. And those revenues have to come from somewhere.

    Property taxes are, in an odd way, a fair way to tax as everyone pays something. After all, we all live somewhere. Renters pay property taxes indirectly through raised rents; homeowners pay more directly. In states with a large number of illegal aliens working underground in a cash economy, thus avoiding taxes, emphasizing real estate taxes makes sense -- it captures their income for the taxman through rent.

    Property taxes have morphed into an utterly regressive tax. In 2016, the White Working Class is taxed as if they were multimillionaires….Which I suspect is the reason why Noam Chomsky….nice multimillion $$$$ estate on Wellsfleet Cape Code….is an enthusiast for the property tax.

    Read More
    • Replies: @anon
    How is it regressive? It is directly proportional to the value of property i.e. proportional to wealth (or, in case of mortgaged property, proportional to income since mortgage is usually 3 times income or so for most people). If anything, it is a fairly "flat" tax. Even better than Sales Tax since the rich can buy only so much stuff, the rest is usually saved/invested/tax sheltered. The only distortion I see is the trend to anchor assessed value to some point in past rather than market value to help the long term residents and elderly. But since this distortion was popularly enacted (and hence can always be popularly undone), there is nothing unfair about it.
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  27. Che Guava says:

    they have to find the tax revenue elsewhere – for instance, by sales taxes on what con summers buy.

    Sorry, I am understanding most of the logic here, but am having trouble with

    what con summers buy.

    Read More
    • Replies: @Willem Hendrik
    Consumers buy stuff.
    Con summers are rainy, windy days, when the weatherforecast made you prepare for a sunny day at the beach!
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  28. Anonymous says: • Disclaimer
    @Montefrío
    Maybe "nobody" needs to learn that no one gives a hoot about what he or she wants. No latte bars and nail salons? Too bad. If that's what's wanted, then accept debt-slavery and let the cottage crowd go about keeping out of debt and scratching out a life. They have or had far more dignity than those who become 30-year-indentured servants to dwell in a fiberboard box within striking distance of the mall.

    The “cottage crowd” today have easy access to the internet, cheap entertainment via the internet, and global supply chains via Amazon et al. They’re not exactly “scratching out a living” like the rural communities of the past.

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  29. bluedog says:
    @Kristen
    Ridiculous.

    Where I live -- Denver -- a hefty percentage of homes are bought with cash. Many of these homes become rental properties. Furthermore, a third of all homes in Phoenix, too, are bought "cash." So, your entire argument about mortgages seems a bit misplaced.

    There's an interesting sidebar to home prices here, in Denver, which will quickly spread to Vegas and all the towns/cities in CA since both these states have de-criminalized marijuana. Here the profits from growing and selling pot cannot be put into banks because of federal issues relating to the War on Drugs, so this money is put into the housing market. Many houses in Denver are bought with cash from the drug "industry." This has artificially inflated housing prices in Denver, a pattern I would expect to find in the states which voted to allow the sale of marijuana a few weeks ago.

    Expect to see a quick and government-induced increase in housing prices in Calif and Nevada.

    The same here in N.Y. as they are busy buying up and building rental property but the question is who’s buying up and building the rental property one guess and its not John Q. public but corporations after all they are the only ones left with the money to do it.!!!

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  30. woodNfish says:

    HUDSON: Nobody knows what it means because we don’t know whether he’s just going to turn the presidency over to the Republican Party’s lobbyists to write the bill. The implication is that when he talks about cutting taxes, being a narcissist he means cutting taxes for himself. He doesn’t mean cutting taxes on most people. There may be a small token tax cut for other people, but a big cut in the taxes on the highest wealth brackets. So, you can be sure that his constituency is going to get the biggest tax cuts.

    Actually Hudson, you don’t know jack shit about what Trump means when he says he will cut taxes, and your answer is a lie. THERE IS NO FEDERAL PROPERTY TAX. While this article seemed interesting it is obviously just more lying LSM slander, lies, and propaganda against Trump.

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  31. anon says: • Disclaimer
    @War for Blair Mountain
    Property taxes have morphed into an utterly regressive tax. In 2016, the White Working Class is taxed as if they were multimillionaires....Which I suspect is the reason why Noam Chomsky....nice multimillion $$$$ estate on Wellsfleet Cape Code....is an enthusiast for the property tax.

    How is it regressive? It is directly proportional to the value of property i.e. proportional to wealth (or, in case of mortgaged property, proportional to income since mortgage is usually 3 times income or so for most people). If anything, it is a fairly “flat” tax. Even better than Sales Tax since the rich can buy only so much stuff, the rest is usually saved/invested/tax sheltered. The only distortion I see is the trend to anchor assessed value to some point in past rather than market value to help the long term residents and elderly. But since this distortion was popularly enacted (and hence can always be popularly undone), there is nothing unfair about it.

    Read More
    • Replies: @War for Blair Mountain
    Anon

    You answered your own question. Property values go up....salary wages don't go up. You pay a greater percentage of your salary towards property taxes. When wealthy foriegners move in they bid up the market value of your home...causing your property taxes to rise. You can either lose your home in a property tax lien sale or pack up and leave.





    This is the basis of the property tax revolt across the US for the past year.


    The property tax is regressive be because you can wake up one day and be taxed as if you are a multimillion. This is what makes the property tax a highly regressive tax.


    Perhaps the National Forests can be cut down to have affordable housing for the victims of the highly regressive property tax.....But what happens when wealthy foriegners move in and bid up the cost of housing in the Adirondacks?....The property tax Ponzi scheme has very serious ecological consequences.
    , @Alfred1860
    As WfBM says, it is regressive to tax someone who does a better job of maintaining their home (hence sustaining or increasing its value, not to mention the fact that they would have paid many other forms of tax to do this) at a higher rate than his neighbor who lives in an identical house that he has allowed to become a shithole.

    I think the only fair way to levy property taxes is to base it on some combination of road/street frontage and lot size. Using such a formula would be beneficial to both the guy who wants to keep his home and property immaculate, and do the occasional renovation, without being penalized for it, and for the guy who just wants to live in a modest house without having the new development of McMansions next door inflate his tax bill.
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  32. @Che Guava

    they have to find the tax revenue elsewhere – for instance, by sales taxes on what con summers buy.
     
    Sorry, I am understanding most of the logic here, but am having trouble with

    what con summers buy.
     

    Consumers buy stuff.
    Con summers are rainy, windy days, when the weatherforecast made you prepare for a sunny day at the beach!

    Read More
    • LOL: Che Guava
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  33. @jacques sheete

    And keep hoping and praying for the loaves and fishes to materialize soon among “white people”–(& after Liddy just for good measure), SUCKERS!
     
    You write fine comments. Trump will not deliver on many, if any, of his campaign promises to the middle classes, not that Hillabeast was in any way preferable as you already noted.

    In fact, the main, if not only, positive from the circus is that the Hag won't be sitting in the oval office. Little else will change for the better.

    Apart from any issues, it is also very positive, and perhaps more important in the long run than now appears, that the mainstream media was so wrong, or better, deliberately fraudulent. Anyone who was paying close attention realized that the effort to hand the election to Señora Clinton, by polls and other means, was utterly absurd and that at the very least it would be close.

    Also it is clear that other channels of communication, besides the mainstream mediatics on television, “newspapers” on the internet, and so forth were significant for the Trumpists. Finally, as was never emphasized in the same mainstream, Señor Trump was already a non-political celebrity and media star. This meant that his mannerisms were already well known and part of his celebrity.

    How to evaluate all this is still an open question. Very early on, as someone who had read P. T. Barnum’s autobiography, one made an identification of Señor Trump as P. T. Barnum Redidivus–that is, the showman and impressario whom the rubes glory in being fooled by. One was surprised to learn that two American historians, also familar with Barnum, had made the same identification independently a few months earlier. Indeed, Señor Trump himself may have made it–his “I am so popular I could shoot people in the street” (or whatever the exact quotation is) was the essence of the Barnumesque. Also interesting is that the two American historians, like oneself, did not see the identification as showman and conman as something that would decrease his popularity–just the reverse.

    As perhaps a not completely trivial aside, one recalls a Southron writer, whose name one forgets, writing an article during Señor Clinton’s first run or office, identifying him as a classic Southron “scalawag”, and thus a popular folk figure in the South. It was a brilliant insight and similar to the Barnum angle, but only a Southerner or someone knowing the South could understand it. With Barnum it was more universal. Also interesting is that both Barnum and Trump were centered in New York City, but radiated their identity over the rest of the country, especially the MidWest.

    But all this just scratches the surface.

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  34. @Verymuchalive
    "No government entity ever forced a bank to give a risky loan inconsistent with sound and safe practices."
    Weasel words.
    No doubt it is true that no government has ever forced a bank , but if the government guarantees a bank loan, the bank will generally give it. Fannie Mae and Freddie Mac are recent examples of such schemes.

    Not weasel words at all. To qualify for government guarantees various risk models must be satisfied.

    The pressure to make those models and loans riskier and riskier came not from the government but from retail banking, which is most of United Statesian banking right now.

    And yes, anything with a Federal guarantee will likely result in a loan–from a retail bank. What do they care–they will sell the paper immediately.

    You obviously know very little about US banking. What do you suppose the Wells Fargo affair is about? Yes, illegally proliferating accounts but on a deeper level–lack of imagination.

    This because the offenders were not high enough up the hierarchy and had to bet on blind eyes among management. They were right of course about the blind eyes but at a certain level it is much safer simply to change the structure to make whatever is profitable legal.

    Thus also the bailouts, jeje.

    Read More
    • Replies: @Verymuchalive
    Since 1992 when their charters were altered, Fannie Mae and Freddie Mac have to reach "affordable housing goals." This has been government policy since. Indeed, Fannie Mae was so eager to please that it bought lots of sub-prime mortgages as investments ( ! ) in 2006 and 2007.
    In no country in the world has the housing market been so rigged by Government intervention as the " Home of Capitalism", the U. S of A. Home mortgages have been pushed at people who were likely to default, and the vast majority did.
    Of course much of the financial sector is corrupt and greedy, but you attempt to deny that most of this is coming from the very top, from government itself. A corrupt financial sector is a very useful tool for governments who want to use it for their own ends. And that's precisely what the US government has been doing for decades.
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  35. @anon
    How is it regressive? It is directly proportional to the value of property i.e. proportional to wealth (or, in case of mortgaged property, proportional to income since mortgage is usually 3 times income or so for most people). If anything, it is a fairly "flat" tax. Even better than Sales Tax since the rich can buy only so much stuff, the rest is usually saved/invested/tax sheltered. The only distortion I see is the trend to anchor assessed value to some point in past rather than market value to help the long term residents and elderly. But since this distortion was popularly enacted (and hence can always be popularly undone), there is nothing unfair about it.

    Anon

    You answered your own question. Property values go up….salary wages don’t go up. You pay a greater percentage of your salary towards property taxes. When wealthy foriegners move in they bid up the market value of your home…causing your property taxes to rise. You can either lose your home in a property tax lien sale or pack up and leave.

    This is the basis of the property tax revolt across the US for the past year.

    The property tax is regressive be because you can wake up one day and be taxed as if you are a multimillion. This is what makes the property tax a highly regressive tax.

    Perhaps the National Forests can be cut down to have affordable housing for the victims of the highly regressive property tax…..But what happens when wealthy foriegners move in and bid up the cost of housing in the Adirondacks?….The property tax Ponzi scheme has very serious ecological consequences.

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  36. islagiatt says:

    Ummmm….. Where are property taxes lower today than they were 5 years ago?

    Read More
    • Replies: @Alden
    Where do you live? during the housing crash where I live, although in theory a house would be worth a couple hundred thousand less than it had been in 2006, the taxes remained the same and the counties didn't budge an inch.
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  37. @E. A. Costa
    Not weasel words at all. To qualify for government guarantees various risk models must be satisfied.

    The pressure to make those models and loans riskier and riskier came not from the government but from retail banking, which is most of United Statesian banking right now.

    And yes, anything with a Federal guarantee will likely result in a loan--from a retail bank. What do they care--they will sell the paper immediately.

    You obviously know very little about US banking. What do you suppose the Wells Fargo affair is about? Yes, illegally proliferating accounts but on a deeper level--lack of imagination.

    This because the offenders were not high enough up the hierarchy and had to bet on blind eyes among management. They were right of course about the blind eyes but at a certain level it is much safer simply to change the structure to make whatever is profitable legal.

    Thus also the bailouts, jeje.

    Since 1992 when their charters were altered, Fannie Mae and Freddie Mac have to reach “affordable housing goals.” This has been government policy since. Indeed, Fannie Mae was so eager to please that it bought lots of sub-prime mortgages as investments ( ! ) in 2006 and 2007.
    In no country in the world has the housing market been so rigged by Government intervention as the ” Home of Capitalism”, the U. S of A. Home mortgages have been pushed at people who were likely to default, and the vast majority did.
    Of course much of the financial sector is corrupt and greedy, but you attempt to deny that most of this is coming from the very top, from government itself. A corrupt financial sector is a very useful tool for governments who want to use it for their own ends. And that’s precisely what the US government has been doing for decades.

    Read More
    • Replies: @E. A. Costa
    I hate to break it to you so suddenly, but sub-prime did not cause the real estate collapse, its collpase was an effect of it.

    Indeed, the first major residential mortgage bank to go bankrupt, and the harbinger of what was to come, American Home Mortgage, had NO sub-prime at all.

    Let one repeat--NO sub-prime.

    The whole sub-prime story is a mythology.

    One is not, for various reasons, going to go into more detail here.

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  38. apple paid 2% in tax, I paid 33% on my income :( fuckers.

    the walton family paid zero death tax, while I will pay 50% on my death, fuck that.

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  39. @Kyle McKenna
    One out of three homes in the USA is owned free and clear.

    And your point is? I would hope that anyone over the age of 55 owns their home free and clear. That’s a far cry from having paid cash for multiple homes, unless of course you have a job that requires you to move every two or three years as a senior consultant or something.

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  40. @anon
    How is it regressive? It is directly proportional to the value of property i.e. proportional to wealth (or, in case of mortgaged property, proportional to income since mortgage is usually 3 times income or so for most people). If anything, it is a fairly "flat" tax. Even better than Sales Tax since the rich can buy only so much stuff, the rest is usually saved/invested/tax sheltered. The only distortion I see is the trend to anchor assessed value to some point in past rather than market value to help the long term residents and elderly. But since this distortion was popularly enacted (and hence can always be popularly undone), there is nothing unfair about it.

    As WfBM says, it is regressive to tax someone who does a better job of maintaining their home (hence sustaining or increasing its value, not to mention the fact that they would have paid many other forms of tax to do this) at a higher rate than his neighbor who lives in an identical house that he has allowed to become a shithole.

    I think the only fair way to levy property taxes is to base it on some combination of road/street frontage and lot size. Using such a formula would be beneficial to both the guy who wants to keep his home and property immaculate, and do the occasional renovation, without being penalized for it, and for the guy who just wants to live in a modest house without having the new development of McMansions next door inflate his tax bill.

    Read More
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  41. Sam J. says:

    My Aunt lived in New Jersey and had to sell her house. The taxes were so high she said the taxes were the same as the payments. What happens if you are older and can’t pay such high property taxes? What happens if you lose your job but own your home then lose it to property taxes? I don’t like high property taxes. The first rule is you have to have somewhere to stand or stay and if that’s taxed at a high rate it becomes difficult to even keep a roof over your head.

    Read More
    • Replies: @War for Blair Mountain
    High property taxes is theft of wages and homes whose mortgages have been paid.


    The US population is exploding because of nonwhite Legal Immigrants.


    Affordable middle class housing in safe neighborhoods is very scarce and expensive resource for the struggling Native Born White American Middle Class. The property tax allows Asian Legal Immigrants to expell The Historic Native Born White American Middle Class from safe White Middle Class neighborhoods. Native Born White Americans are experiencing a defacto mass expulsion out of large parts of the US by post-1965 nonwhites...


    This is why I have 0 interest in POTUS Trump's aracial Nationional...it's the Nationialism of narcissistic Multi-billionaires...Aracial Nationalism is a massive lie.
    , @Alden
    6 years after I bought my first house the property taxes had risen to equal the mortgage payment. I did get one small raise during those 6 years but because income and social security tax rose the increase in take home pay was only $11.00 a month while the property taxes were going up by $100 to $130 per month year after year.

    That's why retired people have to take out those mortgages to just pay property taxes.
    , @dahoit
    Just received a political pat on the back county report that school taxes in Nassau County NY on average are 71% of the tax bill.
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  42. @Sam J.
    My Aunt lived in New Jersey and had to sell her house. The taxes were so high she said the taxes were the same as the payments. What happens if you are older and can't pay such high property taxes? What happens if you lose your job but own your home then lose it to property taxes? I don't like high property taxes. The first rule is you have to have somewhere to stand or stay and if that's taxed at a high rate it becomes difficult to even keep a roof over your head.

    High property taxes is theft of wages and homes whose mortgages have been paid.

    The US population is exploding because of nonwhite Legal Immigrants.

    Affordable middle class housing in safe neighborhoods is very scarce and expensive resource for the struggling Native Born White American Middle Class. The property tax allows Asian Legal Immigrants to expell The Historic Native Born White American Middle Class from safe White Middle Class neighborhoods. Native Born White Americans are experiencing a defacto mass expulsion out of large parts of the US by post-1965 nonwhites…

    This is why I have 0 interest in POTUS Trump’s aracial Nationional…it’s the Nationialism of narcissistic Multi-billionaires…Aracial Nationalism is a massive lie.

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  43. @Verymuchalive
    Since 1992 when their charters were altered, Fannie Mae and Freddie Mac have to reach "affordable housing goals." This has been government policy since. Indeed, Fannie Mae was so eager to please that it bought lots of sub-prime mortgages as investments ( ! ) in 2006 and 2007.
    In no country in the world has the housing market been so rigged by Government intervention as the " Home of Capitalism", the U. S of A. Home mortgages have been pushed at people who were likely to default, and the vast majority did.
    Of course much of the financial sector is corrupt and greedy, but you attempt to deny that most of this is coming from the very top, from government itself. A corrupt financial sector is a very useful tool for governments who want to use it for their own ends. And that's precisely what the US government has been doing for decades.

    I hate to break it to you so suddenly, but sub-prime did not cause the real estate collapse, its collpase was an effect of it.

    Indeed, the first major residential mortgage bank to go bankrupt, and the harbinger of what was to come, American Home Mortgage, had NO sub-prime at all.

    Let one repeat–NO sub-prime.

    The whole sub-prime story is a mythology.

    One is not, for various reasons, going to go into more detail here.

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  44. Alden says:
    @islagiatt
    Ummmm..... Where are property taxes lower today than they were 5 years ago?

    Where do you live? during the housing crash where I live, although in theory a house would be worth a couple hundred thousand less than it had been in 2006, the taxes remained the same and the counties didn’t budge an inch.

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  45. Alden says:
    @Sam J.
    My Aunt lived in New Jersey and had to sell her house. The taxes were so high she said the taxes were the same as the payments. What happens if you are older and can't pay such high property taxes? What happens if you lose your job but own your home then lose it to property taxes? I don't like high property taxes. The first rule is you have to have somewhere to stand or stay and if that's taxed at a high rate it becomes difficult to even keep a roof over your head.

    6 years after I bought my first house the property taxes had risen to equal the mortgage payment. I did get one small raise during those 6 years but because income and social security tax rose the increase in take home pay was only $11.00 a month while the property taxes were going up by $100 to $130 per month year after year.

    That’s why retired people have to take out those mortgages to just pay property taxes.

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  46. Boris N says:

    This always happens when you give up your government to banks and the 1%.

    I only wonder if it is really so bad and unbearable in the USA and if the situation is the same in other developed countries.

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  47. dahoit says:
    @Sam J.
    My Aunt lived in New Jersey and had to sell her house. The taxes were so high she said the taxes were the same as the payments. What happens if you are older and can't pay such high property taxes? What happens if you lose your job but own your home then lose it to property taxes? I don't like high property taxes. The first rule is you have to have somewhere to stand or stay and if that's taxed at a high rate it becomes difficult to even keep a roof over your head.

    Just received a political pat on the back county report that school taxes in Nassau County NY on average are 71% of the tax bill.

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  48. @Verymuchalive
    Homeownership was lower in many other ( industrialised/de-industrialised ) countries in 1960 than now, for example UK, Republic of Ireland, Australia. The common factor is governments getting banks to push mortgages at people, many who ultimately couldn't afford them. This was at variance with traditional lending practices.
    In these countries, the percentage who owned their homes outright - no mortgages- would be considerably higher in 1960 than today

    Exactly, governments have been stocking up the demand for housing, while doing little to stimulate the building of more houses. The inevitable result is expensive housing and or more people indebted to the banks. Australia used to have one of the world’s most affordable housing markets, now it has one one the world’s most expensive.

    As far as taxes increasing, this is largely because of the removal of import tariffs. In the past tariffs were an important source of revenue, and that short fall in revenue from cutting tariffs has to be made up by increasing taxes elsewhere.

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