Fixing America

[GlennB]

The biggest thing that sentence says is that official figures are way off the pace when it comes to inflation. But that is not at all surprising when you realise that most staple goods have been taken out of inflation calculations.

They haven't in the UK.

 

[SteveAitch]

They haven't in the UK.

A full list can be found in the Excel files on this page. Only up to 2024 though.

 

[TellyKNeasuss]

From my perspective, that tax exemption shouldn't exist. That is what turned homes into investments, instead of places to live. Increasing the exemption maintains the idea that a home is an investment. It turns the middle class into speculators. Buy a house, flip it in a couple of years and do it again. All tax free. Increasing the tax exemption makes it more attractive to sell. Which is great for them. But is does nothing about housing supply. I'm really not interested in heating up the housing market. I'm interested in solving the housing crisis and creating affordable living.

If you think I'm wrong about the tax exemption, please tell me what you think I'm missing.

The home mortgage income tax deduction is, in the USA, an accident of history. When the income tax was implemented in the early 20th century, most Americans paid cash for houses and most businesses were individually owned small businesses. The govt. wanted to make business loan interest tax deductible, and it was felt that it was easier to just make all loans tax deductible rather than burdening small with keeping track of personal vs. business loans. The deduction was never eliminated as mortgages became more common precisely because it inflates the price of houses. Real estate agents make a percentage of the sale price, so the higher the price the more they make, and real estate agents have been bribing politicians, er, exercising their free speech rights to make political donations in order to keep the deduction in place.

 

[acbytesla]

The home mortgage income tax deduction is, in the USA, an accident of history. When the income tax was implemented in the early 20th century, most Americans paid cash for houses and most businesses were individually owned small businesses. The govt. wanted to make business loan interest tax deductible, and it was felt that it was easier to just make all loans tax deductible rather than burdening small with keeping track of personal vs. business loans. The deduction was never eliminated as mortgages became more common precisely because it inflates the price of houses. Real estate agents make a percentage of the sale price, so the higher the price the more they make, and real estate agents have been bribing politicians, er, exercising their free speech rights to make political donations in order to keep the deduction in place.

I think you or I misunderstand each other. I was not referring to the deduction for the interest. But the capital gains tax exemption when you sell the house. As it presently stands, you can buy a house and when you sell the house, your gain is tax deductible up to $250,000 or $500,0000 for a couple.

 

[acbytesla]

One problem is when the US attacks its own successful businesses. Opiate addicts used to be able to rely on US produced opiates (oxycodone) and the profits from the sale of the opiates was kept in the US. The drugs were produced to a high and consistent quality. The profit was taxed. Attacking US based manufacture hasn't stopped people being addicted they have just moved to using imported fentanyl, often of variable quality. The profits are off shored, and the US has lost the tax. The US needs substitution therapy, replace Chinese fentanyl with US oxycodone. Use a hypothecated opiuate tax to fund drug addiction services.

Opioid Use Disorder

In 2017, more than 72,000 Americans died from drug overdoses, including illicit drugs and prescription opioids, a 2-fold increase in a decade.

www.psychiatry.org

(This post is intended to be satirical)

Food in the last few years has skyrocketed. And it hasn't just been eggs. Still, I think the rise of housing and medical costs are far greater problems.

 

[TellyKNeasuss]

I think you or I misunderstand each other. I was not referring to the deduction for the interest. But the capital gains tax exemption when you sell the house. As it presently stands, you can buy a house and when you sell the house, your gain is tax deductible up to $250,000 or $500,0000 for a couple.

Oops!

 

[The Great Zaganza]

What is needed is some actual populism, not one directed by the Right-wing billionaire apparatus.

 

[acbytesla]

Oops!

I made a mistake there. It's not deductible, it's tax exempt.

 

[TomB]

From my perspective, that tax exemption shouldn't exist. That is what turned homes into investments, instead of places to live. Increasing the exemption maintains the idea that a home is an investment. It turns the middle class into speculators. Buy a house, flip it in a couple of years and do it again. All tax free. Increasing the tax exemption makes it more attractive to sell. Which is great for them. But is does nothing about housing supply. I'm really not interested in heating up the housing market. I'm interested in solving the housing crisis and creating affordable living.

If you think I'm wrong about the tax exemption,
please tell me what you think I'm missing.

First, I agree that a residence shouldn't be treated as an investment. It's actually for that reason that I think your primary residence should to some extent at least be exempt from capital gains. Here's why:

I bought my house for $85,000 in 1998. According to Zillow, it's now worth something like $170,000. I can sell it and I've made $85,000 right?
Not really.
I still need somewhere to live. If I buy an equivalent house in the same area, it's going to cost me...$170,000. I haven't really gained anything.
Yes, I can put that (and additional money) towards a nicer house, but I can't actually buy a nicer house with the proceeds of the sale, so that doesn't actually increase my bottom line.

Now, I could downsize. Buy a smaller house with the proceeds of the sale and put the remainder in my bank account. If I had bought a smaller house to begin with and saved the excess money I might or might not have ended in the same place depending on the real estate market at the time of purchase and of sale.

So it makes sense to me that proceeds that are then applied to purchasing another residence should be exempt. It's probably simpler to just set a dollar limit.

Note that this exemption only applies to your primary residence, can only be taken once every two years, and you must have occupied the house 24 months of the past five years. Which means it doesn't apply to flippers or landlords, although there is a way to game that last one.

 

[acbytesla]

One problem is when the US attacks its own successful businesses. Opiate addicts used to be able to rely on US produced opiates (oxycodone) and the profits from the sale of the opiates was kept in the US. The drugs were produced to a high and consistent quality. The profit was taxed. Attacking US based manufacture hasn't stopped people being addicted they have just moved to using imported fentanyl, often of variable quality. The profits are off shored, and the US has lost the tax. The US needs substitution therapy, replace Chinese fentanyl with US oxycodone. Use a hypothecated opiuate tax to fund drug addiction services.

Opioid Use Disorder

In 2017, more than 72,000 Americans died from drug overdoses, including illicit drugs and prescription opioids, a 2-fold increase in a decade.

www.psychiatry.org

(This post is intended to be satirical)

I'm glad to hear that. As I was having trouble following that.

 

[acbytesla]

First, I agree that a residence shouldn't be treated as an investment. It's actually for that reason that I think your primary residence should to some extent at least be exempt from capital gains. Here's why:

I bought my house for $85,000 in 1998. According to Zillow, it's now worth something like $170,000. I can sell it and I've made $85,000 right?
Not really.
I still need somewhere to live. If I buy an equivalent house in the same area, it's going to cost me...$170,000. I haven't really gained anything.
Yes, I can put that (and additional money) towards a nicer house, but I can't actually buy a nicer house with the proceeds of the sale, so that doesn't actually increase my bottom line.

Now, I could downsize. Buy a smaller house with the proceeds of the sale and put the remainder in my bank account. If I had bought a smaller house to begin with and saved the excess money I might or might not have ended in the same place depending on the real estate market at the time of purchase and of sale.

So it makes sense to me that proceeds that are then applied to purchasing another residence should be exempt. It's probably simpler to just set a dollar limit.

Note that this exemption only applies to your primary residence, can only be taken once every two years, and you must have occupied the house 24 months of the past five years. Which means it doesn't apply to flippers or landlords, although there is a way to game that last one.

It does absolutely. And that nails the reason for the exemption. And I took advantage of that exemption twice. But it does little to address housing shortages and skyrocketing home values. Great for the homeowner, but renters remain screwed.

 

[Thermal]

Still totally not getting this. "Houses" don't cost more than they did in granpda's day, except that they are of exponentially higher quality. Maintenance free exteriors, dishwashers, high efficiency heating to offset the rocketing fuel costs, double paned windows and insulation and all that. You weren't lounging in a G-string in the living room in sub zero temps like you can now. Many older homes had one bath, and that one small. No one wants the stripped down home anymore.

The problem with high costs is lot value. Dramatically lower the lot value and everything becomes manageable. The lot value is based on market forces, like any other investment. So what needs to be done?

 

[acbytesla]

Still totally not getting this. "Houses" don't cost more than they did in granpda's day, except that they are of exponentially higher quality. Maintenance free exteriors, dishwashers, high efficiency heating to offset the rocketing fuel costs, double paned windows and insulation and all that. You weren't lounging in a G-string in the living room in sub zero temps like you can now. Many older homes had one bath, and that one small. No one wants the stripped down home anymore.

The problem with high costs is lot value. Dramatically lower the lot value and everything becomes manageable. The lot value is based on market forces, like any other investment. So what needs to be done?

You're right. And if that lot is zoned for single family residences it creates a shortage. This is why I mention this in the opening post. Change zoning laws to begin with. Don't issue permits for single family residences. Don't allow mcmansions in urban areas.

Increase density above all.

 

[Thermal]

You're right. And if that lot is zoned for single family residences it creates a shortage. This is why I mention this in the opening post. Change zoning laws to begin with. Don't issue permits for single family residences. Don't allow mcmansions in urban areas.

Increase density above all.

Just kicks the can down a relatively short road, though. The market will react by raising the lot value further, and the smaller properties have the value of today's larger ones.

Extreme density is a questionable solution. Packing people in like sardines works for some folks, but not all. In my fair NJ (the nations most densely populated, with every county designated urban), we have so many problems with high density destroying the environment that we move in the opposite direction, requiring more land to build on. Paving over every blade of grass to make parking lots for new million dollar entry level condos is not solving this problem.

 

[Brainster]

You're right. And if that lot is zoned for single family residences it creates a shortage. This is why I mention this in the opening post. Change zoning laws to begin with. Don't issue permits for single family residences. Don't allow mcmansions in urban areas.

Increase density above all.

This. The first town I lived in had a minimum lot size of 6000 square feet, so you could (in theory) get 7 houses per acre. The second town had a minimum lot size of 22,000 square feet or a little under 2 houses per acre. The town we shared our high school with had one-acre zoning, and the really ritzy town next to them required two acres. I shouldn't have to mention that the per square foot value of land was higher the more restrictive the zoning; thus the land cost alone of building a house in the last town was even more than 14 times as expensive as in the first town. BTW, these towns were all next to each other, within a 5-mile radius.

 

[Mike!]

Trump is planning on "Fixing" America in much the same fashion as I plan on "fixing" my dog.

 

[acbytesla]

Just kicks the can down a relatively short road, though. The market will react by raising the lot value further, and the smaller properties have the value of today's larger ones.

Extreme density is a questionable solution. Packing people in like sardines works for some folks, but not all. In my fair NJ (the nations most densely populated, with every county designated urban), we have so many problems with high density destroying the environment that we move in the opposite direction, requiring more land to build on. Paving over every blade of grass to make parking lots for new million dollar entry level condos is not solving this problem.

No I beg to differ. I've lived in downtown Seattle and in the University District and I loved living in both places. Both very dense neighborhoods. As long as it is done right with essential services like supermarkets and other businesses close by as well as access to parks and transportation. But I do agree that more than changing zoning laws needs to take place. We have to build a lot more housing.

 

[acbytesla]

This. The first town I lived in had a minimum lot size of 6000 square feet, so you could (in theory) get 7 houses per acre. The second town had a minimum lot size of 22,000 square feet or a little under 2 houses per acre. The town we shared our high school with had one-acre zoning, and the really ritzy town next to them required two acres. I shouldn't have to mention that the per square foot value of land was higher the more restrictive the zoning; thus the land cost alone of building a house in the last town was even more than 14 times as expensive as in the first town. BTW, these towns were all next to each other, within a 5-mile radius.

Yep. They don't want to live among the riff raff. It's an "exclusive" neighborhood.

 

[ponderingturtle]

I expect a lot of them will be bought up by the wealthy, and then rented out to the masses. That way they can extract the money from them without giving up the assets themselves. The larger corporations might think to do that, and bring back company housing. Some of the oligarchs might enjoy being medieval liege lords and allow peasants to exchange labor for housing. It'll be very interesting.

Ah capitalism at its heart and therefor a moral good for such things to happen.

 

[arthwollipot]

What is needed is some actual populism, not one directed by the Right-wing billionaire apparatus.

No, populism is not the answer. People are dumb, panicky animals and you know it. Populism consists of reacting to the latest peur du jour, which is not necessarily rational or wise. Futhermore, it is very easy to manipulate with propaganda so that the people are frightened of what you want them to be frightened of, and therefore very susceptible to being directed by the right-wing billionaire apparatus, which is why it is the right's modus operandi.