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.

 

[Norman Alexander]

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

Liked, but see post #2.

 

[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.

That town with 2 acre lots was set up as an enclave for the rich. It might as well post a sign not to enter unless you make 7 figures. My belief is that kind of zoning should be illegal. I owned a 2400 square foot house on a 1/3 acre lot. Man I hated mowing it. You could have put 2 or three more houses on that lot.

 

[TragicMonkey]

Liked, but see post #2.

I saw your avatar like five times before I realized it wasn't one of the aliens in The Fifth Element.

 

[Orphia Nay]

I saw your avatar like five times before I realized it wasn't one of the aliens in The Fifth Element.

I see Jabba the Hutt.

 

[Norman Alexander]

I saw your avatar like five times before I realized it wasn't one of the aliens in The Fifth Element.

Mangalores...MAGA-lores?? That would have been an excellent alternative! Thanks for the hint!

 

[TragicMonkey]

CNN reporting Trump just "made a deal" with El Salvador that they'll accept deportees of any nationality from the US...and also they'll accept into their prisons American prisoners. Americans, born in America, shipped off to a foreign prison. Um, that seems very wrong to me. Alarmingly, unconstitutionally, stripping-people-of-their-rights wrong.

 

[Norman Alexander]

CNN reporting Trump just "made a deal" with El Salvador that they'll accept deportees of any nationality from the US...and also they'll accept into their prisons American prisoners. Americans, born in America, shipped off to a foreign prison. Um, that seems very wrong to me. Alarmingly, unconstitutionally, stripping-people-of-their-rights wrong.

Ask SCOTUS about that!

Oh wait...

Are the affected people brown? Then the original constitution didn't apply to them. Too bad, how sad.

 

[TragicMonkey]

Are the affected people brown? Then the original constitution didn't apply to them. Too bad, how sad.

The affected people could be anybody, any American. And once shipped off (sold?) to El Salvador I'm guessing they won't retain any of their rights as Americans. Trump and his cronies could just dump Americans they don't like into an El Salvadorean prison and that would be the end of them. This is straight up dictator stuff. Every day we slide further into it. This is insanity.

 

[Norman Alexander]

The affected people could be anybody, any American. And once shipped off (sold?) to El Salvador I'm guessing they won't retain any of their rights as Americans. Trump and his cronies could just dump Americans they don't like into an El Salvadorean prison and that would be the end of them. This is straight up dictator stuff. Every day we slide further into it. This is insanity.

I can see the El Salvadoreans making a massive profit off this. Because they will be paid to take these "prisoners". Who they will then quietly let out of jail (if they ever put them in), and encourage them to walk back to the USA via Mexico. Sooner or later they will be transported again, for another bite of profit.

 

[Brainster]

That town with 2 acre lots was set up as an enclave for the rich. It might as well post a sign not to enter unless you make 7 figures. My belief is that kind of zoning should be illegal. I owned a 2400 square foot house on a 1/3 acre lot. Man I hated mowing it. You could have put 2 or three more houses on that lot.

We had a full acre, although about a quarter of it was wooded; still took about 2 hours to mow. My current house is on about a quarter acre so in theory its big enough for another house, but it's a pie-shaped lot so the back yard is huge compared to the front. Desert landscaping so no mowing and only occasional weeding.

BTW, the two-acre zoning town is Saddle River, New Jersey, and yes, it is very rich--the kind of town today where former NBA stars (Vince Carter, Jason Kidd, Mark Jackson) and TV personalities (Rosie O'Donnell, Andrew Dice Clay) live(d). Nixon lived there for awhile after leaving the White House. Having dated a few gals from there back in my high school days, I can tell you that the houses you could see from the road might be pretty spectacular, but it was the ones you had to drive a quarter mile back in the woods that would really take your breath away.

 

[The Great Zaganza]

I mean - can you fix stupid?
Trump claimed to bring in billions in Tarifs, and then instantly backs down for token gestures.
And he won't lose any support for it, on the contrary, his supporters will gush who big and powerful he was getting them nothing in return for pissing off allies.

It might take a generation to get over this brain deficit.

 

[Norman Alexander]

The affected people could be anybody, any American. And once shipped off (sold?) to El Salvador I'm guessing they won't retain any of their rights as Americans. Trump and his cronies could just dump Americans they don't like into an El Salvadorean prison and that would be the end of them. This is straight up dictator stuff. Every day we slide further into it. This is insanity.

All true. Just that it all applies to only brown people.

 

[TragicMonkey]

All true. Just that it all applies to only brown people.

To begin with.

 

[Resume]

Until trumpism is rooted out, there ain't no fixen nothin'.

 

[Norman Alexander]

To begin with.

Everyone is a shade of brown, to Elon.

 

[acbytesla]

We had a full acre, although about a quarter of it was wooded; still took about 2 hours to mow. My current house is on about a quarter acre so in theory its big enough for another house, but it's a pie-shaped lot so the back yard is huge compared to the front. Desert landscaping so no mowing and only occasional weeding.

BTW, the two-acre zoning town is Saddle River, New Jersey, and yes, it is very rich--the kind of town today where former NBA stars (Vince Carter, Jason Kidd, Mark Jackson) and TV personalities (Rosie O'Donnell, Andrew Dice Clay) live(d). Nixon lived there for awhile after leaving the White House. Having dated a few gals from there back in my high school days, I can tell you that the houses you could see from the road might be pretty spectacular, but it was the ones you had to drive a quarter mile back in the woods that would really take your breath away.

I have a friend who lives in the Highlands in Seattle, Washington. It is a gated community with a guard house at the main entrance. There are other gates which can be accessed with a remote control that residents get with the homes. It used to be the most exclusive neighborhood in the Seattle Metro area. The founder of Boeing created the enclave. You can't even see any of the spectacular homes from outside its fences. This is heavily wooded area. Some of the homes line the private Seattle Country Club. Others are on the hill or cliff overlooking Puget Sound. Spectacular views of the Sound and Olympic Mountains.

The only way riff raff like me saw what was inside those fences was my friend purchased a house there during the mortgage crisis. He got it cheap. (For that area) It had lost more than half its market value as a result. He bought it for 900K. He had a nice home in Torrey Pines that he inherited from his parents. Nothing spectacular. But a very expensive neighborhood. He wouldn't have spent all that money on a gome here in Seattle normally. But he was looking at a huge tax bill if he didn't use most of that money on a home here. So he bought the most he could in Seattle. Now, you would probably be lucky to purchase it for under 5 million.

The lots in the Highlands vary in size and cannot be subdivided because of covenants. So it has nothing to do with government zoning. More the result of the privileges of being rich and powerful. I doubt there is one less than an acre and other lots probably as large as 5.

 

[Minoosh]

The affected people could be anybody, any American. And once shipped off (sold?) to El Salvador I'm guessing they won't retain any of their rights as Americans. Trump and his cronies could just dump Americans they don't like into an El Salvadorean prison and that would be the end of them. This is straight up dictator stuff. Every day we slide further into it. This is insanity.

The prison would be "Salvadoran." People from El Salvador are called Salvadorans.

 

[Minoosh]

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.

It's not necessarily great for the homeowner because although they get a wad of cash they still have to live somewhere. They can downsize or move to a cheaper market. Or live in an RV but you have to park it somewhere and often pay for the privilege.

 

[TragicMonkey]

The prison would be "Salvadoran." People from El Salvador are called Salvadorans.

If you want to be pendantic --am I'm assuming you do-- they'd be Salvadoreños. Or Salvadoreñas if the ones being referenced were female. But I suspect this is not a particularly important point and that both of us wasted time on it.

 

[Brainster]

I have a friend who lives in the Highlands in Seattle, Washington. It is a gated community with a guard house at the main entrance. There are other gates which can be accessed with a remote control that residents get with the homes. It used to be the most exclusive neighborhood in the Seattle Metro area. The founder of Boeing created the enclave. You can't even see any of the spectacular homes from outside its fences. This is heavily wooded area. Some of the homes line the private Seattle Country Club. Others are on the hill or cliff overlooking Puget Sound. Spectacular views of the Sound and Olympic Mountains.

A friend of mine rented a place in Tuxedo Park, which was one of the first gated communities in the USA. The word "tuxedo" comes from there and apparently it was quite swanky back in the 1920s-1940s, but by 1980s when I visited, it was pretty tired. Looking it up now, there are some real mansions, but apparently the median home price is only about $900K, which in the NY metro area means pretty cheap.