[FoRK] [Fwd: Re: Then there's this...]
Stephen D. Williams
sdw at lig.net
Fri Feb 27 13:57:19 PST 2009
-------- Original Message --------
Subject: Re: Then there's this...
Date: Fri, 27 Feb 2009 13:57:11 -0800
From: Stephen D. Williams <sdw at lig.net>
To: Jeff Bone <jbone at place.org>
References: <104A57FF-A110-4583-9D42-E2BE32123618 at place.org>
<0FA05645-EB95-4D94-9B4E-A213913C9712 at place.org>
<891A9389-AFF2-48EA-81C1-3E4E42B82EE9 at place.org>
Seems like a minor point.
Assume that more revenue must be collected during a certain near term
(for some values of more and near), where would you gather it? For each
incremental level of funding, where would you get it for the most
beneficial / least destructive effects?
Don't complain unless you have a better alternative. Wishing the budget
was balanced while pitching mainly to make it worse ("cut taxes no
matter what") isn't really that helpful. Insisting on things that can't
be done doesn't help either (cancel the military, cancel medicare...).
Some core reasons that the housing bubble happened were easy credit,
good tax writeoffs, etc., i.e.: huge mortgages were affordable. That
shouldn't have happened to the degree it did. Pulling back on that
could be considered prudent. Yet, you disagree with this measure. Tax
breaks are all about incentives and taking the most revenue with the
least bad effects. This seems like modest pressure to heal the bad
situation. Certainly, any pressure may make things worse first, however
we're already deep into that.
Jeff Bone wrote:
> So everyone with three functioning brain cells left understands that
> declining home asset values and mortgage lending are at the heart of
> the present economic crisis, with basically halted consumer
> discretionary spending a distant third. So explain this insanity:
> Apparently anyone that owns a home --- well, at least those that own
> homes they can, or *could* afford --- is now in that "rich" class that
> needs to be punished.
> "Households paying income taxes at the 33% and 35% rates can currently
> claim deductions at those rates. Under the Obama proposal, they could
> deduct only 28% of the value of those payments… For the 2009 tax
> year, the 33% tax bracket starts with couples with taxable earnings of
> $208,850, when adjusted for personal exemptions and various deductible
> expenses. A taxpayer in the top bracket paying $1,000 of mortgage
> interest, for example, would see a tax break worth $350 reduced to $280."
> Now, that may not seem like a lot, but it *certainly* has a broader
> impact than is perhaps immediately obvious. This is *guaranteed* to
> have a non-linear impact in keeping home prices depressed, increasing
> foreclosures as those that were on the cusp now find themselves unable
> to afford their houses, and / or constraining future recovery of home
> asset values. Furthermore, the home interest mortgage deduction is
> usually the biggest single deduction in most middle- to upper-middle
> class homeowner household taxes, and therefore central to the question
> of how much home they can afford *and* what their annual discretionary
> budget is; in regards to the latter, this will *certainly* keep
> consumer spending depressed for even longer, and cause cascading
> failures throughout the transitive consumer economy and its entire
> supply chain, leading to further business closures and job losses.
> This is the single worst "tactical" tax adjustment I've managed to
> find so far in this behemoth of economic stupidity.
> Coupled with the other adjustments (cap gains hikes, marginal tax
> hikes, protectionism, the wrong sort of new regulation for financial
> markets --- including a securities transaction tax --- and insane
> massive deficit spending increases) --- I have to say, this is
> actually *a lot worse* than I thought it was going to be.
More information about the FoRK