Saturday, October 15, 2011

999 and the Home Owners Deduction

999 would not hurt the housing industry; it would stabilize it. Like most swords, the income tax deduction for making interest payments for buying homes is double-edged. Yes, it can encourage booms in the housing industry. (Not that booms are necessarily a good thing.) Obviously, people are attracted to put money in things conventional wisdom counts on to appreciate in value, especially when doing so reduces their tax rates. However, There Is No Free Lunch! The slack will be taken up in increased costs for new buyers. So this is just another kind of gimmicky pyramid scheme, for making younger generations pull burdens imposed by elders. The benefit of the income tax deduction is temporary, being most prominant for those who get into the game early, but less likely to flow through to very much benefit for following generations. Further, young families need to move more often to follow the job market. Home ownership, especially once the market stagnates, becomes an anvil around their necks. The popular benefits under home buyers' interest deductions are a lot like robbing younger Peter to pay older Paul (and the gimmick man in the middle). This cynical kind of connivery occurs every time government engages in stumulus shenanigans! Every time, these schemes blow unsustainable bubbles into the market. If government could be Made To Butt Out And Confine Itself To Its Proper, Limited Role, the market would become more balanced and less enticing to sharpies, panderers, and race baiters, who are practiced in arts for leveraging gimmicks, credit default swaps, and other unsane hedges, but who otherwise constitute drags on society. If the market were freed to balance home needs, people would be more inclined to rent while their jobs were in flux, and they would be less inclined to take speculative risks by buying homes that are larger than they need or can safely afford. Landlords would still build and rent housing, just more realistically coordinated with the market. It hardly takes an economist to spot a ponzi scheme. The goal should be to make Congress as unneeded as possible.


Anonymous said...

From A.T. -- "There are no quick fixes in the real world." I think that's right. However, easy promises and the appearance of "doing something," no matter how wrong, seem to be effective techniques for getting votes and sometimes for raising confidence. FDR's feeling people's pain and getting in the hole with them to help them dig deeper helped him keep getting elected. Best would be if government just stopped doing the wrong things, got out of the way, and the people could sense confidence in that approach. Problem is, that doesn't seem to bring out voters and it's not coordinate with the agenda of wannabes.

Anonymous said...

I hope Herman's faith is real. I worry about the economists he admires. I hope Mitt and Rick's expressions of faith are real. I worry about easy promises, acrobatic flips, crony appointments, and sell-out opportunism. Where does any striving politician with few resources go to get quick money for organizing and campaigning? He puts out gimmicks and for-sell ads. He lets Johns and Cannibalizers know he's a talented whore and their gimmick guy. He fools idiots, and he panders to manipulators. Appointments and czars. Flat taxes. No death taxes. Redistributions. Currency manipulations. Border enforcement in name only. "Free" trade with despots. Corporate-welfare. Crony-Capitalism. Crony-Socialism. Thug buyers of technologies and arms. Off-shore laundered contributions. Dividing and laying waste to everything that could assimilate an independent and resistant middle class. Facilitating competitions for cheap third world labor. Inciting class, race, gender, and generational warfare. Hounding assimilating faiths.

The deck's been stacked. Against foreign despots and homegrown, faithless nihilists, the middle class has been declawed of capacity to fund or control candidates to do more than promise to defend America, all the while selling America out. Among those who now control the springs of power, except in pretense, faith in America has all but died out. Certainly, faith is derided in most of America's main institutions! Until that trend changes, lights will continue to flicker out. Fake? What's fake is the snake oil that mere forms, gimmicks, and tax laws can fix the middle class! What? Widening the wealth-power chasm is supposed to protect us from the bad faith of those who would reimpose serfdom? If there's justice, it consists in this: The hell cronies make will consume them as well. Once faith is lost, no one is safe.

Stop hounding proponents for higher values from the public square. Tax all citizens. Smart trade. Use death taxes to limit inherited wealth from morphing into some callous breed with delusions of superiority. Stop crap that assimilates the world to accomodate cronies, despots, and terrorists. There's little hope for preserving America so long as there abides so little appreciation for what America is.