Philly Realtors For Taxing Land, Not For Loopholes
Tax Breaks for Goldman Sachs, Disney, NASCAR, et al
It's the few who don't need a break that win them. To lose such loopholes, lose taxes in general, and replace them with what? We excerpt three 2013 articles from: (1) Truthout, Jan 2, on extended breaks by M. Stoller; (2) the Mercatus Center, Jan 8, on mortgage interest by A. Castillo; and (3) Philadelphia Business Journal, Jan 15, on land tax by N. Kostelni.
by Matt Stoller, by Andrea Castillo, and by Natalie Kostelni
Corporate Subsidies in the Fiscal Cliff Bill
Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted -- “tax extenders”, or roughly $205B of tax breaks for corporations. Here are eight corporate subsidies in the fiscal cliff bill .
JJS: From a direct tax break for several businesses to an indirect tax break for land speculators.
The Home Mortgage Interest Deduction: A Bad Deal for Taxpayers
One of the most popular—and therefore one of the most difficult to reform—subsidies in the tax code is the home mortgage interest deduction. This policy fails to achieve its intended effects and the fact that a lion’s share of the benefits go to high-income homeowners. The benefits of this policy are overstated and the consequences are understated.
The home mortgage interest deduction is one of the largest tax expenditures in the U.S. tax code, second only to the non-taxation of employer-provided health insurance and pension contributions. A mere 21.7% of taxpayers even claim this benefit. What’s more, most of these benefits don’t go to the middle class, but rather to households with incomes of over $200,000.
The claim that this policy is necessary to encourage home ownership is dubious as well. Between 1960 and 1997, homeownership rates stayed within 62 to 66 percent, despite the fact that the deduction's value fluctuated dramatically.
The home mortgage interest deduction likely creates the perverse effect of discouraging homeownership by artificially raising home [site] values. The value of the deduction is simply capitalized into price.
Countries like Canada and Australia have managed to produce comparable rates of home ownership as the US without a mortgage interest deduction.
To read more
JJS: Some thoughtful and well-meaning people offer some insights on how to make revenue policy work right for everyone, but can the answer be found by keep thinking within the old left/right box?
Our Unjust Federal Tax System
Economic Update with Professor Richard Wolff and guests will discuss the current state of the economy, both locally and globally in relation to the economic crisis.
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JJS: From an attempt to correct dumb taxes by an academic to a real solution by, believe it or not, a business lobby.
Allan Domb, Next President of the Greater Philly Realtors
This Realtors Association has tackled such issues supporting legislation that looked at implementing a land value tax and lowering the city wage tax.
JJS: Some realtors understand that when land is taxed, they might not make quite so much money from each sale but they will enjoy many more sales as owners who had been waiting to sell would get prodded to offer their parcels to buyers.
Everyone else benefits, too. Having to pay land dues or land taxes spurs owners to put their lots to best use, which means urban land gets used more efficiently. That prevents sprawl with all its traffic and pollution and waste of energy and other resources.
Another major benefit is that putting land to use puts labor to use, too, so poverty is ended. And recessions would be over, too, once owners and investors lose the profit motive to bid up the price of land, which sucks people’s money out of the productive sectors of the economy.
It gets better. When society recovers the socially-generated value of sites and resources, then it need not tax things like earnings, purchases, and buildings. Once those taxes get wiped away, they take their tax breaks with them, and the favoritism for insider businesses.
This rational revenue policy could be called geonomics and has worked wherever tried.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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