Housing Is Too High Sans Real Tax Reform
|May 15, 2012||Posted by Jeffery J. Smith under Progress Report, The Progress Report|
Housing Is Too High Sans Real Tax Reform
Do Current Taxes Drive FaceBook Founder Elsewhere?
Being paid big bucks doesn’t mean that you’re worth it. We trim, blend, and append three 2012 and one 2011 articles from: (1) Los Angeles Times, May 12, on Saverin by R. Lynch; (2) LA Times, May 8, on markets by M. Kinsley (Bloomberg columnist); (3) CommonDreams, Nov 8, on health by J. Matthaei and N. Wollman; and (4) Economic Voice, May 12, on housing by J. Taylor.
by Rene Lynch, by Michael Kinsley, by Julie Matthaei & Neil Wollman, and by Jeff Taylor
Americans feel defriended over FaceBook tax dodge
Eduardo Saverin, the Facebook co-founder, renounced his U.S. citizenship, defriending the country that made him rich.
Saverin is Mark Zuckerberg’s Facebook co-founder, and his role in the business venture was immortalized in the Oscar-winning film, The Social Network. He has a reported 4% stake in the company, a stake that could be worth nearly $4 billion after Facebook’s highly anticipated initial public offering, expected next week.
A spokeswoman for Saverin says the move was not intended to avoid paying the US income tax. It just makes more sense, she said, because Saverin plans to live in Singapore for an indefinite period of time handling business ventures that he’s launching in that part of the world. Tax-planning experts call the move shrewd, the timing — days before the IPO.
His action angered many:
* Mogul Mark Cuban Tweeted his more than 1 million followers: “This [ticks] me off … If i could realistically stop using facebook, this would be the reason I would. Just wrong.”
* Welcome to America, Eduardo. How good of you to come here, make a fortune and then refuse to pay taxes. * I think it’s time for me to denounce my Facebook citizenship.
JJS: America is for making a fortune; everybody should be so lucky. Plus, Americans already get plenty of free value from FaceBook. Further, paying taxes is not necessarily paying anything to society, not when governments waste the money on war and bailouts.
Sure, everyone should contribute to everyone else, and maybe the lucky should contribute more, but can that be a private matter or must politicians get involved?
Besides the nouveau riche, what about big gainers in general?
Overvaluing the free market
Let’s accept the thesis that an individual is entitled to get rich if he or she makes a significant contribution to society. Still, there is a necessary distinction between riches gained through truly productive, socially beneficial activity, and riches from activities that just enrich the actor.
Many large fortunes are nothing more than “monopoly rents,” such as the value of broadcast licenses given away free by the government or ownership of land in places where rising population makes it more valuable.
After Facebook goes public later this month, Mark Zuckerberg could be worth more than $17 billion. Would Zuckerberg not have created Facebook if he only expected to make, say, $12 billion? Or even $12 million? If Zuckerberg had never been born, would no one else have come up with the idea of Facebook?
Let’s imagine that all the paper-shuffling and exotic transactions that go on in American finance are productive somehow. Does it follow that we need to pay Jamie Dimon, chairman and CEO of JPMorgan, $23 million in a bad year (2011) to do whatever it is that he does? He might settle for $10 million if pushed to the wall. Or perhaps someone just as good, or almost as good, would do the job for a lower price.
There is no evidence that remuneration at the very top of society is calculated to extract the maximum amount of entrepreneurial energy and talent at the minimum price. In fact, quite the reverse: There’s every reason to think we overpay.
JJS: The issue is bigger than the income gap, big as that may be.
Why the Occupy Movement is Good for Our Health
The incomes of the top 1% nearly tripled between 1979 and 2007, whereas those of the middle class increased by less than forty percent. The after-tax income of the top 1% was 21 times higher than that of middle income families in 2005, compared to only 8 times higher in 1979. Inequality has been on the increase.
The Occupy movement is drawing attention to: the injustice of the high incomes (and lack of incarceration) of Wall Street executives; the corrupting influence on the democratic process of the concentration of wealth in the hands of a few; and the basic indecency of the top 1% having much more than they could ever spend, while millions of Americans lack housing, health care, even food.
There any other societal problems associated with inequality. More equal societies outperformed less equal ones in fifteen ways, including longevity, criminality, learning, teen pregnancy, and addiction. Income inequality is bad for our health, and for our society.
Reductions in the level of inequality improve social well-being more than do increases in GDP. This suggests that pro-growth policies which lead to increased inequality may in fact make people worse off. Conversely, slower growth could increase wellbeing.
We should all seek the better distribution of income. One way is to join the Inequality Project. To read more .
JJS: The end result of severe inequality has a cause — concentration of the value of land, resources, and nature.
So, why cant you afford to buy a house?
The average inhabitant of the UK cant buy an average house. Now why would that be? The stock answer would be to blame it on US sub-prime mortgages or bankers etc. But that would be to miss the main point, because this state of affairs has existed before.
Actually it has happened with almost clockwork regularity every 18 or so years, a housing boom followed by a bust. There must therefore surely be a more systemic reason for it than the reasons so easily trotted out and so readily accepted.
The fundamental reason is the failure of governments to recover the socially-generated value of land.
A tax on land (or land dues or fees, etc) would replace just about all other forms of tax. No more income tax and VAT. All those other taxes could be replaced by a Land value Tax set at a magic figure of about 6% of price annually.
Likely the land tax would be lower than what you are paying now
How would that benefit us? People who let land sit unused as it grew in value would face a very hefty annual tax, which would encourage them to use it productively. Tenants would find that landlords would be very eager to rent their land out to recoup the tax so pushing prices down. There are many more all well explained in the video, Real Estate For Ransom.
This is a good idea whose time has come. Please spare some time to watch it and then pass it around.
JJS: Land is to fields of knowledge as deeds are to patents and copyrights. While one does have a right to some land and to a stand on the field of knowledge, one also has a duty to compensate those whom one excludes (as they compensate one, too). Functionally, the land owner would pay land dues into the community treasury and the patent holder would likewise pay an annual fee set by the value of holding a monopoly on part of the body of knowledge.
Instead of demand a share of ones fortune downstream, government would sell its patents, copyrights, land titles, broadcast licenses, utility franchises, corporate charters, etc for full market value upstream. Thereby, government would collect societys share in advance, before any monopoly rents could collect themselves into a private fortune. Not only would charging full market value preclude a yawning income gap, itd also preclude the concentration of political power.
The idea is not to punish success or equalize everyones income but to make sure that every penny raked in be earned.
What are one-way public relationships?
A New Heresy — Abolish Corporate Income Taxes
Evidence the US is becoming a two-class society?
What are your views? Share your opinions with The Progress Report!