2011 September

October 2, 2014

Own-to-Rent

 

Owning a home — it’s the quintessential American dream, but this nation’s lingering housing crises (largely a construct of government ) has resulted in so many home foreclosures and underwater mortgages that it has transformed that dream into an absolute nightmare for millions of Americans.  Most of us have heard of the term “rent-to-own” which is considered a constructive way to transform a home-renter into a homeowner, but when the government gets too involved in something the results are usually the opposite of what you’d like to see happen, hence we are now seeing a new trend in this nation that looks more like — own-to-rent.  And trust me it’s not a positive development.      

Before taking that giant leap into home ownership it makes sense to weigh-in on the pros and cons of renting vs. owning.  This Ginne Mae chart lists some of the pros and cons and contains some good reasons for each position.  Notice that one of the cons of renting as outlined in the (government generated) chart is “no tax benefits”.  This deduction can literally save a homeowner thousands of dollars per year as shown in this chart.  The resulting lower (in effect) monthly payment could mean the difference between homeownership and remaining stuck on the perpetual-rental-treadmill.

Government owned Ginne Mae hammers-home this point nicely:

In many cases, the amount of money a renter spends on rent can be about the same as or less than the amount a homeowner spends on a mortgage. With the tax benefit for homeowners, the savings can be significant.  

Anyone still on the fence about the idea of renting vs. owning (if their lucky enough to find credit that is) may find that the decision will be much easier to make if the Obama administration has its way and is successful in severely altering or eliminating the mortgage interest deduction from the tax code.  The Administration has recently backed off of previous proposals and now only proposes to alter it for the so-called “rich”, but judging from the past proposals that came out of Obama’s bipartisan debt commission, I think it’s fair to say that the ultimate goal would be to eventually close-the-door on the deduction all together.  The NAHB is certainly trying to raise awareness on this issue and provides some good resources to sift-through.

 It’s hard to find any wisdom at all in such a proposal, let alone it being made with the economy in such a shambles.  And with the housing market stuck in the proverbial gutter as well, the added expense to potential homeowners would be nothing less than a disaster that would send real estate prices sliding down into the dark depths of the storm drain.   And what will all of those current home owners that are already facing the worst housing crisis since the Great Depression do when their payments suddenly go up, in effect, by several hundred dollars a month in many cases?  This would be like adding fuel to a house-fire at a time when common sense says all that is really needed is just a good dousing of water.

 I’m all for the simplification of the US tax code and would have no problem with some sort of a flat tax system that everyone takes part in and that consumes a much smaller percentage of our earnings.  Taking away the Mortgage interest deduction as-is though would be a large tax increase added right on top of what we are already paying in taxes which, as I’ve discussed before, is already way too much of a burden on the taxpayer.  What we have in this nation is a spending problem, not a revenue problem.  The government needs to first get its own house in order by controlling spending — period.

 While weighing the pros and cons of owning vs. renting, I think it’s also fair to ask those that already own a home — do you really own your home?  Most would instinctively answer yes, but if you think about it, “owning” your home comes with the obligation of paying property taxes.  And the government treats this obligation very seriously.

 If you’ve busted-your-behind over the last 30 years and have finally paid off your mortgage in full you may think that you’re now home-free, but just try ignoring that property tax bill that’s sitting on your desk and see what happens to your “ownership” rights (don’t get sick grandma).  You may want to hold off on that mortgage-burning- party indefinitely.  And if you do happen to have a mortgage and lapse on paying your taxes it’s in your lenders best interest to pay those taxes in order to prevent a loss of their investment.  That’s right; the government has the luxury of being able to void all other contracts and to move to the front of the line in terms of lien priority (our founding fathers would love that one).   

 So in reality the foundation of own-to-rent started many, many years ago but in recent years the government has been working overtime in order to accelerate its construction.  If despite all of this you are still interested in home “ownership” don’t worry — the government will be right there with you every step of the way.

So Who is Telling the Truth on Taxes?

Some more ammo from American Thinker by Randall Hoven.

Tax Demagogues Are Lying Liars, in One Graph

Read it here

Pass on the Buffett

It seems we’re constantly inundated with terrible economic recipes from this administration.  The so-called “Buffett tax” is no different.

The American Thinker article All You Can Eat (Warren) Buffet  by Joseph Ashby discusses the “Buffett tax” and some of the other crazy dishes served-up by this crew.   It’s a great read but warning — it may cause you to lose your appetite!

Here is a sample in the spirit of Frederic Bastiat’s Broken Window Fallacy:

…Speaker of the House Nancy Pelosi said unemployment benefits are the fastest way to create jobs because they “inject demand into the economy.” In December 2010 and again earlier this month, the President proclaimedchecks to the jobless a key aspect of his job-creation policy.

 By this thinking, the only thing between us and full employment is all the people who have jobs. 

Unemployment benefits are like a store owner who gives his customers $100 as they walk in the door.  The theory is that if the customer then buys products in the store, then the owner is better off.  Obviously that’s nonsense — the customer walks out with $100 worth of merchandise and the owner is not compensated.  Sure, there is a flurry of activity, cash registers sound, money changes hands, but to what end?  Eventually the store runs out of merchandise and has no new money to replace it.

Please read the whole thing.

 

Is It Over For The EU?

This is a look at the future of the United States if we don’t stop, turn around and run away from socialism.

As Margaret Thatcher once said (simplified): “The trouble with socialism is that eventually you run out of other people’s money”

Biggovernment.com has a good article today titled: European Model Imploding – Hold on To Your Hats by Of Thee I Sing 1776.  Read the whole thing  here

There are two things we know for sure about the European financial meltdown: Its cause and its potential ramifications for America.  No one should lull themselves into thinking we are mere spectators to those European economies that are collapsing of the weight of their own misguided policies when what is unfolding is a gathering storm which exacerbates the risks to our own very uncertain economy.

 If Europe’s defense wasn’t paid by the United States how much sooner would this have happened?

Obama’s $4,000 Bribe

One of the very first thoughts that entered my mind after reading about the $4,000 tax credit contained within Obama’s so-called “jobs bill” was — government subsidized discrimination.  Obama’s plan essentially provides the employer with incentive to discriminate against those who have been recently laid-off, or even those that are currently employed but possess the selfish desire to improve their lives through seeking better prospects elsewhere.  If there are multiple candidates jockeying for the same position, the deciding factor will no longer be which has the best qualifications, but rather which one happens to have been unemployed for at least 6 months.

 And now I just learned that the bill contains an element that would actually allow employees to sue those that didn’t hire them if they felt “discriminated” against for being one of the long-term unemployed.  Thank you to American Thinker and Ed Lasky for the heads-up on that little gem.

 Message to employers — only hire the long-term unemployed to collect your Obama-bucks.  Message to employees — enjoy your 6 months of paid vacation (at taxpayers’ expense) and don’t even bother looking for work until you are once again deemed “hirable”.  Message to entrepreneurial slackers — go trolling for potential lawsuits.

 PerhapsObama is just trying to one-up those “civilized” Europeans by proposing to provide much more lavish time off from work for Americans than even those in the EU receive?  If these tax credits are made permanent he’ll be able to campaign on having created yearly six-month-long vacations for all. 

 Here is another message to employers.   Join club-crony and lay-off your current employees so you can cash-in by hiring those long-term unemployed (thanks to Obama there are more and more “tax credits” to choose from every day).  This process could even be continually repeated if structured properly.

 This could potentially be a win/win/win/win for several groups — at least until the well runs dry.  Employers win by collecting millions of tax credits. Employees win by receiving a much-needed vacation and can finally scoff at the “unjust” working conditions of our allies in the EU as horribly oppressive.  Lawyers win by having an increased pool of government created lawsuits.  Obama wins by creating millions of rested and happy voters.  Sorry, there appears to be no room for the tax payer in this “winning” scenario (I know; tax payers include employers and employees).

Understanding the Left

If you’re having a hard time deciphering the language of the Left this American Thinker  article by Robert A. Hall will provide a little help.

The Statist Dictionary

It’s difficult to discuss policy with or even listen to Statists, because their words and phrases don’t mean what we in the real world understand them to mean.

Read the rest at American Thinker

Obviously just a partial list…any other ideas?

 

Your Double Life

My article as originally published in American Thinker:

Let’s all be honest here.  It’s time to fully come clean on this scandal — that’s right — the gig is up — time to acknowledge the fact that you’re living double life.  I’m not here to judge you (hey, we’re all in the same boat) — rather just to point out what everyone is bound to figure out anyway.  If your significant other is clueless about it, don’t worry — I won’t say anything — filling him or her in on the details is up to you.

There’s no need to feel ashamed or embarrassed about this — on the contrary, you should be thoroughly outraged!  You start your work day early.  You work extremely hard to provide for yourself and your family.  It may require a 2nd job, or maybe your spouse has to work full-time as well in order to make ends meet.  What ever it takes, right?  You pay your bills, you pay your taxes — you pay your taxes.

From this day forward, every time you make a purchase, take a moment to think about those Doublemint Twins from the Wrigley’s commercials of years past.  No, I’m not saying your breath stinks; I just want you to think about the fact that you have your own twin right there with you every time you buy that new house, or car, food, clothing, that college education for your kids, or even that vacation you’ve worked so hard for.  Every time you go out and spend your hard-earned money, just be aware that your twin is in essence right there with you buying the exact same things with the other half of your money.  Don’t you think you should get to keep more of what you earn?

You say you don’t want or need to have twice the number of all of those wonderful things that you already possess — that you’re happy with what you already have.  Fair enough, but what about your time, your life — don’t you deserve to keep more of it?  Think about it.  You wouldn’t have to put in all of that extra overtime.  You wouldn’t have to work that 2nd job.  Just making ends meet wouldn’t require dual incomes.  None of this would be necessary unless of course it was something that you chose to do for yourself and your family.  What would you do with all of that extra time?  Freedom — what a concept.

Most will agree that some taxes are necessary in order for our government to provide the basic services as outlined in the U.S. Constitution.  But government left unchecked and unrestrained will always find justification for its continued growth, and as we (and those in the EU) are sadly coming to realize, that continued growth is unsustainable and will eventually lead to the bubble-popping if not reversed.  Unfortunately, it is much easier to teach a five-year-old the economics of why it’s impossible to go to Disney Land every other day than it is to teach a politician these simple, historically verifiable economic facts.

Thanks to the new media, many are finally starting to ask some tough questions, and the answers are out there for those who care to look for them.  Unfortunately, many are unwilling to even look.  Paul Kengor did a wonderful job with his discussion on this topic as well as provided some good research in his recent American Thinker article:

If you Google the words “Who pays income tax?” you will find a chart (click here) from the National Taxpayers Union.  It includes these telling statistics:

The top 1% of income earners pay 38% of all federal tax revenue.  The top 5% pay 59%.  The top 10% pay 70%.  The top 25% pay 86%.  The top 50% pay 97.3%.  Conversely, the bottom 50% pay merely 2.7% of all federal tax revenue.

As the data shows, the rich are certainly paying their fair share.  In fact, they pay the vast share.  The poorest Americans, conversely, pay literally nothing in income taxes.

Unfortunately, the tax story doesn’t end there with income taxes.  To find out the true burden of taxes placed upon all of us as Americans, we must add in all of the other taxes and regulations that we incur.  Those include the ones that we’re aware of, such as sales taxes, and also those that are hidden from us.  The burdens of those hidden taxes that we all pay are enormous, as this IPI report discusses.  And according to this Americans for Tax Reform study, in 2011, the average American had to work until August 12 to cover the full burden of taxes and regulations placed upon him or her by all of government.  That is 27 days longer than 2008.  Chew on that one for a little while.

While all of this frustrates me to no end, what really has me seeing double is knowing that the poor and middle class are misled to the point where they actually think the “rich” (AKA job-creators) are getting the shaft without realizing that that very same shaft actually comes right back around and impales the non-rich as well.  And more often than not, each “shafting” creates more than one wound.

A perfect example is corporate taxes; these costs of doing business are simply passed on to the consumer through higher-priced goods and services.  If global competition doesn’t allow for the taxes to be fully passed on, then American jobs end up being shipped overseas in order to make up the difference.  Who really gets hurt in this scenario?

The twin Ponzi schemes of Social Security and Medicare are two more examples.  Yes, you have to pay half of these taxes, but at least your employer gets “shafted” for the other half — right?  Wrong!  Employers care only about the total cost of your employment.  Whether or not it goes into your pocket or Uncle Sam’s really changes nothing on their bottom line.  Who has gum stuck on his shoes now?

Oops, I thought I was done, but I forgot about (QE) quantitative easing.  QE-1 and QE-2 were the genius ideas of printing money that we didn’t really have in order to pay for the bills that the government couldn’t pay for (talk about doubling-your-pleasure).  In reality, QE is just a stealth tax that makes every dollar that we earn or have sitting in the bank worth less than it was worth before.  Does this hurt only the rich?

Forget about the Doublemint Twins; I think my original analogy may have been a tad-bit off.  If we were to fully look at every single burden that our government places upon us, I have a sneaking suspicion that it would be a little more realistic if we were to add one or two more twins (don’t get any ideas, Hef) and to state that we’re all living a double-double life.  In that case, you could actually– quadruple-your-pleasure?

It’s hard to believe that our current president actually thinks we should be paying more than we already are.  Isn’t human cloning illegal?

Obama – Just Get Out-of-the-Way

Nice article by J. D. Thorpe at Townhall.  The government needs to just get out-of-the-way.

John Galt’s Advice to Obama

“Get out of the way.”  With this statement, John Galt articulated the simple and necessary policy solution to the disastrous centrally-planned economy in Atlas Shrugged.  It’s also sage advice that President Obama should consider before he unveils his latest jobs plan before the Joint Session of Congress tonight….

Read the rest at Townhall .  This is what zero experience in the private sector gets you.

Democrats Don’t Get It!

A must read over at American Thinker by Paul Kengor.

The Democrats’ Invincible Ignorance

I’ve only recently come to realize the nature of the hurdle this country faces in trying to turn around a stalled economy and horrendous deficit.  Here it is: liberal Democrat politicians have completely convinced huge numbers of their followers that our economic/fiscal mess is the result of two principal demons: 1) “the rich,” and 2) the Tea Party…. 

Read the rest at American Thinker

Is it any wonder why we now have almost as many riding in the cart as we have pulling it?

 

 

Education Spending Has Increased Nearly Threefold In 40 Years

This is after adjusting for inflation.

So why are we always told that more money is needed? 

Why is the quality of education declining?

Here are some useful links (more will be added over time):

http://nces.ed.gov/programs/digest/d10/tables/dt10_190.asp

http://nces.ed.gov/programs/digest/d10/tables/dt10_193.asp

The Heritage Foundation

 Cato Institute