This time around, that modicum of public discussion was avoided but we all gave those who can afford teams of lobbyists and lawyers lots of money anyway. For version 3, we can expect automatic deductions from the checking accounts of the bottom half of the income bracket, with automatic credit card transactions against those without checking accounts, to be transferred directly to entertainment allowances for Bezos, Musk, Gates, Buffett, MbL, and various estranged spouses thereof. "Representative government" seems fine until one looks more closely at who is actually represented.
My employer was minimally directly effected by the housing market crash, but due to the intermingling that comprises the financial industry everybody was seriously hurt indirectly. They were forced to purchase, by the federal government, a major stock brokerage that was in serious trouble for pennies on the dollar and assume all their troubled assets.
> Representative government" seems fine until one looks more closely at who is actually represented.
When looking at current politics I find your statement incredibly strange. I used to think the Republican Party represented the wealthy and special interests (certain business interests as both major parties have their special interest priorities). That was years ago when they were the stronger and more dominant of the two US major parties, back when they had values and weren’t so hypocritical about them. But now they seemed to have strangely thrown away dominance for a failed bet on populism to energize some new core constituents to the disgust of everyone else. I have trouble finding who is actually represented by that, but then I guess a lot of people have that trouble which explains that parties atrophy.
Over most of USA history, both parties active at any particular time serve the interests of capital. There are occasional exceptions (e.g. FDR), but now is not such an exception. It's silly to emphasize the difference between parties, but if we must do so the past two decades in which control of Congress and the presidency has passed back and forth are something of an anomaly. Before Bush the Lesser, the last time Republicans were in any sense "dominant" was under Hoover. The Democrats held the House for twenty consecutive Congressional sessions.
If the stories you've been told, about your bank or about the USA political system or about anything else, don't make sense, then consider the possibility that those stories simply aren't true.
> Has anyone ever had to be "forced" to purchase anything for "pennies on the dollar"?
There is typically not much interest in the purchase of something with a high negative value even if highly discounted. That is why it was mandated by the government, so that a large solvent organization could assume another large groups insolvency before the insolvent group closes and strikes their assets.
Why ruin an otherwise reasonable argument with an out-of-nowhere jab at representative democracy? If anything, without legitimate elected officials in charge, the problem would have been more acute.
[1] https://thehill.com/opinion/finance/358922-mortgage-interest...
The 'cost' of spending $1,000,000 on a wealthy person should be measured in terms of how much utility less-wealthy recipients would get out of that money. In the same way, your example with the standard deduction also, I think, supports this critique: either standard deduction is marginal once you reach a high enough level of income, but at lower levels of income it is much, much better (and results in higher tax rebates for poor people). It's an example of a tax policy that does the reverse of the mortgage tax deduction - it becomes less proportionally beneficial at higher levels of income.
P.s. I may have misread your comment, and if we are actually in agreement I apologize!
For example, if you have a $1mm house, your interest on a $800k mortgage @ %2.7 APR is a ~$30k/yr interest deduction, which is in the same range as the standard deduction, representing around $15k/yr paid in less taxes. For those kinds of people, it's easier to just make $30k/yr more per year too. These people often live in states with an income tax, so they can't deduct their property tax anymore either, since it gets dwarfed by their state tax bill.
On a dollar aggregate, they of course get the most benefit from the deduction, because most middle & lower income americans don't pay a lot of taxes to get much of an aggregated benefit. But as a percentage of their own income, its not actually that much!
The tax code is complex largely to enable such seemingly subtle interactions.
However, some oddities like theft of investments such as gold or artwork and even some fines can be deductible. So sure on it’s own the mortgage tax deduction isn’t always huge, but it’s rarely the only deduction someone could take.
Charitable donations are not a tax dodge scheme for even the people who make $500k/yr, it's way too complicated and expensive to make it a vehicle to direct tax free spending. As an estate tax dodge, yes it is a thing, but again, many high income people don't have $5mm sitting around where that becomes a good idea too.
Theft is also not a reliable tax deduction, and if it was, it would be fraud! And you just lost something!!! I assure you the vast majority are not doing this.
So please, tell me what actual tax deductions you can take as a high income W2 employee that is actually significant
If we want to go down your route, 10% of all clothes in ShoppingCentre(TM) is unfair too, because someone buying an Armani suit saves more money than someone buying a $10 5pack of white tshirts.
https://taxfoundation.org/publications/latest-federal-income...
Will it be fairer to employees ? I don't know, there will be lot more pain for employees without government intervention.
However with Quantitative Easing or bailouts and COVID loans means the rich are not paying the same price as well, that is why rich are becoming richer, poor suffer either way.
In this sentence, is "weaker demand" euphemism for mass homelessness?
While rents have dropped a bit here, it more likely to get 2 months rent free rather than actual drops.
In a tough economy I would expect rents to drop and in turn asset prices as well.
The 6 trillion pumped in has to go somewhere, if it’s not inflation of consumer goods, it is inflation of capital goods. This has made it incredibly harder for mobility and wealth inequality
I think it's a great thing and a credit to our institutions that millions of citizens of my country weren't evicted last March and April. Who cares if landlords got paid for rent or if a bank received a mortgage payment?
Hmmm...unfortunately, most landlords are people who own a single rental, often the one they lived in previously that they cannot sell. By not bailing out landlords (not speaking of institutional investors here that buy up distressed mortgages in cash by the hundreds), you've hurt average-earning middle income citizens. So yes, with the moratoriums, you've transferred wealth from a chunk of the middle class to a different chunk of the middle and lower class.
So what you're saying is both true (in that it saves average-earning citizens) and false (most of the money went to large corporations like https://en.wikipedia.org/wiki/Mid-America_Apartment_Communit... ).
As far as I know, no landlord, large or small got any bailout. Are you saying investor-landlords received some type of direct stimulus? If so, can you elaborate?
All it says is that it's a good thing that the government backed you up when you were in trouble. And I'd rather see the government back up the poor folk instead of them bailing out the stupidly wealthy. It'd cost less money.
If the gov't took money from taxpayers to give to companies to pay worker salaries to pay rent and you squint a bit that's just workers paying rent semi-collectively which on a macro scale is like... fine. Not good. But fine.
Long story short it's more likely that they were able to buy other necessities and more food than they could without a job.
Your argument would work though if these were high paying jobs - that would likely only result in fewer luxuries being bought.
If money ends up in the hands of employees, then statistically by definition most of them are not the 1% and money equals higher level of living instead of more useless stuff.
How much of that translates to the rich getting richer, depends on what proportion of those treasuries’ funds originally came from taxes on the rich, vs. taxes on everyone else.
That's why I believe many laws like "let's help THOSE people in need" end up on a giant pile that's mostly getting abused by those who have time for it (of course there are exceptions).
Your comment is written as if a rent payment is a transfer from one person to directly to someone else’s savings account. I’m not convinced this is true.
Homes that used to be owned and rented locally by individuals or small businesses are now rented and managed from elsewhere.
Profits resulting from higher rents and cheaper maintenance flow to stock holders, creating bad incentives. These homes are no longer rotating into the market for sale, reducing inventory.
Even for rental homes rented by local owners, the increased rent due to the commercialization of rented residential housing created conditions for everyone's rent to go up.
https://www.nytimes.com/2020/03/04/magazine/wall-street-land...
Their negligence nearly killed my family, and left us with life long injuries.
The gas line was leaking natural gas, improper installation? the furnace and stove were emoting lethal levels of carbon monoxide. Detector was defective.
A portion of the AC fell into the kids room. One wall got so hot it burned my wife. Only reason we didn’t die is smell was so bad we nearly always had all windows open.
At every stage they lied and did what they could to cover up problems.
I still recall spending an hour each morning trying to wake kids, not realizing we were all being poisoned.
Just last week they tried to settle the matter by paying back my deposit if I agreed to Silence, and gave up all legal claims.
https://lease.invitationhomes.com/homes/665-cranberry-ct-300...
Reuters covered a few examples in 2018: https://www.reuters.com/article/us-usa-housing-invitation-sp...
Various workers IH sent admitted they were told to do as little as possible to make it look good.
It seems unlikely a typical landlord would need to raise rent at the same rate because they maintain their own operations and have no duty to shareholders.
An offer to buy from IH would need to beat IH’s own model for returns in such a substantial way that it would be overpriced and affect comparable home pricing in the area.
Thus, it is not similar to making an unsolicited offer to some regular home owner.
Managed properties the agent generally does have a lot of datapoints about the market and will raise the rents accordingly,. They can see what similar properties are fetching, they can see the result of hikes in terms of people who move out, and their incentive is the management fee is quite often a % of gross revenue.
I’d go as far as saying charging significantly under the market rate for rents is financial mismanagement. You’ve got an asset delivering you income and you aren’t managing the return on the asset to be broadly what equivalent assets are returning to others.
I don’t think charging the market rate makes you a mustache twirling villain.
So people with a ton of money can just buy a lot of property which they then rent out. Renovation work can be delayed and property values have only went up in the past 30 years or so (minus the financial crisis, which in the greater scheme of things turned out to be just a blip). So they have an ever appreciating asset that's a constant stream of revenue. Double-win.
Which makes this whole multiple-bankruptcy thing for the former US president even the more baffling :-))
If you have a high salary and no ability to save for a deposit then property can be unaffordable and you're stuck paying someone else's mortgage.
If you have a 5% deposit saved and a high salary, you still can't afford a home because lots of people are in your position and have driven up house prices and rates and leverage available sucks.
If you have 20-25% down and a high income you can afford a home to live in and it's probably cheaper than renting long term.
If you have 100% in cash then you can buy one to live and buy 3 more as buy-to-lets as a side business.
I keep hearing this trope and reading about it. Not positive why it gets repeated. It doesn't take long to do a realtor.com or trulia search to find a shit-ton of affordable homes. It seems to me that, there's a certain class of people, many of which I gather hang out on HN, that don't have either a long enough lifetime behind them to possess an acute perspective or just outright completely have false expectations. My home value in the midwest hasn't risen in 15 years. My value actually decreased by 10K two years ago. Within 6 blocks of my house in SE WI, I can find about 80, 3bdr, single family houses for sale, many if not most under 120K. I'm looking at a 3bdr, 1bath now for 60K that I would love to fix up and turn into a rental. If you feel like 120-130K is not 'affordable' to someone with a 5% deposit saved and a "high salary", let me blow your mind. Nobody, and I mean, not a single person on my block makes more than 48K/year. Me and my wife bought our house for 124K, while making 28K/year jointly!
They’ll list on a Friday, get 35 viewings over the weekend, and the seller has 10+ offers by Wednesday and accepts $300k over asking with all contingencies waived.
I’ve personally heard over a dozen such examples in the last 90 days. I’m sure someone’s looked at MLS data and done a better analysis.
Lenders continue to appraise nearer the initial asking, availability of capital is tightening up because of risk and underwriting has become more conservative since Summer 2020, typically meaning buyers need >740 credit and good debt-to-income ratios to do 5% down, and then they also need the $300k cash to bridge the gap between appraisers valuations and what it actually takes to do a deal in this market.
Despite COVID purporting to offer more work location flexibility, what we seem to be experiencing in WA is downtown renters looking to buy within 30 miles of work, perhaps for a “Hybrid” future, rather than packing their bags and moving to WI.
The mortgage rates on 5% down are like 3.5% and the mortgage rates on 20-25% down are like 1.5%, so effectively your monthly mortgage payment could get 50% higher with a 5% deposit.
Property in the UK is more like 9x.
Or, you know, don't give money to anybody. You'll have some people bailed out through deflation, and some other screwed because they are over-leveraged. Whatever happened to being responsible and putting some money aside for a crisis?
This only works if the company was breakeven, or had $ reserves (eg, VC funded w expectation of ever-growing losses)
those relatively useful (at least in the cases where it wasn't abused/cheated) programs is a minor part and basically a window dressing of that multi trillion transfer of wealth to the rich. It is just a bone thrown to the populace to detract the attention and to derail the public discourse they way you just did.
How would the mechanics of this work? Suppose I had 1 share of publicly traded stock A. Others sell and buy stock A at $x at end of day on Jan 1, 2021, and $x+$10 at end of day on Dec 31, 2021.
Am I now potentially forced to sell some of my stock A to pay taxes on unrealized gains? Is this basically property tax, except applied to all securities?
The way money is printed and given directly to the rich via the financial industry needs to stop. If the money supply needs to be increased every year it should be done by giving it directly to the masses via UBI or similar.
I'm starting to have the opinion we've been getting scammed with hidden inflation since the 80s.
If a rich person thinks inflation is coming they can buy fixed assets, invest in resource companies, invest in companies that provide critical services (food supply, communications, etc.).
The problem for the poor is that it's hard to invest in things that benefit from inflation, especially if you don't have any money to invest. It's unlikely the paycheck-to-paycheck wages of poor people are going to go up enough to cover any kind of increase in (ex:) housing prices.
Or you have people like my parents whose (defined benefit) pensions aren't going to do well against inflation. They'll get to watch the value of their retirement income drop like a rock at the same time they've seen millionaires with "small" businesses pocket hundreds of thousands of "bailout" dollars they didn't really need.
Those millionaires will be the ones creating inflation by buying up fixed assets with their free government money. My parents will at least benefit from increased value in their house. Me and the generations after me that can't afford houses and don't have many fixed assets will get screwed really badly.
I can see it coming and there's not much I can do for myself :-(
At the low end wages are also capped by the minimum wage, which doesn't go up with the important inflation metrics (healthcare, housing, assets, education) but instead with regulation or CPI.
FWIW, 98% of my net worth is in stocks, the other 2% is cash
Also rich people can sometimes take loans with interest lower than inflation, this is basically free money.
In Canada you can borrow well below 2% and housing prices in hot markets have been going up well over 10% YoY with a lot of predictions of 20%+ this year.
Free money indeed. You just need $1 million+ to play the game.
Have you seen how much the stock market went up in the last year?
Does it really though? It definitely helps people who used low, fixed rate debt to buy assets that will appreciate with inflation, but does it really help the average person with $100k in student loans that isn't going to see a wage increase that comes anywhere close to the increased cost of living?
IMHO the answer is no.
Wonder where will the American elites flee. Maybe won't need to, guns and all.
Taking egregious sums of state aid is crony capitalism and is market manipulation. And wherever you find egregious market manipulation, you'll almost always find government doing the steering.
It’s a cause and a symptom of “crony capitalism” — a feedback loop that perpetuates and exacerbates existing inequality.
That under capitalism those who accumulate massive amounts of wealth can use that wealth to “buy” the state institutions to do their bidding, is precisely (one of the) problems in capitalism.
I feel that we should seek something more like "free markets" and "free enterprise". C[rony, if you insist, c]apitalists hate both of those things, and undermine them at every opportunity.
The poor tend to be net borrowers. The rich tend to be net lenders. Inflation makes the poor less in debt by lowering the real value of payback. Inflation helps borrowers.
To whit, US mortgage debt in 2020 was at $10T while the debt that the poor are more likely to have (Credit Card / Personal Loan / Auto Loan) is a combined $2.5T[1].
The wealthy are often highly leveraged in a variety of ways. Just look at some of the world's richest people – they generally fund themselves through loans taken out against their equity holdings (stocks in the case of Bezos / Musk / etc).
So the ultra-wealthy like Musk are actually winning twice: once when everyone rushes to buy stocks like Tesla because they're worried about inflation and such, increasing the value of his holdings substantially. Then again when the inflation actually hits, because he is funding himself with loans, which are now easier to repay.
[1] https://www.experian.com/blogs/ask-experian/research/consume...
Wages for the poor won't go up because they don't have any leverage in terms of negotiating. With no fixed assets and no negotiating power to demand higher wages, the value of the real payback won't change for them, but the cost of living will go up.
It'll help a few people who got lucky and bought houses within the last couple of years, but the truly poor (no assets) are about to get much poorer in terms of purchasing power.