Tuesday, August 28, 2012

My take on taxing home sales...

Apparently, according to the email message below, not everyone's aware of the coming national tax on home sales to help pay for health care reform. And of course the National Association of Realtors is pulling out all the stops to try and get it repealed. Now, before we get too sideways over this folks, make no mistake, we all pay for all of it, one way or another. Seriously, you haven't forgotten that every penny the government spends is taken from you and me, through taxation and/or inflation (printing of money), have you?

Sure, by all means holler all you will about the tax on home sales, and maybe you'll succeed in getting it repealed. But I assure you, it'll have absolutely no impact on the cost of the Affordable Care Act (ACA) - i.e., it won't save you a dime in taxes when it's all said and done.

That (reality) said:

A tax increase is, sadly, the definition of trickle down - ultimately sparing no rung on the economic ladder. A tax increase on commerce, for example, is a burden on the consumer, as the increase filters down through higher prices, and/or less production (less employment), and/or less innovation.

The same goes for the coming surtax on corporate dividends (also pays for ACA), as those who rely on dividend income cut back their spending, in effect hitting commerce (the sequence outlined above) - plus the ultimate impact of making investment income less attractive. You tax something, you get less of it. And less investment means less capital in the private sector to grow jobs, innovate, etc.

Of course there's the counter argument; that a tax increase, while it may indeed have a negative impact in one place, stimulates growth in others. I.e., the government takes from the private sector, pays its people (who spend), pays the interest on the national debt (to people [worldwide] who spend), invests in its special-interest industries (you know the ones), who create 'something', and create jobs in the process. Thus, at worst, nothing's lost. At best, society gains.

If you buy the notion that society either looses nothing, or in fact gains, as government redistributes capital - if you truly believe that the process of spending other people's money on other people could ever result in a net gain (or a wash even) to society, when compared to the process of business people (and consumers) allocating their own hard-earned resources - you crazy!

A friend forwarded me the following yesterday. The linked article (I only read the intro) begins with a quote from the President promising absolutely no tax increase whatsoever on folks earning less than $250k. I suppose this tax on home sales contradicts that message, but again, repealing it in no way mitigates the hit the middle (and low) incomer will take on behalf of the Affordable Care Act. Of course the ultimate question is, what will he/she receive in return? There will of course be winners and losers. As for the purported benefit to society, well, let's hope. I would be a skeptic - and I sincerely hope I'm wrong...

Home Sales Tax becomes effective Jan 1, 2013
National Sales Tax on all home sales
The National Association of Realtors is not pleased with this new tax and hopes this information is forwarded to every voter prior to the election in November.

It doesn

No comments:

Post a Comment