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It now masqurades as capital. The idea of not taxing risk is for risk that has as its value in human ingenuity, not the fastest swimmer to the island though shark infested waters to hold deed. How did it benefit humanity?
i am not bothered by the idea that smart , hard - working people achieve great success.
what bothers me is when smart, hard-working people grow so powerful that they are able to change the rules of the game in their favor, to the detriment of society.
Yep!
I am pro-capitalist as well, but I wholeheartedly disagree when our government is not in the business of protecting our interests as a society.
Individualism is great, but that doesn't negate the fact that we are all tied in to the same economy. So all of our actions individually impact us all as a society.
So, you will be taxing my earned sweat equity since I have put a great deal of mental and physical labor into my projects. I will then have to pull a bigger labor salary and probably eventually raise the rent, raise the rent, raise the rent. The govt. will step in once rental property becomes unaffordable for the masses. The govt. will collect more taxes and create more bureaucracy cost for more HUD programs which will issue more Section 8 pmt. vouchers to renters. The renters will then present these pmt. vouchers to... guess who? Property owners like me. So, in the end, govt. money will eventually make it back to the land owner. Property values will likely become even more depressed, at which point I can afford to buy even more cheap properties (uh, Detroit) and further use the govt. income to invest in other capital building activities.
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Originally Posted by gwynedd1
The idea of not taxing risk is for risk that has as its value in human ingenuity, not the fastest swimmer to the island though shark infested waters to hold deed. How did it benefit humanity?
Human ingenuity can be found in all types of products, even redesigned rental buildings. Safe, affordable, conveniently located, environmentally efficient housing is also a product that benefits humanity. I also manufacture a physical product that you would approve of. Yet, I still have to swim hard with the sharks to bring that one to market.
But for how long my friend? Notice the consideration of shoveling lasts for only so long, and that means its the paved space that is of value and must be returned to the public. A space to shovel is worth something, not just shoveling.
For the, oh I don't know, 10th time sweat equity will not produce rental income. You are almost tragically ironic to be honest. You don't seem to realize you can afford to make capital improvements to cheap land more than expensive land, even though you are doing it. Even worse is it you seem upset someone may tax you because after all, you paid into, it but it was at an inflated price.
You should be compensated for capital improvements, but not land. Thus real estate taxes on gains needs to account for the land. Local land is basically always in short supply. There are only 4 directions. So basically the income is monopolistic in nature(the root of many economic problems). I tell you what, you get a plot somewhere in Nevada and I'll take one in Manhattan. You improve yours, and I'll improve mine.
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I will then have to pull a bigger labor salary and probably eventually raise the rent, raise the rent, raise the rent. The govt. will step in once rental property becomes unaffordable for the masses. The govt. will collect more taxes and create more bureaucracy cost for more HUD programs which will issue more Section 8 pmt. vouchers to renters. The renters will then present these pmt. vouchers to... guess who? Property owners like me. So, in the end, govt. money will eventually make it back to the land owner. Property values will likely become even more depressed, at which point I can afford to buy even more cheap properties (uh, Detroit) and further use the govt. income to invest in other capital building activities.
Its people bidding land up in prices with cheap financing that is driving up people's RENT. If the the biggest buyer has 500k in his pocket, but the bank will loan 1 million, then that drives up land prices and leaches off the goods and services economy. So instead of the land being owned for 500k, its half owned by a bank just because they can issue currency. Now instead of making monthly improvements, he will make monthly payments. If inflating land prices improves the land, than I ask you why was it that people would buy homes and sit on the floor? Its because money went to a finance guy who sleeps on his desk, the last thing the carpenter will ever build.
.....IMO, the American middle class were the ones lacking the common sense. They have free will and, hopefully, a mind of their own. Although they were "encouraged" to leverage their homes (how were they "forced?"), it was often their own greed and recklessness that led them to do it in order to acquire depreciating/materialistic possessions. Now they are paying the price.
And yet, the Corporate Wall Street implemented insanely risky loan options and borrowing incentives with the aid of a shadow banking system. Predatory lending and outright mortgage fraud skyrocketed, plus inaccurate credit ratings and shaky bundling tactics. Talk about "greed and recklessness!" This was a lack of common sense in the extreme, and directly led to the meltdown.
But instead of "paying the price", the Corps. expected to be bailed out at the expense of these same taxpayers who you characterize as being stupid. They took billions of dollars in TARP money, and looked at it as a no-strings-attached windfall they could use to make even more profits. Even worse, out of 295 billion dollars in bailout money (AKA corporate welfare) handed out in 2008, 114 million of it was used on lobbying and campaign contributions.
Big Business has always sought to privatize profit, but socialize losses. I find this hypocritical at best.
But for how long my friend? Notice the consideration of shoveling lasts for only so long, and that means its the paved space that is of value and must be returned to the public. A space to shovel is worth something, not just shoveling.
For the, oh I don't know, 10th time sweat equity will not produce rental income. You are almost tragically ironic to be honest. You don't seem to realize you can afford to make capital improvements to cheap land more than expensive land, even though you are doing it. Even worse is it you seem upset someone may tax you because after all, you paid into, it but it was at an inflated price.
You should be compensated for capital improvements, but not land. Thus real estate taxes on gains needs to account for the land. Local land is basically always in short supply. There are only 4 directions. So basically the income is monopolistic in nature(the root of many economic problems). I tell you what, you get a plot somewhere in Nevada and I'll take one in Manhattan. You improve yours, and I'll improve mine.
Its people bidding land up in prices with cheap financing that is driving up people's RENT. If the the biggest buyer has 500k in his pocket, but the bank will loan 1 million, then that drives up land prices and leaches off the goods and services economy. So instead of the land being owned for 500k, its half owned by a bank just because they can issue currency. Now instead of making monthly improvements, he will make monthly payments. If inflating land prices improves the land, than I ask you why was it that people would buy homes and sit on the floor? Its because money went to a finance guy who sleeps on his desk, the last thing the carpenter will ever build.
I'm not sure what your ultimate goal is with this exchange. Do you want me to stop taking lower interest bank money/real estate income and find other funding sources? What are your financing ideas? Or do you want me to just keep a big bag of cash at my office so I don't have to use credit to make payments? Would you like me to try to change the laws?
I am not a banker, nor the govt., nor a big corporation taking bailout money. I am a small fish who plays the game by the rules and follows the laws, which I did not make. I fully agree that I take advantage of cheap financing and leverage cheap land to build business. I never said I did not. I am an opportunist and will go where the money and market is. I am comfortable assuming the risk and attempt to mitigate it with diversification. I'm not worried about losing the parking space, I'll secure another one. I know you find that greedy, but I believe the end result has been very beneficial to my employees and the economy as I have explained in previous posts. You disagree with this.
You do not think that I used ingenuity (in financing/rental product creation) to provide social benefit because I used land funding to get where I am. Yet I have ultimately created ingenuous products that are selling and employing people. And FTR, I did not call you a Marxist. I am also not upset at additional taxes (not sure where you got that). That is inevitable. I do worry about the funding availability for the next generation of innovative self-made entrepreneurs though. I did have the luck of good timing when I legally secured cheap financing and also an established 5 year business when this economy hit. But I also worked hard and made some good decisions and sacrifices along the way which had nothing to do with luck.
^^Nah, I guess Gwynedd does not appreciate the risk/reward aspect of investing in real estate. Doesn't understand that down payment money is often saved through an individual's labor/earnings. Middle class people NEVER take the chance on purchasing a 2 flat or 6 flat and using their sweat equity in addition to their regular employment to get ahead. It's only the filthy rich who unrighteously take advantage of the downtrodden to fleece the working poor via their investment properties. And the down-trodden NEVER trash the apartment they rent, or NEVER stop paying rent until the 6-8 month eviction process plays out. Or perhaps the renter are entitled to living rent free.
oh-vey
I'm not sure what your ultimate goal with this exchange is. Do you want me to stop taking lower interest bank money/real estate income and find other funding sources? What are your financing ideas? Or do you want me to just keep a big bag of cash at my office so I don't have to use credit to make payments? Would you like me to try to change the laws that helped me?
GoCUBS1,
You actually seem like a nice guy, and were it not for our current dispute, I am sure we could reminisce over Jerry Morales or Bill Buckner.
I am the beneficiary of precious metals going up. I am also the beneficiary of oil prices going up. I am also a land owner. However I cannot, for the sake of my own convenience, define that as productive potential. All my profits from it are from squatting. If the money supply were not being increased recklessly under the federal reserve system, the real gains would be reflected in their price and my gain would be closer to reality, that being zero. Thus the increase in your real estate would be more because of your capital improvements. There is still some monopoly power of course.. Not trying to tax capital to any excess here ...I am also explaining why the economists I mentioned, as well as me personally, see this as a problem.
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I am not a banker, nor the govt., nor a big corporation taking bailout money. I am a small fish who plays the game by the rules and follows the laws, which I did not make. I fully agree that I take advantage of cheap financing and leverage cheap land to build business. I never said I did not. I am an opportunist and will go where the money and market is. I know you find that greedy, but I believe the end result has been very beneficial to my employees and the economy as I have explained in previous posts.
You are, as you say, improving property. The reason is because you own it. As has also been historically pointed out, royal lands became the most undeveloped in Europe. I am not saying you should not have compensation for capital improvements. If not for inflated prices on land, you would in fact be able to do even more of this. You should be compensated for your capital and labor. However you know very well the same exact capital and labor spent on 2 given properties will not turn out the same. The reason is the location monopoly. Worse still is we are now renting most of it from finance.
Quote:
You do not think that I used ingenuity (in financing/rental product creation) to provide social benefit because I used land funding to get where I am. Yet I have ultimately created ingenuous products that are selling. And FTR, I did not call you a Marxist. I am also not upset at additional taxes (not sure where you got that). That is inevitable. I do worry about the funding availability for the next generation of innovative self-made entrepreneurs though. I did have the luck of good timing when I legally secured cheap financing and also a 5 year business. I also worked hard and made some good decisions and sacrifices along the way which had nothing to do with luck.
The thing is you secured money from a bank that is created on the spot that increased the cost of the property. You paid more for it because of new money and debt. It may seem to help individually but its collective slavery.
Ending fractional reserve lending would go a long way to keep our children from being tenents to the bankers. They get two people bidding on a monopoly , and eventually the winner will go into as much debt as he can to win the prize. Most of the prize will go to the banker. Since most of the value is in the land, nothing productive is really being created, so eventually someone will not be able to pay. Thats why real estate equity will keep dropping
Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point since World War II.
The best way to look at it is there are 3 people on an island. 2 people want to buy the island, and the banker will create as much money as needed to buy it. If each person has a clam shell, the the island is worth 2 clam shells. If the highest bidder is 2 clam shells then the bank will produce 1 clam shell and the owner will have 1/2 equity. What this means is the owner owns half the island and the bank owns half. Guess who will do all the work? Does not sound so bad for the one who bought half the island yet does it? So guess what the other member of the island is going to want to do?
If the highest bidder is 4 clam shells then the bank will produce 4 clam shells and the owner will have 20% equity. If the third worker, now a slave, can only produce enough clams to pay the interest, guess who also needs a job? So basically the banker causes the two to play a game of chicken not to be the slave and the banker causes both of them to rip out their steering wheels.
Its happening right now and will continue to happen. Someday you will sell out and the highest bidder will be the one who not only buys it with money he has, but with the most money he can borrow.
It has nothing to do with you improving property and charging for that benefit which is perfectly economically justifiable. That is why I want to separate the two classes of income which are now conflated together. I also want to end private money creation which essentially monetized land debt, turning everyone into tenets of finance.
^^Nah, I guess Gwynedd does not appreciate the risk/reward aspect of investing in real estate. Doesn't understand that down payment money is often saved through an individual's labor/earnings. Middle class people NEVER take the chance on purchasing a 2 flat or 6 flat and using their sweat equity in addition to their regular employment to get ahead. It's only the filthy rich who unrighteously take advantage of the downtrodden to fleece the working poor via their investment properties. And the down-trodden NEVER trash the apartment they rent, or NEVER stop paying rent until the 6-8 month eviction process plays out. Or perhaps the renter are entitled to living rent free.
oh-vey
The highlighted portion can only be thought of as idiotic since I already explained that income is not defined by what you purchase with it. I could buy a knife to help me extort people using money earned bagging groceries. I could use extortion money for a fruit stand. See the difference?
Sweat equity cannot produce land rents because land rents are unearned income by definition. If you have no idea about economics or what all the classical economists were talking about, then why not take Mark Twain's advice and not remove all doubt that you are clueless?
Did you even understand my analogy of hand vs glove? Any income from the value of the hand is rent and any income from the value of the glove is from capital.
I put in the sweat equity to educate myself. I can hardly admire your post as anything more than a drool stain on an inherited security.
And yet, the Corporate Wall Street implemented insanely risky loan options and borrowing incentives with the aid of a shadow banking system. Predatory lending and outright mortgage fraud skyrocketed, plus inaccurate credit ratings and shaky bundling tactics. Talk about "greed and recklessness!" This was a lack of common sense in the extreme, and directly led to the meltdown.
But instead of "paying the price", the Corps. expected to be bailed out at the expense of these same taxpayers who you characterize as being stupid. They took billions of dollars in TARP money, and looked at it as a no-strings-attached windfall they could use to make even more profits. Even worse, out of 295 billion dollars in bailout money (AKA corporate welfare) handed out in 2008, 114 million of it was used on lobbying and campaign contributions.
Big Business has always sought to privatize profit, but socialize losses. I find this hypocritical at best.
I agree with your entire post. Govt. should not socialize losses for big business. In capitalism, those corps. (not all big corps. socialized their losses) should have been allowed to fail or found alternative financing solutions. There should have been more protections against mortgage fraud. Conflict of interest between Fed. directors and Wall St. should have been addressed. AND the American middle class should have lived within their means and not overpaid for materialistic possessions with money they didn't have. There is a lot of blame to go around.
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