This Overwhelming Feeling Of ‘We Can’t Lose’
The LA Times reports from California. “The Obama administration’s budget threatens to cut a benefit many Americans view as practically a right — the mortgage interest tax deduction — and powerful real estate interests are fighting back. The move would affect only households earning $250,000 or more, but opponents say it could prolong the housing crisis by slowing already torpid home sales and deal another blow to home values ravaged by the market crash. The heavy hit on California is also why Bob Gartland said he is against the proposed deduction cut. A consultant to the consumer electronics industry who said he voted for Obama, Gartland just bought a $4-million home in Manhattan Beach and said he borrowed just under $1 million solely to get the tax deduction.”
“Gartland said reducing the deduction wouldn’t have a dramatic effect on his life. But he contends that in high-priced areas such as Southern California, a $250,000 household income doesn’t quite make you rich. ‘I have many friends making $250,000,’ he said. ‘The husband and wife both work. They live in a middle-class house and go out to dinner twice a month because that’s what they can afford.’”
“Fear that the Obama proposal could lead to future cuts to the deduction is a major concern of some opponents, said David Kissinger, director of government affairs for the South Bay Assn. of Realtors. ‘If today it’s households earning $250,000 who will pay more, does it mean tomorrow if they still need to balance the budget it will be those making $180,000, then $160,000? How often is the government going to go back to the well?’ he said.”
The San Gabriel Valley Tribune. “Home foreclosures in Los Angeles County spiked nearly 70 percent last month, according to figures released this week. A total of 3,921 foreclosures were reported in February, up from 2,314 the previous month. In February, 9,228 notices of default were issued, a 47 percent increase over the 6,286 issued the previous month.”
“Noman Cox, regional VP of Coldwell Bank Town & Country, said that 80 percent to 85 percent of the transactions his office handles are either foreclosures or short sales. ‘There are a lot of them to wade through and there are more coming,’ said Cox, whose office covers the eastern San Gabriel Valley and western Inland Empire. ‘But we’re seeing an upsurge in buying. We’re getting multiple offers on anything under the $300,000 range.’”
“Cox said home prices have fallen so dramatically that most sellers are opting to wait on the sidelines. ‘We counsel people that if you don’t have to sell now, don’t,’ he said.”
The Union Tribune. “When one of downtown Los Angeles’ largest landlords said this past week that it may seek bankruptcy protection because the company can’t pay its loans, it didn’t bode well for the commercial property market. Meruelo Maddux Properties is just one of many Los Angeles landlords struggling against the recession and job losses, which are driving vacancies higher and giving tenants leverage in renegotiating more favorable lease terms.’
“‘I think 2009 will inevitably be a very difficult year for property owners,’ said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services.”
“‘We have definitely seen a market turn here in the last five months,’ says Lew Horne, executive managing director of CB Richard Ellis Inc.’s Los Angeles region.”
“‘What happened was everybody wanted to be in West L.A., so the prices went up,’ says Chuck Hunt, executive managing director at the Los Angeles arm of real estate services firm Grubb & Ellis Co. ‘Now everybody is willing to look at downtown, so West L.A. prices are coming back down.’”
The Union Tribune. “Call it the Charge of the Lighten Up Brigade. For Dale Condy, it’s making playful signs and stickers to banish the recession. Ben Kephart is giving a free meal at his restaurant to customers who have a positive story to tell. And Kelly Schneider has replaced the daily specials etched on a coffeehouse chalkboard with upbeat quotes and philosophy.”
“‘As a nation, we’ve always talked about consumer confidence, but in the last year the focus has shifted to the opposite perspective – fear,’ said George Belch, a professor of marketing and consumer behavior at San Diego State University. ‘So if consumer confidence is important – and it’s one of the leading economic indicators – somehow this mind-set that the world is coming to an end in an economic sense has to be reversed.’”
“‘People are really angry at the situation, not just unhappy about it,’ Schneider said. ‘It’s not just the economy. A lot of people think the government is taking advantage of people, that the media is negative. The chalkboard is a way for everyday people to have a voice, even if it is a small voice. When they see something that strikes a nerve, it’s like a breath of fresh air. It’s human.’”
“Nearly 70 plaintiffs who invested millions of dollars in the Trump Ocean Resort, a planned luxury oceanfront development in Baja California that was never built, are now suing Donald Trump, his son and daughter, and the project’s developers on a fraud claim. The lawsuit was filed yesterday in Los Angeles Superior Court. It alleges, among other things, that buyers who put down deposits on the planned development’s 526 condo-hotel units were deceived into believing they were buying into a Trump development when the Trump name was merely licensed by the developers.”
“In a phone interview yesterday, Donald Trump maintained his distance from the developers, saying he was ‘not happy’ with what occurred. ‘I have never been there,’ he said of the site. ‘They licensed my name.’”
“Nearly 200 buyers are believed to have deposited more than $32 million for ocean-view units priced at $300,000 to $2.5 million. Tammy Willis, 38, a city employee in Oakland, put down three installments totaling $150,000 for a one-bedroom unit costing $525,000. She said she paid her last installment in early 2008. By that time, the developers were already in financial trouble, said Bart Ring, an attorney representing 69 plaintiffs.”
“Willis, who has not yet taken legal action, traveled to San Diego for a sales reception in December 2006, where prospective buyers were served appetizers and drinks as they chose color schemes. She paid her first $50,000 then. ‘I was never told the (Trump) name was only licensed,’ she said. ‘It could have been in the legal documents, but I didn’t know that. I thought it was what it said, Trump.’”
The Press Democrat. “Home prices not seen in Sonoma County in nine years continued to draw buyers back into the housing market in February, according to a new report. Sales jumped 77.6 percent in February compared to a year ago — rising for the 11th consecutive month — as bargain hunters snapped up foreclosure properties, often priced under $300,000. More than three out of five homes sold in February were owned by banks that had seized the properties in foreclosure.”
“But for the first time in four months, sales failed to keep pace with the number of homes hitting the market. A surge of foreclosure homes for sale swamped buyer activity. Banks are putting more foreclosure homes up for sale and the number of homeowners falling behind on mortgages is on the rise again. Buyers continue to find ample choices because they remain outnumbered by bank-owned homes and properties put up for sale by homeowners hoping to avoid foreclosure. Sellers put 502 homes on the market in February, while just 309 properties moved off the market when buyers purchased them.”
“Homeowners in trouble had gained a reprieve last fall, the result of a new state law aimed at slowing the foreclosure process. It requires lenders to delay foreclosure proceedings and attempt to help borrowers stay in their houses. But lenders have now started to release more foreclosure homes for sale, according to real estate agents who sell distressed homes for banks. That puts increasing pressure on other sellers to reduce prices.”
“Falling prices are good news for buyers who can face increasing difficulty obtaining loans. While interest rates are near record lows, lenders have tightened standards to qualify for mortgages in response to record levels of defaults and foreclosures. Lower prices improve a borrower’s chances of qualifying for a loan. ‘It’s a great opportunity. They may not have qualified as they did a month or two ago,’ said Colleen Militello, owner of Century 21 Classic Properties, in Rohnert Park. ‘“People who had been waiting are taking advantage right now. We have a lot of first-time buyers, and investment buyers have been coming out of the woodwork.’”
The Enterpriser Record. “To prevent a Chico woman from losing her home, several lawyers filed suit against three firms they accused of engaging in a ‘predatory lending scheme.’ Jan Poythress, 53, was within days of being evicted from her northeast Chico home last month when the attorneys intervened. The eviction was put on hold, and Poythress remains in the house while a new trial is scheduled to decide the legality of requiring her to move.”
“The lawsuit states that Poythress, who is disabled, lived in her home, with her parents, most of her adult life. Before her parents died, several years ago, they looked after her finances. After their deaths, Poythress was lonely and vulnerable, the suit says. It wasn’t long before a salesman convinced her he was her friend and talked her into letting him and his girlfriend move in with her. The suit says they didn’t pay rent and persuaded her to buy them luxury items, including a car. Then they disappeared.”
“Poythress, who then had a large credit-card debt, was contacted by a telephone salesman representing Expedia. He called her two or three times a week until she agreed to take a loan against her house to pay off her debts. Although her home was worth quite a lot, Poythress has a very low income — less than $1,000 a month from Social Security.”
“Poythress believed she had obtained an affordable loan that was in her best interest and that she was borrowing $100,000 to pay off her debts and get $20,000 back in cash, the suit said. But in fact, the loan was for $195,000, the entire balance of the loan was to be repaid in a ‘balloon’ payment after one year, and Poythress’ monthly payments were to be about $2,356.”
“In a separate case, the lawyers, on March 5, sued Instant Mortgage Lending Corp. of San Diego, ForeclosureLink of Fair Oaks and Expedia Home Loan of San Diego, demanding, among other things, that Poythress’ loan and the foreclosure on her home be canceled. ‘When you read this complaint, you see how sinister this is,’ said Evanne O’Donnell, managing attorney of Legal Services of Northern California, in a phone interview.”
The Recordnet. “California small-business owners are increasingly pessimistic about the economic outlook, saying that they plan to cut spending and jobs this year, according to new survey conducted by Union Bank of California. Daniel Hoag, owner and president of Hoag Construction Inc. in Lodi, said this week he’s feeling less optimistic now than when the Union Bank survey was conducted in mid-January.”
“While Hoag’s company is busy with some restaurant remodeling jobs, his residential business has dried up. ‘I’m basically down to a 10th of the calls I was getting,’ he said.”
The Sacramento Bee. “The losing streak that defined last year for the home building industry continued in the first month of the new one, the California Building Industry Association said Friday. The association reported 1,355 January sales statewide, a 64 percent drop from 3,773 sales in January 2008. Last year was the industry’s worst for home starts since records started in the 1950s.”
“Yuba and Sutter counties builders sold six homes in January, 64.7 percent below the 17 last year. Merced’s four sales were the state’s biggest year-over-year drop: off 94.7 percent from the 76 sales in January 2008.”
The Merced Sun Star. “It didn’t have to be this way. Maybe County Bank could have made it. Maybe a Dutch white knight could have rescued Merced’s only publicly traded corporation. Maybe more employees would’ve kept their jobs. Maybe more branches would’ve stayed open. But we’ll never know because that’s not the way events played out.”
“Instead, County Bank, beset by mounting multimillion-dollar losses, quietly went on the auction block in late November as it became clear its survival was unlikely. By January’s end, County Bank announced it would suffer nearly a $100 million loss. Its failure was imminent. Eight branches — Stockton, North Clovis, Sunnyside in Fresno, Delhi, Newman, Coalinga, Farmersville and Lemoore — are set to close by the end of the weekend.”
“Former County Bank CEO Thomas Hawker blames the failure, not on the bank’s lending practices, but on the unimaginable decline in loan values. Every time land prices went down — even if the loan payments were current — the bank was forced to set cash aside in case the borrower defaulted. ‘That’s the problem I don’t think people have focused on,’ Hawker said.’
“The form of accounting is called mark-to-market, and its effect on the crisis has been questioned. That’s because it requires lenders to put a value on assets that can’t sell. County Bank had $1.3 billion in loans, with $470 in commercial real estate and $135 million in construction and development. Both industries have been battered during the recession. The Financial Accounting Standards Board will discuss the accounting rule Monday.”
“Yet others believe County Bank, and similar lenders, made too many risky bets and were doomed. ‘There was this overwhelming feeling of ‘We can’t lose’ and ‘We’ll just keep going on our merry way,’ said one former employee. ‘We wanted to be the gorilla in the Central Valley.’”
“A consultant to the consumer electronics industry who said he voted for Obama, Gartland just bought a $4-million home in Manhattan Beach and said he borrowed just under $1 million solely to get the tax deduction.”
Another fool betrayed by The One. This is where the “hope” part starts - hope you’ll have a pot to piss in in four years!
Well my pot will have plenty of piss in it
Well, his piss will have plenty of pot in it.
Good one , funny as all get out
I’m sure that guy who’s not named Joe and not a plumber was going to vote for him too until he found out he would have paid more taxes if he made WAAAAY more money than he ACTUALLY did.
Joe the Dumber? The same clown who is now an author? lmao…
4 people went to his book signing….. they were probably paid. Talk about taking the gold at the loser olympics.
Ha Ha! Ok Mr. Obama, I’m with you on this one - to get rid of the mortgage interest deduction!
As a renter, I get no tax break.
Get rid of all these special targeted tax breaks, get rid of the income tax, capital gains taxes on anything and dividends taxes, and let’s finally have a national sales tax.
I shed no tear for limousine socialists who voted for Obama because of white guilt when they could have voted for Ron Paul instead.
But I want Obama to hang in there. Democrat Presidents are better because they cause Americans to get p.o.d and vote in gridlock by voting in Republicans for Congress.
As a renter, I get no tax break.
=========
Really? So do you also think as a renter you don’t pay property taxes or HOA fees? Of course you pay both, indirectly. And the same with the tax deduction. You get it indirectly. If your landlord didn’t get the tax deduction, your rent would be that much higher.
Except your landlord gets the deduction as a business expense, not as a special personal mortgage interest deduction, so get rid of the special personal mortgage interest deduction and your landlord would still get his.
Polly does have a point there Manny. Do you want to acknowledge her point?
Fecaltime!
“But he contends that in high-priced areas such as Southern California, a $250,000 household income doesn’t quite make you rich. ‘I have many friends making $250,000,’ he said. ‘The husband and wife both work. They live in a middle-class house and go out to dinner twice a month because that’s what they can afford.’”
This guy makes it sound like it’s the lot of most $250K households in SoCal to live in some middle class purgatory.
Income levels don’t determine your standard of living; what you do with the income determines your standard of living. Your income is just a set of tools and materials. There’s no guarantee that you’ll build a better life than others with less.
I live in the Bay Area. I know of some people who make $250K a year and don’t understand why they aren’t living “better.” Some people way overpaid for their house, some people basically gambled it away with bad bets because $250K just won’t cut it for them, some people spent it all on flashy stuff that loses its zing after a year, and so on and so on.
And they feel cheated as if they were entitled to something more because of their pay, education, job titles, etc. They don’t understand why they’re not doing any better than people who don’t make that much money. And so they look for convenient excuses that revolve around what others are doing to them instead of what they’re doing to themselves.
Conversely, we make $250K a year, we aggressively save to meet our financial goals, and we still have enough left over to do the things we want to do. I’m pretty grateful to be where we are.
And lastly, I wish people would stop making it sound like living middle class is some crap lifestyle. We grew up middle class. Life was fine for us back then. Once upon a time we were making $65K in SoCal with one of us unemployed, and we liked our time down there too (well, except when we were both unemployed). And we’re having good times at $250K now. I’d rather be making $250K than $65K, but the reality is that a healthy chunk of our happiness isn’t defined solely by what our income can buy for us. And we’ve always been good with managing what we had.
I think to some extent what’s screwed up in the US is that unless you are Bill Gates, you’re apparently some loser who can’t possibly be happy under your current standard of living so the solution is to fake it until you make it.
Don’t sweat it, Manny, let these clowns cheer while Obama soak the “rich”, just give it another 5-6 months or so before the Obama crowd figures out that they’re still not getting enough to pay for his grand visions of free everything for everyone, then 150K and 100K and eventually 75K will be the “new rich” to soak.
Wino Bear: At $250K the effective tax rate is already 40-50% when adding fed, state, SS, Medicare and in some cases county/city taxes. And that’s still not enough for you? Is it too much to ask that I get to keep at least 1/2 the money I earn? Where is this notion of fariness liberals keep harping on about? 60, 70, 90%?
Polly: Most landlords are mom and pop sole proprietorship, LLC or S-corp types. In THE ONE’s vision, their deductions would still go away if they dare to earn more than $250K.
And if he does get some semblance of sanity and allows these landlords to keep the deduction, that awesome little thing called unintended consequences will happen. I forsee a wave of new landlords who “rent” their house to their husbands, wives, mothers, fathers, brothers and sisters.
Well you know, $75,000 a year DOES seem really “rich” to most Kenyan Marxists.
Wino Bear: At $250K the effective tax rate is already 40-50% when adding fed, state, SS, Medicare and in some cases county/city taxes. And that’s still not enough for you? Is it too much to ask that I get to keep at least 1/2 the money I earn? Where is this notion of fariness liberals keep harping on about? 60, 70, 90%?
That’s weird. I thought my post was starting a new thread instead of getting stuck in the middle of this one.
In any case, all I’m saying in my post is that $250K is a lot of money. For the quote to make it sound like they’re barely scraping by in some sort of middle class purgatory is sad and insulting to the the folks who somehow seem to get by with a lot less. There’s not much, if anything, in there talking about tax rates and what’s a fair rate or what not. Thanks for the label-dropping and slippery slope deluge though.
But since I’m here, there’s a certain intellectual dishonesty about arguing about the unfairness of being overly taxed but then clinging to a tax deduction regardless of how unfair or stupid because you think the former justifies the latter.
I don’t know why you would give a tax break for owning a home because we all have to live somewhere. What’s so special about owning a home that homeowners get a break but renters don’t? But it’s that same individual mentality that gives us the tragedy of the commons situation that we’re currently in.
A free-market proponent would decry the personal mortgage rate deduction as the government distorting the overall housing market on the basis that it’s a social agenda predicated on the idea that owning a house is intrinsically a good thing. It’s no different than something like Fannie Mae in my mind. A free-market proponent would also say that you shouldn’t be treating a house differently than any other asset with respect to capital gains.
But you don’t hear that very much from even self-labeled fiscal conservatives because it’s politically very unpopular. Dropping it is instead re-labeled as a tax increase to the masses to mask the stench of pandering.
I don’t agree with the mortgage interest deduction either, and I never bought property because of it, but you know, people need to be able to plan and make decisions based on laws they can rely on. This is very destabilizing to the economy, to see the government constantly changing the rules, not just on this but on a number of other deductions, taxes, and who they’re going to bail out, who they’re going to let fail, the repeated manipulation of interest rates and money supply, which industries they’re going to subsidize or “stimulate”, it seems like the rules change constantly and it becomes impossible to plan.
No wonder no one wants to plunk money down and invest in anything.
I don’t agree with the mortgage interest deduction either, and I never bought property because of it, but you know, people need to be able to plan and make decisions based on laws they can rely on.
You could just grandfather the mortgage interest rate deduction at a certain date in the future. There might be a temporary surge in housing purchases as people try to get the deduction, but presumably housing prices would quickly rise to meet the temporary surge in demand and then go back to some equilibrium rate based on affordability again.
The short-term thinking of keeping a bad idea around just because people have gotten used to it is why I’m never that bent out of shape with what I consider bad policy. Gotta give the masses what they want, no?
No wonder no one wants to plunk money down and invest in anything.
Those who have managed their capital prudently and don’t require a rising tide to lift all boats to get a good return aren’t having trouble investing their money.
I don’t agree with the mortgage interest deduction either, but with the government constantly changing tax law, deductions, money supply, who gets a bail out and who doesn’t, who gets stimulated and who doesn’t, it’s very de-stabilizig, people need to be able to make economic decisions and plans and rely on laws, if this continues, no one will want to invest for the long term in anything.
And don’t forget the change too.
His change of address will be from uptown to slumsville.
My pot is also huge and I voted for O. But I know how to play the game. We hired O to fix the damage from t he last 8 yrs….this is going to take a while and maybe leave some permanent scars.
It would take The Great One about a dozen terms in office to fix the Northern Ohio problem; just finding enough people of sufficiently low IQ to actually consider living here (let alone having the ability to pay off a 40 year mortgage) will take 50 years. No amount of political posturing will prevent the looming 2010 Census from certifying the exodus from this quadrant. At that point, deconstruction will be our industry of the future.
And with the mass exodus from California (where are they going - Tennessee and the Carolinas, to name a few I I know personally),
who’s left to pay the taxes?
I grew up in NE Ohio and got the hell out with my M.A. in ‘95. I now live in the Bay Area (don’t really like it, but that’s where our jobs are) and am thankful we left. So many of our friends who stayed are BROKE and they voted for Obama. If he puts in all his “green” crap, NE Ohio will be in for much more pain due the effect on manufacturing. I go back a couple of times a year and each time it looks more and more depressed. “Magic” Obama cannot solve the problem - getting rid of the “old” men at the top will help it! The “old” man mentality has sunk Ohio which is why it will not come back in our lifetimes.
Once again, the rubes who voted for Tweedle Dee over Tweedle Dum, or in this election, Bad over Worse, are squealing with dismay as their champion turns around and screws them. I have no sympathy. They could have worked for, and voted for, REAL change, not the snake oil version offered up by the Messiah, but instead, complacent as Hindu cows, they moved along with the herd and voted for business as usual.
Mooooooooooo.
I take exception to insulting Hindu cows!!
If this dude can’t afford to pay his taxes, then he can’t afford a $4 million house, duh. Obama is a Democrat. This is a little point I want to make for all you guys who insist there’s no difference between a Democrat and a Republican. Word.
How does a “consumer electronics consultant” make that kind of bank? And speaking of banks, who in their right mind would lend a million dollars to such a consultant so that he could buy a mansion? Talk about a job with limited future upside.
.
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>How does a “consumer electronics consultant” make that kind of bank? And speaking of banks, who in their right mind would lend a million dollars to such a consultant so that he could buy a mansion? Talk about a job with limited future upside.<
I THINK BY “CONSUMER ELECTRONICS CONSULTANT” HE REALLY MEANS “COCAINE SMUGGLER”
‘In San Joaquin County, foreclosure activity jumped 27 percent, from 2,649 filings in January to 3,376 last month, while California filings rose by 5 percent, from 76,761 filings in January to 80,775 in February. One in every 67 housing units in Stockton got a foreclosure notice in February.’
‘The increase in foreclosure activity from January to February was somewhat surprising, given that many of the foreclosure prevention efforts and moratoriiums in place in January were extended through most of February, the report said. But RealtyTrac Senior Vice President Rick Sharga said rising unemployment has played a growing role in the foreclosure scene.’
‘Existing homes sales in San Joaquin County have fallen for the second consecutive month. Real estate brokers say that’s because the number of new foreclosure homes on the market has continued to be slow temporarily due to moratoriums and a state law that requires lenders to at least try to contact homeowners about possibly modifying mortgage payments.’
‘Foreclosures are still selling well, but there just aren’t many of the good-quality ones left, said Art Godi of Art Godi Realtors in Stockton. ‘The cream of the (foreclosures) is thinning out,’ he said.’
‘Abbott said there are more short-sale properties on the market these days, but they aren’t selling consistently, with banks often deciding to go ahead and foreclose a property while a short sale is still in the works.’
And from the Sun Star link:
‘Merced’s four sales were the state’s biggest year-over-year drop: off 94.7 percent from the 76 sales in January 2008.’
Folks this is pretty stark news for the central valley. IMO, we’ve been able to watch what happens here and expect other areas to follow suit. Recently, sales in San Joaquin had been as high as during the boom. But seeing new house sales crater and now even REOs going back down suggests the ‘bowling ball on the stairs’ effect is still in play.
Boy I have so many friends and family in the Valley to whom I want to say “I told you so!” but they are all out of work and well, it just doesn’t feel American to heap scorn upon criticism like that.
I had a soon-to-be-former brother-in-law who was adamant that my wife and I were stupid for renting these past few years. I tried showing him the NY Times rent vs. owning chart, the Credit Cuisse reset charts, etc. but to no avail. The attitude was “Well, you’ll just never convince me that you are right.” Now he is facing almost certain foreclosure.
OK, so there is a *little* bit of schadenfreude.
it just doesn’t feel American to heap scorn upon criticism like that.
And that’s where you’re wrong, my friend. It’s very American.
Heap furious scorn on the fools. Otherwise, how will they learn?
Drive by in your Ferrari with a bottle of wine (or six) and ask them how their real estate “investments” are working out for them.
Without that, how do you expect the country to make progress? All that self-striving; the wish for betterment. Go on, then! You’re doing it for a better world.
And what could be more American than that?
I’d drive by in an Audi R8 and with a bottle of wine and an awesome girl, but I’m spending my party budget on charity to family members. So I’ll just drive by in a Toyota economy car, a bottle of coke, and a DVD of that awesome girl.
Charity to family members is verboten.
Do foolish things, get your @ss smoked. That’s how it works.
Thankfully, the first few “non-bailouts” made the rest of my life a LOT easier. When they know the cavalry won’t show up, they make better plans for their own cavalry.
I could swing a modest car, a modest house but the high holding and maintenance costs of another one of those awesome girls would surely bust me
Well, you’re just a lowly renter. You don’t know nothin’!
If I me to want get into my rants/lectures on the up-take and distribution of sevoflurane, desflurane, isoflurane and halothane. via the O2 and N2O carrier gas in general anesthesia, you’ll have to pay like everyone FPSS
Halothane?! I thought nobody used that any more. Recoveries are too long and too stormy.
I’m seeing ads for homes ranging from $75,000 to $124,000 in the low end of the market here in Merced,. The listing indicate some of these homes are less than four years old.
Existing tax code already phases out home mortgage equity deduction after just $150,000, so I don’t know how much different this will be
“The Obama administration’s budget threatens to cut a benefit many Americans view as practically a right — the mortgage interest tax deduction — and powerful real estate interests are fighting back. The move would affect only households earning $250,000 or more, but opponents say it could prolong the housing crisis by slowing already torpid home sales and deal another blow to home values ravaged by the market crash.”
IMHO, they should eliminate the mortgage interest deduction all together. It would be one of the fairest ways to raise taxes (and yes, I own a house, so this isn’t some schadenfreude-motivated desire. Of course, my house is paid for…)
BO seems to want to fan the flames of a class war, so I guess this plan makes sense to him and his core constituency of deadbeats and freeloaders.
…eliminate the mortgage interest deduction altogether…
Agree 100%.
I am sure 100’s of millions are wasted each year by banks,
CPA’s, IRS auditors and homeowners shuffling
useless “makework” paper.
Not to mention yet another window to promote fraud.
Elimination would make homes more affordable as it
would forces prices *down*!. Elimination would actually
benefit lower income owners as higher income owners
would take the biggest tax hit.
oooh yeah let’s tax the rich some more….is that the only answer libs have?
If every tax write-off is considered sacred, no matter how out-dated or absurd, then we’ll never create a more equitable tax code, ever. I own a house and benefit from the write-off, but that was never a reason for buying a house, or justifying a larger loan. I’m not rich, and I sure don’t think eliminating this artificial subsidy is “taxing the rich.” Is that the only answer GOPs have? This is just another “entitlement” that GOPs like to complain about–unless it affects them personally. 90% of the senators wailing about the “pork” in the spending bill (2% of the budget) were among the group with the most $$$ in earmarks.
Few here disagree with you about the deduction in general. I don’t like this (or any other targeted tax deduction aimed at one group or another).
What is objectionable to me is the $250,000 figure.
Is “tax cuts” the only “solution” the so-called Republicans have? Both parties, and the fools who vote for them, are asshats.
Tax cuts increased revenues significantly in the 60s, 80s and 00s. Even THE ONE campaigned on cutting taxed for 95% of the people.
Only problem is that 50% of the people pay $0 taxes and 90% of the people pay only 30% of all taxes. I know it’s in fashion now to hate the rich. But the fact of the matter is the rich pay for everything and without the rich, this country would very poor.
Ask Mayor Bloomberg about this. He recently said that 1% of the NYC population pays 50% of all city taxes and that if their taxes go up even more, there’s a good chance they will leave.
I prefer to think of myself as an Ass Chapeau, thank you very much. It’s the french socialist streak in me.
“Ass Chapeau”. Droll, really droll.
The poor rich people!!!! lmao.
If tax cuts increased revenues in the 80s why did the favorite Republican son Reagan have to raise taxes?
I’m beginning to find all these arguments over how much money a person should be “allowed” to “keep” after getting ripped off by the government to be tiresome. If you believe in principles and the concept of private property, then the answer is obvious, wealth belongs to the individual who earned it, the total amount earned by all is not some pie to be divied up by One and his friends at ACORN (Absolute Control Over the Republic and Nation).
Those who believe other people’s money is better off elsewhere are the same people who rarely give their own money to others. Statistics prove it.
Wide swaths of well-heeled individuals in our biggest, wealthiest cities (all heavily liberal) love nothing more than to redistribute OTHER people’s wealth. Call it the Boulder Phenomenon if you wish.
Redistributing other people’s wealth is a highly effective way of keeping undesirables at bay. Give everyone just enough to keep them hungry and salivating for more - yet never allow them in.
Keeping others OUT is paramount if you’re a liberal. If you allow others in, you have to examine and confront preconceived ideas and ways of living that long have provided feelings of security and entitlement.
30% of the people pay 90% of the taxes.
30% of the people make 90% of the money.
It’s the only answer that makes any sense.
I always enjoy the way the supposedly rich think.
They DON’T WANT to pay for policemen, firemen and EMT’s wages but they DO WANT a cop, a fire truck and medical personel standing CLOSE by, just in case, the poor people riot and shoot, burn them out or injure them
Instead of whining, mikey, why don’t you take the bull by the horns, double you output and income, and then give half of YOUR money to firemen, policemen, teachers and EMTs?
Don’t wait for Uncle Sam to redistribute (too slow - and, besides, you need to think about reducing the government’s carbon footprint).
Simply take cash out of your account via the ATM, ride your bicycle over to the firehouse, and throw a handful of hundreds on the desk. Say “thanks”, bid farewell, and quietly ride away.
Mikey, why are you waiting for others to redistribute your money? You are capable of doing it yourself, are you not? You have the needed intellect, correct? You have a pure heart, unmotivated by greed, do you not?
Better get going, man. You’ve work to do.
Too busy watching you squirm
I’m an elementary school teacher who makes less than $50K a year, mikey. I’ll be working until I drop dead.
I used to work corporate USA, but decided that kids needed my help after seeing “programming” at elementary schools that was beyond the pale. I trend libertarian/conservatism, and decided that taking the massive pay cut to be worth it.
That’s my contribution to improve things for future generations. What’s yours? Voting for Obama?
And, yes, I support lainvestorgirl’s point of view. She’s mad because the Feds are going to take money from her for causes she doesn’t believe in. Why shouldn’t she get to keep what she has earned? Because Al Gore wants his propaganda films delivered free to schools nationwide?
BTW, I work in a Title I community. Parents provide me with much of what I need for the classroom.
A year ago, I was a teacher in a very well-heeled Chicago lakeside community. Ultra-liberal area. Mommies had nannies for their kids. $1,000 purses. The drill.
I spent about $2800 out of my own pocket to buy supplies for my classroom that year. No liberal in Chicago rushed to supply me with funds. You certainly didn’t.
Why not?
I’m with lainvestorgirl, why should my hard earned money be going to pay $50K for some elementary school teacher, who by their own admission could be contributing more. Seriously Eudemon free public school education is just another one of those evil entitlements that we need to get rid of.
I agree, Eric in JC. I’m all for private/business-supported education, starting in kindergarten. Sadly, you can’t make a living doing that if you’re a teacher.
Now, re: lainvestorgirl’s point of view, why should MY hard-earned money (I work 60+ hours each week) be going to pay for someone else’s kid? Why all the tax write-offs for offspring? Why am I buying supplies for someone else’s progeny?
How about those entitlements, paid for by teachers? I have no children of my own - now, not only am I paying for the education/negligence of someone else’s kids out of my paycheck, BUT I AM ALSO paying out of pocket costs directly to the kids themselves.
Why am I buying pencils, erasers, scissors, paper, Kleenex, dry erase markers (I went through 27 of those in January alone) out of pocket?
Unlike others here, I don’t eat out five times a week. I haven’t purchased any new clothes in a year. My car is 10 years old. I haven’t been on a vacation since 1998.
If I could find a private school where I could make $20K more annually in the here and now, I’d grab it.
Unfortunately, their kids’ brains are worth less to Mummy and Daddy than the things Mummy and Daddy want to buy to enjoy life.
You need another vocation. In fact I’m very skeptical of an unstable individual teaching kids.
We’re going to take this a step further.
Stupid argument. The rich could hire their own private armies, hospitals, and firefighting services for a helluva lot less than they pay in taxes.
They need money to spend on all their scam “green” and condom programs!
Oh…I guess I did not know that. I’ve been rening long enough that I never had the privilege of earning more than $56,000 annually when I last made a mortgage payment.
Well, at least Obama isn’t accused of really torturing anyone yet, not even the republicans.
Like their circular firing squads, republicans always manage and enjoy their own torture BEST when it is left among themselves
Circlular firing squad=end result of the failed GOP policy of never criticizing your own.
He’s torturing me!! I can’t even stand to watch him or hear his voice on TV!
For information on the current mortgage-deduction phaseout, see http://www.irs.gov/taxtopics/tc505.html (and follow the link on the bottom of the page).
Putting a cap on the mortgage interest deduction may backfire on BO. Just as the right-wing was able to get J6P angry about the “death tax” (which I think is one of the fairest ways to tax!) even if he’d never be hit by it, they may be able to get J6P–who imagines himself wealthier than he is–angry about this, too.
funny to read about this.
the Dutch government is discussing a 1 million euro cap on home mortgage deduction; an extremely touchy subject over here, that has brought down previous governments. Up to now the mortgage and many other costs related to the home are 100% deductible for income taxes. As a result, high income people get the maximum mortgage in order to avoid paying income taxes (50% top bracket, while gains from selling ones home are completely tax free).
Dutch J6P is strongly in favor of a 1 million HMD cap; but when the cap would be lowered to 0.5 million (proposal from labor party) or 0.3 million (proposal from some left-wing parties) many would start to disagree, because they hope that some day they too will profit from this scam (median home price 260K now, which buys one a pretty lousy home).
The Dutch HMD cap proposal will probably not pass: with 8-10x income loans still the norm, the average kleptocrat or high level burocrat (income 150-250K euro) can have a 1-2 million euro mortgage if they want. AndIF the cap is introduced, I don’t doubt they will introduce some nice form of compensation for those affected.
Take a man’s money when he’s dying/dead is the fairest way to tax? Sheesh, I need another tea party.
Right on! All we can hope for is 2010! At least some of this crap can be stopped! My greatest hope is for 2012 when hopefully we can have better candidates!
“Nearly 200 buyers are believed to have deposited more than $32 million for ocean-view units priced at $300,000 to $2.5 million. Tammy Willis, 38, a city employee in Oakland, put down three installments totaling $150,000 for a one-bedroom unit costing $525,000.
Oakland city employees buying Trump condos in Mexico…remember when city workers made a little money, had decent benefits and got a pension to modestly live on?
How much you want to bet she sucked the equity out of her house for that down payment?
Didn’t know a city employee in California could afford to purchase anything over $200k.
Yeah right. Govt leeches, err employees are the best paid people out there. And not only that but after 20-30 years the get to retire with a fat pension and fatter benefits.
And I’ll give 1000:1 odds that this poor, poor city employee voted for and most likely enthusiastically campaigned for THE ONE.
I bet this city employee spent half her time at work, or more, on the Internet searching for get-rich-quick schemes, instead of actually doing whatever it is that the State was paying her to do.
Federal wages really aren’t that high. But California government employees–yes, they are that high. Cal-Fire firefighters routinely make $100K+, I know of two batallion chiefs making more than $200K. Beat cops in bankrupt Vallejo START at $120K, plus they get 80% of their high 3 after 20 years. Anything unionized in California: including nurses, Cal-Trans, and PG&E, make tons of money. The secretary for PG&E’s small district office in Eureka makes $92,000/year. And, the highest paid city employee in SF in 2008 was a city nurse, who made more than $300K.
You’re kidding, right? City employees of California are waaaayyyy overpaid. In my city, 1 in every 11 city employees are making over 100k a year. In Vallejo, the CA city that went bankrupt last year, almost 50% of the city payroll was making over 100k a year.
“Nearly 70 plaintiffs who invested millions of dollars in the Trump Ocean Resort, a planned luxury oceanfront development in Baja California that was never built, are now suing Donald Trump, his son and daughter, and the project’s developers on a fraud claim.”
Bajajajajajajajajajjajaajajaajajajaaaaa!!!!
Will the Trump name recover after this bust? He is Mr. RE, after all. And, didn’t he have one of those RE porn shows during the boom?
“Bajajajajajajajajajajajajaajaajajajaaaaa!!!!”
Classic.
It’s entertainment at its finest to watch Judas Goats like Trump and Jim Cramer, who led the sheep to the slaughter, starting to face the consequences of their shilling. Jon Stewart handed Cramer his head on a platter, very publicly, and now Trump is going to get keel-hauled in court. This is going to be beautiful to behold.
Isn’t it sad that a comedian was the one to ask the hard questions and our so called investigative reporters on the MSM seemed to not be able to ask those questions.
Wasn’t it only the court jester who was able to poke fun at the king?
So what makes the best humor, isn’t it Truth in disguise?
PB,
Love the laugh.
“Call it the Charge of the Lighten Up Brigade. For Dale Condy, it’s making playful signs and stickers to banish the recession. Ben Kephart is giving a free meal at his restaurant to customers who have a positive story to tell. And Kelly Schneider has replaced the daily specials etched on a coffeehouse chalkboard with upbeat quotes and philosophy.”
That should be as effective as the “WIN” button. Hello again, 1974!
No kidding. Getting mad as hell is a justified and appropriate reaction to the massive swindles that have been perpetrated by the Fed, the government, and Wall Street working in collusion. Cutesy signs won’t change that. My only hope is that people do something constructive with their anger, like blame the right culprits and not convenient scapegoats. And get off their a$$es and start working positively for real change, not the counterfeit Obama version.
Sammy this is the second time you’ve posted about real change. Please define.
Everyone who makes over 250K is rich and is responsible for the entire mortgage fraud, didn’t you know?
UHH…….per the naacp. Everyone who makes over 250K is rich (and is white) is responsible for the entire mortgage fraud, didn’t you know?
Or some recycled “Just say NO!” buttons to the recession
Willis, who has not yet taken legal action, traveled to San Diego for a sales reception in December 2006, where prospective buyers were served appetizers and drinks as they chose color schemes. She paid her first $50,000 then. ‘I was never told the (Trump) name was only licensed,’ she said. ‘It could have been in the legal documents, but I didn’t know that. I thought it was what it said, Trump.’”
It says something about the mental caliber of these “investors” that they spent more time gobbling up appetizers and choosing color schemes than doing an actual due dilligence on their “investment.” And how many times are we going to hear these fleeced FBs and Trump wanna-bes bleat that “I was never told…” Caveat Emptor has been the unspoken rule of commerce since Roman times, and yet these dull-eyed slugs filing in to sign away their financial future expect to be spoon-fed the downside? All I can say is, both sides deserve to lose this lawsuit.
It’s easy to identify such “investment” turds at trade shows and golf clubs. Simply observe those mobbing shrimp-laden tables like flies on shit.
Wanna know how to painlessly and cleanly commit mass murder among the wanna-be jet set? Throw a bowl of shrimp over a cliff.
priceless
+100
“Gartland said reducing the deduction wouldn’t have a dramatic effect on his life. But he contends that in high-priced areas such as Southern California, a $250,000 household income doesn’t quite make you rich. ‘I have many friends making $250,000,’ he said. ‘The husband and wife both work. They live in a middle-class house and go out to dinner twice a month because that’s what they can afford.”
I’m sorry, but in my book, if you make 250, you are rich. I do well with a family of 4 on 70K (Now reduced to 50 because of recently reduced hours) on Long Island. It’s a struggle, but we have no debt. We shop the sales, no car payment, live in a nice neighborhood, etc., you get the picture. If I made 250K, I would definitely be rich here. I can’t understand these people whining like this… I would feel quite well off even if I made 150K. If I made 150, I wouldn’t worry about a thing, really.
Exactly. No one wants to come out and say that this couple just bought too much house.
Yes, thank you. Cheers!
There is something truly wrong with the people who are making the comments that “250 doesn’t make you rich”. By the standards of just about EVERYONE on earth; your FILTHY rich making 250K a year. Your in the top 1-2% of the country, and probably the top .1-.2% of the entire world. Frankly, you have so much money that you shouldn’t ever have to worry about money again (assuming you keep that 250K/yr job).
The idea that 250K is middle class in CA is simply insane. The only reason that those people are living “middle class” (and I’d like to know what the definition we are working from here is; middle class with 2 M3’s in the driveway?) is because they are paying WAY too much for housing. Like 3-4X what they really should be paying. That’s why they are living a middle class life, they are lighting half (or more) the money that they take home on fire at the alter of the great “CA housing ponzi scheme” that’s been going on for a very, very long time.
Simply put, if you make 250K and don’t feel rich, you bought WAY too much house, or you live in an area that’s WAY overpriced.
It may be true that $250K is a lot more than most, but consider taxes on the second 125K are a whole lot higher than the first, and what things really cost, and if you live in a moderate $500K home with no pool in a dumpy part of town in many bubble areas you are not doing as well as you might think.
I routinely earned over $120K and we definitely had to watch what we spend carefully in San Diego, living in a $2000 / Mo apartment, but with NO tax shelters not as much left over for spending as one might think.
You’re wrong. If you make 250K, that’s the bare minimum if you live in LA, after you pay taxes, mortgage, insurance, maybe contribute a little to your retirement fund, plus tuition for two kids, you’re pretty well tapped out. I couldn’t live on a penny less here in LA, and I live a very simple lifestyle. The last movie I saw was Forrest Gump.
I earned $228,000 in 2005 in LA. My money went far, had lots of fun. Of course I lived darn cheap by renting a studio apartment. No kids no wife. Brazilian girlfriend who never asked for money. Gave me a lot of money to buy gold with. Good old days.
Then how come you have money left over for investing if you barely make it? Borrowing?
it sounds like you simplly spend too much.
Families making over 250k are getting furious because it feels they have a target on their back. How can we have “equality” or “fair” if we are being singled out as the ones who have to pay for everyone else’s tax breaks/stimulus.
If you make over 250k:
1. You don’t get a 8k credit when buying a new house.
2. You don’t get a stimulus check/credit (nor did you get one during Bush’s term either.)
3. Your federal tax is INCREASING, going up by 2-4% for income over 200k.
4. You pay 33-35% in federal taxes alone, plus state taxes, etc.
5. You will get an additional SS tax on money made over 200k. (Money we don’t ever expect to see come back.)
If my family is going to pay about 100k in taxes for 2008, is it “fair” that someone who didn’t work will get 400 dollars? That money comes from somewhere, either from my taxes today or tomorrow.
If all of Obama’s tax changes pass, a family in California will pay over 51% in fed/state taxes for money earned over 200k. That would be an increase from about 42% last year. That is why people are mad! If we need to increase taxes, increase it for everyone or STOP spending. We have a 1.7 Trillion deficit, that’s the real problem.
If we keep the discussion to what Obama is proposing, his plan is to put the federal tax rates for the rich essentially back where they were before G. W. Bush got into office. (What is happening to the CA state taxes is another matter.)
I’m old enough to recall those years way way back when Clinton was president. As I recall, the rich did pretty well in those days.
If you’re going to bring up the issue of fairness, we should address in its entirety. Even before the issue of taxes is discussed, is it fair for you have such a tremendous income when so many people doing important work earn so much less?
Obama getting rid of the mortgage interest tax deduction will depress all homeowners. What incentive is it to own a house anymore? None. Everyone should just rent their homes and if things get worse, Obama will need to come in and buy up all the houses in America. Landlords will spike their rents and thus creating a deeper problem in the housing market. SoCA house prices are still to high for anyone. People are leaving California, too expensive and there is no quality of life there. If you like to pay high taxes …. California is the place for you. The California dream has turned into a nightmare by the CA governor and liberal lawmakers. The state is a goner … there’s nothing left to like about it.
Um, if the tax deduction goes away, then the price of the house will go down to compensate, thereby facilitating the mortgage payment part of it.
I wonder what MOT is saying on youtube. (Man of truth)
Big V,
You are just too logical for people like Shirley.
If the price of a home goes down, then more foreclosures will follow and the banks will need yet more bailout - essentially to make up the difference between loan amount and current value. IMO, the government already gets more than enough money to handle the day to day running of our country and tax reductaions would go a long way to easing the current economic crisis. That goes for all levels of Government.
So let me see if I understand. Taxing a house purchase will lead to less demand and hence lower price? Kind of like taxing labor at a higher rate reduces demand and lowers the price (wage)?
If the IRS were to disallow deducting employee salaries or wages as a business expense I would expect this would have a big impact on hiring and most definitely drive down wages.
Higher taxes leads to less spending that leads to more Job loss that means your undoing your economic stimulus package. In other words you ultimately collect less in taxes and our debt goes up. good work.
“Obama getting rid of the mortgage interest tax deduction will depress all homeowners”
Yup…That will really hurt ALL of the little strawberry pickers and their $720K shacks
Obama taking away the mortgage interest deduction will take away the artificial value of houses in the short run. Face it. The interest deduction is a subsidy from the renters and owners to the people paying mortgages.
In the long run, the people who want a home for non-investment reasons will tend to be the 64% of the population in homes. This will raise the quality of neighbors in the ‘hoods.
People will save for their ideal home, not starter cracker jack boxes.
Sometimes I wonder why would anyone want to buy a stucco box amid a sea of look-alike stucco boxes where you can see nothing else but pavement, sidewalk, lawn, and sky?
I always preferred the idea of a custom house in a mountain or beach setting if I had to live in the country. Like something out of Sunset Magazine. Otherwise in a city I’d be in a luury condo or loft that better have lots of amenities (and nearby nightlife). And if I neeed to store junk, justs rent a storage unit.
Come to think of it, many people treat their houses as storage units. Sad!
Not ALL. Some of us owe nothing.
And the Democrats are the ones to blame for California. They have controlled and spent this state into bankruptcy.
I am finally beginning to see the tide change favorablly in the best parts of the san fernando valley..huge inventory increasing everyday…This will be a brutal spring,the show is just starting in Los Angeles…….the bailout plan to help the losers is useless for this part of the country THEY ARE TO FAR UPSIDE DOWN….GOOD
Do you have any specific listings that you can post as examples.
LAinvestorgirl,
If you have to ask the question about listings and sales, you are not really an investor as your name suggests.
As a broker for over twenty years, I can tell you that inventory in the Los Angeles area has skyrocked, prices were holding steady until about three months ago, as banks tighten lending standards by the month. Now, foreclosure listings are competing with the homewoner whom is not upside down.
Woodland Hills, Sherman Oaks, Encino, & even Glendale, and Burbank just to name of few.
I know someone that does FHA, and speaking to her every couple of weeks, she states it just gets more difficult. They just uped the minimum credit score to 600 fico.
We are just getting started here, unfortunately.
“Poythress believed she had obtained an affordable loan that was in her best interest and that she was borrowing $100,000 to pay off her debts and get $20,000 back in cash, the suit said. But in fact, the loan was for $195,000, the entire balance of the loan was to be repaid in a ‘balloon’ payment after one year, and Poythress’ monthly payments were to be about $2,356.”
This happens because people don’t read or can’t read the documents that the are agreeing to. Such a shame.
Reading the context of this article “disabled” seems to indicate a mental difficency, which if true would indicate that this person may not have been in a position to understand what she was getting into.
“I’m sorry, but in my book, if you make 250, you are rich. I do well with a family of 4 on 70K (Now reduced to 50 because of recently reduced hours) on Long Island. It’s a struggle, but we have no debt. ”
I second that we have no debit either and life aint bad., It really bugs me how poster cry about some one getting a 3% increase in tax on 250k AGI. My combine family income is over 165k a year. We live in nice area, nice house, and two paid for cars. One of our daughters is at UCR and she dose not get anything from FISA and the other is a RN like her mother, and we paid for nursing school.. I don’t understand the hardship that people making 250k a year are suffering from. Either my wife shop in the wrong places or we go to the wrong restaurant because we go out to eat and purchase clothes and are not broke. We go out to dinner most Sundays and I even have different color suit for church and we do 401k and tithe. So please I don’t want to hear these sad sob story about how “O” is taxing the rich and they will stop working because of this. I say quit if you feel so burden and oppressed the world will still turn. Plus I like to see how the rich learn to survive on those hated food stamps they begrudge those people who do use them.
The reason that there’s such a disconnect is because of the price of housing between areas. 250K in LA is probably very middle class because the homes are still 2X what the population can support. However, 250K in suburban GA and you are filthy rich.
The thing is, those who make 250K and don’t feel rich simply are spending way, way too much on housing. Even if your renting, your spending too much. And granted, I don’t have kids; but, even so, with kids, 250K is a he** of a lot of money.
What’s the difference (in cost of living) between LA and Omaha, NE? It’s not in the cars (they cost the same), restruaunt, WallMarts, KMarts, or anything else. It’s the fact that homes are still priced FAR too high for the median income to support (250K puts you in the top 5% of earners in LA, I’m sure).
Michael:
Also what can you charge people for your services is very important if you have to spend a lot of money up front to invest in your business
For example DJ equipment is the same price in NYC as in Omaha….but if i get $1000 per wedding in NYC i would have to do double the weddings in omaha at $500 to pay off the stuff.
————————————————————
What’s the difference (in cost of living) between LA and Omaha, NE?
You can spin this any way you want. Fact is for every additional % of tax I have to pay, there is less of an incentive for me to work. This may not necessarily apply for salaried people. If you make $240K and you get a $20K raise you’re not going to say ‘oh no, please, just give me $10K so I don’t go over $250K’
But for someone like me who isn’t salaried it does matter. I decide how much I work. And with each progressive tax bracket, the incentive becomes lower and lower. If THE ONE does what he says he will do and hikes the marginal rate to 39.6%, then for every dollar earned above $250K, I will only keep 51.5 cents after paying 6% to Georgia and another 2.9% to Medicare. And if THE ONE does what I think he will also do - eliminate the SS tax cap above $106K - that’s an extra 12.4%. Meaning that if I work an extra week above $250K, I will be working Monday, Tuesday, Wednesday and Thursday morning for Obama. And only after I’ve had my 2nd cup of coffee Thursday morning will I get to keep the money for myself. And let me tell you that once that happens, I’m not working that week anymore.
Yeah I know, I know, poor me, cry myself a river blah blah blah.
Exactly! If BHO uncasp social security, I’d be less likely to pursue more work.
And it’s not just that I only get to keep 35 cents on the dollar (with my CA taxes included)….it’s that my taxes are going so deadbeats can live like kings and queens.
If you think the marginal benefit of your work doesn’t exceed the marginal cost by some minimum return on investment, you should stop.
That’s a market response.
But if it turns out that someone else’s marginal cost or ROI requirement is lower than yours, it’s likely that he will gladly step in for the work you can’t afford (or don’t want) to do.
That’s a market response too.
So it could be that at $250K of income under the new setup, the tax rate is so burdensome that your entire business segment will disappear or move elsewhere because the return is simply not there for the risk.
But if it turns out that the tax rate isn’t as cumbersome as you think for that market, there will be a lot of other people somewhere trying to figure out how they can have your problem while you are trying to figure out your motivation to go to work.
(250K puts you in the top 5% of earners in LA, I’m sure).
That’s an interesting point, Michael. Even if you’re estimate is low and 10% of the families in Southern California have an income of $250k, then it’s pretty amazing that people shout and scream that $250k is only middle class there. That would mean that 90% of the population has a standard of living that is below middle class.
Your point about the difference between LA and Omaha ia slo a good one. If Obama’s tax plan helped pushed down CA house prices a little more than they are already falling, the result would be that the folks making $250k would be able to afford a better standard of living by taking advantage of the cheaper housing.
The quote that a lot of us are taking exception to is that $250K is basically middle class in SoCal.
However, some others have decided to turn it into a discussion of taxation “fairness” for that group which is a much broader question. “No, $250K isn’t more than middle class because of the current and new tax policies.”
If you personally make $250K of income a year, go on TV in CA, say that you’re middle class and don’t know how you’re getting by today (never mind the new tax changes.) Please let us know how many times you get your azz beat when you walk down the street by the other 95%+ of the CA population.
It’s not class warfare. Think of it as a real-world economics lesson by Mr. Market.
“Yuba and Sutter counties builders sold six homes in January, 64.7 percent below the 17 last year. Merced’s four sales were the state’s biggest year-over-year drop: off 94.7 percent from the 76 sales in January 2008.”
After being here in Yuba City for the last 2 months I can’t believe they sold any homes! 6 more weeks and this place is in the rear view mirror forever.