Wealth and Want
... because democracy alone is not enough to produce widely shared prosperity.
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House-Rent and Wages

Joseph Stiglitz rightly points out that sharecroppers who must pay their landlord 50% of their produce are being highly taxed.

But what of residential tenants and homebuyers who are paying 40% of their wages to their landlord or to the mortgage lender who paid off the seller?

And keep in mind that most of them pay another 6.5% of their wages for social security (13% if you — correctly — take into account what the employer pays), and then pay state and local wage taxes, sales taxes as high as 11%, taxes on fuel, taxes on telephones, taxes on cable TV, to name a few.

Their landlords, meanwhile, pay 0.2%, or 1%, or 2% of the market value of their real estate to the schools, town or city, and county, and then get to deduct from their state and federal income taxes some allowance for depreciation (usually calculated on far more than the value of the house itself, and not infrequently on property that others have fully depreciated in the past!) And home sellers get to pocket the first $250,000 in profit completely tax-free ($500,000 if the taxpayers are married), and pay only a lower capital gains rate on profits above that level — less than the tax on wages! Talk about windfall profits!

When we-the-people invest (often through pork projects funded by federal income tax) in local infrastructure, the result is that the rent the tenant must pay, or the selling price a buyer faces, increases. The landlord gets richer, and the tenant pays — twice! In California, where Proposition 13 limits property taxes to 1% of market value, and keeps property taxes far below that level for long-time owners (residential and commercial), so few households can afford the median house that the state Realtors' association has given up their monthly reporting on housing affordability. (However, to their credit, they have turned to golfing fundraisers for affordable housing, which have created homes for several dozen families across California!)

A May, 2006, Federal Reserve Board study found that in the top 46 metro markets, land accounted for, on average, 50.9% of the value of single-family housing stock, in 2004. The study reported that in the remainder of the country, the corresponding value, for 2000, was about 27%. The 50.9% figure ranged from a low of 23.3% in Oklahoma City to a high of 88.5% in the San Francisco metro. (source: http://www.federalreserve.gov/pubs/feds/2006/200625/index.html; see tables 6a through 6g.)


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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper