Really interesting stuff on how our tax system in the U.S. is, in effect, quite regressive.
Taxes are not my thing. (My accountant will testify to the effect that I don't know a damned thing about them.) But I find this stuff fascinating. Sometimes I have to re-read individual paragraphs to make sure I fully grok what the author is talking about, but once I do follow it, the subject matter is actually fascinating to me.
Of course, I'm not even halfway done reading yet, but it shouldn't be long before I finish this one up. One of the most interesting concepts I've encountered thus far has been the notion of the middle class' most prized tax deduction (mortgage interest) actually benefitting the rich and super-rich more than the middle and working classes. The move led to a vast increase in housing prices, and those who could afford to buy more real estate were able to deduct more from their tax returns, so the rich and super-rich were able to pay less in taxes over time.
On a similar note, I keep wondering whether the low interest rates and housing boom that have been underway for a while are screwing younger, working-class people in the long run. In 1978, my parents paid $60,000 for their house in Wading River. Adjusted for inflation, that's just under $180,000 in 2005 dollars. Yet in today's housing market, that house sells for around $450,000, which is a remarkable rate of return. First-time homebuyers are making it possible for people who are better off to lock in these gains. Granted, they're paying for it with low-interest loans as compared to what folks might have paid 10-15 years ago. But one wonders whether we're in a housing bubble or not.
After all, housing prices are affected by a number of different factors, including rents in the area, taxes and a number of other things. One of the biggest factors is the price of a home in comparison to the cost of buying land and the labor/material cost of building a home yourself. If I can do this in my area for approximately $300K, what's the incentive to pay $450K+ for something that's already built? It makes me wonder whether real estate can continue on this path.
If it does come crashing down, we'll see older, better off people with money in the bank while new homebuyers struggle (and even go into bankruptcy). This could be another way in which the gap between the haves and have-nots is both reinforced and made even worse.