🚀 go-pugleaf

>In ye olden post I said...
>>
>>Let's be clear.  Prop 13 (using purchase price for tax assessment )
>>is a benefit *only* to owners whose home values have increased.
>>Could you explain to me again why someone deserves a tax subsidy from
>>my pocket because they have gotten richer?

and linley@netcom.com (Bruce James Robert Linley) replied
>No one 'gets richer' until they _sell_ the house. Where is the homeowner
[..munch...]

  *WRONG*

If there has been no increase in wealth, then what collateralizes
home equity loans?  True, the wealth is in an illiquid form, but with
reverse mortgages, tax-advantaged home equity loans, and other innovations,
this is less of a problem than it used to be.

As I understand your argument, the reason others are entitled to this
tax subsidy from my pocket is that they bought their residence
before I bought mine.  Now THAT is one econmically compelling
argument....

>>About your [deleted] prop 13 defense: if the purchase price is the "correct"
>>price, then why is there a provision in prop 13 that allows you to reduce
>>you tax basis to market value if market value is less than  purchase price?

>All geared to protect homeowners, in this case, those homeowners who bought
>in an expensive market and now need a break in these economically difficult
>times.

I think I now understand our key philosophical difference: the nature of
the "imputed rent" on a residence that has appreciated. 
I believe Keynes made a comment that people in economic disputes
are usually hostages to some dead  economist. For you and I, I believe that
economist is Ricardo.  The debate is about "capturing rents."
In a nutshell, if two equally industrious farmers use the same
techniques to grow the same crop, but one farmer has higher yield
due farming more fertile soil, who is entitled to the excess?
The farmer? the land owner? "society?"  the local duke? 
the proletariat?

In terms of this discussion, when someone experiences an increase in wealth from
the good fortune of living in their house, how should that wealth be 
distributed?  As I understand you, you believe matters should be
"geared to protect homeowners," meaning strictly those who already own
homes, not possible future homeowners.  This is a noble view that
goes directly back to Jefferson (and earlier).

Given homestead exemptions on the one hand, and the triple federal subsidy
for homeowners on the other hand, I believe this noble view
has been taken too far when it also includes a direct wealth
transfer from my to pocket to theirs  because
"they were here first." 

Note: for those interested in the "triple federal subsidy"
of mortage interest deduction, capital gains rollover, and,
most importantly, intermediate credit facilities (e.g. Fannie Mae),
read _Supermoney_ by 'Adam Smith'.  After carefully
explaining just how massive these subsidies are, he
concluded "The government wants you to buy a house.
GO BUY A HOUSE," correctly forecasting the 70's bull market
in real estate.

-- 
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Tyler Holcomb   *   "Remember, one treats others with courtesy and repsect *
tylerh@alumni.  *   not because they are gentlemen or gentlewomen, but     *
  caltech.edu   *   because you are."  - paraphrased from Garth Henrichs   *