Baffled by all the political posturing?  If I were running for public office, here is what I would do since having Mastered Real Estate and Economics 101;                   

1.  Reduce the Capital Gains tax to 5%, what this will do is encourage those that are holding long term capital gains to sell. 

First of all, what is considered  a capital gain?     Some people think this is only for the rich, think again.  A sale of stock, mutual funds or bonds fall in that category, as well as other long term gains, such as a real estate investment, apartment building containing 1 to 4 units, is also considered a capital gain.  

Most people don't realize it, your home could be a capital gain if you made more than the allowable profit, as an example; you bought a home for $85,000 and you sold it for 420,000 there would be a $335,000 profit, and depending on your own status, that could be a taxable event.  Another example, lets say I owned a rental unit, I am tired or the headaches of managing it, I want to sell, there is a good chance I might be incline to sell, because I want retire after owning it for 15- 20 years, however, after looking at the consequences of the Capital Gains Tax, I would be very reluctant to do so, or  I may opt to stick it out and let my heirs worry about it, or use a IRS 1031 exchange to defer the taxes by buying another property, hoping the management headaches go away.    

Basically speaking, capital gains taxes reduces the governments ability to collect revenue.  Capital gains taxes are currently at15% on the Federal side and 15% for California, plus depreciation that may be due.  and are scheduled to rise in 2011. 

However, should Congress lower the capital gains tax substantially this would encourage property owners to sell, who are inclined to sell.  By lowering the capital gains taxes, this would have an enormous effect on the economy by raising revenue to the federal government, as well as the States, like California, who are facing budgetary problems.  

Imagine increase revenues, by simply reducing their capital gains taxes, more revenues created by simply reducing taxes.  Raising taxes can be counterproductive.  More is less, and Less is more!

With the Capital gains tax being so high, most people are very reluctant to sell because of this. 

 Paying lower capital gains taxes encourages income property owners an opportunity to sell, cash in, retire and do what they want to do, pay less taxes and enjoy life, or invest in other opportunities, joint ventures that create jobs.  This is something to really think about. 

 2.  Eliminate the Taxes on individual savings accounts held by banks, savings and loans, up to $100,000 in tax free income with an inflation index to keep up with inflation.  This would encourage more people to save.  Imagine  using the Tax laws to create incentives for people to save money.  

Lot of people would be pouring money back in to the banks, making them healthy again.  Banks would be in a better position to provide mortgage money for those who want to buy homes or refinance their existing homes, others can get a car loan, or even finance a college education.   We should make the tax laws help our nation, not cripple the economy. 

The cost of credit is much too high, like credit cards for example, they need to be reflective of the risk as well as, a reasonable rate of  return for the investor banks, yet not gauge the consumers wallets.                                                     

3.  Regulate the interest rate that banks pay on regular passbook savings accounts at 1% less than the 10 year Treasury Note Rate, currently published at 3.83%, that means all regular passbook savings accounts would be paying 2.83% to their depositors.   What this does, it provide banks with liquidity for banks to lend on.            

Currently many people are looking for a safe havens for cash, including many mom and pop investors, who lack the sophistication of the stock market. 

 4.  With respect to the Bailout and foreclosed homes that would be on the federal governments books as bad mortgages.  I would allow these foreclosed homes to become part of a special recapture equity pool, in which the Government would Lease these bank owned properties with an Option to Buy.  I believe this Lease   Option Program could  ultimately save  the government tons of money, by turning a negative asset (bad mortgages) into a performing asset.  These properties will have a tenant maintaining the up keep, as well as paying rent, at above the market rents.  At the time the lease has been exercised, the tenant would have a portion of the payments credited back to the tenant (20%) of the rent collected, can be used as a down payment, if the tenant fails to exercise their option to purchase or fail to comply with the lease provision, they forfeit any option money.  They must also go through a rigorous housing counseling program, where they will learn how to budget and manage their  finances.  If they fail to attend classes or fail to pay the lease in timely manner, they lose the opportunity and   forfeit any option money. every month they were late that they may have been entitled too. 

 Tenants still must also qualify with periodic accountability sessions, to insure they know how to manage their financial affairs.  They must also sign an acknowledgment and agree to the terms prior to entering into a lease option contract, and taking procession of the property.  They would still need to qualify for the lease financially to have a reasonable assurances of qualifying for a mortgage by the end of their lease option period.  In no event, is the tenant entitled to any portion of rents collected, if they fail to qualify for a mortgage due to acts of ill responsibility.  After attending these home buyer certification courses, they will be better prepared to handle a mortgage payment.  This encourages success of obtaining home ownership, because they earned it.  This also makes it a win for the taxpayers and it gives those who want to buy in the future with an opportunity to own their own home.  The government wins, by receiving rent money while the equity eventually rises if the tenant fails to exercise the option to buy.  The tenants are guaranteed they have the first right of refusal at today's prices, the community wins, as there is no blight in the neighborhood, and the taxpayer wins by returning a bad asset to a performing asset.  That's a Win for

 Carlos R. Arvizu Sr

TheDOn1950@aol.com

I may enter the political Arena in 2010.  If you think I should, please let me know.  Thanks