Special offer

Realtors. Are Your Rich? Joe Biden Thinks So.

By
Real Estate Agent with 1st Action Real Estate

Are you rich? I suspect the answer from most of us, especially given the events of the past couple years, would be a resounding "NO". Most of us might even take that up a notch to "HELL NO".

screwedBut if this administration allows some or all of the current tax cuts to expire at the end of this year, you might be surprised. For  example, according to the most recent NAR statistics, the median income for a licensed broker/broker associate in 2010 was $49,100. Does making just under $50k a year qualify you as rich? Well if the tax cuts expire you'll be rich enough to pony up an additional $923 next year. 

You rich SOB's making between $50 and $75k/yr will get to kick down an extra $1,126 next year. (figures supplied by Associated Press 9/3/2010)  

The administration is caught between a rock & a hard spot here. Knowing they're in for a major drubbing in 2 months, do they stick to their guns (campaign promise) and dip even further into our pockets at a time when their vaunted recovery is sputtering like an old Model T? Or do they try to limit tax breaks only to the 'wealthy' and put off dinging the 'average taxpayer' for another year or two? 

Of course this panacea will be vehemently opposed by Republicans who rightfully claim that what's good for one is good for all - and back it up with data showing that every dollar not taxed from the wealthy actually stimulates job creation. 

screwedOr in this divisive political climate, do they have a Kum-ba-Ya moment and just kick the can down the road by extending the current cuts a year or two? Democrats claim that will add about 1/2 trillion to the national debt for every year the cuts are extended.

The last alternative is to just do nothing - allow the gridlock to unfold, in which case the tax cuts simply expire, our legislators can honestly say they didn't vote either for or against it, depending which way the wind blows, and you still  up paying more taxes next year.

Now some of you progressives are still stuck up a couple paragraphs and are ready to argue the jobs creation point with me. Bring it on. I'm dying to hear your argument about how tax cuts for the poor create jobs - they start businesses, they hire more employees, they expand their current operation. Yeah, right. You know better. Certainly the poor are deserving of relief, but it's the rest of us who drive the economy - not the poor. 

Maybe you got sucked into Joe Biden's recent semi-coherent rant that only 3% of small businesses actually qualify for the tax cut anyway. Or Nancy Pelosi's flip of that incorrect number to claim that the planned tax increases would exempt 97% of small businesses. In a classic case of 'figures lie and liars figure', they chose some selective statistics from the IRS to back their flawed supposition. 

According to an article in today's Wall Street Journal, that 3% figure is predicated on raw data counting everybody who shows some business income on their Schedule C - including the millions of people simply making a few bucks off eBay or CraigsList. If you look at the returns for sole proprietorships, partnerships and S Corp's, which includes a lot of you, the number of households with incomes above $200,000 rises to 48% - a far different figure from the 3% Joe Biden would have you believe. Of course if they can foist that faulty argument on 97% of the people who think only the upper 3% will get smoked, they're golden. If the other 45% find out beforehand, then they're screwed even deeper into the quagmire come November. 

screwedIf the tax rates are allowed to float up for 'the wealthiest', it would result in a decrease in gross receipts of more than 7% to sole proprietorships according to a study done by the National Bureau of Economic Research. 7%. On top of the declines in Realtor income the past 3 years because of the market, are you ready to eat another 7% loss just because our spend-happy administration needs more of YOUR money? And Realtors are doubly screwed because we can't even raise our prices. We're stuck. 

In order for many small businesses to survive another cut in income, they will just try to raise prices for everybody else - medium and large businesses will do the same. Some will be successful, many will just sink under the waves. How many restaurants have gone under in your city the past couple years? If you have $923 less to spend next year, will you be going out to restaurants as much? The beauty parlor? Movies? Will that cause more people their jobs? Apparently Joe Biden thinks not.

So if you are blessed to have a liberal-progressive congressman in your neck of the woods, make sure you ask them which set of numbers they subscribe to - Joe Biden's or the real deal? A lot of them are feeling the squeeze right now and, fortunately many of them won't be returning next year. On BOTH sides of the divide, errr - aisle. 

Well, if you're an average income Broker, I'm sure the government can spend your $923 better than you can anyway. And if you think politics and real estate don't mix, just go back into your stupor - this rant's not for you. 

Keep on hoping for change people, it'll be here before you know it. 

Comments (13)

Mike Saunders
Retired - Athens, GA

Gene - but how do you really feel about this. Somehow or other the administration and congress have failed to recognize every society that has tried to use top down redistribution of income and wealth (not necessarily the same thing) to generate an economy. Just look at the two strongest economies in the world today, China and India. They are getting out of the way and those economies have growing middle classes and are going great guns.

Sep 03, 2010 09:38 AM
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

It's more than a litte annoying how taxes work. I'm not looking forward to giving the government more of my hard earned money to squander!

Sep 03, 2010 09:40 AM
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

Gene, this is how the Government plans on handling the questions...shut up and get in line for your screwing, you all brought it on yourselves for having a job.

Sep 03, 2010 09:57 AM
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Gene ... I expect that this US government admin will do nothing and let the income tax credits expire and that the average RE broker here in CA and his and her clients will be hurt by this decision.

Sep 03, 2010 10:11 AM
Delaware Junk Removal Residential And Commercial Hauling Clean Outs
Delaware Junk Removal 302-530-9186 - Wilmington, DE
Whole House Clean Outs, Basements, Garages, Attics

Yeah Gene but im sure someone living in section 8 for the last 10 years could have a little more fun with the money than me.....

Sep 03, 2010 02:27 PM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

They know that they are screwing the people that can pull us out of the economic slowdown... but that isn't what they want.  Harder to take control of independent citizens. 

Sep 03, 2010 03:54 PM
Bill Lauler
Chase Realty LLC - McLean, VA
Associate Broker,CIPS,CRB,SRES,GRI

Yes Gene , the government works on that old adage.."If you have the money,they have the time" to take it all from you.

Sep 04, 2010 03:42 AM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

 

Congratulations this post is now featured in the Silent Majority Group of Active Rain.

Sep 04, 2010 06:20 AM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Say it isn't so Joe - I am tired of fighting with this government and tired of swimming upstream when this government is sending everything downstream to small business and especially realtors!!!!

Sep 04, 2010 06:21 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Instead of focusing on raising more tax revenue, why can't Washington focus on cutting spending?  But wait, then how could the politicians buy votes?

Sep 05, 2010 03:03 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

I give MORE to charity in 1 month, than VP and doc wife give in an ENTIRE years and they probably make 4X the amount that I do.

Conservatives are MORE generous than lib/dems and local charities in our area are REALLY hurting because of the lack of corp contributions this year.

Sep 05, 2010 05:45 AM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

It aint going to get any better for awhile... we have to use our vote to make a real change in November and then 2012...  maybe if we elect someone who has actually run a business not just read about it in books....

I love your graphics in this post...

Sep 06, 2010 07:33 PM
Gene Wunderlich
1st Action Real Estate - Murrieta, CA
Realtor & Legislative Liaison

Thanks Nicholas - nice to get a feature. Too many PC people over in the Rain anymore who can't see the connection between real estate and politics - and either don't realize, or won't admit to how far off track we've gone.

Lane is right - it's harder to get control over independent citizens - the more folks they can get on the ublic dole or dependent on public spending the better they like it. Scary.

Sep 07, 2010 09:13 AM