Happy Tax Day! Here is a fantastic quote from Benjamin Franklin:
"Idleness and Pride Tax with a heavier Hand than Kings and Parliaments; If we can get rid of the former we may easily bear the Latter."
This is the case with us, as much as we complain about taxes (and I agree, the complaints are justified), we still live in the most productive economy in the history of the world. By hard work and humility we can get ahead in this country. Our system of real estate that allows the common man to "own" was the dream of the founders of this country. Try buying property in a flourishing China for example--or even Mexico; can you? Abe Lincoln referred to our system of government that promotes "property as the fruit of labor" as "The American Experiment." I submit at the core of this system is the way we title, protect, and promote property ownership. It's why we all have jobs.
Our system of Titling property is the envy of the modern world; millions of tracts of land broken up, very few of which are conveyed without a guarantee of rights to enjoy, convey, and use. Many Urban areas have county records completely automated and on line, so the search for ownership is easy; prospective borrowers can feel confident that when they purchase, with title insurance, they are going to get something without encumbrance or strings attached. This confidence has created an industry in Real Estate which accounts for 61.5% (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html) of wealth for 90% of people in the United States.
I went to our local city hall and saw a grade school project where children made collages of the rights granted to us by the constitution. I was disappointed to see very few children did a collage on the right to be protected in your ownership of property. Not a right to own, but to be protected by the due process of law. The 14th amendment says: "...nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." The opposite of the rule of law being the rule of monarchy or whim. Once we own something, the government can't just arbitrarily take it without due process. Although there are many ways they have figured out how to do this, and our tax code is in question here, our foundation is still there. The way we protect property is sacrosanct to many Americans.
Finally, the way we promote home ownership in this country has a tremendous effect on livelihood. We have all seen how small changes in programs or lending, etc. can sway the market and by the stroke of a pen, thousands of people can lose jobs, and send us all into a tailspin. The FHA was created in 1934 to guarantee banks would get repaid if the borrowers went into foreclosure. This stimulated banks to take risk and created a secondary market to increase liquidity for lenders. Many people don't realize this because all of the spin, but the FHA is still one of the only SOLVENT government programs (last year they ran a deficit for the very first time--so they raised their fees, but since all they earn is thrown into the general fund they cant really surplus, forget about the semantic of insurance pool--it's just like social security only they pay out far, far less); meaning they typically take in more than they cost. If every government program ran like this, we certainly wouldn't have the deficit we have. Many people want to get rid of FHA, but it has been a bulwark of lending in the US for over 75 years. The low down payment options offered by the FHA create a natural incentive and stimulus for borrowers. We know this is true because the industry glutted itself largely through low or no down payment equivalents from sub-prime. It generates a lot of business. One other thing that clearly affects home ownership levels is the mortgage interest deduction; despite being on the chopping block this incentive gives borrowers with little or no appreciation, real incentive to OWN. This seems like low hanging fruit to shore up our financial crisis, but the chilling effect on the economy could be disastrous. If your home isn't going up in value, and there is no tax incentive, then why do we want to hold a mortgage with all the attendant risk? This is a bad idea, here is a link for a little ammunition on this:
So today, on Tax day, if you've already filed, do something to help preserve your industry, our way of life, and your livelihood by going here and sending a letter to your elected officials:
If you've already done it, you should send it to your clients who now own to do it as well.
Well, Happy Tax Day, and even though it's a dogfight out there, remember, you still get to live here.