Joseph Stiglitz rightly points out that sharecroppers
who must pay their landlord 50% of their produce are
being highly taxed.
But what of residential tenants and homebuyers who are
paying 40% of their wages to their landlord or to the
mortgage lender who paid off the seller?
And keep in mind that most of them pay another 6.5% of
their wages for social security (13% if you —
correctly — take into account what the employer
pays), and then pay state and local wage taxes, sales
taxes as high as 11%, taxes on fuel, taxes on telephones,
taxes on cable TV, to name a few.
Their landlords, meanwhile,
pay 0.2%, or 1%, or 2% of the market value of their real
estate to the schools, town or city, and county, and then
get to deduct from their state and federal income taxes
some allowance for depreciation (usually calculated on
far more than the value of the house itself, and not
infrequently on property that others have fully
depreciated in the past!) And home
sellers get to pocket the first $250,000 in
profit completely tax-free ($500,000 if the taxpayers are
married), and pay only a lower capital gains rate on
profits above that level — less than the tax on
wages! Talk about windfall profits!
When we-the-people invest (often through pork projects
funded by federal income tax) in local infrastructure,
the result is that the rent the tenant must pay, or the
selling price a buyer faces, increases. The landlord gets
richer, and the tenant pays — twice! In California,
where Proposition 13 limits property taxes to 1% of
market value, and keeps property taxes far below that
level for long-time owners (residential and commercial),
so few households can afford the median house that the
state Realtors' association has given up their monthly
reporting on housing affordability. (However, to their
credit, they have turned to golfing fundraisers for
affordable housing, which have created homes for several
dozen families across California!)
A May, 2006, Federal Reserve Board study found that in
the top 46 metro markets, land accounted for, on average,
50.9% of the value of single-family housing stock, in
2004. The study reported that in the remainder of the
country, the corresponding value, for 2000, was about
27%. The 50.9% figure ranged from a low of 23.3% in
Oklahoma City to a high of 88.5% in the San Francisco
metro. (source:
http://www.federalreserve.gov/pubs/feds/2006/200625/index.html;
see tables 6a through 6g.)