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.)