In Georgia, housing woes a long-term drag on economy
As we claw our way out of this recession, it’s easy to forget where it all started: housing. And while other parts of the economy have begun to recover and show signs of health, the housing situation is actually getting worse by some key standards. The Atlanta Federal Reserve has some interesting data and — oh goody! — charts to explain where we are at the moment.
For example, the number of American households who owe more on their mortgage than the house is worth — known as negative equity — continues to grow in many markets, including Georgia. In fact, in the fourth quarter of 2010, Georgia had the sixth highest rate of negative equity in the nation. Three out of 10 Georgia homeowners owed more in loans on their property than their property was worth, which is a remarkable number.
In the metro Atlanta area, the ratio is even higher. More than one out of three homeowners in this market are “underwater” on their mortgage, making them prime candidates for eventual default or foreclosure. Those who do not default will experience long-term “houselock,” meaning they’re stuck in those homes because they’re unable to sell them for enough to pay off the mortgage. Every monthly mortgage payment they make is another payment in a bad investment, but they make them anyway because that investment is also a home.
That is not a problem that is going away soon, with “soon” defined as anytime in the next five or maybe 10 years. It will continue to be a drag on housing prices and on consumer spending. New-home construction — once the driving force in the metro Atlanta economy — will continue to be more of a boutique business than a thriving industry.
That’s what happens when a bubble pops. That’s what happens when the music stops. Sooner or later, things that are too good to be true always stop being true.
– Jay Bookman
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895 comments Add your comment
ConnedConsCon
March 23rd, 2011
11:00 am
What Ivy League school did you attend?
Your comprehension seems to be moving at a slower pace than those advancing vines at the ivy league schools. I do believe that the only one on this blog that you would be able to see is yourself, WOW, unless you sit beside other bloggers on here.
Mick
March 23rd, 2011
11:01 am
doom
If this was a three stooges short and you put georgia and florida together on a map, it would be named moronica….
@@
March 23rd, 2011
11:01 am
MD Anderson’s a great place.
T-rue!!!! Became acquainted with them thru a friend (a volunteer).
On my list of annual donations, they are.
Thulsa Doom
March 23rd, 2011
11:01 am
Bosch,
Were you meaning to say people who make less pay more as a % of their total income in taxes? Cause people who make less certainly don’t pay more in taxes. Even on a % basis they don’t.
Normal
March 23rd, 2011
11:02 am
Glad y’all enjoyed it. Now get out paper an pencils…pop quiz in 3-2-1…dang, the bell just rang…
WOW
March 23rd, 2011
11:02 am
“MLK would be marching for gays and Muslims to be treated equally.”
HAHAHAHAHAHAHAHA
Mick
March 23rd, 2011
11:03 am
normal
Saw that on the history channel this morning…
WOW
March 23rd, 2011
11:03 am
“Your comprehension seems to be moving at a slower pace than those advancing vines at the ivy league schools. I do believe that the only one on this blog that you would be able to see is yourself, WOW, unless you sit beside other bloggers on here.”
Con Translator 2000: He did not attend an Ivy League school, does not have a degree in anything and pretends to be something he’s not.
getalife
March 23rd, 2011
11:04 am
There is my Sharia law friend Thulsa Doom er Scout..
Good to see you post on something else.
WOW
March 23rd, 2011
11:04 am
“wow is not informed on anything.”
OH NO!!!!!!!! A left winger throwing out another left wing catch phrase!
DebbieDoRight
March 23rd, 2011
11:05 am
Peadawg: “What part of the tax would be “Fair” to everyone?” – Again, the part that everyone would be paying the same percentage.
O.k. let’s do some math. Let’s say everyone pays 20% in taxes of their net worth. So if you’re worth 35K on paper you will pay annually 7K in taxes. Worth 135K – pay 27K in taxes. Worth 335K – pay 67K in taxes, worth $3,335,000 – pay 667K in taxes. ok still following me so far? But there is one variable that we forget here, and that’s the wealthy folks forever have played games with taxing authorities to hide their wealth (net worth). Tricks used to reduce taxes range from bribing to simply hiding wealth. Plenty of rich investors who have hired accountants that have illegally, or perhaps legally, reduced their investment taxes to $0; (think off shore accounts); which would substantially brings down their net worth.
So the Networth of the guy with $3,335,000.00 has now hypothetically shrunken to the networth of someone with $335K and instead of the $667K he should be paying in taxes he is now paying $67K. Who looses in the end? The guy whose net worth is 35K.
WOW
March 23rd, 2011
11:05 am
“If this was a three stooges short and you put georgia and florida together on a map, it would be named moronica….”
If you put Illinois and California together on a map, it would be named Bankruptia.
Normal
March 23rd, 2011
11:05 am
Mick,
That’s where I got it. History.com. Required daily reading in the Normal household.
Ragnar Danneskjöld
March 23rd, 2011
11:05 am
Dear @@ @ 10:38, “No doubt he’s a character, much like my father-in-law was…a gambler and owner of a local pool hall. I married his “snooker” pro.” When I married his daughter 33 years ago, he was affirming his hope to die at 104, “shot by a jealous husband.”
joe
March 23rd, 2011
11:06 am
We only have Barney Frank and the Dems to blame for this…he was the driving force in Freddy and Fannie loosening up loan restrictions for mortgage holders who simply could not afford the homes they were buying. This was the single driving force behind our economic problems over the past 10 years or so.
Thulsa Doom
March 23rd, 2011
11:06 am
Mick,
I’ve actually lived in all 3 states- Al, Ga, and FL. and of the 3 Florida is by far the worst as far as red tape and ridiculous politicians of both stripes.
But I’m sure AL. has its fair share of morons too.
So why is the neg. home ownership so much higher in GA. and Fl. than in Bama and Tenn. The bigger building boom and thus higher % of new mortgages being written would explain only some of the disparity.
Common Sense
March 23rd, 2011
11:06 am
The abuse of English here is amazing. Choose the right words.
People who make less money may pay a higher percentage of income in taxes. But they do not pay more dollars in taxes. They may not even pay a higher percentage of income in taxes.
When talking taxes, clarify whether you are talking dollars or percentages. If you believe yourself ti be intellectual, this should not be an issue for you.
Unless you are trying to hide the truth.
kayaker 71
March 23rd, 2011
11:06 am
People who make less money pay more taxes? More like people who make less money pay no taxes…. about 40 some million of them. The bottom 50% of taxpayers payed only 2.7% of federal income personal taxes paid in 2009. The top 50% paid the rest. So how do we go from paying nothing to paying your fair share? We either revise the tax codes to make those who make under 33K/yr start paying their fair share or we tax everyone across the board the same amount based on how much they spend. Obviously, those who make 33K/yr will not spend as much as those who make 200K/yr so it all evens out, much like it already is except the bottom 50% at least pays something. We already work well into April every year to meet our tax obligations. As the bottom 50% grows, it will soon be May, then June. What’s fair about that?
WOW
March 23rd, 2011
11:06 am
MLK, like most black people, would be against gay marriage.
uhoh
March 23rd, 2011
11:06 am
It’s gonna be OK once the hyper-inflation kicks in-everything will be worth more…..
getalife
March 23rd, 2011
11:07 am
@@,
They cracked me open at St. Joseph’s in Atlanta.
They can use some donations too.
Thanks.
Kamchak
March 23rd, 2011
11:07 am
Normal — if you enjoy history:
http://hnn.us/
You can sign up for a daily newsletter.
Jefferson
March 23rd, 2011
11:08 am
If the fed will keep rates so low to prop up housing, just think what would happen if they let market forces set the interest rates. Prices went too high because rates were too low. Payment shoppers, not value shoppers.
getalife
March 23rd, 2011
11:09 am
joe,
This is a no lie zone.
Please stop lying .
Thanks.
WOW
March 23rd, 2011
11:10 am
“This is a no lie zone.’
Guess that means you have to leave.
Beth
March 23rd, 2011
11:10 am
I am proud to NOT be one of those people who took out loans and lines of credit against their house. I’m above water sitting in a lounge chair on the beach.
Obama
March 23rd, 2011
11:10 am
“This is a no lie zone.”
Aw shucks…guess I gotta go for good then.
Doggone/GA
March 23rd, 2011
11:11 am
“People who make less money pay more taxes?”
No, they don’t…but any tax system (except some kind of progressive rate) more negatively impacts the taxpayers the lower on the economic scale you go.
AmVet
March 23rd, 2011
11:12 am
Blasts and gunfire were heard in Tripoli today, hours after Libyan leader Moammar Gadhafi said his nation was laughing at coalition rockets.
Read that and instantly thought of this classic…
Well they blew the horns
And the walls came down
They’d all been warned
And the walls came down
They juststood there laughing
They’re not laughing anymore
The walls came down
Sanctuary fades
congregation splits
Nightly military raids
The congregation splits
It’s a song of assassins
Ringin’ in your ears
We got terrorist thinking
Playing on fears
Well they blew the horns
And the walls came down
They’d all been warned
But the walls came down
I don’t think there are any Russians
And there ain’t no Yanks
Just corporate criminals
playin’ with tanks
http://www.youtube.com/watch?v=_kX8lqXAONg
@@
March 23rd, 2011
11:14 am
I’ve often suspected that Dems oppose the Fair Tax because it would eliminate their opportunity to cultivate a voting base. When the opportunity to divide us is gone, what’ve they got?
Nuthin’.
A private sector employee
March 23rd, 2011
11:14 am
DebbyDingbat wrote: O.k. let’s do some math. Let’s say everyone pays 20% in taxes of their net worth.
Really? This would put non working old people out of their homes nearly instantly! In fact, a job loss would wipe out most responsible middle class families in ONE YEAR of we paid taxes based on net worth. I say “responsible” because it is the correct and responsible thing to do to try to pay off loans and owe nothing. Yet, these would be the people that a networth tax would hit the hardest. OTOH, if I take out loans and charge up credit cards such that my net worth is ZERO, I pay no taxes under the DebbieDingbat tax scheme.
A networth tax is STUPID and discourages fiscal responsibility. ANYTHING someone accumulates has 40% of that accumulation taxed away in just 4 years. Does your grandmother own her $100k home? She will have to come up with $20k every single year to stay in it… more than her Social Security check. She will get put out of her home in ONE YEAR. This is the plan that DebbieDingbat proposes.
Normal
March 23rd, 2011
11:14 am
Kamchak,
Thanks!
Bosch
March 23rd, 2011
11:14 am
“Were you meaning to say people who make less pay more as a % of their total income in taxes?”
Yes, in the Fair Tax system they would
“Cause people who make less certainly don’t pay more in taxes. Even on a % basis they don’t.”
Now, they don’t.
Keep Up the Good Fight!
March 23rd, 2011
11:15 am
Breaking news: Incomprehensible nonsensical unreasoned posting is now the official US Blog language…..President will award a single poster to an AJC blog the most incompehensible. The evelope please:
And the award goes to….ShamWOW
Thulsa Doom
March 23rd, 2011
11:15 am
DebbieDoRight,
Yes. The wealthy do have ways of hiding money but in the vast majority of cases it is perfectly legal. They also take money that they’ve paid taxes on and invest it in offshort accounts to avoid more taxes- perfectly legal and the term is called tax avoidance. Tax avoidance is legal- reducing your tax liability in legal ways t- through the tax code. And they still end up paying the overwhelming majority of taxes- that is indisputable according to IRS data.
I think what some people are trying to say is that after taxes many middle class people have much less of their disposable income left as a % to pay for essentials such as gas, food, etc.
As for offshore accounts I have 2 but I certainly don’t consider myself wealthy. And I don’t cheat on my taxes either.
MC
March 23rd, 2011
11:16 am
You’ll never hear them say AmVet that right after GW’s 2003 speech where he declared everyone should own a home the first subprime loan was given. GW wasn’t as dumb as people thought. They knew the economy was going into the tank then and had to keep it propped up hoping it wouldn’t implode on their watch. Keep building houses. Keep people buying houses no matter how you have to sell to to them. Let the foxes into the hen house. There’s plenty of blame to go around in that debacle. Maybe if he’d bitten the bullet in 2003 this thing would had a better outcome. Bottom line in this whole thing is that if your economy depends on building more houses than there are people to buy them………DUHHHH!!! Bubble after bubble after bubble.
Bosch
March 23rd, 2011
11:16 am
“I think what some people are trying to say is that after taxes many middle class people have much less of their disposable income left as a % to pay for essentials such as gas, food, etc. ”
Yes, Doom, that’s what I was trying to say — probably wasn’t doing a good job of it though.
godless heathen
March 23rd, 2011
11:17 am
Normal: And then Sarah Palin invented Okey Dokey, and the rest is history.
Not Blind
March 23rd, 2011
11:17 am
If not for millions of illegal alien construction workers there would have been no bubble to burst. There was a natural limit to what the American workforce could accomplish but due to the feds willful encouragement of illegal immigration this natural limit was bypassed and many thousands of excess houses were built. At the same time many typical house buyers [ like say a worker at a carpet plant ] found their income negatively impacted by the influx of illegal aliens.
Many fortunes were made by people that knew what was coming, i.e. the bubble bursting. The American middle class got screwed again.
@@
March 23rd, 2011
11:18 am
Getalife:
I spent many a day at St. Joe’s. My mother-in-law had dialysis there. They performed her transplant there.
Excellent care.
I rotate out on donations. A coupl’a years here…a couple there. My way of spreading the compassion around.
AmVet
March 23rd, 2011
11:18 am
Cons will never admit it, but their ultimate goal is to join in with their fellow corporate persons (because they ARE people too!) and make taxes voluntary/non-existent.
Then their long awaited Ronnie dream of this comes true…
http://www.youtube.com/watch?v=CWpND8GhBuU
DebbieDoRight
March 23rd, 2011
11:18 am
I find it odd that you would single me out and not say a peep about your left wing comrades such as Debbie.
What does that mean wow?
truth: debbiedoanimals, perhaps if you got off your rather large rearend
that would be YO MAMA!!
and studied the fairtax instead of letting the oblowboy media cloud your judgement then you wouldn’t appear so ignorant all the time.
I know more about taxes, than you know about the boogers in your nose or one point of the Fair Tax debate. You’re too ignorant to read the dang proposal for yourself, you’re just parroting what your heroes are saying. Do the math stooopid, learn the history of the rich paying taxes in America (think MADOFF), then comment. Until then, Sesame Street is on right now, Brought to you by the letter “s” (for stooooopid) and the number “1″.
Paulo977
March 23rd, 2011
11:18 am
Deep Throat
re: “Obama, I hope you’ve had a good time in South America, partying ” As far as is possible to tell , he never even sleeps, here or abroad, for working on some problem , many of which have been DONATED to him by you know who!!
MetroLanta Developers, c. 2000
March 23rd, 2011
11:18 am
“Sustainability”? What’s that, some Commie term?
kayaker 71
March 23rd, 2011
11:19 am
As an add on to the 11:06, I find it difficult to understand why those who make less money get all of the things that taxes pay for for nothing. They get the same military protection, the benefits of OSHA, the FDA, the FCC, the FBI, the CIA, the CIC and gazillons of other federal services that I pay for but because they make less than 33K/yr they are afforded all of these services for nothing. Sound fair to you?
Bosch
March 23rd, 2011
11:21 am
kayaker,
And percentage wise, the people who make MORE money than you pay even less of their total income for those services — sound fair to you?
WOW
March 23rd, 2011
11:21 am
“I’ve often suspected that Dems oppose the Fair Tax because it would eliminate their opportunity to cultivate a voting base.’
EXACTLY!!!!!!! Same goes with unions. Get rid of them, there goes their money supply.
Paulo977
March 23rd, 2011
11:21 am
Not Blind
“If not for millions of illegal alien construction workers there would have been no bubble to burst.” That’s right make use of the scapegoats through some garbled logic!!
Thulsa Doom
March 23rd, 2011
11:22 am
Debbiedoright,
Private sector employee is correct. If you tax people on net worth then the economy goes to hell in a handbasket. Incentive is everything. Why would anybody do all the right things- live within their means, slowly invest and accumulate assets and savings over the long term, avoid credit card debt, and build a nest egg if its all going to be just taxes away. Penalizing people or doing things the right way is the last thing we want to do.
WOW
March 23rd, 2011
11:22 am
“The wealthy do have ways of hiding money but in the vast majority of cases it is perfectly legal.”
Yep, just ask John F. Kerry, The Kennedy Klan, Obama, Hillary and Bill.
Peadawg
March 23rd, 2011
11:23 am
“As far as is possible to tell , he never even sleeps, here or abroad, for working on some problem , many of which have been DONATED to him by you know who!!”
So now Bush is responsible for Obamacare and Libya? Please tell me that’s not what you’re talking about.
WOW
March 23rd, 2011
11:23 am
“that would be YO MAMA!!
What. A. Comeback.
Kamchak
March 23rd, 2011
11:24 am
Bosch
Sounds like you got a bad case of wealth envy.
WOW
March 23rd, 2011
11:24 am
“sound fair to you?”
Since when is life about fairness?
Doggone/GA
March 23rd, 2011
11:24 am
“I find it difficult to understand why those who make less money get all of the things that taxes pay for for nothing”
I guess it WOULD be difficult to understand, since it isn’t true. Some of those people pay no INCOME tax, that doesn’t mean they pay no taxes at all.
WOW
March 23rd, 2011
11:25 am
“Cons will never admit it, but their ultimate goal is to join in with their fellow corporate persons (because they ARE people too!) and make taxes voluntary/non-existent.”
Another Vet conspiracy theory. Hey Vet, look! There goes a UFO!!!!!
Dave R.
March 23rd, 2011
11:25 am
““Were you meaning to say people who make less pay more as a % of their total income in taxes?”
Yes, in the Fair Tax system they would”
Not necessarily, Bosch. The Fair Tax is ONLY on new goods and services, which many low income people do not buy, and the pre-bate returns a far larger percentage of a low income person’s tax burden than a high income person’s. All-in-all it is still a fairer system than what we have today.
WOW
March 23rd, 2011
11:25 am
“So now Bush is responsible for Obamacare and Libya?’
Yep, along with the BP oil spill, higher unemployment, gas prices etc…… ITS ALL BUSH’S FAULT! LOL
Doggone/GA
March 23rd, 2011
11:26 am
FairTax archive
Part 1: Fervent faith defies reason
Part 2: Zealots bluster and bluff without effect
Part 3: Huckabee’s fantasy feeds on workers’ frustration
Part 4: Farcical, it’s anything but fair
see sidebar on this page…to the right
Normal
March 23rd, 2011
11:26 am
godless heathen
March 23rd, 2011
11:17 am
Actually…she stole it. Col. Potter of M.A.S.H. 1077 said it first…
AmVet
March 23rd, 2011
11:26 am
MC, do you remember when, in 2000, George of the Bungle said he was “going to clean up Wall Street”?
His fans certainly don’t.
Even back then, everybody who had their eyes open, knew the banksters and big money plutocrats were completely out of control.
But he kept on enabling them. And they grew even more imperious and untouchable.
Need proof? When he had the chance to make the Security & Exchange’s Corporate Oversight Arm grow from a ridiculously undermanned and underfunded situation, what exactly did he do?
One of his first acts as President was to do the very opposite. He cut even a very modest increase, and gave them a pitifully small pittance of a raise to do their jobs.
That was one of his very first acts of treason and sabotage. Keep anyone from closely watching those foxes in the American hen house.
And his doltish fans laughed. We don’t need no stinking regulators!
When it comes to protecting white collar criminals the cons simply don’t like cops, of any kind…
WOW
March 23rd, 2011
11:26 am
“Some of those people pay no INCOME tax’
The people that are likely not to pay income taxes are the Democrats voting base.
Southern Comfort (aka The Man)
March 23rd, 2011
11:26 am
More like people who make less money pay no taxes…. about 40 some million of them. The bottom 50% of taxpayers payed only 2.7% of federal income personal taxes paid in 2009. The top 50% paid the rest. So how do we go from paying nothing to paying your fair share? We either revise the tax codes to make those who make under 33K/yr start paying their fair share or we tax everyone across the board the same amount based on how much they spend.
If you and others had wanted more to pay income taxes, then:
A) You would have been against Bush’s tax cut proposals when he first proposed them. His cuts increased the number of peope with no income tax liability to the oft-quoted 47%. Before his jackassery, the percentage was low to mid 30’s.
B) You would have been against extending the Bush tax rate sale. By letting them expire, the rates would have reset to their positions before Bush jacked them up, and there would have been the potential of 10-15% more people paying income tax instantly (dependent on them actually having a job).
getalife
March 23rd, 2011
11:27 am
No lying means you cons have to go to kyle wingnut blog to lie.
What are you cons here on a lib blog anyway?
Bosch
March 23rd, 2011
11:27 am
“Why would anybody do all the right things- live within their means, slowly invest and accumulate assets and savings over the long term, avoid credit card debt, and build a nest egg if its all going to be just taxes away. Penalizing people or doing things the right way is the last thing we want to do.”
Problem is, Doom, there are fewer and fewer people who can do that “right thing” as you say. More and more people, living within their means, as their wages get smaller, and their health care costs go up, it’s an impossible task.
WOW
March 23rd, 2011
11:28 am
“Need proof? ”
Vet, we always need proof when you go shooting off on your keyboard. Buuuuuuuut, you never provide anything to back up your conspiracy theories.
Joe the Plumber Too
March 23rd, 2011
11:28 am
debbiedoeverybody, YOMAMA…really, what are you six? That about sinks you forever in my mind as having a brain. You claim to know more about taxes than the poster and follow it with YOMAMA & boogers. Classic!!!!!!!!!!!!
WOW
March 23rd, 2011
11:28 am
“No lying means you cons have to go to kyle wingnut blog to lie.”
You tell em, getalife!
Mick
March 23rd, 2011
11:28 am
WOW
March 23rd, 2011
11:05 am
“If this was a three stooges short and you put georgia and florida together on a map, it would be named moronica….”
If you put Illinois and California together on a map, it would be named Bankruptia
You left out texas…..
Dave R.
March 23rd, 2011
11:29 am
“FairTax archive
Part 1: Fervent faith defies reason
Part 2: Zealots bluster and bluff without effect
Part 3: Huckabee’s fantasy feeds on workers’ frustration
Part 4: Farcical, it’s anything but fair
see sidebar on this page…to the right”
Don’t waste your time. Phony figures and conclusions based on said phony figures. Been debunked at least a half dozen times by me alone.
WOW
March 23rd, 2011
11:29 am
“More and more people, living within their means, as their wages get smaller, and their health care costs go up, it’s an impossible task.’
Impossible is nothing.
WOW
March 23rd, 2011
11:29 am
“You left out texas…..”
Texas ain’t goin bankrupt.
WOW
March 23rd, 2011
11:30 am
“You claim to know more about taxes than the poster and follow it with YOMAMA & boogers.
Joe, in case you haven’t noticed, ALL of the left wing bloggers resort to name calling.
Normal
March 23rd, 2011
11:30 am
The only thing I know about Fair Tax is that since the GOP/Tea Party wants it, it’s probably bad for the working poor and the fixed income elderly.
WOW
March 23rd, 2011
11:31 am
“The only thing I know about Fair Tax is that since the GOP/Tea Party wants it, it’s probably bad for the working poor and the fixed income elderly.’
I rest my case.
AmVet
March 23rd, 2011
11:32 am
Paul, I’m still chuckling about this one:
C’mon, just one teeny tiny bit of analysis…. just once?
http://www.youtube.com/watch?v=-d0hspFapMA
getalife
March 23rd, 2011
11:32 am
Texas was 25 billion in debt but used the stimulus money for that debt.
Then perry screamed about the e v il of the stimulus.
Hilarious.
Thulsa Doom
March 23rd, 2011
11:32 am
“The only silver lining to this economic meltdown was how it took so many clueless cons with it.”- AmVet at 8:43 am.
AmVet,
The irony of your statement is breathtaking.
Most of the people caught up in this subprime mess are minorities- basically the dem base. We know this because we’ve all seen the local news showing homeowners seeking relief and also the maps showing the highest percentages of foreclosures being in black neighborhoods and counties- Clayton county especially.
In your hate of Republican coservatives you want to think that they got hit hard in the subprime crisis but you would be disappointed. Unfortunately it was mostly minorities who were devastated the most.
WOW
March 23rd, 2011
11:32 am
“Texas was 25 billion in debt but used the stimulus money for that debt.’
Gotta link to that claim?
Mick
March 23rd, 2011
11:33 am
**Texas ain’t goin bankrupt**
It sure has a quantum sized deficit….last count 17 billion..yikes, no unions to blame…
@@
March 23rd, 2011
11:33 am
O.K., so Clinton and George Bush’s “Ownership Society” was a go for me….the liberal in me. As a result, I no longer support government’s efforts to socially engineer our society. The endgame? It serves no one.
Letting go is one of the hardest lessons in life.
DebbieDoRight
March 23rd, 2011
11:33 am
But the FairTax Will Lower Prices
Proponents of the FairTax point out that prices on consumer goods contain what are called “hidden taxes.” Under current law, corporations have to pay taxes on their earnings. Moreover, businesses have to pay social security taxes for each employee. The money to pay these taxes has to come from somewhere, and FairTax supporters argue that the cost is passed on to the consumer. In fact, the best-known proponent of the FairTax, talk-show host Neal Boortz, argues that 22 percent of the price of a consumer good is really a “hidden tax.” Get rid of corporate and social security taxes, Boortz argues, and consumer good prices would drop by 22 percent. Even with the 23 percent FairTax, prices stay the same, and with the elimination of income taxes, paychecks will get bigger. Everyone gets a raise and the federal government still gets its revenue. About 10 percent of the e-mail messages we received from FairTax proponents trumpeted this kind of magic act. It is easy to understand the confusion on the issue, as Boortz himself made similar assertions in the hardcover edition of his book. (He later issued a corrected version in paperback.)
A bit of critical analysis shows that this cannot be right. The FairTax is revenue-neutral. That means that for every tax dollar collected under the current system, the FairTax has to collect a dollar. If the FairTax exactly equaled embedded taxes, then it could not possibly be revenue-neutral, since embedded taxes do not take into account personal income or estate taxes. The FairTax rate would have to be high enough to replace embedded taxes plus income and estate taxes.
Who Really Pays?
With the prebate program in effect, those earning less than $15,000 per year would see their share of the federal tax burden drop from -0.7 percent to -6.3 percent. Of course, if the poorest Americans are paying less under the FairTax plan, then someone else pays more. As it turns out, according to the Treasury Department, “someone else” is everybody earning between $15,000 and $200,000 per year. The chart below compares the share of the federal tax burden for different income groups under the current system and under the FairTax. Those in the highest and the lowest brackets will see their share decrease, while everyone else will see their share of taxes increase.
Upon Further Review
We stand behind our earlier analysis of the FairTax. The proposal to which Gov. Huckabee referred is not a 23 percent tax, but rather a 30 percent tax. And it is revenue-neutral only through an accounting trick. It will collect more money from those earning between $15,000 and $200,000 per year and less from those earning more than $200,000 per year. It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair.
http://www.factcheck.org/taxes/unspinning_the_fairtax.html
WOW
March 23rd, 2011
11:33 am
“Most of the people caught up in this subprime mess are minorities- ‘
Didn’t the city of Atlanta just have a massive problem with blacks who were seeking government assistance? Yep, I believe they were.
WOW
March 23rd, 2011
11:34 am
“It sure has a quantum sized deficit….last count 17 billion..yikes, no unions to blame…”
Gotta link?
james
March 23rd, 2011
11:34 am
“Just corporate criminals playin’ with tanks”
yeah- I will never get that picture out of my head of the JP Morgan and GSachs tanks flying into the WT towers. should be a rule against moronic little diddies on blogs- but I guess that what blogs are for.
getalife
March 23rd, 2011
11:34 am
wow,
Don’t ever call me out.
Google it.
You need to read something.
Atlanta 1
March 23rd, 2011
11:34 am
Ah the ignorance…
If you trace this back to the problem, it started when Fannie Mae and Freddie Mac determined that they could make ‘loads of money’ by lowering their requirements and basically ‘open the door’ to this fiasco. In fact, banks inpaticular were graded on the amount of these type loans that were given out.
This was not only done with blessings, but to a certain degree ‘pressure’ from two key democrats – Representative Barney Frank and Senator Cristopher Dobbs. There was a law created under the Carter Administration that opened the door for this to be ‘legally done’. It was ignored by Reagan, Bush, Clinton. George W. Bush tried to close the loop hole it early in his administration, but was beaten back by Frank and Dobb (and others) playing the ‘race card’.
They (Dodd and Frank) also happen to be number 1 and 2 in donations given over the years from these two institutions. Who’s number 3? Our sitting President, who while Senator, took more money (by far) than anyone else from Fannie Mae and Freddie Mac. Dodd ring a bell? Oh yeah, the guy who got the ’sweet heart deals’ from Country Wide Mortgage. You know, that nightmare of a company that Bank of America was more or less forced to absorb…
And while Wall Street has been ‘publically accosted’ by the White House and Democrats (some of it well deserved) – these two institutions have gotten a ‘free pass’.
Let’s be clear, this was not the ‘only reason’ – there was mismanagement across the board and the average American became very comfortable living off credit cards. This simply was the ‘tipping point’ for multiple abuses in our economic system committed by many. My issue is that it gets a ‘free pass’ on the left – and the Democrats.
WOW
March 23rd, 2011
11:34 am
FACTCHECKDOTORG!!!!!!!!! LOL!!!!!!! Hey Debbie, you may as well post DAILY KOS!!!!!!
Thulsa Doom
March 23rd, 2011
11:35 am
getalife,
If California also got stimulus money then how is it they are still broke? By any economic measure- economic growth, unemployment, state debt load, etc. Texas is in dramatically better shape than California. Its not even debateable.
Bosch
March 23rd, 2011
11:35 am
“Gotta link to that claim?”
How funny, the name changer demanding proof of a statement.
WOW
March 23rd, 2011
11:35 am
“Don’t ever call me out.’
I just did.
“Google it.’
Nothing came up.
WOW
March 23rd, 2011
11:36 am
“How funny, the name changer demanding proof of a statement.”
Says the guy who thinks poor people pay more taxes than higher bracket income earners.
Mick
March 23rd, 2011
11:36 am
doom
Actually, most of the real estate mess wasn’t just minorities but many people who thought they could get easy money by buying and flipping real estate. Unfortunately, the bubble burst and many well to do people bit the dust…
Dave R.
March 23rd, 2011
11:36 am
“The only thing I know about Fair Tax is that since the GOP/Tea Party wants it, it’s probably bad for the working poor and the fixed income elderly.”
Then your conclusion would be based on ignorance, Normal, and you’re usually better than that.
Southern Comfort (aka The Man)
March 23rd, 2011
11:36 am
Texas ain’t goin bankrupt.
Dude, you’re funny….
http://www.stateline.org/live/ViewPage.action?siteNodeId=136&languageId=1&contentId=15158
james
March 23rd, 2011
11:36 am
no “fair tax”- it fails by having to cutesy of a name. Simplify the corporate and individual tax structure and increase the base from 60 some odd % to close to 90% of folks paying- at least not receiving refunds for simply filing the form. Before the leftist go off- yes, folks do get monies back over and above any federal income tax withholding done throughout the year by receiving refundable credits.
DebbieDoRight
March 23rd, 2011
11:37 am
Doom: Penalizing people or doing things the right way is the last thing we want to do.
Four Words. Inherited Income. Paris Hilton.
Joe the Plumber Too
March 23rd, 2011
11:37 am
WOW, you can’t make this stuff up……normal just gave away the lib Bible, if GOP comes up with something, it must be bad. Too bad they never showed up for class and learned to read, it’s very simple to understand. But like loyal party member dave r. stated “it has been debunked by him at least a half a dozen times”. Well, that must settle it, if a great mind such as that had debunked it………
WOW
March 23rd, 2011
11:37 am
“Dude, you’re funny….”
Texas is currently debating $10 billion in education-related cuts.
That’ll end the so-called debt.
Mick
March 23rd, 2011
11:37 am
wow
I assume you know how to google?
http://www.statesman.com/opinion/dunnam-texas-needs-more-than-just-debate-on-1341045.html