The we need third party/independent platform 2024 part 2

 

This is a new topic for me and it is a single issue post. I am struggling with how to address this problem because it involves two dynamic forces colliding. And maybe not the best description, but I hold fast to this is a dynamic collision in how do you address the best policy.

And this is the housing situation in America. More and more you read that corporate America is buying up homes. The obvious problem is where does this leave individuals and families when it comes to owning a home. Do we let the market dictate everything? And allow those with the assets to have free reign on the market? Or is the opportunity to own your own home at a reasonable price something that allows for government interference in the housing market?

This is a dynamic collision in America. Does one side have an inherent priority over the other? And if we say the government should get involved what exactly does that look like?

And it can become a major political fight if anyone wakes up and realizes how fast corporate ownership of houses is growing. For now, investors have been buying houses for years and some people feel that is one of the problems that caused the 2008-2009 recession. There were too many house flippers buying houses borrowing too much money to do such. Well things are a bit different now. We are looking at full corporations buying into the housing market. They bring a much stronger financial balance sheet than the house flippers so their ability to gain larger market share is real and depending on your outlook potentially dangerous.

Historically owning a home is one of the ways young couples in the working and middle class could start to build wealth or have something to pass on to their children. If the housing market consolidates too much then the wealth gap only increases. And if you are a regular reader you know that I feel the wealth gap is a danger to this country and democracy/our republic in general. I am of the camp that believes a strong middle class is the backbone of a strong democracy. Yet as a conservative I do not want too much government overreach into our lives and this includes the economy. So where does this land us with trying to balance these two competing dynamics?

A strong purpose of an elected government is to defend or protect the public in general, whether it be from external forces or internal issues. You can make the case that at times the government should get involved when the general welfare of its people is negatively affected by an issue. I think this is one of those cases. And since our government is founded on certain ideals such as life liberty and the pursuit of happiness, the government can at times look to balance competing interests to help the general welfare of the populace. And owning an affordable home is beneficial to the general populace. Now you also have to realize that owning a home is not a “right” nor is it a privilege,  but being able to afford where you live should be considered a necessity in modern times. And having the opportunity to thrive is an opportunity that should be open to all.

So how do we keep the door open for home ownership to many while not interfering with businesses well, doing business?

This is a interesting question and I do not think it has been addressed enough with ideas. It is talked about in the press somewhat, but there is not a plethora of competing arguments, policy, or platforms that addresses the pros on either side, much less discussions in general that weigh the two competing sides. I will make the joke/statement this is ripe for some dissertational work. I say this knowing we need some immediate action or policy to this before housing does get out of reach for most Americans.

And since I have not seen too much in regards to public policy initiatives and maybe I have missed them and I feel the Democrats and Republicans are just too weak to step up and address this problem I will step into whatever mess is lying on the floor and put forth some thoughts.

And if you read through many of the immediate platform posts you may start to notice a theme so I will state it now. And some will not like it. Since I fear the wealth gap growing some policy proposals will have considerations to tax activities that drive the wealth gap larger. And since I have already stated I feel this is happening with corporations buying home large swaths of the housing market or will have in the near future one approach is to tax at very high rates profits on transactions that remove properties from the open markets or corporations owning too much of the housing market. Does this interfere with business opportunities? Yes, yet something needs to be done to allow anyone and especially young people a fighting chance to create a worthwhile dynamic for themselves for those that choose to want a home. Some people do not want a home and so we are not going to force everyone into that mindset, but for those that do, they should not be priced out of the market.

So what does taxing at a higher proportional rate for business activities in the housing market look like? And that is difficult because corporations owning the housing market is a change from what was considered the norm for the last fifty plus years. I have seen articles that state corporations may own forty percent of the market by 2030. Honestly is that too much and if you support the business models of life you may think not. Yet if you support the wealth gap problem, you would feel way too much.

And if corporations can change the mentality and find a way to make their ownership just a way to make money as a conduit to more people owning a home, you wouldn’t need to tax at a proposed higher rate. For example since the real estate market is changing with the amount of commission real estate agents may be charging in the future, what if the corporations buy the house then sell it at a six percent mark up which was the previous real estate commission rate. That would not be affecting the market in a negative way. Yet if the corporations buy up houses and then start creating their own market for rental pricing then they are taking away wealth from the general populace. One way to determine if rental prices are too high would be relative to past inflation, current inflation and if rental prices are adding to inflation and not being affected by inflation. Quite a few parameters in that scenario, but that could be a start to determine if rent prices should be taxed at higher rates than regular income tax or corporate tax rates. So instead of starting with the formula to determine if it is excessive you force the business  prove their income is not excessive. So the rates start higher and I mean higher so hopefully to discourage corporations trying to raise rates just for profit motives.  To lower their tax rate they would have to prove their income is not driving housing costs up either through buying and selling or rental income. You may say this is quite a bit to prove. And yes that is the point. We are trying to discourage corporations for over owning housing in America so you have to make it difficult for corporations to take advantage of a monopoly in the housing market. Would it be better for them to keep housing prices in line or would the cost of managing many homes for little profit keep them out of this business? If they are doing so only for their bottom line, then they are negatively affecting the market and the higher tax rates are implemental. If they are trying to generate a new way for Americans to obtain housing at affordable housing and this is a new business model, then their profits should be reasonable and taxed at current corporate rates.

Yes we are walking some thin lines here, but we have to start talking about this issue with more emphasis on maintaining affordable housing and this can be either ownership or rents. The housing market is changing fast and my idea may not be the most ideal. So my goal is to force the issue and bring it to the forefront of political discussion requiring politicians to make decisions on policy to protect the American public from runaway housing costs. Better ideas are always welcome. Until then I am sticking with my general theme that the government can take action to protect the general welfare of its populace as best as it can without completely stifling free market competition. Again a very thin line to walk, but one that is needed always and specifically with housing. Otherwise our illustrious two major parties will sit on this until it is too late since neither has any backbone to really help the American people.

Cheers

The we need third party/independent’s 2024 platform, part 1

 

So it is time to give you a different perspective than what you will see from the two major parties. I have done this before so some of this may sound familiar to regular readers. And I think that is good. Hopefully my ideas are consistent. Some changes may be made here and there, yet that is because the times change every four years and some of my ideas getting furthered developed as time goes on. As I mentioned in a post last month I will be presenting the platform in multiple posts. And I am starting with one topic I have discussed many times previously. This should be shorter than future posts since I hope to more or less consolidate what I have expressed previously.

Part one is about social security and ideas to help it survive and even thrive. Social Security is something that I think most Americans agree needs to not only be kept, but improved so that it is available for all working Americans now and in the future. One point I recently mentioned was I am glad Ms. Haley is talking about it, but her main point of extending the retirement age until 70 should not be considered. You can choose to work as long as you want, but you should always be able to choose to have your own life after working 40 or more years. I know this is not a “right”, yet if the company you work for won’t take care of you when you retire and we have a system to help you in place then we should make it as strong as possible.

So to keep social security viable we really need to have a multi prong approach. Trying to keep social security solvent beyond next decade is too difficult for a one solution fix, so I propose these ideas to keep it funded and to build up the future.

The first step is to change some of the current income tax policy. Currently the worker and the employer each contribute an equal share into the coffers of the Trust Fund. And more on the Trust fund later. You could say just raise the amounts that are contributed which would be helpful for social security, yet would be difficult for both the employer and worker. You are taking more out of the pocket of the employer and worker at a time when many workers are struggling with high inflation and high cost of rent or mortgage. And the housing situation is another platform idea that will be addressed in a future post.  

A better approach is to lower the income tax bracket of the working and middle class by a certain percentage and use some of that tax reduction and move it into social security. And yes this does mean that the worker contributes more than the employer, but this helps many small businesses by not raising how much they have to contribute to social security. You can create an inordinate amount of mathematical examples, yet to keep it simple I will say, cut the tax rate for the first few tax brackets by ten percent. Verbiage here is important, I am not saying cut the tax rate by ten percent so we are not moving the fifteen percent bracket to a five percent bracket. No I am saying cut the fifteen percent bracket by ten percent so a worker’s income is now taxed at 13.5 percent. And then of that 1.5 percent reduction half stays in the worker’s pocket and the other half, .75 percent, goes to social security. Honestly we would need to cut more than ten percent, but the math is going to be much more involved as to how much we can cut into the fifteen percent and other brackets once the numbers are looked at in depth. I just use the ten percent example so you can see how the cut can be hypothetically applied. This also means there will be changes to the overall tax code to make this work and that will be discussed in a future post. I will say for now that corporations and people with large incomes will see a shift upward, however for corporations if they apply certain other aspects of the taxes to their employees their tax increase can be mitigated, but not removed.

The second idea is to increase earnings in the Trust fund.  To some people this sounds like we need to have Wall Street manage the Trust fund. I am one hundred percent against Wall Street or any facsimile of private enterprise taking over this amount of money. I along with you fear the potential for abuse of people with this much at their disposal. What kind of havoc would be unleashed on the financial system by people trying to cook up earnings for social security so they could get paid? I know some people will say they would just manage it according to whatever protocol Congress sets up, but as you know the same people managing money have an extensive lobbying apparatus set up in Washington. It would not take them long to change whatever laws set in place to keep them in check were drastically changed. And I am saying this with complete confidence that this would be a horrible mistake. No I am talking about a more measured approach. And yes I realize some experienced money managers would need to be hired to run the amount of money in the Trust fund, however, you keep it out of the Wall Street economy by only allowing investments in public/private partnerships in infrastructure. Another words social security is invested in municipal projects such as water treatment plants where revenue bonds are normally issued. Or public school districts needing to build new schools. I also have some development projects that will be discussed in an economic platform post where to solve problems private enterprise entities that might benefit from the development will be required to invest their own money and not totally rely on tax payer funds for the specified project.  This way the project is developed for the general good, but any type of industry or business that benefits has skin in the game for their own rewards. A Social Security public/private partnership projects allows some public money to be invested in larger projects to help reduce the burden on local governments and entities so taxpayers are not funding someone else’s profits. Businesses develop as the project is built while the public benefits in general from the project itself. This is a quick example, but try thinking about toll roads being partially funded by the company that profits from running the toll road. In Texas we have companies making significant profits from roads that are built by tax payers so there needs to be a balance to building the road, and if we have to pay tolls then then the money should go back somehow to the general populace who pays for it. Or some of the tolls collected go back to the social security trust. Rates can be set by local government also so the tolls do not become overly burdensome. End result is a road is built by the public/private partnership, less, not none state and local tax money is used, some private enterprise money is used to help lower this taxpayer cost and then the company receives a portion of the profits and they can make a reasonable profit, and some is used to pay social security back for their investment with a competitive, but maybe a half point to point lower interest rate than on the open market for bonds. Not all the money comes from social security so the overall markets are not left out of infrastructure development. It allows for multiple partners on public projects to benefit.

The third idea is a small addition. Social Security is taken from all paid wages. Basically there is no cap on income. Some may say corporations will find away around this to pay their higher wage earners and this means some creativity will need to be created in the tax code to discourage this behavior. And there will be a future post on taxes. Now a strange difference though is that high wage earners can take a cash payout of their social security when they retire. I heard and I forget who said this, yet it made sense to me. The person was reputedly a billionaire and he was complaining what the heck am I suppose to do with this monthly check. I sure do not need it. Or something to that affect. And I agree with him.  It is possibly a burden to keep track of this check in his income and tax planning, there is no need for this check, and he understood paying into the system for him to receive this money was to him a waste. I still think a person should pay into the system because until you reach a certain point financially it might be good to have social security available until you reach said certain point financially. Yet at that point it does become a potential hindrance. So to avoid social security having to pay out over a person’s life time they can elect to receive back what they have contributed.  Now the question becomes is a rate of return calculated so they receive their contributions plus? Maybe something similar to an annuity cash out where you end up with less than if you took the lifetime payout, but more than you contributed. I think you could work something out where the person who does not need social security still receives a small investment return while the majority of the people who need it can receive the lifetime payout amounts. Making this available to all might be dangerous because this is suppose to be their lifetime support. So creating a buyout option would need to have some serious caveats, but I think should be offered if we up the requirement that all wages are included in social security. If people want to invest their own money in retirement they still can through work place and IRA savings accounts. I would make using social security to try and increase their earnings difficult since there are no guarantees in the investment world. And that does go back to corporations saving some on their taxes by offering more to employees as touched on above.

These are just a few ideas and I am open to others. The goal is to find ways to strengthen and improve social security so it is viable for our grandchildren’s grandchildren without putting the burden on workers to work so long they never receive anything in social security. Hence working until 70 as a solution only means every few years we just keep adding to the retirement age until we work until our death and receive none of our contributions. This may be what the corporate world wants from us, or the short sighted, but I am of the mind set that social security is a healthy option for so many people that it needs to be preserved.

Happy New Year and Cheers