How Taxes Were Shifted Off Real Estate

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Nov 21 2016 How Taxes Were Shifted off the Donald Trumps of the World and onto Homeowners, The Real News Network, November 21, 2016. https://www.youtube.com/watch?v=8rhBdWojLe0 SHARMINI PERIES, TRNN: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore. And we’re unpacking some economic mythologies here with Michael Hudson who joins us in our Baltimore studio. Thank you so much for joining us Michael. MICHAEL HUDSON: Good to be here. PERIES: Michael has a new book out, J Is for Junk Economics: A Survivor’s Guide to Economic Vocabulary in an Age of Deception. Michael, so let’s continue our discussion about the various myths that are out there that we need to be aware of in order to understand the economy. Part of the ...

L is for Land

Part L in The Insiders Economic Dictionary Labor: The labor theory of value resolves the value of products and capital goods into labor costs, while Say’s Law focuses on how employees spend their wages. Hence, labor often is euphemized as “consumers” rather than focusing on the terms of their employment by capital. Labor capitalism: Industrial capitalism is based on employing labor to produce goods to sell at a profit. The essence of “labor capitalism” is to extract money from labor by deducting payroll income for the purpose of inflating stock-market prices. First used by the Chilean dictator Augusto Pinochet, the term was adopted by British Prime Minister Margaret Thatcher as a populist label for her policy of channeling labor’s paychecks into the ...

China – Avoid the West’s Debt Overhead: A Land Tax is needed to hold down Housing Prices

How can China avoid the “Western financial disease” – a real estate bubble followed by defaults and foreclosures? The U.S. and European economies originally sought to avoid this fate by taxing the location’s site value. A rent tax was the focus of Progressive Era reforms. Enacting a rent tax remains China’s main challenge to accompany its privatization of real estate and natural resources. If land rent were fully taxed, it would not be paid to banks as interest for rising mortgage loans – and governments would not have to tax income and sales. Holding down housing debt will reduce labor’s cost of living, but not its living standards. While Western ...

How Neoliberal Tax and Financial Policy Impoverishes Russia – Needlessly

* A shorter version of this paper has been published in the Russian Academy of Sciences journal, Mir Peremen (The World of Transformations), 2012 (3):49-64 (in Russian). An earlier version was posted by the Global Policy Forum meeting in Yaroslavl, Russia, September 7-8, 2011, on its website. Russian poverty is unnecessary. Like all poverty in today’s high-productivity age, it is the result of bad policy. There is no technological need for it, nor is Russia lacking in a full spectrum of natural resources and economic potential. So future historians no doubt will puzzle over how the nation was convinced to de-industrialize its economy and impoverish much of its population in favor of exporting fuels and minerals, and to impose ...

Reforming the U.S. Financial and Tax System

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The pretense is that privatization is more efficient. But privatizers add on interest and financial fees, high executive salaries and bonuses, and turn the roads into toll roads and other infrastructure into neofeudal fiefdoms to charge monopolistic access fees for people to use. …. So the financial sector first creates a problem by loading the economy down with debt, and then “solves” it by demanding privatization sell-offs under distress conditions.

Iceland's Fair Value Vultures

The New Bank Disaster Olafur Arnarson, Michael Hudson and Gunnar Tomasson* The problem of bank loans gone bad, especially those with government-guarantees such as U.S. student loans and Fannie Mae mortgages, has thrown into question just what should be a “fair value” for these debt obligations. Should “fair value” reflect what debtors can pay – that is, pay without going bankrupt? Or is it fair for banks and even vulture funds to get whatever they can squeeze out of debtors? The answer will depend largely on the degree to which governments back the claims of creditors. The legal definition of how much can be squeezed out is becoming a political issue pulling national governments, the IMF, ECB and other financial agencies ...

The Land-Residual vs. Building-Residual Methods of Real Estate Valuation

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Some Prefatory Remarks to the N.Y.U. Real Estate Institute discussion, Oct. 25, 2001 Economic theory focuses on labor and capital, yet the largest category of tangible assets is not industrial plant and machinery earning profits, but real estate, and its primary objective is to make capital gains. Most new entries into the Forbes or Fortune lists of the richest men consist of real estate billionaires, or similar individuals coming from the fuels and minerals industries or natural monopolies. Those who have not simply inherited long-standing family fortunes have gained their wealth by borrowing money to buy assets that have soared in value. The Federal Reserve Board publishes an annual balance sheet of the economy’s assets and liabilities showing real estate to comprise ...

Gordon Brown spills the beans on the IMF: Make Iceland pay for Incompetent British Bank Deregulation

Counterpunch Last month the G-20 authorized the International Monetary Fund to increase its loan resources to $1 trillion. It’s not hard to see why. Weakening currencies in the post-Soviet states threaten to raise default rates on foreign-currency mortgages as collapse of the Baltic real estate bubble drags down Swedish banks, while the Hungarian property plunge threatens Austrian banks. It seems reasonable to infer that creditor-nation banks hope to be bailed out. The IMF is expected to lend the Baltic, central European and other debtor-country governments money to pay them. These hapless debtor economies are then to follow IMF “conditionalities” to squeeze enough money out of their populations to pay foreign creditors – and repay the Fund by imposing yet more onerous ...

A Tax Program for U.S. Economic Recovery

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interview with ITulip. Janszen: How do we fix this mess? Hudson: Debt service is the major charge that is institutional rather than “real” and technologically necessary. Our tax system favors debt rather than equity financing. By encouraging debt it has prompted a tax shift onto the “real” economy’s labor and capital. The resulting interest charge and tax shift mean that we’re not as efficient and low-cost producers as we used to be. This makes it hard to work out way out of our foreign debt. You want to phase out the “tollbooth” economy that adds unnecessary charges to the cost of living and doing business – charges that have no counterpart in actual necessary cost of production. You want to avoid monopoly rent ...

The Methodology of Real Estate Appraisal: Land-Residual or Building-Residual, and their Social Implications

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NYU Real Estate Institute's Round Table Discussion of Land- and Building-Price Indices A meeting was held at New York University’s Real Estate Institute on October 25 to discuss the virtues and pitfalls of constructing a land-price index to distinguish between land and building values. The Institute’s Associate Dean Ken Patton had invited Michael Hudson and the Robert Schalkenbach Foundation to assemble an economic team to discuss the pros and cons of the Georgist position regarding land-values with the Institute’s faculty and real estate industry representatives. The discussion was moderated by Schalkenbach’s Executive Director, Christopher Williams. Prior to the meeting, Dr. Hudson, President of the Institute for the Study of Long-term Economic Trends (ISLET) had circulated a discussion paper spelling out the statistical ...