The purpose of the whole exercise is to keep the assets of banks propped up. The whole mess is a big dung-heap that has been plopped in the middle of the economy and what we need is a shovel to scoop it away - to clean up the balance sheets of banks, break them up, etc. What the government has substituted in place of a shovel is a rolling pin. They are rolling out the doo-doo into the future as thin as they can get it, but unfortunately the doo-doo is still too thick. The solution? Get more rolling pins and apply more pressure.

Senior Tax Abatement Will Ease Housing Crisis.

(I have proposed this elsewhere )

My proposal would abate local property taxes for senior homeowners in the amount of tax equal to the percentage allocated to public school operation. This in all communities is at least 50% and up to about 70% if bond costs are included.

Currently 18.1 million homeowners (of the 75 mil total) are over the age of 65. Over 99% have no children in public schools and this taxation represents an indefensible cost shifting from users of the schools to non users.

There are already a number of senior tax abatements but they do not include everyone, do not abate as much and are cumbersome to administer. My proposal is easy and inexpensive to administer.

The externalities of keeping more seniors in their homes certainly has a direct benefit to the well being of seniors and enriches the life of any community; but given the housing crisis which is forecast to go on for at least 5 years, anything localities can do to keep inventory off the market will stabilize house prices across the country and quicken the recovery.

The 18, 1 million homeowners are as of 2008 census figures. Right behind this group are an additional 15.4 homeowners age 55-64 which will add houses hear by year to an already overbuilt and oversaturated housing inventory. Some estimate there are today about 8 million houses in some stage of foreclosure that are not being absorbed in the market.

Giving seniors a local property tax abatement of 50-70% will allow cash to stay at the local level and help pay for their consumer needs
but most imporatant it will keep inventory off the market a goal as important to end the housing crisis as to give tax credits to new home buyers.

sorry author of hte evergreen comment about is

BCMurphy

sorry author of the evergreen comment above is

BCMurphy

Until economists scream from the hills the principles of land rent, the government will make lining the pockets of landowners its business.

Matt has it right.

And Evergreen has it wrong. Seniors might not "use" the schools, but the schools drive up land rent, which means higher home prices, which benefits seniors (either their estate when they die, or if they want to take out a reverse mortgage, etc).

Besides which, there are non-seniors with no children; focussing on seniors is inequitable.

Dean, I agree with all of your points. It is extremely bad policy.

I'd like to add that there is an entire ecosystem of unskilled workers who feed at the real estate trough: agents, bankers, mortgage brokers, etc.

Without that trough, these people have no chance of ever making the kind of money they earned during the bubble years.

Thus by inflating housing, the government also keeps these unskilled people unproductively employed and earning far more than they should vis-a-vis skilled workers, further distorting the market.

They have done this in Australia. It's called here the First Home Buyers Boost and here it's not a tax grant.
People here seem quite happy with it, and I'm sure they will remain happy until the very moment the bubble burst.
Those out of the market aren't currently too happy, though.

response to liberal

well actually it is you who has it wrong.

Since at least the 1980s one group of economists have recognized it is the local taxation and mismangement of local expenditures and taxation that has caused the problem.

Let me draw you attention to one article I have at hand titled: Escaping the Burden--Growing State and Local Taxes could Hurt Real Estate Values by Robt Hopkins, Solomon Bros, or howsa 'bout "Anatomy of a Fiscal Crisis" by Bob Inman, Wharton? In the Inman paper he clearly examines the same actions by local officials that we see today in budget gimmickry and phantasy tax projections.

I could cite more but you get the picture.

America has been had and by one group of academics who were nothing more than handmaidens of forces of greed in this society.

It is astonishing that the jewel of our country, our education system, was turned against us by the very academics whom we nurtured and respected.

Archibald McLeish certainly called this in 1942.

I don't think any american thinks Alan Greenspan, Robert Rubin, Larry Summers Timothy Geithner, or Hank Paulson told the truth to the american people or that they had the interests of all in the commonweal when they enacted the laws and regulations which facilitated our economic destruction.

Local taxation based on cost shiting ( which local school funding employs) needs to stop. The only way to rein in costs is for the consumers to call a halt to the runaway growth of school administrative staff instead of teaching staff. Phoney courses have also grown expotentally and no wonder without oversight or costs to the users.

In re: your point of under age 65 that is more complex for obvious reasons: they may have children or marry someone that has children. In fact tht is why they moved to suburbia for the schools for their children.

There is a case that could be made for abating taxes for under age 65 but really we have the most to gain by abating the over age 65 group both for their personal benefit, and during this housing crisis, the overall housing market.

Evergreen authored the response to Liberal above

@#%@, gosh i'll get the hang of this soon and my typing will improve too!)

I am so tired of proposals to give discounts to seniors.

Discount on property tax, is that what is being proposed?

I can't stand to read the whole diatribe, but to tackle one point, the assertion that seniors should not pay school fees because they do not have kids.

News flash, non seniors also do not have kids. I never had and never will have kids. Lots of old folk did have kids at one point, and are certainly paying back what they already used in school services.

On and on.

I don't even understand the term "fixed income" for seniors. Don't most humans, of any age, have a fixed income?

Seniors are making out relatively well. Guaranteed income, guaranteed health care.

Senior advocates sound greedy. Especially those who want to keep Medicare fat and happy, and exclusively for the benefit of seniors.

Helping poor people is one thing, assuming all old people need help is totally different. I hope most people can tell the difference.

to Erich Riesenberg

Senior age parents and homeowners already paid their freight and it is now time for parents of current students to pay theirs.

The local municipalities have already moved in the direction of user fees for public services ( see ambulance fees, selling roads to private companies and charging users of roads for maintenance; etc.

So the direction is toward user pays.

For anyone to think the education of someone else's child is required of non users 80s and 90s needs to rethink local taxation theory.

NB In is the very government entities that have advanced the user-pay theory of taxation and this only extends it to the inequity of school taxation.

Other benefits:

it would keep millions of homes off the market at a time that we need to stop housing inventory from increasing.

keeping houses off the market during this crisis is as valuable as paying buyers a credit to buy a house.

If all parents who had children in schools paid for those services then that would force schools to watch their budgets and eliminate useless programs.

Evergreen -

Keeping houses off the market keeps housing unaffordable for us young people. That is exactly the opposite of what we need.

The younger cohort cannot buy homes and start families and get on with life because of an aging population that is enjoying a historically unprecedented share of domestic wealth. Look at Japan now and that is where we are heading with these policies.

I agree with the other poster about how the senior demographic is showing their self interest in that they want seniors to enjoy Medicare benefits and don't want young families to feed at the same trough.

Young people have older parents that they care about, but something has got to give here.

Dan Keys

actually just the opposite will occur.

This country must absorb the overbuilt inventory and the forclosures ( about 8 million). There is enough afforable housing, in fact, we are awash in afforable housing right now.

If you need housing this is the best time to buy with low prices and low interest rate.

The focus should be on increasing the number of high paying jobs.

No jobs that pay enough to support these house prices
at this rate is a sorry economy.

Evergreen,

You argue "Senior age parents and homeowners already paid their freight". If that was true, then why did the US have a 10 trillion dollar debt in October of 2008 ?

I can accept an argument that schools should be federally financed, or that property taxes should be less for those with smaller income.

But I don't agree with a special deal for age.

Having read news reports of actions taken by doctors and hospitals to reduce infections originating in the hospital and the resistance of hospital staff to such actions, I wonder whether the best tort reform would make it easier for an infected patient to recover for hospital origin infections.

You argue "Senior age parents and homeowners already paid their freight".

AndrewDover

it is not a special deal for age it is a 'users pay' deal.

If you do not have children in school, have not for many years and are over age 65 your taxes should be reduced by the cost of schools operation ( 50% -70)

And the people with children should pay a child school tax for the services they receive. simple to me.

This corrects the inequitable cost shifting ot the elderly for services being used by others.

In re: why we now have a gazillion dollar deficit, ask yourself and your elected officials.

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