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From a telephone survey by Rasmussen: 62% believe it's better for homeowners who can’t afford to make increased mortgage payments to sell their homes and find less expensive ones. Twenty-five percent (25%) think it’s better for the government to assist those homeowners in making their payments. Thirteen percent (13%) are undecided.
Thursday, July 28, 2011
Northern Virginia Bits Bucket 7/28/2011
Posted by Harriet at 10:42 AM
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13 comments:
I regularly drive by Pulte's finally-starting Potomac Yards project (south of Crystal City, Arlington) - they're building the first few units - the first of which appear to be pretty good-sized townhouses with detached garages in the $800k range. (Looks like there will also be condos in other phases of the development) Will be fun to track how these sell, although I'm not looking forward to more traffic on Route 1.
Does this much new inventory hurt prices in Old Town, Del Ray, etc.?
http://www.pulte.com/communities/va/alexandria/potomac-yard/index.aspx?lsc=Community_Offer&CMP=OTC-MID-newcomm-other
The Tea Party also is unwilling to agree to tax cuts which along with spending cuts would help balance the budget. I don't think their concerns about the budget can be taken too seriously.
Kevin-
I assume you mean they can't agree to tax increases or are you trying to go down the path of saying Reagan knew what he was talking about with cutting taxes raises revenue.
Gordon-
There has been very little new supply over the last few years so some new supply is needed for the growing population. Its definitely possible prices will go down, but I doubt it is from the new development
I misspoke, I meant tax increases.
I definitely do not subscribe to the insane theories of Mr. Laffer.
@ Kevin, "I definitely do not subscribe to the insane theories of Mr. Laffer."
Mr. Laffer's "theory" was that if you draw a curve of tax rates vs. tax revenue, you can safely assume that a tax rate of zero% will yield tax revenue of zero, as will a tax rate of 100% (few will willingly work for nothing).
He went on to posit that in between tax rates of 0% and 100% tax revenues would vary, but that they would initially increase as rates increased above 0%. At some point revenues must begin to decline as tax rates approach 100% (and revenues decline to zero).
We can argue about precisely which rate structure maximizes tax revenue over time (this is an empirical question for which evidence can be adduced). This theory is not insane, even if you don't like it.
Maybe you just don't understand it?
Mark B-
I agree and I assume Kevin does that Laffer's curve is correct in saying revenues are optimized somewhere not at 0 or 100%. Although it is very clear we are no where near the maximum tax revenue area so when people are claiming tax revenues would increase by lowering taxes when we are already have one of the lowest tax burdens in the world it is pretty clear they don't understand basic market fundamentals.
Also I would disagree that the government gets no revenue if taxes are 100%. Isn't this exactly what happens in communist nations. Everyone works, the government gets everything, and then they redistribute as they see fit. In general this doesn't work well, but it does show that the government gets revenues even when they don't let you keep any of your wages.
Housebuyer,
"I agree and I assume Kevin does that Laffer's curve is correct in saying revenues are optimized somewhere not at 0 or 100%."
Kevin called Mr. Laffer's theory "insane", so I'm not sure why you assume Kevin agrees with you and me on that point. I don't assume that Kevin knows what Mr. Laffer's theory is.
"...it is very clear we are no where near the maximum tax revenue area so when people are claiming tax revenues would increase by lowering taxes when we are already have one of the lowest tax burdens in the world it is pretty clear they don't understand basic market fundamentals."
The fact (if true -- and I doubt it) that we have one of the lowest tax burdens in the world says absolutely nothing about which rate maximizes revenues. Maybe the other more heavily taxed economies achieve even lower revenues as compared to the optimal rate structure.
"Also I would disagree that the government gets no revenue if taxes are 100%."
Given our historical perspective, it is safe to say that OVER TIME, this figure approaches zero, and socialist tyrannies become insolvent. Slavery doesn't last forever.
Just because we have one of the lowest rates in the world doesn't mean that we need to raise taxes at all! This mentality gets us nowhere....
I think they will come to some sort of agreement, but if they don't will this "crisis" affect housing prices? We are already past the debt ceiling as it is.
Sehrwunderbar: "I think they will come to some sort of agreement, but if they don't will this "crisis" affect housing prices?"
I think it MUST affect us here in the National Capital Region sooner or later, as our current levels of spending are not sustainable, even if the nuts on the left raise our rates to 100%. But, it could take a while. Ausgezeichnet!
Mark-
I assume that kevin agrees with me based on having read many of his posts in the past, although I could be wrong.
wunderbar & Mark-
First I was saying whether I want taxes raised or not. All I said is that if we raised taxes it would increase tax revenue. Second I'm not sure why it gets us nowhere by saying we should raise taxes. Sure there is a lot of government spending that should be cut, but its not like our government has grown dramatically recently like the news may tell you. The whole reason that spending as a percent of GDP is higher now than historically is because a lot of automatic stabilized programs like more people are getting food stamps, unemployment insurance, medicaid...
Wunderbar-
So far the government basically hit the debt ceiling and has been running down their cash supply. This supply is down to ~$70B, which is only enough money for a week or two. If we don't raise the debt ceiling one of two things will happen. First, its possible although unlikely we will default. If this happens, markets will plummet (think what happened when Lehman failed. Our government is obviously much bigger...) In this case housing prices will fall dramatically definitely double digit. Second the more like scenario is the government would keep on paying the debt, but would need to immediately balance its budgets. Most economist think this would cut GDP by ~5% causing a pretty major recession. It would hit this area even harder since we are more reliant on the government. So seeing that we already have a fragile economy I am pretty confident that prices would get hit very hard.
Mark B: Maybe you just don't understand it?
I understand it, but it's just a theory and there's no empirical evidence I've seen to support it. Not to be cynical, but it's a way to always point to a lower tax rate as a means of increasing GDP. It always creates/widens deficits. It seems like the strongest backing for the Laffer Curve came about five to eight years ago when the strong economy which followed Bush's large tax cuts was the biggest (and only) point of proof that Laffer was right. Of course, we all know that the trillions in imaginary equity wealth created from the housing bubble is what fueled the economy. So I'm not buying it.
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