But here's a question rarely asked, at least in Washington: Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?

borrowing to buy a home is like buying stocks on margin

Because the I.R.S. lets you deduct mortgage interest from your taxable income but doesn't let you deduct rent, the federal tax system provides an enormous subsidy to owner-occupied housing.

The subprime mortgage fiasco is sending tremors through Wall Street and has brought the U.S. economy near (if not into) recession. For African Americans and Latinos — the primary victims of the debacle — the mortgage meltdown may widen the considerable gap in wealth that already exists between whites and people of color.
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"We estimate the total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. We believe this represents the greatest loss of wealth for people of color in modern U.S. history," the Boston-based organization United for a Fair Economy noted in its report "Foreclosed: State of the Dream 2008."

When banks refused to loan to unqualified minorities to purchase unqualified properties, they were denounced as "redliners."

When banks commenced loaning to unqualified minorities to purchase unqualified properties, they were denounced as "predatory lenders."

For these disingenuous malcontents, it's always the same: You start at "denounce" and then work your way back to fit the particulars.

The tax cuts passed since 2001 have reduced the overall progressivity of the federal tax system with the notable exception of the stimulus package passed in early 2008. The tax rebates in the stimulus legislation are in effect for 2008 only, however, and so the progressivity of the tax system will decline markedly in 2009 and 2010 as effective tax rates rise substantially for lower and moderate-income households. At the same time, effective rates will fall for high-income households as the repeal of the limitations on itemized deductions and personal exemptions and the complete repeal of the estate tax become fully phased in. Finally, almost all provisions of the 2001–06 tax cuts are set to expire at the end of 2010. Barring legislative action, effective tax rates will therefore rise across the income spectrum in 2011. The largest increases will be in the upper income classes and so the tax system will become more progressive in 2011 unless the tax cuts are made permanent.

Another driving force behind the changing distribution of the federal tax burden between 2008 and 2010 is the continued expansion of the alternative minimum tax (AMT). Under current law, the AMT will affect an estimated 26.9 million taxpayers in 2008 and 33.4 million in 2010, while AMT revenue is projected to grow from $87.7 billion to $124 billion over that period.

Democratic presidential candidate Barack Obama sought to tap into Americans' anxiety over high gasoline prices on Monday by saying he would impose a windfall profits tax on U.S. oil companies if elected.
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"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills," the Illinois senator said.

Obama said he would seek a reform of the U.S. tax code if elected in November, saying the current tax system is a "10,000-page monstrosity."

Samuelson is correct here and Avent is misleading. When there is uncertainty about the location of the social optimum, and uncertainty about elasticities, a carbon tax and cap-and-trade are by no means equivalent. If you see very high costs from setting the binding cap too low and choking off growth — as Samuelson mentions — you should prefer the carbon tax. The price of carbon is more certain and you bear less risk from uncertainty about how fast solar power and other technologies will develop. Alternatively, you might say that risk is transformed into price risk rather than "you can't exceed this cap no matter what" risk.

Of course the postulated uncertainties are realistic in this context and you don't have to invoke uncertainty about the science of global warming.

Here are some of the features of the bill: Allocation to farmers and foresters[;] Transition assistance to workers[;] Transition assistance to ... refiners of petroleum [sic!] and natural gas providers; Federal assistance to low-income consumers[;] ... Assisting state economies that rely heavily on manufacturing and coal[;] Assisting state and local partnerships for mass transit[;] ... Allocation to owners of high efficiency buildings[;] Allocation to US producers of cellulosic biofuels; Special auction with proceeds directed to federal Firefighting[;] Special allocation to foreign countries [sic!][.]

Calling some of these carve-outs "transition" assistance is pretty funny, since they extend out to 2030 for the oil, natural gas, power generating and manufacturing companies (six presidential elections and more than three senate terms from now). Do you think that when 2030 rolls around their reaction is going to be "a deal's a deal"?

Of course, this is the rent-seeking we have now as the regulatory process is about to be kicked off. For this program to work, it has to remain in force for many decades. If this happens, entire lobbying firms will be built up to seek exemptions, allowances and so on. ... It will create another income tax code.

(Via Will Wilkinson, who has a follow-up post here.)

(Source.)

The Jewish tradition in which Jesus lived and taught demanded that just rulers make a minimal provision for the poor, including no-interest loans and the distribution of agricultural commodities. (Look it up: Exodus 22:25-27 and Deuteronomy 24:19-21.) The apostle Paul held a high view of government's role in promoting justice and urged the willing payment of taxes — a biblical demand more severe, for some of us, than all those sexual prohibitions.

At least some, if not most, translations of Exodus 22:25 say "excessive interest" or "usury" and not just "interest."

The passage could also easily be interpreted as a call for discrimination: Do not charge one of my people (i.e., another Hebrew) excessive interest. Open season on exploiting goyim, however. (See also Deuteronomy 23:20.)

And the passage says nothing about government-mandated law — just being a good neighbor (and, of course, avoiding God's wrath).

The Alliance Defense Fund announced a new initiative Friday that will challenge the tactics of groups that use the Internal Revenue Service to intimidate churches and pastors into silence on important issues of the day.

"Pastors have a right to speak about biblical values from the pulpit without fear of punishment. No one should be able to use the government to intimidate pastors into giving up their constitutional rights," said ADF Senior Legal Counsel Erik Stanley. "The government can't demand that a church give up its right to tax-exempt status simply because the pastor exercises his First Amendment rights in the pulpit. Groups like Americans United intentionally trigger IRS investigations that will silence churches through fear, intimidation, and disinformation."

The new initiative will equip, protect, and defend pastors who wish to exercise their First Amendment right to openly discuss the positions of political candidates and other moral and social issues from the pulpit. Participating pastors across the country will deliver a sermon along these lines in their own churches Sept. 28.

Although most organizations seeking tax-exempt status are required to apply to the Internal Revenue Service ("IRS" or "Service") for an advance determination that they meet the requirements of section 501(c)(3), a church may simply hold itself out as tax exempt and receive the benefits of that status without applying for advance recognition from the IRS.
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The unique treatment churches receive in the Internal Revenue Code is further reflected in special restrictions on the IRS's ability to investigate the tax status of a church. The Church Audit Procedures Act ("CAPA") sets out the circumstances under which the IRS may initiate an investigation of a church and the procedures it is required to follow in such an investigation.
--Branch Ministries v. Rosotti, 40 F. Supp. 2d 15 (D.D.C. 1999)

Congress has not infringed any First Amendment rights or regulated any First Amendment activity. Congress has simply chosen not to pay for ... lobbying. We again reject the notion that First Amendment rights are somehow not fully realized unless they are subsidized by the State.

U.S. Rep. Paul Kanjorski said it's time for America to stand up to the big oil companies and shout out, "We've had enough."

Kanjorski, D-Nanticoke, was in town Monday to announce his introduction of House Resolution 5800, the Consumer Reasonable Energy Price Protection Act of 2008. The bill, introduced on the House floor April 15, would allow the federal government to tax windfall oil and gas profits resulting from historically high oil and gas prices that average Americans struggle to afford, he said.

Kanjorski said industries yield windfall profits when earnings exceed what a Reasonable Profits Board determines is rational, as laid out in the legislation.

(Click to enlarge.)

Shirley Giarde of Walla Walla, Wash., was not prepared when her husband, Raymond, suddenly developed congestive heart failure last year and needed a pacemaker and defibrillator. Because his job did not provide health benefits, she has covered them both through a policy for the self-employed, which she obtained as the proprietor of a bridal and formal-wear store, the Purple Parasol.

But when Raymond had his medical problems, Ms. Giarde discovered that her insurance would cover only $22,000, leaving them with about $100,000 in unpaid hospital bills.

Even though the hospital agreed to reduce that debt to about $50,000, Ms. Giarde is still struggling to pay it — in part because the poor economy has meant slumping sales at the Purple Parasol. Her husband, now disabled and unable to work, will not qualify for Medicare for another year, and she cannot afford the $758 a month it would cost to enroll him in a state-run insurance plan for individuals who cannot find private insurance.

Perhaps the problem isn't so much with health insurance as with Ms. Giarde's "Purple Parasol" business model. If her business can't produce enough income for her to pay her bills, then she's in the wrong business.

Debate a "right to health care" all you like, but don't claim that there is a right to run an unprofitable, sub-mediocre business and then get taxpayer-extracted health insurance on top of that.

P.S. What exactly was the back story of Mr. Giarde taking a job with no health benefits in the first place? Because I have no doubt that there was in fact a back story.

The thought of taxing a Big Mac or a Wendy's burger came up at a New Jersey Hospital Association meeting where Gov. Jon S. Corzine was asked if it could be an option to help fund struggling hospitals. At the meeting, he reportedly called it a "constructive suggestion."

A spokesperson for the governor, however, told CBS 2 on Wednesday: "The governor is open to reasonable solutions to help solve our financing problems, but there are no plans for any fast food tax."
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"I think this country has gone too much in the direction of fast and unhealthy food, and if people are taxed they may terminate that and turn toward more healthy foods," said West Orange resident Maureen Felix.

Dean Baker: "Actually, almost all economists would agree that the tax cut proposed by Senators Clinton and McCain would save consumers nothing."

In 2004, 36.6 million people — or 12.6 percent of the U.S. population — were poor. The "poverty gap" — the amount of additional income required to remove all Americans from poverty — was $105.6 billion. Poverty rates were highest for African Americans, Hispanics, women, and persons under 25. Without government benefits, 61 million people would be poor. Social Security and other social insurance programs remove 21 million people from poverty. Means tested programs remove 3 million people from poverty. If food and housing assistance were counted as income for poverty purposes, an additional 7.6 million people would be counted as not poor.

originally derived in 1963-1964, using U.S. Department of Agriculture food budgets designed for families under economic stress [and] data about what portion of their income families spent on food[.]

Social insurance, including Social Security and other programs available to persons regardless of income remove 21 million people from poverty.

Although the House and Senate have both defeated a moratorium on earmarks, the debate about direct congressional grants rages on. And generally absent is any mention of the pressing needs that these grants have helped so many of our nation's communities meet.

Are programs to reduce gang violence a good use of taxpayer funds? How about keeping sewage out of local streams? Or fixing unsafe roads and bridges before another tragedy?

By any reasonable standard, nearly all congressionally directed grants would be considered a good use of taxpayer funds.

Contrary to conventional wisdom, such congressional grants do not increase federal spending but only help to guide how this funding is directed. For fiscal 2008, Congress held to the total discretionary spending caps that President Bush demanded. So congressional grants did not add one dollar to federal spending or to the deficit.

In addition to local taxes, Americans send more than $1 trillion in federal taxes each year to Washington to fund projects that localities cannot undertake alone: building highways, providing for defense and so on.

For fiscal 2007, Congress placed a moratorium on grants ... and spending decisions were left solely to the Bush administration. What happened? The administration picked a select group of winners that got all the money — and hundreds of smaller and less well-connected communities were left out in the cold.

By any reasonable standard, nearly all congressionally directed grants would be considered a good use of taxpayer funds.

In what may become the first formal request from Congress for a criminal inquiry into one of its own special projects, top Senate Democrats and Republicans have endorsed taking action in connection with the earmark that Rep. Don Young (R-Alaska), former chairman of the House Transportation and Infrastructure Committee, inserted into the legislation.

"It's very possible people ought to go to jail," said Sen. Barbara Boxer (D-Calif.), chairman of the Environment and Public Works Committee, which oversees highway funding.

Young's staff acknowledged yesterday that aides "corrected" the earmark just before it went to the White House for President Bush's signature, specifying that the money would go to a proposed highway interchange project on Interstate 75 near Naples, Fla.

Young's critics suggest that the motive for the I-75 provision was campaign contributions from real estate developers who own 4,000 acres of land near the proposed interchange. ... Local planning officials, who never requested money for the interchange, were outraged to learn after the highway bill became law that they were required to spend $10 million on a project they did not want. The Lee County Metropolitan Planning Organization, the recipient of the money, has rejected it three times in the past year.

The Internal Revenue Service expects to lose more than $37 million by using private debt collectors to pursue tax scofflaws through a program that has outraged consumers and led to charges on Capitol Hill that the agency is wasting money for work that IRS agents could do more effectively.

Three firms were awarded contracts: Pioneer Credit Recovery, based in the western New York district represented by Rep. Thomas M. Reynolds (R), who supported the program and recently announced his retirement; the CBE Group of Waterloo, Iowa, the home state of Sen. Charles E. Grassley (R), who helped create the program; and Linebarger Goggan Blair and Sampson, a law firm based in Texas, home to President Bush.

Pioneer Credit employees have given congressional candidates and political action committees $117,450 since 1995, including $16,250 to Reynolds. CBE Group employees have given $9,372 during that period, including $2,500 to Grassley. Linebarger Goggan, one of the nation's largest collection agencies, has extensive government ties. The firm, its employees and their spouses have given PACs and federal candidates in both parties $423,260 since 1995.

Senator John McCain ... called on Congress to suspend the 18.4 cent a gallon federal gas tax from Memorial Day until Labor Day. Mr. McCain said that doing so would provide "an immediate economic stimulus," but some environmentalists said that the change might encourage more people to use their cars, while Mr. McCain has made combating global warming central to his campaign.

"People like Bill Gates and Warren Buffet don't need their prescriptions underwritten by taxpayers," he said. "Those who can afford to buy their own prescription drugs should be expected to do so. This reform alone will save billions of dollars that could be returned to taxpayers or put to better use."

So solar is not now "cost-competitive with other forms of electricity"? We're going to spend money to waste money?

How utterly Bloomberg.

[T]oday's Navy includes 280 vessels, down from President Reagan's Navy of 568 ships. Additionally, we are building only one Virginia-class attack submarine per year, compared to China's annual production of four to five advanced subs.

A state lawmaker wants voters to decide if people making more than $250,000 a year should have their Illinois income tax doubled, with the billions of new dollars paying for education, roads and tax breaks for everyone else.
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Colleagues have already dubbed downstate Democrat Rep. Mike Smith's plan the "Robin Hood referendum." State tax data shows 107,000 people in the state made more than $250,000. That's roughly 5 percent of all tax filers. "Let's take from the rich and give to the poor," said state Rep. Joseph Lyons, a Chicago Democrat.

Supporters hope the other 95 percent — who'd pay nothing more and could see upward of $300 in state tax breaks — would swamp polling places to vote for this. "I'm not sure who would campaign against this other than those 107,000," Smith said.

I heard a statement that sounded something like this: "We're spending three million dollars to study bear DNA. I don't know if it was a paternity issue or criminal, but it was a waste of money."

Ack! First McCain credulously buys into the pseudoscience that vaccines somehow cause autism, and now this! Shades of William Proxmire's infamous Golden Fleece Awards from the 1970s and 1980s. In a truly irritating bit of antiscience demagogery [sic], Proxmire not infrequently peppered his lists of truly wasteful spending with Golden Fleece Awards to federally funded science projects that, because of the odd or unusual nature of the subject matter, were easily portrayed to the ignorant as wastes of taxpayer money. Never mind that many of them had been subjected to NSF or NIH peer review, just like any other grant proposal, and been found scientifically meritorious enough to fund. If they sounded "funny" they must be wasteful.

[Clinton's] insourcing plan would enact the largest expansion of tax benefits for research and job growth; create at least 15 new "Innovation and Research Clusters" across the country, launch a new "Insourcing Markets Tax Credit" to spur business investment communities facing global competition, and catalyze the 21st Century manufacturing sector with several bold new programs, including the "Made Green In America" Fund, which would provide $500 million annually in investments to encourage the creation of high-wage jobs in clean energy manufacturing technologies.