We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Tuesday, November 22, 2016

How Taxes Were Shifted Off Real Estate

Click here to access this interview with economist Michael Hudson complete with transcript conducted by the Real News Network.

Hudson does us a good service by explaining how the shift of taxes off real estate benefits the bankers at the expense of workers. This argument is another attack on the banking sector for taking over more of the pie that American workers bake by reducing the interest income that bankers enjoy onto taxes that workers pay to maintain necessary public services, and some not so necessary such as huge expenditures to maintain the military forces necessary to maintain capitalist class control of their Empire. 

Of course, Hudson does not argue the latter because he is very much a part of the ideological system that the ruling class employs. As long as he restricts his criticisms to peripheral issues such as the growing financial sector's dominance of the economy that few people understand, and never attacks the capitalist system in which finance plays a major role, his job will be safe--and he knows it.

I think he needed to expanded on certain parts of his argument to create greater clarity. I had to go over this section several times to understand its meaning:
What they don’t realize is that when the real estate taxes are cut, that leaves more rental value of the land available for new buyers to pledge to pay the banks in interest. The basic principle is that rent is for paying interest. This is true in commercial real estate as well as residential real estate.

Bankers know that every time there’s a property tax cut, they can make a larger mortgage loan against that property. The result is that instead of paying taxes, new homeowners pay interest to the bank. The higher interest payment absorbs the tax cut.
The interviewer, Sharmini Peries, rarely asks clarifying questions of Hudson who she often interviews and obviously adores. I suspect that she has been selected for this role more for her ethnic garb and appearance than her skills at interrogating guests on the program.

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