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Is America nearing a complete overhaul of the tax system?

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Congressman Paul Ryan’s plan gaining traction

Both sides of the aisle are pushing for reform of the tax system, and Wisconsin Congressman Paul Ryan has put forth his three steps to pro-growth tax reform as explained in the video above. The tax system has long had major loopholes and because each independent real estate professional is a small business, taxes are a major issue to a Realtor’s bottom line, especially in this down market.

Video transcript:

America’s economy has been hit really hard. A lot of people have lost their jobs. More borrowing and spending and higher taxes are not going to bring jobs back to America. The last thing we need to be doing is hindering job creation in America with a complicated tax code like the one that we have today.

A tax code should be fair, competitive and simple, and the U.S. tax code fails on all three counts. Here are common-sense ideas we’ve advanced before; ideas that have bipartisan support.

First, we have to make our tax code fair.

It’s full of deductions, credits and special carve-outs – otherwise known as “loopholes” – that let politically-connected companies avoid paying taxes. Every dollar that businesses spend lobbying for a better tax deal, is a dollar they’re not spending on making a better product.

And, since every dollar hidden in a loophole doesn’t get taxed – politicians make up for this lost revenue by increasing overall tax rates. So we need to close these loopholes.

But if we just close loopholes, then our federal corporate tax rate climbs to 35 percent, which is really high. Add in state and local taxes, the rate climbs to 39.2 percent – the second highest tax rate among developed countries.

On top of sending almost 40 cents out of every dollar earned, straight to the government, businesses pay investment taxes, payroll taxes, and a handful of other taxes our government makes job creators pay.

In the 21st century global economy – and when American families need jobs – this approach just doesn’t make any sense.

We need to make our tax code competitive.

The budget we passed in the House of Representatives calls for closing the loopholes and lowering the rates.

The President’s bipartisan Fiscal Commission proposed something similar.

Its plan would reduce the corporate tax rate to as low as 26 percent, and to lower the top individual rate that many small businesses pay to as low as 23 percent.

So if we lower tax rates, does that mean the wealthy pay less in taxes? Not if we do it by closing loopholes, because the people who use most of the loopholes are those in the top tax brackets. For all the money that’s parked in these tax loopholes, all that money is taxed at zero. Take away the tax loophole; lower everybody’s tax rates. That money’s now taxed but it’s taxed at a fair more simple, more competitive way so the small business men and women who are out there striving and competing have a better tax rate so they can succeed in this global economy.

Third, let’s make the tax code simple.

All together, individuals and businesses spend over six billion hours and 160 billion dollars, every year, just trying to understand and comply with the tax code.

Let’s simplify the code, not just by closing loopholes, but also by decreasing the number of different tax brackets taxpayers fall in.

Fewer brackets, along with lower individual rates, will make the tax code less complicated, and let more people keep more of the money they earn.

There’s a reason this approach has attracted bipartisan support: It’s Fair, It’s Competitive, and It’s Simple.

America’s been knocked down before. We’ve had tough recessions before, and we know that the secret to growing jobs and prosperity in America are through the ingenuity and the hard work of our businesses – of our small businesses, of our large businesses, of job creators. We don’t want a tax system that rewards people for coming to Washington and getting special favors. We want a tax system that rewards Americans for hard work, risk taking, entrepreneurship , investment and innovation. These are the kinds of things that have made America great in the past. And these are the kinds of ideas we’re going to need if want to grow our economy in the future and compete in the 21st century global economy.

Note from the Editor: when the Democrats put forth their plan for tax reform, we will publish it.

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19 Comments

19 Comments

  1. Missy Caulk

    September 16, 2011 at 6:44 am

    I like your Note from the Editor….(((waiting, waiting, waiting)))

  2. Manhattan Beach Realtor

    September 16, 2011 at 9:33 am

    Discussing loopholes in current tax code is like putting a bandaid on an arterial wound. Rather, U.S. needs to shift tax burden from productivity (income) to consumption to start eating away at ridiculous, unsustainable imbalances. Something like the Fair Tax would, overnight, turn U.S. into most competitive country in the world, wiping out labor market issues as global firms come racing to open shop domestically.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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