Taxes and Real Estate – How Do They Affect Each Other?
The Cato Institute has released this chart on taxation and income levels. It shows that the Bush tax cut has lowered the tax rate across the income spectrum from the richest to the poorest demographics.
On the top end of the income chart lower taxes means more disposable income possibly creating new home sales but we are talking size of homes or second homes that would have been bought irregardless. However, for the bottom 50 percent of taxpayers you will see that the effective tax rate is about half of the rate paid in 1990 at 2.98% (via taxfoundation.com). Would this money be part of what fueled the housing boom?
I do not have the answers to this but it is an interesting question. With the bottom 50 percent of households having essentially no taxes owed, is the mortgage deduction that important to voters? An astute politician could promise bread and circuses to the public on the back of cutting or getting rid of the mortgage deduction and quite possibly get away with it.
Please give your feedback in the comments as this is a large question and I can not try to answer it all myself. All I do know is that a great deal of income is in the hands of the American people that was not there in 2000 and that is a great thing.
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