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What drew me into the FairTax at first were the end to FICA and the concept of permanent untaxed ownership. Since then, the more I compare it with other revenue collection methods, I haven’t found anything I’d characterize as a poison pill, or even anything I’m having to hold my nose over. I’ve only found more to love about it, practically and philosophically.
I personally haven’t run the numbers, but my parents sold the family home my dad spent his working years buying, and moved into a home they inherited. The math for making the former a rental in walking distance from the University of New Mexico campus, one of the highest occupancy areas of town, wouldn’t work out considering upkeep and repairs, a property management company, property taxes, income taxes, and the accountant they’d have to hire at least the first year to add rent to their income taxes. If the FairTax were enacted, they’d pay a simple 23% out of their renters’ check each month. It would be clean income after that, no profit/loss calculations messing up their Social Security, and no worrying about the next administration making their lives hell for 3% in the polls.
Your question 1, “am I [to assume] this tax policy will make people tilt even harder towards ownership vs rental?” I have a feeling this is so. I’ve always understood home ownership to be a part of the American Dream which (question 2) society is invested in encouraging. In America, every citizen is a nobleman, and his home should be his estate.
The most disordered people I know have been lifelong renters. An “efficiency” apartment is an abomination, a box built to impart pain and despair, but even the townhome apartment one of my best friends had stank of fear and giving up. And with vulture capital buying up complexes, it’s an even worse situation.
But aside from philosophical and psychological ideals, I’m sensitive to structural inequality. There’s a point to be made about giving everyone slack at once, not just one class. My gut says the slack is to be found in ensuring owners of second homes are renting them long-term to families that want to escape apartment life instead of renting them as Vrbos and Airbnbs. It seems abominable to me that hotels are long-stay while houses sit empty three out of seven days a week.
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