In an article published on CNBC, many speak specifically about the effects the proposed tax system could have on the housing market.
The article weighs the benefits of having the average American have more money in their pocket, which is "always a good thing" says Jerry Howard, CEO of National Association of Home Builders (NAHB). Putting more money into an average Americans pockets allows for economic growth. More money allows more spending relative to ones Marginal Propensity to Consume.
The tax plan also poses a threat to millions of homeowners. The National Association of Realtors (NAR) says that the new framework would get rid of certain deductions/exemptions that incentivize buying a new home. More specifically, state and local tax deductions.
On the other hand, the NAHB says the tax plan is a step in the right direction. Their perspective focuses specifically on making sure that their is more money in the consumers pockets, which could give them the possibility to move or build a new house. Builders of affordable rental housing could benefit from this as well. The retention of Low Income Housing Tax Credit and a few small business deductions are the specific tax pieces that can help those builders.
Personally, I am in agreement that increasing the amount of money in the average americans pocket can really help stimulate the economy. Also, the decrease in taxes on corporations will allow for the possibility of hiring more workers. All of these could be benefits to the tax plan. The downsides depend on how one looks at the importance of government intervention in daily life. Such as universal health care, social security, medicare/medicaid and any other government.
https://www.cnbc.com/2017/09/28/industry-groups-are-split-on-how-the-gop-tax-plan-will-affect-housing.html
I agree with you Antonio. The several advantages that you mentioned will indeed help our economy grow and prosper. It is proven that the more money a consumer has in their pocket, the more they will consume (MPC). The few exemptions and deductions do not outweigh the money that will be gained from the new tax plan. The money the government is not receiving from tax, will be (essentially) be entered into the economy. The increased spending by the lower classes of our nation will lead to a more healthy economy. I look forward to following the results of this plan.
ReplyDeleteI believe increasing the public's disposable income is ultimately a good idea. As you stated, this will help increase consumption in most all industries. Also, while the housing market may take a slight hit due to a lack of incentive to buy, it should still see some help from the increased disposable income that buyers have. This should reduce the negative effect that the new tax plan has on the market.
ReplyDeleteThe deductions and exemptions for buying and building a new home would help keep money in the consumer's pocket because it would lower their taxable income which would lower the amount of taxes they have to pay. I don't think there would be any harm in keeping the deductions/exemptions for buying/building a new home if you propose that the extra money consumer's have could be put towards housing. The only downsides to keeping the deduction/exemption for new housing is that the government gets less tax money from you.
ReplyDelete