The following was an email news update sent out to the NGO Common Ground-NYC and other interested parties on February 8, 2015.
Hello Common Groundlings (and friends):
Hello Common Groundlings (and friends):
The
ongoing corruption of our culture through Real Estate purchases was
highlighted in a recent front page NY Times article, which is even
better viewed in the interactive online version:
The
takeaway is that over half of the $5 million or more condos purchased
are sold to obscure shell companies whose owners are unknown. It took
the NY Times over a year, multiple reporters, sifting through hundreds
of property records in over 20 countries etc. to uncover who actually
owns these land-based money laundering vehicles (my term, not theirs). Of course, my presentations over the last year or more have highlighted the Big Five 94% tax-exempted properties
including the rapidly becoming infamous One57, but still the yearly tax
of just $17,268 on the just sold $100 million duplex in that building should shock us.
That
amount is just 0.017268% of 100 million. A more typical $1 million
condo owner paying $1,700/month is paying more in a year - $20,400 - than the $100 million condo owner (itself still too low in a fully
realized site valued rent)! Even if we assume the same property tax on the $100 million condo, that is 1/100th the rate of the $1 million condo!
As
the Times article points out however, these extremely mispriced condos
with almost no property tax are driving up the prices of relatively
cheaper condos all over the city, from the decimillionaire class to the
"mere" millionaire condos. If a condo goes for $100 million, why
shouldn't a condo that would otherwise go for $10 million go for $20
million instead? And why shouldn't a condo for $1 million, go for $2
million? And perhaps more importantly for the struggling middle and
working class, who would even bother building apartments, even for rent,
for non-millionaires at all when there is so much money to be made
through tax avoiding super-properties? Just do the math: it's a
drastically regressive property tax. It's driving oligarchs - many if
not most of them involved in corruption and criminal investigations in
their home countries - to tax havens like NYC (though the same can be
said for San Francisco and Los Angeles, and even "second tier" hot spots
like Miami), while making it impossible for middle or even upper middle
class New Yorkers to find affordable housing, let alone the working
class and poor.
What is to be done?
Mayor DeBasio rightly made affordable housing the centerpiece of his recent annual State of the City speech. Mayor de Blasio Delivers State of the City Address
The
reviews are generally positive, though wary of the program's great cost
for 200,000 new or rehabilitated housing units (a bit less than it
would take to house the homeless 4X over). In response to a followup NYT editorial, I left this comment:
The solution to NYC's - or any expensive city's - housing affordability problem has been known for over a hundred years. It was even tried partially in NYC in the 1920s and early 1930s and is the reason there are still so may pre-war apartments today.
It is the Land Value Tax (LVT). If you really want to encourage new home construction and other improvements, untax those, and make up the difference with just the Single Tax on location. This will reward people for building, punish people for hoarding and speculating, and return the fair share of the property tax to those whose demand created it, instead of the land-owner, who did nothing to increase the value of the land, but to be in the right place at the right time. If you still can't see how this works, take a look at this 8-minute video: click here made by some Single Tax graduate students. Read Professor Mason Gaffney's: "The Taxable Capacity of Land: Enough and to Spare" economics.ucr.edu/papers/papers08/ 08-12old.pdf
Or, see my presentation to the Henry George School, here: click here
- Scott Baker, president of Common Ground-NYC
Yet,
as the Mayor has said many times, we have the Tale of Two Cities. One
that is barely affordable and shrinking. And another that is truly
another world, for only the rich and unimaginably wealthy. The last
results in ridiculous oxymoronic record-setting like this: In Program to Spur Affordable Housing, $100 Million Penthouse Gets 95% Tax Cut
In Program to Spur Affordable Housing, $100 Million Pent...
The
57th Street penthouse is a prime example in the debate over a program
that offers generous tax abatements to generate apartments affordable to
poor and moderate residents.
Our
colleague, Josh Vincent - CEO of the Center for the Study of Economics,
has posted an update on the great LVT initiatives his organization is
coordinating, as well as an appeal for a small amount of funding (a
lunch for one of the oligarchs and their friends living at One57 might
cost more than he is asking for): Will Connecticut Cities Regain their Balance?
Will Connecticut Cities Regain their Balance?
Funding
for LVT Projects in Connecticut have never been more necessary.
But for $5,000, Connecticut can have more LVT. It is almost ridiculous what small amounts history can be made upon.
Monetary Reform News in Canada
As
long-time members and supporters of Common Ground-NYC know, the local
chapter voted three years ago to support Monetary Reform along the lines
of Henry George's Greenbacking philosophy.
There is now news north of the U.S. border supporting these kinds of reforms.
Monetary Reformer Bill Still's report on Canadian decision allowing lawsuit against bank
of Canada for not continuing to create debt-free money after 1974 is a good summary of progress in the north.
Virtually all Canadian debt and inflation occurred after 1974 and is
completely unnecessary and illegal. Still Report #357 -- Correction on the Canadian Decision
Still also summarizes his plan for restructuring the Canadian monetary system, which could equally apply here in the U.S.
1. No more government borrowing - phased in at 10% a year over 10 years by allowing the banks to create 90% of the money the first year, then 80% if everything works out, then 70% etc.
2. "Forbid banks from creating the national money out of thin air."
3. Spend the new debt-free money on infrastructure projects. The projects are different in Canada, but not the principle. "(Infrastructure) projects put the most number of people to work. IT puts the greatest amount of money into the hands of the People."
Also,
Greek Finance Minister Yanis Varoufakis, whom I and Andy interviewed
(me and Andy once, and Andy alone again once: both are available on the
HGS site and the first one here: OpEdNews Diary: From the Henry George School: Debating Economics),
explains his plans for Greece to Channel 4 news in Greece and why the
EU will be gone in 2 years if reforms are not carried out to eliminate
country-shrinking debt like Greece is experiencing.
Greece has shrunk
by 25% in just 5 years and the so-called 1.9% growth in 2014 is really
an illusion because the debt burden has only increased too. "We are going to destroy the Greek oligarchy system" | Channel 4 News says Varoufakis, but it remains to be seen who will destroy whom.
I
wrote about the Greek situation, including a transcript clip from the
Varoufakis interview above, an outline of a joint Mazonne/Baker economic
plan for Greece, and more about sources of revenues, here: http://www.opednews.com/articles/Will-Greece-or-the-EU-Blin-by-Scott-Baker-Assets_Austerity_Debt_Finance-150208-883.html
Until next time, Happy Landings...
Scott Baker - President: Common Ground - NYC ; NY State Coordinator, Public Banking Institute; Op e d n ews Blogger/Managing Editor; Huffington Post Blogger; Author
Video Appearances & Slideshows here:
http://newthinking.blogspot.com/
Petitions:
-- Commemorate President Lincoln's Assassination with 1 Billion Debt-Free Lincoln $5 Bills
-- Replace Property Tax with Ground Rent in New York State
-- Assess NYC buildings using comparative properties
-- California Dreaming: Set up a State Bank with abundant CAFR funds
-- Complete the East Side Manhattan Greenway from 38-61 Streets and save bikers, help the environment, and clear up traffic
-- Tax Vacant & Unused Land to Return its value to the Community
-- Close New York State's budget Gap with money from its own agencies by setting up a State Bank
-- Defend the Clean Air Act
-- Produce debt-free United States Notes
-- Reclassify the FED's account, from private to public
Video Appearances & Slideshows here:
http://newthinking.blogspot.com/
Petitions:
-- Commemorate President Lincoln's Assassination with 1 Billion Debt-Free Lincoln $5 Bills
-- Replace Property Tax with Ground Rent in New York State
-- Assess NYC buildings using comparative properties
-- California Dreaming: Set up a State Bank with abundant CAFR funds
-- Complete the East Side Manhattan Greenway from 38-61 Streets and save bikers, help the environment, and clear up traffic
-- Tax Vacant & Unused Land to Return its value to the Community
-- Close New York State's budget Gap with money from its own agencies by setting up a State Bank
-- Defend the Clean Air Act
-- Produce debt-free United States Notes
-- Reclassify the FED's account, from private to public
2
2
1
