Saturday, February 13, 2010

Do it Yourself and Taxation

One of the seldom discussed advantages of owning a home compared to renting an apartment is the do-it-yourself opportunities it allows. Homeowners can pick a few, or many, of the maintenance and repair chores to do themselves. Where renters pay rent it must cover the full cost of commercial maintenance and repair; homeowners can provide untaxed labor that reduces their need for cash flow and income.

I am unaware that Congress or the state legislatures consider the do-it-yourself effects of their policies and taxes. Mostly they do the opposite because the U.S. economy depends on the volume of spending. To keep the economy going our governments would rather pressure us to work like demons and spend like maniacs.

Back in the great depression farmers produced a cash crop for market, but cash earnings were only part of their income. Fruits, vegetables, maple sugar and a high percentage of everything put on the family's table could be produced on the farm. Do-it-yourself production does not require a transaction but it means consumption and supports a family's standard of living in the same way dollar income producing on the job supports consumption.

In today’s economy we can drop our magazine subscriptions, our cable TV and the health club, but notice the recent “Cash for Clunkers” and tax breaks for first time home buyers provide help for spending and spenders, but not for those out of work and looking for ways to save. Policies of aid give aid to those with cash to pump up spending.

For the unemployed homeowner, or those with periods of unemployment, the pressure to pay property taxes continues without relief. America’s property tax system pressures people to keep their property in use or sell it to someone who will. If the United States was a country without property taxes, it would give those who owned homes a better opportunity to withdraw from the market place and turn more to do-it-yourself work.

America primarily uses a combination of income taxes, property taxes and sales, use and consumption taxes that demands a relentless tide of cash. As long as our politicians want us to spend our way out of recessions that is not likely to change.

A tax system that reduces income, payroll and property taxes in exchange for more emphasis on sales and consumption taxes would increase cash flow from wages and permit people to keep more of their interest earnings from saving. Higher consumption taxes on goods and services raise more revenue from those with the income and preference to spend, but lets others choose more do-it-yourself opportunities.

Recently I was speaking with someone who grew up on a farm in the 1930’s. He told me his father was required to grade and maintain the county road that went along their property as were all the farmers in the district. Well of course, it makes sense with farmers short of cash but time and equipment to exchange for taxes. It sure beats eviction.

Americans have millions of people short of cash like the hard pressed farmers of the 1930’s. America can give them better choices than the have now.

1 comment:

Anonymous said...

Not sure where to post this but I wanted to ask if anyone has heard of National Clicks?

Can someone help me find it?

Overheard some co-workers talking about it all week but didn't have time to ask so I thought I would post it here to see if someone could help me out.

Seems to be getting alot of buzz right now.