Slump in housing? Raise taxes.
“Government is a contrivance of human wisdom to provide for human wants. People have the right to expect that these wants will be provided for by this wisdom.”
—Jimmy Carter, 39th President of the United States of America
“Transportation officials want to sharply increase fees paid by developers for road projects, which builders say could drive up the cost of new homes and further damage an ailing housing industry,” or so sayeth a May 14 report in the Reno Gazette-Journal.
For the uninitiated, the Regional Transportation Commission is considering increasing road impact fees on new single-family homes by a whopping 250 percent. For those keeping score, that would translate into a $2,000 to $7,000 tax on new homes.
It should come as no surprise that your never-humble host is vehemently opposed to levies, fees, assessments or whatever euphemism government bureaucrats come up with to avoid calling a tax, well, a tax.
The RTC claims inflation has raised the cost of construction by the aforementioned 250 percent. It claims that while a one-mile, four-lane road would have cost $1.8 million back in 2003, the same stretch now costs $6.4 million.
Now I will save, for the moment, the fact that inflation—that magical economic term that refers to the cost of stuff going up over time—has averaged about 4 percent over the past 60 years. Coincidentally, when government bureaucrats want money, there’s always a crisis of epidemic proportions that must be averted, but I’ll allow for the minutest prospect that I may be over-generalizing about that here.
Now $2,000-$7,000 may not sound like a lot, especially when you consider that single family houses for under $300 large in the Reno-Sparks area are few and far between. The reality, however, is that the market—as evidenced by a recent story in this publication titled “Open House” (cover story, June 7)—is in the proverbial basement. Find me any real estate agent in the area who isn’t starving, and I’ll show you someone with a second job or sitting on a pile of cash to ride out the slump until the market picks up again. Although, as long as we’re on that subject, when that monopoly known as the Multiple Listing System or MLS finally gets busted open, a lot of agents will be seeking a new line of work.
Anyway, along comes the RTC to prove my point that government agencies contribute nothing to the economic well-being of the citizenry. With the market depressed, the agency wants to raise taxes. This is not what I would call intelligent timing. It does, however, work great for the anti-growth hypocrites who, themselves, live in developments that inconvenienced someone else when they were built.
The RTC claims its proposal would tack on a modest $30 per month to your average mortgage. Sounds nice until you actually do the math. An extra $30 per month invested at a 6 percent interest rate would yield a cool $30,286.00. Unless you buy into the RTC’s mentality, in which case, prepare to drop an extra $30,000 over the life of your loan. Personally I’d rather have the 30 grand.
This perhaps returns us to Carter’s assertion. Although perhaps a lyric from a song by the Rolling Stones is more apropos: “You can’t always get what you want, but sometimes, you get what ya need!”