Capital “Gains” on Sale of Primary Residence

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I just read President Trump has proposed rescinding co-called capital “gains” on sale of one’s primary home. At first, I thought is unnecessary, because I mistakenly believe this confiscatory tax was removed years ago. Wrong!

Actually, if you meet the criteria, only $500,000 “gain” is excluded for a married couple. To the cost basis, one may add “improvements”, provided, of course you have taken time out of you productive activities (which afford the privilege of paying many other confiscatory taxes) to create intentionally-burdensome records of such expenditures. Naturally (so we are told) we are subject to three separate, conniving and colluding sovereigns: local, state and federal. Thus, in addition to the capital cost of purchasing and maintaining a home - whereby one’s mortgage payments over 30 years generally double the purchase price of your home taxes can add a second equal dollop of cost over about 30 years. The figures vary according to the rapaciousness and shamelessness of those who “serve” us at any particular level at any particular time. Let’s say that the “American Dream™” of home ownership is illusory. My home, according to CPI, has tripled in PRICE (not value) from $235K to $710K - just about an accurate market price today.

Any tax on any “gain” on the sale of one’s residence can be characterized in a few choice words allotted to the legal profession: fraud, extortion, theft, collusion (a fave among lefties), conspiracy. Take your pick. I would love to see an honest census of those rotting away in state and federal prisons for the exact same crimes. It turns out that however many there are, the schemes which landed them there were invented very accomplished trailblazers in the magnificent professional field of separating ordinary people from their hard-earned (so-called) dollars. Note in passing: when it suits, our betters do know how to index financial stuff for inflation (even if the methodology for calculating CPI is, itself, dishonestly adjusted to benefit ‘guess who’?)

If you find this unsettling, go ahead and suss out the “return” on your Social Security contributions over all those years. Warning, you’ll need some calculus to do it accurately if you can’t find an “un-massaged” table of numbers (I first tried Brave’s AI search, who lied to my face saying that CPI figures were unavailable for the years beginning in 1967, when I earned my fist real income. Is it possible that AI has already been co-opted to become a more sophisticate propaganda arm of the totalitarian left (redundant, I know) than the MSM?).

When you begin that calculation, don’t forget to include the fact that those dollars - every year earned - were already taxed as income, as those dollars are included in each year’s Adjusted Gross Income (AGI)!! Then, unless Trump’s changes are actually legislated, Social Security “benefits” will no longer be taxed (currently 15% of those benefits are not taxes (85% are). Watch the details if this goes through.

I would bet that anyone who has some savings/investment or any retirement income from a private source - will still be substantially taxed on SS. For starters, just consider the taxes beginning with the one on your AGI each year. Add it up, subtract inflation. See what you (don’t) get. If one looks really carefully at lifetime taxes - including the taxes which corporations pay*, which pass through to customers (a favored stealthy tax technique) - you may find the “American Dream” is punctuated by nightmares - thanks Our Democracy™.

*I have read an analysis of overall taxation, especially taxation of the (bad) corporations, which convincingly shows that all-in 90% of all profit at all levels goes to the state (meaning government at all levels). Yes! Give us more government!!

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One minor correction – your home tripled in price, as measured by the changing yardstick of the dollar.

Consider the guy who had enough money to buy a house for $X. He really would have liked to buy the bigger house on the other side of the road with the view of the river, but it cost a then unaffordable $1.5X. Now years later, the “value” of his house has increased to $2X. Is there any chance he could now sell his house and use its increased price to buy that place across the road?

So yes, FedGov devalues its Dollar, thereby inflating the price of an asset (but not its intrinsic value) – and then taxes the peon on the fake value created by that FedGov inflation. Representative democracy has failed!

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Arguably, all taxation is theft. Certainly, taxation on capital gains without honest inflation indexing is theft of a kind that incentivizes government to inflate the currency — as if there were not already enough incentives. There’s nothing special about capital gains on a house. What is special is that your house, unlike other financial assets, is also subject to property tax that does not arise from any gain or profit. Ordinary income taxes are also bad because they disincentivize work and all productive activity. Thus, one can find fault with all forms of taxation. Taxes on capital gains, at least if properly indexed, are arguably among the least offensive: at least you have some extra cash to pay them.

All that said, a functioning government has to raise money somehow. Given that, one has to choose among the least worst options. The real issue is not that any particular tax is bad — they all are. This is the fallacy of comparing real options to an unattainable ideal.

No, the real issue is that the government is is way too big, having colonized almost half of the economy. Taxes for a smaller government would be less objectionable and a smaller government would engage in less mischief. If the size of governments (all levels) were reduced to what prevailed 100 years ago, we wouldn’t be having this conversation — with the added bonus that governments would not have the financial means to torment their citizens.

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This is bad economics. You borrowed the money and had to pay interest. This is the time value of money. You got to enjoy the benefit of living in your house even though you could not afford to buy it. Someone else had to defer gratification so that you could use their money. If you’d saved your pennies (as they did back in the olden days) to buy your house, then no mortgage and no interest payments. If you don’t want to defer gratification, you gotta pay for the privilege.

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Hence the benchmark for inflation should be the cost of homestead as defined in militia.money. And of course homestead requires a definition but fortunately chapter 7 bankruptcy exemption defines it as well as tools of the trade.

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Banks don’t loan other people’s money. They create money when they create a loan. On their balance sheet, they show an asset (the loan) and show a liability corresponding to the money created.

The current reserve requirement on deposits is 0%.

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Infinite fractional reserve banking… nothing to lose sleep over

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Short term capital gains are taxed as ‘income’.

Long term capital gains should not be taxed because of inflation or no indexing for inflation which sounds like too much work so easier to repeal than index for inflation

We should move away from income taxes and toward consumption taxes.

Repeal all estate and inheritance taxes.

There was no income tax before 1913.
No Federal Reserve Bank before 1914.
And somehow the Republic survived… do you believe in miracles?

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Irrelevant. If there were no investors and no depositors, there would be no credit. Yell about fractional reserve banking all you want but someone has to save and invest if anyone is going to get to borrow. This has absolutely nothing to do with fiat currency: those bits of paper in your wallet or entries in a ledger. Capital resources are built up by saving and investment instead of immediate consumption. This fact predates money.

And it remains true that the person who borrowed had to pay for the privilege of not deferring gratification. It applies to houses, cars, and the massive amount of credit card debt. Nobody forced you to borrow. Don’t want to pay interest? Then save your pennies until you can afford the purchase. Home mortgages are a relatively recent innovation.

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Yeah, that’s because the federal government was a tiny fraction of the size it is now. There’s no way to raise enough money to feed the beast’s current appetite without income taxes.

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I recently read various discussions on property tax. The entire discussion was around the need to eliminate or freeze property tax (I think Ohio had/has a bill to do so). Not one person seemed to make the connection between the level of spending and property tax.

People seem to think $100 million schools, $300,000 concession stands at the $2,000,000 high school football fields and the $100,000 police vehicles are free. .

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Last night I attended a well attended mutual aid meeting in Sidney Iowa for emergency responders. It happens every other month. Earlier in the day I was sitting in the driver seat of an ambulance ready to go to a man in respiratory distress in Sidney. I was the only volunteer in my county to respond. Because I had no EMT with me I could not respond. The dispatcher eventually had to call to another county.

The big topic at the meeting was who was going to be admitted to the rodeo.

You should see the contempt leveled toward me by some of the Federal government dollars trickle down women around here. I mean who am I to have an opinion when I’m an old widower living close to the edge?

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If I may commiserate – the big fire risk in my rural area is the fast-moving grass fire, which is as inevitable as the Santa Ana winds fire in Southern California. To deal with an exponentially-growing wind-driven grass fire, the great need is rapid responders – lots of them, and close to the scene … not far-off like the limited number of professional County fire fighters from their distant base. Thus, when the County Fire Department recently issued a call for volunteers, I stepped forward.

The County Fire Department turned me down – probably recognizing (quite reasonably) that I would be a thorn in their bureaucratic hide.

And bureaucracy is the name of the game! First, the potential volunteer has a review with the volunteer chief of the local fire district. Then a review with the professional staff – who are the ones who turned me down. After that, there is a physical fitness review (reasonable); a psychological review (?); and extensive training. Only after all that would the volunteer be accepted to help on future fires.

Talking with old volunteers, before the elected County Commissioners created the “professional” County Fire Department, all volunteers would be accepted – and needed! Some people would be of course be limited to tasks like driving water trucks, but every pair of willing hands was useful. Now we have the Unattainable Perfect being the enemy of the Available Good – and the people of the County are more exposed to the threat of out-of-control rapidly moving grass fires than ever before, despite spending much more money on the fire service.

“Representative democracy” has failed!

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Sinecures are an inevitable consequence of civilization. I’m not going to say “get used to it” because they are also the cause of the cycle of civilization – both on the upward swing and on the downward spiral.

If you don’t figure out what to do with sinecures – especially when entering a downward spiral – you’d better grab all you can and be ready to bolt over the border with the portable and fungible forms of wealth so you can buy your way into the next civilization over.

Careful, though. Once you figure out this game, you may become part of the problem rather than part of the solution:

militia.money

PS: I’m still going through “fears of a setting sun” about the founding fathers struggles with reality as well as their own ignorance. I guess if I could have said one thing to them about unity it would be get a clue about the treatment of military groups with collective punishment and collective reward. The sinecures of civilizations should be treated like that – dispersed without prejudice as widely as possible so that self-policing evolves from the ground up. Adams in particular with his obsession with public morality was such a tragic figure in his ignorance of collective reward and punishment properly metered.

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