05/20/2016 - Charles Hugh Smith: The Unintended Consequences Of Financial Repression
Charles Hugh Smith* explores the concept of property taxes on real estate .. do you really own your house if you have to pay $260,000 in property taxes over 20 years? .. “Owning a home no longer makes financial sense because the property taxes consume any appreciation other than the transitory ‘wealth’ generated by a housing bubble” .. Property tax is not based on consumption or income, but on “the presumed wealth & income of property owners. In effect, property taxes are a wealth tax: if you can afford a house, you can afford property taxes.” .. the problem with this is household income does not rise with housing valuation .. the unintended consequences of financial repression: “As pensions dry up and blow away under the relentless erosion of the Federal Reserve’s zero-interest rate policy (ZIRP), unaffordable property taxes may well start evicting homeowners from the ‘asset’ they mistakenly thought they ‘owned.’ If your Social Security pension can barely pay your property tax, never mind your Medicare, healthcare costs, food and other living expenses, then what exactly do you own?”
