File this one under the one ridiculous argument deserves another category ..

Back in December 2007 after reading countless letters to the editor in the Republican, one example where I suppose the author would also be in favor of dismantling the environmentally destructive Deep Creek Dam, and numerous editorialized comments on Deep Creek real estate blogs about wind turbine development being nothing more than a massive tax avoidance scheme I composed the following (now edited to remove names) and submitted it to a local real estate blog. My comments and the editorialized comments speaking out against wind turbines were subsequently removed from that blog. For the purposes of updating how this blog came to be I thought I would share this for all to see. There will be more to come on why I started this blog as well as some comments on the valuable services that real estate agents provide in the coming days and weeks.



Real estate development is a tax avoidance scheme of magnificent proportions!!! Maybe it's time to start http://www.stopillrealestatedevelopment.org/.

** Under federal tax law, interest paid on a home acquisition debt of up to $1,000,000 for your primary home and second home are tax deductible (i.e. by paying interest to a bank you avoid taxes on other income, see IRS Publication 936).

** Under federal tax law, interest, depreciation, insurance costs, travel costs, repairs costs and utilities for rental properties are tax deductible (i.e. by owning rental property, as several local real estate companies do, you avoid taxes on other income and can depreciate the value of that property even as the market property value increases, see IRS Publications 463, 534, 535, 547, 551, 925 and 946).

** Under federal tax law, taxpayers can exclude up to a $500,000 gain on their primary residence (so by selling a house at a huge profit, you avoid taxes unless you have gained over $500,000, see RaileyRealty website).

So thanks to these tax laws, big real estate companies skim off millions of dollars in transaction fees and out of state banks like Countrywide rake in millions more for pedaling risky no money down, interest only loans to the financially naive (all helping to push consumer debt to record highs while housing affordability is at record lows relative to personal income). At the same time representatives from the mortgage bankers association, the national association of mortgage brokers and the national association of realtors head to Capital Hill day after day to insure that these tax laws remain in their favor. I've been there and seen them with my own eyes, right along side the guys in cowboy boots from big oil and big coal. Then when things get bad and foreclosures rise and property values decline guess who shows up in Washington to ask for even more help, you guessed it. So now you hear talk of "bailouts" and of course the Federal Reserve cuts interest rates to help bailout these people who have been talked into reckless decisions by their realtor and/or mortgage broker. Of course cutting interest rates penalizes those who were not reckless and have saved and/or rely on interest income to pay their bills in retirement, so while the government bails out Countrywide and the realtors and tries to prop up inflated real estate prices the little guys get hurt and the next generation looks at a future where the American dream of owning a home is unattainable (of course these things have a way of correcting themselves over time, no matter how much money the government throws at the problem).

** "Today, the NATIONAL ASSOCIATION OF REALTORS® is widely recognized as one of America's strongest, most effective lobbying organizations." (See National Association of Realtors, http://www.realtor.org/)

Meanwhile, real estate development goes on and homes are continuing to be built using undocumented labor and even documented workers who are paid "under the table" in order for the employer to avoid payroll taxes and allow the employee to avoid taxes all together. A massive tax avoidance scheme!!

And all this development, especially near Deep Creek Lake, takes over acre after acre of farm land that is permanently ruined for farming all so rich folks from "down state" can have their tax deductible second homes. Small farms that have been in families for generations are developed with energy hog homes that are reached by energy hog SUVs and the small family farms that have kept Garrett County rural and are its heritage slowly disappear. Mountain slopes are cleared of thousands of trees to make room for more and more second homes for rich folks looking for tax avoiding second homes. These are the facts and they are undeniable, every time a family from DC heads west to Garrett County, the local real estate companies ring the register as more and more visitors stroll through their own tax avoidance personal amusement park. And this all happens while other folks move to Garrett County and tell everyone else what they should think of wind power and the county they have lived in all their lives.

Like I said, one ridiculous argument deserves another.

Just as the government gives tax breaks to promote investments in infrastructure (transportation, energy, telecommunications, etc), it also gives tax breaks to encourage investment and home ownership so please stop using this massive tax avoidance scheme argument relative to others when you are benefiting from a similar one yourself.

And speaking of investment, if your employer has a 401(k) plan you most likely are invested in General Electric in one way or another. They are one of America's largest, most respected companies and largest supporters of clean energy technologies, so stand to benefit greatly from what you have called "tax avoidance" schemes. Are you prepared to divest your holdings of such companies which would be transferring profits to you as a share holder as well?

Don't forget to check back to Dan's Deep Creek Blog for future updates.