May 17, 2011 4:14 PM
American homeowners are using the tools of technology to solve the many challenges that have come with the economic downturn, but new legislation could soon change that.
Ecommerce has been one of the tools that many consumers have turned to in recent years. Rather than drive to the mall, consumers are ordering more products and services online than ever before. This not only saves money at the gas pump, but offers consumers greater access to the goods and services they want, frequently at lower prices.
Additionally, more homeowners and other consumers are expanding the use of ecommerce sites as their primary or secondary source of income. According to AC Nielson International Research, 1.5 million people have generated extra cash by having garage sales online. The study also showed that even several years ago about 724,000 Americans said that eBay was already their primary or secondary source of income. The recent recession has driven both of those numbers up, as workers who have lost their jobs or seen their hours cut are increasingly turning their hobbies into small online businesses. This important income supplement is saving many homeowners from foreclosure and helping first time buyers save up for a down payment. Both are helping to stabilize housing values.
While consumers, businesses, and state and local governments all benefit from ecommerce, not everyone is supportive of its continued growth. As more consumers buy online, shopping center owners have experienced higher vacancy rates and stagnant rental rates. The oil companies are probably unhappy that consumers are driving to the malls less frequently, as well. Even though home based ecommerce businesses pay sales taxes on their local sales revenue just like other local retailers, many revenue hungry state and local governments are looking to increase their coffers by burdening out of state small home based ecommerce businesses with new sales tax collection requirements.
Unfortunately this debate has made its way to the halls of Congress. Senator Richard Durbin (D-IL) is planning to introduce a bill, ironically called the "Main Street Fairness Act," which would increase the amount of state and local sales taxes consumers pay on Internet purchases. It will also create new complexities in the sales tax law that will especially hinder small home based ecommerce businesses. This bill does nothing to create "fairness" in the retail market. If the shopping center owners and large brick and mortar retail chains that support it can increase the cost of online purchases, perhaps they can run the small mom and pop stores off the Internet just as they continue to run them off Main Street.
The Main Street Fairness Act is completely contrary to the sentiments of American voters. A majority of Americans believe that increasing the collection of sales taxes on Internet purchases is bad public policy. A 2008 survey by Parade Magazine, asked readers: "Should Internet Sales Be Taxed?" Based on 3,125 survey responses, 85% opposed taxing ANY Internet sales. By contrast there is far less voter opposition to raising sin taxes on products like alcohol and tobacco, or temporary income tax surcharges on the very wealthy, when tax increases are the only remaining way for state and local governments to balance their budgets.
A permanent Internet sales tax holiday, similar to the temporary sales tax holidays many local governments currently provide for back-to-school or other purchases, makes a lot more sense than increasing Internet taxes. Currently most state governments don't charge sales tax on products such as prescription drugs.
Consumers will be able to buy more online and small home-based online businesses will grow faster if there was a permanent Internet sales tax holiday. They will hire new workers, providing badly needed jobs at a time when unemployment is still hovering at close to 10%. By reducing unemployment we will also help federal, state and local governments by reducing government spending associated with unemployment benefits. More ecommerce will also reduce government costs for the maintenance and expansion of the transportation infrastructure.
The economic challenges the country is facing, coupled with rapidly changing technological advances indicate that more and more of our lives will be spent online. Before enacting policy that will impede our economic recovery, hurt consumers and home based ecommerce companies, and which is opposed by the vast majority of voters, policymakers should look to other alternatives. The Main Street Fairness Act is clearly an idea whose time has not arrived, and it should be opposed by voters and legislators alike.
The American Homeowners Grassroots Alliance is a nonpartisan consumer advocacy organization dedicated to assisting the nation's 70 million homeowners understand significant policy issues affecting homeowners and homeownership, and empowering homeowners to make their voices heard by state and federal officials.
April 8, 2011 8:34 AM
American homeowners are the beneficiaries of the 6th district federal court's April 6 opinion affirming the Federal Trade Commission's earlier decision prohibiting multiple listing services from blackballing competitors who charge home sellers less than the prevailing real estate sales commission rates. The FTC had earlier ruled that Realcomp MLS's policy of prohibiting discount broker members from advertising their listings on Realcomp's website was nothing more than a transparent effort to maintain high real estate commission levels. The American Homeowners Grassroots Alliance filed a brief in support of the FTC's efforts in that case.
In her decision Circuit Judge Karen Moore concluded that "substantial evidence supports the Commission's findings that: 1) Realcomp's website policy gave rise to potential genuine adverse effects on competition due to Realcomp's substantial market power and the website policy's anticompetitive nature; 2) the website policy in fact caused actual anticompetitive effects; and 3) Realcomp's proffered precompetitive justifications were insufficient to overcome a prima facie case of adverse impact. These findings establish that Realcomp's website policy unreasonably restrained competition in the market for the provision of residential real-estate-brokerage services in southeastern Michigan and the Realcomp MLS area."
American Homeowners Grassroots Alliance President Bruce Hahn thanked Judge Moore for her wisdom and the FTC for it's diligent defense of American homeowners. "This decision means that the issue is dead. Many other MLS's have tried the same tactic, and the NAR invested heavily in this appeal. They have lost every case. It is time for MLS's and industry leaders to put this issue behind them and stop wasting their members' dues money on lost causes that only offend their customers and tarnish the profession's reputation. Instead they should focus instead on how to better serve their clients and their members."
November 11, 2010 10:36 AM
On November 10 the bipartisan Federal Deficit Commission proposed a massive change in federal spending and the tax code. The plan would save $3.8 trillion by 2020 and balance the federal budget by 2040. We congratulate the Deficit Commission for its good work. Unless we reign in the growing deficit our nation will continue to lose jobs, and the future of our children and grandchildren will be bleak.
Everybody can find parts of the proposal they oppose, and most of us can find parts that we like. What's critical is that we support the bottom line. If you don't like specific parts of the plan's tax increases and/or budget cuts you should offer specific alternatives to minimize the pain and/or make up for the difference. For example we're concerned about the Commission's proposed $500,000 cap on the mortgage interest deduction. At minimum it should be indexed to housing values. A flat $500,000 cap would have little impact in many rural areas where you can buy one of the largest and nicest homes in the county for that amount. In pricey cities like Washington DC that will barely buy you a small starter home. A cost of housing index could be applied that would lower the cap in the areas when home prices are lowest and raise it in the more expensive areas.
We'll look at how such a refinement might work out. If it leaves a large share of middle class homeowners unable to deduct all of their mortgage interest costs, then at minimum we'll propose some alternative revenue sources that would fund an increase in the caps. We would like to keep all mortgage interest fully deductible, but that may not be possible in the give and take of the political debate. It may mean that the future owners of a $2 million, 6,000 square foot McMansion can't deduct all of their mortgage interest. This is unfortunate, but perhaps it would help accelerate the trend towards building smaller homes, which are inherently more energy efficient.
Some of the plan's other provisions concern us as well, but we'll also suggest other budget cuts and/or revenue sources to cover other modifications we might suggest to Congress or the Deficit Commission.
This debate will test the mettle of consumers, business interests and politicians. Many will speak out against cuts in their favorite programs or tax deductions, but will not offer alternative sources for revenue to make up the difference. We all owe it to the future of our country and future generations not to take such a gutless approach. Voters should certainly express their views on specific programs and taxes to their legislators, but at the same time they should insist that legislators support the Deficit Commission's bottom line, and come up with alternatives that are least painful to their constituents and most consistent with their own ideology to get there.
September 20, 2010 12:00 PM
Currently there is no tax on estates. However next year the estate tax reverts to previous levels - a $1 million tax exemption per estate. Congress is trying to decide whether to let the estate tax revert to this previous level, extend the ban entirely, or do something in between. We believe that the latter is the appropriate course.
Most estate tax avoidance tools are used to maximize the amount left to children or preserve the family business. In the latter case, Congress should exempt family farms and businesses up to a reasonable size from the estate tax. We should also remove the inequities in the current estate tax with respect to the number of heirs and their circumstances. Some people have no heirs, others have quite a few kids, and in some cases one or more of the latter children may be handicapped and unable to work and/or care for themselves.
The estate tax exemption should be tied to the number of children. Give everyone an exemption of $1 million per child (out of fairness the childless or those with no surviving children should also get a $1 million exemption). This would enable a parent to provide a good retirement nest egg for each child in an era where economic conditions make it unlikely that most able bodied, hard working, and thrifty children are going to be able to save enough for even a modestly comfortable retirement. Give another $1 million exemption for every child that is handicapped and unable to work and/or care for themselves, in order to provide additional support for their special needs. Then eliminate the trusts and other estate tax avoidance tools and apply the estate tax to whatever is left. The exemption should be indexed to 2010 dollars so we don't have to keep revisiting the issue.
This approach aligns well with the primary estate planning goals of most people and would effectively eliminate taxes on most estates. There is no such thing as a "good" tax, but such a structure would reduce concentrations of wealth which have proved destabilizing in many societies. We do need to reduce the deficit, by spending reductions insofar as possible, but we will still need to tax individuals to bring it into balance. This may not be a "good" tax, but it would be a is a less onerous tax on individuals compared to many of the other alternatives.
August 30, 2010 2:12 PM
On August 29, Shaun Donovan, Secretary of Housing and Urban Development, said that the housing market's July was "worse than expected" and that the Administration may support a new homebuyer tax credit. His statement follows similar recent expressions of concern about the overall economy from other senior Obama Administration figures. They too made it clear that the Administration will step in with other economic stimulus measures to rescue a faltering U.S. economy if necessary. With continued signs of a possible double dip recession, among them the recent housing construction and resale data, the first question is whether additional economic stimulus is necessary. If the answer to the that is yes, then the next question is whether put the stimulus resources into housing, and if so in what form.
With U.S. unemployment stuck around 10%, a further erosion of the economy could be devastating. On the other hand, the bailout and stimulus funding approved by Congress at the request of Presidents Bush and Obama in recent years has resulted in a dramatic federal deficit increase that itself is posing a growing risk to the nation's long term economic stability. In fairness, those steps may have prevented an economic depression, but the net result is that we face a policy dilemma.
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