TWO Things For 2021

As a new administration takes charge today and the White House welcomes a new president, two key issues may have the biggest impact on the housing markets in many areas of the country: 

1. Will the SALT tax deduction limit be eliminated or raised?

2. What level of STATE federal aid is forthcoming?

There are arguments for and against these issues, so I want to share mine. This is NOT a political argument. I'm not picking 'sides'. I don't see sides or BLUE or RED states anywhere in the USA....the vast majority are different shades of purple in my very humble opinion. That's what makes America exceptional. My life beliefs are VERY basic: do what is practical, fair, and just. I feel I share these beliefs with the vast majority of Americans who make all life decisions based on honest realities, practicality, and fairness.

The two issues I refer to lead back to our federal tax policies that make virtually no consideration for cost-of-living differences between a city like Dallas, Texas, and Tupelo, Mississippi. Real estate taxes in states such as Texas, Florida, New Jersey, New York, California, Illinois, etc are very high.....and rising. Why? The cost of operating and existing in these states is expensive too, especially in larger cities. Schools, security, services, etc cost lots, and especially more so in larger cities.

1. Regarding the limit on the SALT deduction limit. This is the only tax deduction that makes some accommodation for cost-of-living differences from region to region. When this was limited to $10k it left many middle and upper-middle-class taxpayers - and rich ones too - in a bad way, regardless of some tax decreases. It also de-valued lots of real estate terribly, lowering assessed values. This impacts EVERYONE negatively, rich and poor.

2. Should States get Federal assistance because of the COVID-related fiscal devastation? Some argue that States need to get their finances in order and make cuts. There is lots of truth to this: Many states do overspend, waste, and mismanage their finances. They need to work on this aggressively. What many fail to acknowledge is that many of the states requiring Federal financial assistance now are the same states that have had billions siphoned off from their Federal tax contributions - EVERY SINGLE YEAR - to re-distribute to other states to help them out. This redistribution of wealth has allowed some states to have low or no state taxes. This is the system we have. Americans love to help and prop up those who need help. I do too. But now when these 'donor states' need assistance don't the same rules apply? When a flood, hurricane, fire, etc devastate an area in the USA, the Federal government steps in too. Many of these 'donor' states tax their population to compensate for this loss of dollars via local and state taxes. This allows more of their federal tax contributions to be spent in states that need 'help', often for the military and retirees. For every Federal tax dollar a Kentuckian gives, they get around $2.61 back. Texas only receives 95 cents back for every federal tax dollar it sends to Washington while Connecticut residents receive just 74 cents back for every $1 they pay in federal taxes. Without Covid Federal State aid, states will be compelled to cut services or raise taxes. Both could impact real estate negatively. Even growing, no-state-tax states have multi-billion budgetary shortfalls for 2021.

I sincerely hope these two issues are addressed with the appropriate sense of fairness. Our constitution implies we are all subject to fair and equal protection......I truly believe in this brilliant principle.