The large number of new residents pouring into Florida and its massive hospitality industry have made affordable housing and taxes on gratuities serious campaign issues for Floridians.
No industry has been hit harder by government regulations and the Harris-Biden inflationary government spending programs than housing. And Donald Trump’s plan to eliminate taxes on tips, then Kamala Harris snatching the suggestion, has also propelled that idea to the forefront.
Housing Headaches: In most markets, land cost is the major component of the final selling price of a house, particularly in Florida. The closer to the beaches, the more expensive the property. However, no matter where the property is located a lack of inventory is keeping all home prices very high. Sellers don’t want to pay the high capital gains tax and borrowers can’t afford the high mortgage interest rates and escalating prices.
According to the Wall Street Journal a home that cost $303,600 in January 2021 now costs $422,600. Mortgage rates that were 2.8% then are now 6.8%. Home prices 40% higher have combined with mortgage financing costs up 125% to double new home buyers’ average monthly payment, to $2,671 from $1,247 says the WSJ.
The National Association of Home Builders estimates that government regulations add a total $94,000 or 23.8% to the cost of a house. The Harris-Biden energy, environment and labor mandates are driving these prices upward and they want even more. This is government price gouging caused by too much government.
Kamala Harris’s only plan to relieve the middle-class financial squeeze is by promising to buy their votes by doling out more “free” dollars that will fuel even more inflation.
She wants to pay people $25,000 along with a $10,000 tax credit to buy houses. Will the government eventually start bailing out unpaid mortgages and credit card debts – just like it’s paying off dead beats who refuse to pay back their student loans?
Where is the money coming from for all those trillions of dollars in housing bailouts?
“When the Fed prints money, that causes inflation,” says Leigh Brown , a real estate broker and best-selling author critical of Harris’s plan. “So when you add $25,000 in ‘free money’ to a house, you just drove the cost up by $25,000.” Sellers will just add that sum to the selling price.
Instead of giving taxpayer money to first-time home buyers, which will increase demand and put further upward pressure on prices, Donald Trump wants to cut regulations and increase supply, to drive prices down.
Part of Trump’s plan is to deregulate and make more federal land available to home-builders. This significant increase in the supply of land for home building will result in lower land prices which puts downward pressure on home prices.
The federal government owns a staggering near-650 million acres of land, which accounts for roughly 28% of all land in the country.
Another solution Trump could consider is a one-time capital gains exclusion for folks 60-years-old and up who have lived in their homes for at least 8-10 years. That would certainly appeal to many Floridians, particularly in growing retirement areas like Amelia Island.
This would be anathema to Democrats who want to increase the capital gains tax, but it could very well be a winning issue for the GOP as it has an appeal to both younger and older voters. It offers economic benefits to all age groups everywhere without the government taking tax money from one group to give to the other or printing more “free” money to hand out, thus increasing the 35 trillion dollar national debt and inflation.
Many seniors are aging in place because they don’t want to get hit with a huge capital gains tax bill on the sale of their homes.
Another solution is to make all low-interest-rate mortgages assumable to new buyers or the mortgage holder when they purchase a home. There are a lot of home owners sitting on mortgages of 3 percent and less, compared to the almost 7 percent rates today.
These two proposals would enable seniors to move out of their large homes with a sizable profit, enabling growing young families to afford a home and be able to move into starter homes.
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No Taxes On Tips! Good Or Bad Idea? Kamala Harris quickly adopted Donald Trump’s “No Tax on Tips” mantra during the DNC convention assuring those earnings tips that they may get some kind of tax relief no matter who is elected.
Currently in Florida employers of tipped employees must pay their employees minimum wage, but they can count the tips the employees receive toward it up to the maximum of $3.02, the allowable Fair Labor Standards Act tip credit of 2003. So the direct wage they must pay is the minimum wage minus $3.02.
The current minimum wage in Florida is $12 an hour, so the tipped minimum wage is $8.98. Both will go up a dollar each until they reach $15 an hour for non-tipped employees and $11.98 for tipped employees.
Despite what would seem to be obvious benefits to tipped employees Democrats claim the potential loss of federal revenue is a primary concern with no tax on tips proposals. Others say not taxing tips would give wait staff a significant financial advantage over other workers, such as cooks and dishwashers, who do not typically earn tips.
Some data also indicate that many in the U.S. support the idea of tax-free tips. For example, a recent poll conducted by the polling and strategic consulting firm Redfield & Wilton Strategies found that 67% of Americans (across party lines) oppose taxing tips received by service workers.
Harris hasn’t specified whether her copycat proposal would apply only to the federal income tax.
If the No Tax on Tips Act, introduced by Senator Ted Cruz (R-Texas), is any indication, the Trump exemption would likely only apply to federal income taxes.
So, how much could a no-tax-on-tips plan save a typical tipped worker? Tip earnings are hard to describe since the amount varies drastically based on the type of service that workers provide, as well as local minimum wage laws. But the Tax Foundation offers an example: Say a server earns $19,000 per year in wages plus $15,000 in tipped income. Their adjusted gross income is $34,000. They take a standard deduction of $14,600, which leaves them with $19,400 in taxable income. Under this example they owe $2,096 in federal income taxes.
With a no-tax-on-tips policy in effect, their adjusted gross income is $19,000 since the $15,000 income in tips isn’t considered taxable. They take a standard deduction of $14,600, which leaves them with $4,400 in taxable income. Under this example, their tax liability is $440. It’s the difference of $1,656 from the previous example.
The tax benefit presents a double benefit to owners: a tax benefit that appeals to workers and an opportunity to save money by shifting the pay burden from owners to customers.
Many businesses that employ tipped workers support the plan. Cruz’s plan would not limit the exemption by industry and income. Two of the biggest associations for the top tipped industries — the National Restaurant Association and the Professional Beauty Association — both endorsed Cruz’s proposal.
“Tipped employees are a critical part of the restaurant industry, and anything that strengthens their economic condition is a positive for them,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association endorsing Cruz’s bill. “The ‘No Tax on Tips Act’ would provide immediate tax relief for more than 2.2 million restaurant employees and their families, putting more money in their pockets at a time when we’re all feeling the squeeze of higher prices.”
Kamala Harris copied Donald Trump’s proposal. However, she hasn’t released any details on it yet. Trump is probably going with the one favored by Texas Senator Cruz or a variation.
The proposal would have to pass through Congress and whether it will generate enough bipartisan support to eventually become law remains to be seen.
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Drunken Logic! Recently, while sitting in a pub near a guy who owns a local eatery, I showed him the sticker below telling him I include one of them with my payment at restaurants when I pay my check.
To say he became unhinged is an understatement. He profanely began shouting at me, screaming that I was “A stupid @#%$&.” He then waddled off, only to reappear a minute or so later continuing his obscene tirade shrieking at me in a bellowing slur: “You are a stupid &%*&$” among other vulgarities. He added that he would like to “knock my teeth down my throat.”
The startled folks sitting with me agreed that his was not the most persuasive or eloquent presentation we‘ve heard on this topic. He eventually staggered off into the night and it’s safe to say I’ll hopefully never encounter him again. I have no idea what triggered this lout and can only assume that customer service at his place when he’s there is not its strength. Why would a restaurateur so viciously and profanely oppose letting their servers keep more of their tip money? Any ideas other than a drug or alcohol-fueled tirade? Or he’s a Democrat come unglued.
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Remember This Before Voting: “Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.” – Milton Friedman
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Fuzzy Math: The bi-weekly Fernandina’s print News Leader far-left columnist Chuck Oliva penned a piece earlier this month intending to mock a Heritage Foundation mailer that arrived in his mailbox. He wrote that the conservative outfit’s message contained a statement claiming that it has 23,033 members in Florida.
Using the fuzzy arithmetic of Bidenomics and anxious to pooh-pooh Heritage, Oliva wrote: “24,033 is 0.001% of the population of Florida. This figure was presented as a boast but shows how far short of the mark the modern conservative wave fell.”
Oliva’s convoluted calculations actually display how far short of the mark his intended slight of Heritage landed. If, as he claims, .001% of Florida’s population is 23,033, then Florida would be cheek-to-jowl with 2,400,000,000 residents, exceeding the populations of India and China combined.
The 23,033 Heritage Florida members are actually 0.1% of Florida’s 23,000,000 population
It’s understandable why this New York transplant stares at his shoes, refusing to show his face in his mug shot?
Tracy Dishman, the editor of the News Leader apparently adopted her math-deprived columnist’s reckoning skills as the headline in that pathetic paper’s post-election edition dated August 23 screamed: “Nassau Decided 2024: Election Results – High Voter Turnout in Nassau County”
This is Democrat math at its best,” said a friend of mine who laughingly pointed out the front page blunder. Ms. Dishman, an editor who doesn’t edit or proofread, bylined the story that went on to babble: “Nassau voters demonstrated their civic duty in impressive numbers.”
There are 75,406 registered voters in Nassau County and only 22,481 of them, or @29.81% voted. These unimpressive numbers illustrate that Ms. Dishman’s concept of simple math is as pathetic as her editing and writing skills.
The across the bridge Yulee News, once again displayed why its readership and advertising numbers are surging with its factual and accurate election reporting in a piece bylined by Melissa Mitchell, the DAY AFTER the election. This weekly paper’s August 22, front page headline blared: “Voter Turnout Falls Short in Recent Election: Participation at 29.81%.” Ms. Mitchell went on to illustrate with her accurate article why her paper’s popularity is growing so rapidly. The folks there can write, do simple math and display common sense in their news reporting.
Dave, I like the idea of giving senior long-time homeowners a one time break on capital gains taxes. but you should consider a different option, once promoted by the Heritage Foundation, and likely still supported by therm. Index capital gains against inflation, and tax that amount. The idea is that if your asset has doubled in value, and the CPI has also doubled, you are at best even when you sell the asset. It does not improve your standard of living.
As to tips, I do not know how things work in Florida, but in DC, my hometown, servers shared their tips with the bus boys and the kitchen help. Part of the culture, and the bus boys can ruin a servers day without doing anything to get themselves in trouble.
Dave, in case you haven’t figured it out, which apparently is the case, Trump is the anti-christ.
Dear Dave Scott:
I’m glad to see that you’ve been attracting mortals that can identify The Anti-Christ within your readership. I wait for their learned observations all week.
Duke
Oliva wrote: “24,033 is 0.001% of the population of Florida. This figure was presented as a boast but shows how far short of the mark the modern conservative wave fell.”
Oliva’s convoluted calculations actually display how far short of the mark his intended slight of Heritage landed. If, as he claims, .0001% of Florida’s population is 23,033, then Florida would be cheek-to-jowl with 2,400,000,000 residents, exceeding the populations of India and China combined.
I’m confused. Which percentage did Oliva use? In one sentence you wrote that he said, 0.001% and then you wrote that he said, .0001%.
.001%
Sorry, Dave. I’m not a fan of Oliva, but it’s your math that’s fuzzy.
He said, “24,033 is 0.001% of the population of Florida.” That is correct. He never said, .0001% if you quoted him correctly. You typed, .0001%, not him. You tried to fix your mis-type and you made it worse by changing it to .1%. You did respond by replying, .001%, which makes his number correct. We need to tighten up our math if we’re trying to make a point… Unless I’m the one with the fuzzy math problem. If so, then I stand corrected.
Thanks for another outstanding blog.
The only problem with assumable mortgages is small banks can’t afford that. With drastically increased interest rates at the incredible pace, destroys small banks business model. They are paying considerably more interest to savers. Their income sources are mostly returns on their loans which is significantly less in interest payments then they are taking in. They don’t have the revenue streams of larger banks.
Dave, it should be noted that if you have lived in your house for 2 years as your principal residence, there is already a $500,000 exemption (if filing joint; $250,000 if filing single) in the capital gains for the sale of your home. There are other provisions for widowers.
Good comment and, interestingly, that wonderful piece of legislation was spearheaded by the democratic party!
Re: Drunken Logic Lout
This local restaurateur is gathering quite a reputation. Even I have been graced by his enlightenment. My suggested reading for him is: 1) ” The Blue Book”, 2) “The 12 Step Plan”, and 3) a treatise on how to recover from bankruptcy by any author.
Duke
Why doesn’t someone give us a hint as to who this guy is so that we can avoid his establishment?
Dave, I’m afraid capital gains tax exclusions for retirees are just not suitable in todays’s political environment. Surely seeing the word “tax” followed immediately by the word “exclusion” must be jarring to noted economists like Elizabeth Warren (D-Politburo). I’m not suggesting those two words can’t occupy the same sentence; for example, saying, “One must pay one’s taxes to the exclusion of all other considerations,” has a nice, progressive ring to it.
You will recall that Ms. Warren floated the idea of a “wealth tax” to give the feds access to money that had already been taxed a time or two, on account of some people having inexplicably accumulated too much of it.
Alas, the “wealth tax” scheme went over like a loud gastrointestinal emission in church—not because it was a bad idea (it was, but so what?), but because it was indelicately named; which is to say, named what it actually was, as opposed to its true meaning being concealed behind a pithy euphemism.
Consider the new and improved Kamala Harris/Karl Marx scheme of taxing “unrealized” capital gains. Sounds vaguely reasonable to the untutored, as long as they don’t think about it much (and Kamala enthusiasts won’t).
Bought your house for $400,000 but it’s worth $500,000 now? Pay up on the difference, pal.
It’s one thing to tax people on money they receive, then tax them again when they spend it. Like frogs on low boil, we’ve all gotten accustomed to that. But proposing to make people pay taxes on money they haven’t even seen yet, and maybe never will? It’s inspired!
I’m not sure if you’re intentionally misrepresenting Harris’ proposal or if you’re a victim of FOX News. 1. The proposal is targeted towards those with a net worth of at least $100 million. So unless you’re one of the approximately 11,000 people who can lay claim to that kind of wealth, put your sword down. 2. The proposal is aimed at capital gains on stock investments (tradable assets), not real estate as illustrated by your example. And again, it only applies to the uber-wealthy whose net worth exceeds $100 million. But I’m sure they’re extremely grateful to you for fighting on their behalf to ensure they don’t pay taxes while employing the “Buy, Borrow, Die” strategy.
Richard, those programs are ALWAYS aimed at the “uber-wealthy” when first proposed, but they invariably creep into the lives of the less affluent (call it “trickle down misery”). There are of course other ways misery flows ever-downward from confiscatory tax policy—but I digress.
I looked it up: The top marginal tax rate when the federal income tax scheme was implemented in 1913 in order to pay for World War One was 7% on an income of $500,000 and up—and that at a time when a $500,000 annual income was a breathtaking thing to contemplate.
Now, more than a century later, a top marginal rate of 7% would be delightful. I happen to be of the counter-intuitive opinion that a rate like that would flood the federal coffers with cash in the course of expanding economic activity out of all recognition—but I digress again.
The First World War came and went; the federal income tax came and put its feet up. It didn’t take long for politicians to become very fond of it, and they are fond of it still, and content indeed with the generally upward drift it has enjoyed over time.
Ms. Warren’s wealth tax scheme was intended to have another swipe at those whose net worth is measured at $50 million or more, not $100 million. But let’s not quibble; fifty XXL is a substantial sum. During the course of its accumulation many paychecks are issued, many products are made, many services performed, and many consumers consume. Many employees buy many houses and many cars to park out front. In the process of all that, taxes are paid; a lot of taxes of a lot of kinds over a lot of years.
I don’t have to be among the 128,000 Americans breathing in the rarified air of $50 million net to recognize that there’s nothing like whipping up a frenzy of envy and lust for other people’s money to energize the electorate—an energized electorate being the mother’s milk of politics. Nor do I have to be a member of that very monied class to see that someone else’s net worth, no matter how grand its sum and no matter how long it took to aggregate, doesn’t belong to Ms. Warren, Ms. Harris or any of their ilk. It simply isn’t theirs to give away.
Even Putin now has what y’all keep calling “TDS”. Interesting.