AFFORDABLE HOUSING: IT’S NOT JUST FOR THE POOR ANYMORE

Apartment 23D and apartment 24D are two identical units in Hunters Point South, New York City’s largest affordable housing project in over thirty years.  Both contain 1100 square feet, have two bedrooms, all new modern appliances, exquisite views, and access to luxury amenities such.  The only difference between the two apartments  is their monthly rents: 23D’s is $4,200 and 24D’s is $2,800.

Now let’s look at several hypothetical tenants for these apartments: Continue reading

TAXES: “A SPECIAL PLACE IN HELL”

A little over a decade ago, I decided to take a very close look at the personal tax return that my accountant prepared for me.  After scrutinizing it very thoroughly, what stuck out most in my mind was the recalculated dividend and capital gain rates after they went through the Alternative Minimum Tax (AMT) meat grinder.  Having worked in money management for many years, and incorporating the trade off between selling a security or not based on its being classified as a short term versus long term gain, as well as stressing to individuals the importance of the latter in their total net returns, I was disheartened to see that the “advertised” number of 20% or 15%, really did not apply to many individuals previously categorized as High-Net-Worth(HNW).  Back in the early 90′s, if you had a million dollars in liquid net worth, you were considered wealthy.  Though that number is laughable today, security sale decisions were based on the assumption that an individual was in the highest income tax bracket of 39%.  Thus having to pay only a 20% rate, or even better 15%, was a huge incentive to wait it out.  But the reality is that the advertised and politically trumpeted number of 15 or 20, is only applicable to the extremely wealthy.  At the lower end, the poor and middle class have minimal savings outside of their pensions and 401k’s.  Let’s be realistic: how much is a family of four making $100,000 a year, or even $150,000, going to save after taxes???  Thus they are not really subject to capital gains/dividend taxes, whatever they be.1  At the lowest income levels, there are no cap gains taxes, nor are there likely any cap gains, or capital for that matter.  But just when you squeeze into the upper middle class, and finally are able to accumulate some discretionary income, that is when the government throws you a curve ball to keep you in line. Continue reading

  1. One of the great things about being a blog, as opposed to a reporter, is one doesn’t have to hunt down the data on a statement like this.  It’s kinda like porn, when you see it you know it.  I know and you know there’s no way a family of four making $150,000 a year is going to sock away more than 5 to 10 grand after taxes …a pittance. []