International Investing

From Bloomberg:

The House Ways and Means Committee, seeking revenue to help homeowners in foreclosure, unanimously approved higher taxes on the sale of vacation homes.

Why would they raise real estate taxes when the whole market is in the middle of a slump?

The Realtor group applauded the broader legislation, which would spare homeowners who have their mortgages forgiven from a surprise tax bill from the Internal Revenue Service; U.S. law generally taxes the value of forgiven debt as high as 35 percent.

The taxes are being raised to makeup for the handouts to those who took on too much debt. In other words, they are punishing the responsible to help the irresponsible. The idea of cutting the tax and shrinking the State is apparently inconceivable. So, to keep the expansion of the government at a net gain, taxes must be raised.

The timing couldn’t be worse: this week alone the Shiller US Home Price Index had the sharpest drop on record while existing home sales fell 200K month-over-month. Higher taxes can only exacerbate the decline and the moral hazard of bailing out irresponsible homeowners will encourage recklessness - but what else can you expect from politicians?