James Musters: ‘A handy state-by-state map, showing how far median incomes have dropped over the past six years.’
☞ The average income has fared better. (When Bill Gates visits a homeless shelter, the occupants are, on average, all millionaires.) But, adjusted for inflation, the median – that income level at which as many people fall below as above – has fallen.
It’s pretty shocking, viewed on this map. And don’t miss the comment beneath the map. (‘Oh well no wonder housing prices have gone up so much in California! Everyone knows that as median income falls, prices go up because of the magic housing fairy!’) Which leads right into:
THE REAL ESTATE BUBBLE
This will not end well – at least I don’t see how it can. In very small part:
Most of the pain will be borne by ordinary people. And it’s already happening. More than a fifth of option ARM loans in 2004 and 2005 are upside down – meaning borrowers’ homes are worth less than their debt. If home prices fall 10%, that number would double. “The number of houses for sale is tripling in some markets, so people are not going to get out of their debt,” says the Ford Foundation’s McCarthy. “A lot are going to walk.”
THE ESTATE TAX
Stephen Gilbert: ‘I wonder why you never mention the most basic inequity in the Republicans’ plan to eliminate the estate tax. If I were to die tomorrow, my shares of Berkshire Hathaway, which cost me about $1200 each, would be inherited at a basis of $96,000. The shares could be sold and the $94,800 gain would never be taxed. Republicans repeat the old saw about ‘double taxation’ – that the accumulated wealth of the wealthy was already taxed. But that is often not the case. Much wealth is passed down without any income tax ever having been paid.’