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I must be the only one. Our current mortgage is a 30-year fixed at 5%, what I viewed as extraordinarily cheap. However, today I can refinance into a 15-year mortgage at 3.6%. I would do that in a heartbeat – with almost the same mortgage payment I would be getting our home paid off in half the time. And as a policy matter, would that be a good thing?

My bank doesn’t charge nearly a thing for closing costs on a refinance. But of course, New York State charges a mortgage transfer tax on the transaction. Can anyone come up with any justification for the existence of the tax? It even seems to me to have regressive properties, despite the higher taxes on larger homes.

In Monroe County, where I live, the tax is 1% of the mortgage value – so I’d be looking at $1,800 in payments to the state. Even if in the long run that works out to less than I’d be saving by refinancing, I absolutely refuse to write another $1,800 check to the government. Think of just how utterly stupid that tax is – if I refinance again next year, I’d pay nearly that same amount, and if I sold the house a year later, to a person mortgaging it for the same amount, they would have to pay this tax, and so on. It’s nothing more than a racket. And there is no force for doing away with it, anywhere.

So, this is mere anecdotal evidence, but I am one person who chose not to do something that would be good for himself and for his cash flow (and therefore the local economy) because of the existence of one, small, tiny tax. And there are literally thousands of these taxes proliferating, and millions of people like me. I must have an agenda – the Koch Brothers paid me to not refinance my house just to make a point.

I guess someone will accuse me of igniting a straw man above, and they may have a point. But far too many people unthinkingly comment on people not responding to increased marginal income tax rates as if, even if that were true, then large swaths of things could be taxed without any adverse consequences. That is malarkey.

5 Responses to “No, People Don’t Respond to Taxes, Not at All”

  1. Speedmaster says:

    Wow, this freaky. I just got of the phone with Wells Fargo an hour ago to refi my house.

  2. Harry says:

    Two days ago I was listening to NPR talk radio. They were talking about our economic mess, and got to the final years of Jimmy Carter, and the first few years of Ronald Reagan, and large increases in GDP, which as I recollect started around August 1982. I got excited, but then the NPR pundit said Reagan had nothing to do with it — it was all Paul Volcker!

    Now, Volcker did what he had to do to stem stagflation.

    But this guy did not acknowledge in the slightest way that there was any effect from lowering marginal rates, or decontrolling the oil business.

    It is as if they were not there, but the moderator of this show was, the sister of one of my fraternity brothers. She should know better.

  3. Rod says:

    Last night Ben Stein said he didn’t know of any study showing that lower tax rates led to economic growth. Another shout-at-the-TV moment: “HAVEYA EVER HEARDA DA LAFFA COIVE, BEN?” I exclaimed. I guess Ben just doesn’t pay attention to how much of his pay gets taken every month by the federal government, California and New York, New York City, Beverly Hills and the other bloodsuckers who demand a big cut of the next dollar (aka dolla, as in “fidollla”). Call the roll for econ class: “Stein? Stein?….. Stein?…).

    And don’t forget the school districts where Ben lives. And their respective counties. And the gas taxes in NY, CA and CT. (Maybe Ben has a house in Greenwich, too.) I bet Ben does not start working for himself until August, or maybe even September, when you figure in the alternative minimum tax and the double secret probation tax levied on him by the BO admin.

    Ben also remarked about how high tax rates before the Reagan cuts did not seem to hamper economic growth. Ben, until inflation took off in the late seventies, a hundred grand a year was considered a very high salary, but when one approached the seventy percent marginal tax rate, one had plenty of tax shelters to resort to, like stock options (nothing is too good for the CEO of a company, especially when he has friends on the board of directors who don’t pay much attention to the interests of the shareholders). And you had the underground economy and things like bearer bonds.

    As for Wintercow’s reluctance to pay another dime to New York State, it’s his freedom to do so, even if it means he might forego some savings on his mortgage. Economic liberty is only a part of personal liberty, which is what living in this great country is all about.

  4. Rod says:

    ‘Hoida da” is the correct dialect.

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