From Georgia State University and the department of “let’s just all live in uniform state sponsored mud huts“, comes this latest inanity, blaming carbon emissions on your ability to get a tax deduction for the American Dream of owning your own home. I wonder what sort of home Kyle Mangum lives in?
US housing policies increase carbon output, Georgia State University research finds
Land use policies and preferential tax treatment for housing – in the form of federal income tax deductions for mortgage interest and property taxes – have increased carbon emissions in the United States by about 2.7 percent, almost 6 percent annually in new home construction, according to a new Georgia State University study.
Economist Kyle Mangum, an assistant professor in the Andrew Young School of Policy Studies, measures the effect of various housing policies on energy use and carbon output in “The Global Effects of Housing Policy,” which he recently presented at the IEB III Workshop on Urban Economics in Barcelona.
Mangum’s empirical study uses data on local construction activity, housing consumption and density, labor and materials cost, and local populations and incomes for the nation’s 50 largest metro areas, ranking them by annual carbon output per person.
Policies that affect the amount of housing consumed per capita and housing density are the two major drivers of carbon savings, he finds.
“Larger homes consume more energy,” Mangum said. “Lower density home sites increase gasoline use. Also, many ‘easy-building’ Sun Belt regions that have attracted more new home building are higher energy-use locations.”
His research suggests removing federal tax subsidies for housing and updating land use regulations to encourage higher density in higher energy-use locations would lower the country’s overall energy use, reducing its carbon emissions.
“I find that the federal tax treatment of housing has added a nontrivial amount of carbon output by increasing housing consumption,” he said. “Also, imposing stricter land use regulations in high carbon output cities would decrease the nation’s overall amount of carbon output by approximately 2.2 percent – about 4.5 percent in new construction – primarily by decreasing the amount of house used per person and then by encouraging movement to more efficient low-carbon cities.”
Mangum also finds:
High carbon cities contribute about twice as much per person as the low carbon cities;
Many quickly growing cities are above the national average in energy consumption;
Cities with more housing area per person use more electricity per person.
Download a copy of Mangum’s working paper at http://www.ieb.ub.edu/files/PapersWSUE2014/Mangum.pdf.
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
[snip – let’s not go there -mod]
[snip no, that’s not it – wrong address, let’s not go there -mod]
“Smart Growth” is a Federal program based on “regionalism” which Obama supports and backs because suburban wealth in his mind should be redistributed to the cities. Stanley Kurtz:
The NGOs and the UN also are involved in the Wilderness Project, which would return all land to wilderness and forbid human presence except in densely packed cities. You can see this agenda embedded in seemingly innocent comments here.
Examples of land being slowly cordoned off already are the closures of beaches, caves, forests, and other places maintained by parks. The huge public transportation rail projects also are part of the infrastructure for Smart Growth.
This mortgage deduction seems to be an American thing. I would be curious to know how much a person saves in taxes on a $400,000 mortgage. And if you sell your primary residence, do you pay capital gains on the appreciated value or is this tax free?
We should end the home mortgage deduction, but not because of anything to do with carbon or emissions. This deductions distort the market and do little to help the homeowner. The real beneficiaries of the home mortgage deduction are the real estate agents. Your home costs more because of the deduction. This gives agents higher commissions. We should also drop the federal income tax rates as well. Move towards a flat tax, or even a hybrid “graduated flat tax” with low rates and few deductions.
The ability of a young family to purchase a home and sell it years later in order to move to a better home is one of the reasons the US does not have a permanent population which is poor. In other words, the people who lived in poverty 10-15 years ago are not the same people as people who live in poverty today. This attack on the wealth of US citizens, which is largely in the form of home ownership, is a thinly veiled attack on the middle class. This policy would effectively outlaw the middle class, and make social mobility impossible.
I think this is the end game, and if enough people realize what the goals of the UN and the environmentalists are, then we can begin to respond effectively, in order to preserve land ownership. I am surprised that so few people recognize the blatant, bold push to make land ownership into a class privilege, just as it was in Europe in the dark ages.
According to Stanley Kurtz states will receive more funding for policies which increase population density. That is essentially bribery of the states and has worked once already in nationalizing education. Also, watch for legislation which raises the minimum wage to $15/hour in the cities. I believe this is a method of attracting young people to cities.
The universities need to teach neolithic architecture. That’s where we are headed.
Once again the path of the climate alarmists invokes The Law of Diminishing Returns.
People wanting to be people runs counter to the central plan of a population of state serving biological units. They get better at managing that problem every day.
The reason that the housing policies are in place is because it has long been shown that higher levels of home ownership boosts the economy. Are they really prepared to give up that economic boost in the name of questionable science?
IEEE is also promoting so-called Smart Cities, which require in the Institute’s words, “a lot of technology”:
“Overhauling a city’s infrastructure and services requires a lot of technology: telecommunications, wireless networks, a smart grid, sensors, facial-recognition systems, renewable energy sources, integrated transportation, crowdsourcing, and data aggregation—the list goes on and on. Who better to understand how to put it all together and make it work than members of IEEE?
“Designing successful and sustainable smart cities requires careful planning of energy, water, transportation, and communications facilities and for the citizens’ public health and safety,” says Gilles Betis, chair of the IEEE Smart Cities Initiative. The initiative is a global, multidisciplinary effort through which IEEE seeks to help municipalities address the huge demands on land, resources, and services associated with population growth.” emphasis added
http://theinstitute.ieee.org/technology-focus/technology-topic/guadalajara-smart-city-of-the-near-future
Frankly, he is correct. The Administration needs to use Executive Fiat to immediately rescind these subsidies and put a tax on all new home construction.
/sarc
In the US, the federal deduction is for mortgage interest, not the entire mortgage. In NJ, say, you could easily spend $400,000 on a modest, 3-bedroom 2-bath home. Let’s say you put down 20% or $80,000 so there is a mortgage balance of $320,000. Your monthly payment on a 30-year loan at 5% would be $1,717.83. You first month’s interest is $1,333.33. Your total interest paid for the first year is $15,892. As a deduction, that amount would be worth about $5,000 in tax credit, depending on your marginal tax rate. Not to mention the real estate taxes which are also deductible. For that house in NJ, you might pay anywhere from $7,500 to $12,000 per annum, the deduction of which might be worth $2,500 to $4,000 off your taxes.
Of course, as time moves on, the interest deduction is of less and less value, due both to the declining absolute value and the time value of money. The beauty of it from the homeowner’s perspective is that (theoretically) due to inflation and the expected progression of wages, the fixed cost of the mortgage takes a smaller and smaller percentage of the takehome pay, making home ownership more affordable as a function of time.
I do not recall when, but a change in the tax code first allowed for a one-time capital gains free sale, and now I believe that any sale of a primary home is free of federal capital gains.
I don’t care if they do away with the mortgage interest deduction.
While it’s proper for the government to collect revenue, I don’t think that the tax code should be used for promoting specific economic/human activity. But that’s a separate debate.
I do though find it ridiculous to use anything based on “carbon” to be the reason to alter the tax code.
Who cares what the stupid reason is? The mortgage interest deduction has got to go. All the deductions need to go. Lower the rates and ditch the deductions, which are merely social engineering.
Alarmists continue to scratch for justification of their control-freak notions.
People living in mud huts emit much carbon from cooking fires. (Oh, excuse me, at root alarmists want fewer people so maybe there would not be an increase.)
Probably a hopeless wish that they would put the same creativity and time into pro-human endeavours.
Rujholla said on June 17, 2014 at 10:38 am:
When haven’t they? Although they will give rosy projections of the jobs created and money “invested” crafting the “better, greener” housing and tout the energy savings as proof their way is best. The people will be happy to be paid for building all the altars of the Green Goddess, then politely ignore the shrieking as it would never be they who are forced to lie down on them.
Besides, home ownership is an anchor, suitable for a lifetime. There are many economic refugees migrating in search of real work, being forced to accept government aid and housing. Plus the projections are for billions of wandering climate refugees.
So why would they care if any of us own a home, it’s a detriment. Unless you’re of the elite and political classes, and can afford a home anyplace you’ll likely stay at more than a week in a year.
DJ Hawkins & Steve from Rockwood,
There is a $250,000 federal credit on net appreciated value if a house is held for 2 years or more. It is $500,000 tax-free for a married couple. A lot of folks have sold, and bought up every couple of years to take advantage of that tax free profit.
Of course, that requires a steadily rising real estate market.
If you “buy up” you do not use the one time exemption ($250/500k). It is only when you cash out or buy down that you have to use it. And it can only be used once. So if you go from a $500k to $400k house this year, you have used your exemption.
‘Stephen Richards says:
June 17, 2014 at 1:21 am
Utter stupidity. Time to throw students out of uni when they graduate and get them into real work.”
You know, that really would be a sensible thing to do – force graduates to work for a year before they can apply for the opportunity to seek a higher degree, be it a Master’s or Doctorate. That would also require them to, obviously, taste reality again to qualify for the doctoral program. It does seem these people live in a world unlike the one I live in. That just might be enough experience to help them understand the realities of life. It is obvious academia isn’t supplying them with any grounding experiences whatsoever.
This will probably draw lots of negative attention, but I personally view the home mortgage tax deduction as a terrible policy.
It has been a key part – along with Proposition 13 style property tax limits – in the financialization of the US economy.
But the good news is: it is highly unlikely that banksters seeking to attack the home mortgage tax dedcution in favor of more subsidies for alternative energy – they’re going up against a much, much bigger gorilla.
As a Canadian I never understood the tax inequity the Home Mortgage tax dodge causes in America?
From dbstealey on June 17, 2014 at 11:25 am:
ABC News keeps telling me about the surging housing market, prices are rising, construction jobs up. I drive down the streets and note how many House For Sale signs are up, and still up.
They point to the big suburb cities near NYC, LA, DC, San Fran and Seattle. An example was a smallish house in New Jersey, went for something like 3/4 of a million. Out the back door, there was a scenic creek flowing right through the property, walk a few flat yards and put your feet in.
The siding look tired, it’ll need a new roof soon, you can see the wear patterns on both. It’s right next to the road. Anyone foolish enough to build that close to a creek better have good automatic sump pumps and a hefty flood insurance plan. Around here it might go as low as $70 thou if it’s out in the boonies.
Sun Spot said on June 17, 2014 at 11:43 am:
The Answer Is: Maybe.
more soylent green! says:
June 17, 2014 at 10:04 am
“We should end the home mortgage deduction, but not because of anything to do with carbon or emissions. This deductions distort the market and do little to help the homeowner. The real beneficiaries of the home mortgage deduction are the real estate agents. Your home costs more because of the deduction. This gives agents higher commissions. ”
That is sooooooooooooooooo wrong. Please explain how taking a tax deduction on the interest you pay on your mortgage drives up the cost of the home?
As clearly explained by D.J. Hawkins (June 17, 2014 at 10:53 am), a home owner gets to deduct the interest paid during the year on a home mortgage but you must itemize your deductions in order to use it. When your standard deduction is higher than all your itemized deductions you cannot use the mortgage interest deduction.
Keep in mind this is a tax deduction not a tax credit. Example: if you make $60,000 per year and you paid $12,000 in interest on your mortgage and are able to use the deduction, your adjusted taxable income becomes $48,000.