A Call To Ban Share Buybacks… Immediately

American corporations are simply raking in profits. Some are so bloated and cash-rich they literally can’t figure out what to do with it all. Apple, for instance, is sitting on nearly a quarter of a trillion dollars — and that’s down a bit from earlier this year. Microsoft and Google, meanwhile, were sitting on “only” $132 billion and $63 billion respectively (as of March this year).

However, American corporations in general are taking those profits and kicking them out to shareholders, mainly in the form of share buybacks. These are when a corporation uses profits, cash, or borrowed money to buy its own stock, thus increasing its price and the wealth of its shareholders. (Big Tech is doing this as well, just not fast enough to draw down their dragon hoards.) As a new joint report from the Roosevelt Institute and the National Employment Law Project by Katy Milani and Irene Tung shows, from 2015 to 2017 corporations spent nearly 60 percent of their net profits on buybacks.

This practice should be banned immediately, as it was before the Reagan administration.

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The most immediately objectionable consequence of share buybacks is they come at the expense of wages. Milani and Tung calculate that if buybacks spending had been funneled into wage increases, McDonald’s employees could get a raise of $4,000; those at Starbucks could get $8,000; and those at Lowes, Home Depot, and CVS could get an eye-popping $18,000.

Some economists are skeptical of this reasoning, arguing that wages are set according to labor market conditions. But if you set aside free market dogmatism, it is beyond obvious that this sort of behavior is coming at workers’ expense. Wall Street bloodsuckers are not at all subtle about it, screaming bloody murder and tanking stocks every time a public company proposes paying workers instead of shareholders. Indeed, it provides a highly convincing explanation for something that has been puzzling analysts for months: the situation of wages continuing to stagnate or decline while unemployment is at 4 percent. The answer is that wages are low in large part because the American corporate structure has been rigged in favor of shareholders and executives.

This raises an objection: What about dividends? (These are payments made directly to shareholders, as opposed to buying stock to increase their price.) Wouldn’t banning buybacks just lead to increased dividends?

It might. But buybacks are worse, for three reasons. First, selling shares is generally counted as capital gains, which are usually (though not always) taxed at a much lower rate than dividend payments. Secondly, where dividends are regular occurrences, buybacks happen at erratic intervals, making it easier for huge payments to slip by unnoticed.

More importantly, share buybacks incentivize corporate short-termism and Wall Street predation. Making a quick buck at the expense of the underlying corporate enterprise is easy: simply pressure the company into spending all its money on buybacks — or more than all; Milani and Tung find the restaurant industry spent 136 percent of profits on buybacks from 2015-17, through cash and borrowing — then sell the stock once the price pops up. Money that might have gone into badly-needed investment or debt repayment is now in your pocket, and if the enterprise collapses later, who cares? Not your problem — you’re already on to the next victim.

Dividends, by contrast, are a lot more amenable to the value investor who wants the company to succeed over the long term. In general, banning buybacks will make it somewhat harder for corporations to be turned into a wealth funnel for the top 1 percent.

That said, dividends payments are also out of control — enabled by low top marginal tax rates and special loopholes, plus a powerless working class — and should be wrenched down as well. Banning buybacks should be considered the first step in reining in the outrageous abuse of the American corporate form, not a panacea.

Before about 2005, postwar corporate profits had never reached 9 percent of GDP (save for a couple quarters in the early 1950s). Immediately after the financial crisis, they bounced back up to that level, where they remain to this day.

This is a social crisis for the United States. Having an economy rigged to suck the wealth out of society and place it in the pockets of a tiny, already ultra-wealthy minority is an extremely risky situation for a democratic state. We need big, aggressive moves to club down corporate profits, and start directing that money back into the country as a whole. Banning buybacks is a simple and straightforward way to get started.

Source: ZeroHedge

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Visualizing Every US Valuation Milestone From 1781: The Road To A Trillion Dollars

The market has been buzzing about Apple’s $1 trillion market valuation.

It’s an incredible amount of wealth creation in any context – but, as Visual Capitalist’s Jeff Desjardins notes, getting to 12 zeros is especially impressive when you consider that Apple was just 90 days from declaring bankruptcy in 1997.

Today’s chart shows this milestone – as well as many of the ones before it – through a period of over 200 years of U.S. market history. It was inspired by this interesting post by Global Financial Data, which is worth reading in its own right.

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Courtesy of: Visual Capitalist

MARKET CAP MILESTONES

Over the last couple of centuries, and with the exception of brief moments in time such as the Japanese stock bubble of 1989, the largest company in the world has almost always been based in the United States.

Here are the major market cap milestones in the U.S. that preceded Apple’s recent $1 trillion valuation, achieved August 2nd, 2018:

Bank of North America (1781)
The first company to hit $1 million in market capitalization. It was the first ever IPO in the United States.

Bank of the United States (1791)
The first company to hit $10 million in market capitalization had a 20 year charter to start, and was championed by Alexander Hamilton.

New York Central Railroad (1878)
The first company to hit $100 million in market capitalization was a crucial railroad that connected New York City, Chicago, Boston, and St. Louis.

AT&T (1924)
The first company to hit $1 billion in market capitalization – this was far before the breakup of AT&T into the “Baby Bells”, which occurred in 1982.

General Motors (1955)
The first company to hit $10 billion in market capitalization. The 1950s were the golden years of growth for U.S. auto companies like GM and Ford, taking place well before the mass entry of foreign companies like Toyota into the domestic automobile market.

General Electric (1995)
The first company to hit $100 billion in market capitalization was only able to do so 23 years ago.

THE OTHER TRILLION DOLLAR COMPANY

Interestingly, Apple is not the first company globally to ever hit $1 trillion in market capitalization.

The feat was achieved momentarily by PetroChina in 2007, after a successful debut on the Shanghai Stock Exchange that same year.

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And as we noted previously, the $800 billion loss it experienced shortly after is also the largest the world has ever seen.

Source: ZeroHedge

Homeownership Losing Edge To Renting

Owning a home is generally viewed as a better deal than renting, but in cities with exploding home prices and relatively flat rents, that may not be the case anymore.

According to Trulia, it now makes more financial sense to rent than buy in the nation’s two most expensive markets — San Jose and San Francisco. The balance is also shifting in favor of renting in a few other high-cost cities, such as Honolulu, Seattle and Portland, Oregon, according to a recent study by the San Francisco-based company.

Trulia said the overall U.S. market still solidly provides buyers with a financial benefit. But in the five years since Trulia began estimating the financial advantages of buying versus renting, this is the first time renters have come out ahead in any of the major metros it tracks.

In San Jose and San Francisco, renting was 12 percent and 6 percent cheaper, respectively, for the consumer than buying a home, Trulia said. San Francisco and San Jose are outliers, though. The National Association of Realtors, for example, has estimated that for a person earning $100,000, just 2.5 percent of the June listings in San Jose and 9 percent in San Francisco were affordable. Trulia reported that buyers still have a significant advantage over renters in places like Detroit. 

Trulia estimated that on a nationwide basis, buying a home was 26 percent cheaper for a consumer than renting as of last month. This is the narrowest gap in five years, and has come down from 41 percent in 2016, according to Trulia. The key factor in closing the gap is that house prices have increased steeply along with mortgage rates, while rents are remaining relatively stable. In San Jose, for example, home prices have jumped up 29 percent in a year, while rents were unchanged. Home values rose 14 percent in San Francisco, and rents fell by 3 percent. 

“There are a lot of factors,” Trulia’s Senior Economist Cheryl Young said during an interview on Thursday. “Obviously, mortgage rates are going up. That is going to tip the scales a little bit toward renting, but also home value appreciation is far outpacing rent growth right now. So, rents are pretty much cooling out. As they cool down and home prices track up, that margin between buying and renting starts closing.”     

 Young said the balance could tip in favor of renters in other cities as well.  

 “There are markets that are always close to that margin, and things that could tip it,” she said. “If mortgage rates were to rise and we still see rents flattening and even decreasing as they have been in some places relative to rising home prices, we may see some markets tip.” 

Trulia’s calculations include forecasts on future rent and price appreciation, and also estimates on how much a renter can potentially earn by investing in other vehicles. Trulia assumes that the buyer will stay in the home for seven years, put 20 percent down on a 30-year fixed mortgage.

Other housing analysts told Scotsman Guide News that gauging the advantages of buying versus renting can be a tricky exercise. 

“The housing market doesn’t necessarily favor either one right now, as the choice of whether to be an owner or the renter is not a purely economic decision, but often includes the lifestyle decisions of an individual,” said Mark Fleming, chief economist for First American Corp.

Fleming also noted that in some of these high-cost cities, renters are in better position now to buy than when home prices were near their low point seven years ago.

“While housing prices are on the rise across the country, by historical standards they are still within reach in many markets,” Fleming said. “In fact, when you account for the historically low interest rate environment and rising incomes, consumer house-buying power is up nearly 24 percent since 2011,” he added.

Len Kiefer, deputy chief economist for Freddie Mac, said that rising home values tend to give the buyer a financial edge over the renter, who is gaining no equity.

“Certainly if we look back historically, homeowners have done pretty well relative to renters,” Kiefer said. “It doesn’t mean that it is going to be true in the future, but if you look at where our forecast is for the overall economy, we are still forecasting home prices to continue to rise at a pretty healthy pace over the next couple of years.”

Kiefer said in a few high-cost cities with high property taxes, homeowners will be hurt by new tax changes that eliminated or reduced homeownership perks in the federal tax code. This may give renters some advantage. He said the tax changes so far don’t seem to have reduced homebuyer demand significantly, though.

“Certainly in the high-cost, high-tax markets, places like parts of California, New Jersey, Illinois,  the cost of homeownership is going to be a little bit negative,” Kiefer said. “But if we look at actual data on what has happened in those markets,  it is hard to see a discernible impact in terms of slower overall activity that you could attribute to the tax law,” he said. Kiefer said rising prices and higher rates were likely making homebuying less appealing, however.

Renters have been less sold on the financial benefits of owning a home, according to recent Fannie Mae surveys. In January 2010, for example, 76 percent of surveyed renters saw an advantage in buying. That number has fallen to 68 percent as of the end of June. 

“Renters’ view of the financial benefit of owning has come down a little bit,” said Mark Palim, deputy chief economist for Fannie Mae. “That probably reflects that home prices are up substantially.”

Palim said that renters are still expressing a strong desire in buying homes for non-financial, quality-of-life factors. He said the improved economy and a surge in household formation has kept the buyer demand up in spite of rising home prices and rates. 

“Millennials have really moved into the market in a big way, and they are closing the gap relative to other generations,” Palim said. “People have far more financial means to afford a home and go out and buy a home, and that has translated into pretty brisk demand.”

Source: Scotsman Guide

Kushner Family Sells 666 Fifth Avenue Office Tower To Brookfield

Brookfield Asset Management has agreed to purchase the lease the office portion of 666 Fifth Ave. in midtown Manhattan from the Kushner family, the WSJ reported.

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“Given Brookfield’s experience in successfully redeveloping and repositioning major office assets in New York and other cities around the world, we are well placed to capitalize on that opportunity,” Ric Clark, Brookfield Property Group’s chairman, said in a statement.

The infamous “devil” tower with the “666” sign on the entrance, has been under scrutiny because Jared Kushner is married to Ivanka Trump, and is a senior adviser to the president. When the Kushner Cos acquired the building in 2007 for $1.8 billion, it represented a New York commercial real estate record and was made when Kushner was taking a leadership role in the business. It remained precarious for years, and potential deals became complicated after Mr. Kushner took the senior White House job.

While terms of the deal weren’t disclosed in a statement Friday, the WSJ notes that the proceeds would give the family enough to pay off the more than $1.1 billion of debt on the building and buy out its partner, Vornado Realty Trust, for $120 million so it can transfer 666 Fifth to Brookfield unencumbered.

The sale means that the Kushner family likely won’t make any money on its investment in 666 Fifth Ave.

In recent years, the building hasn’t been generating enough money to pay its debt service. Jared Kushner had already sold his stake in 666 Fifth to a trust controlled by other family members to avoid potential conflicts. Still, the talks between Anbang and his father ignited criticism that Kushner might use his position to help his family salvage its investment.

Brookfield, which is buying the property through one of its private-equity funds, also plans to invest more than $600 million in overhauling the 39-story building, giving it a new lobby, façade and mechanical systems, according to a person familiar with the matter.

The building has seen its rental payments suffer in recent years due to a relatively high vacancy rate but is viewed in real-estate circles as having potential due to its prime location on Fifth Avenue between 52nd and 53rd Streets.

The structure of the deal is different from what Brookfield and Kushner Cos. discussed in the spring. Back then, Brookfield was considering a deal in which it would essentially acquire Vornado’s 49.5% stake in the property and become partners with the Kushner family.

One of the uncertainties about the Brookfield purchase of the 99-year lease is how much of the current debt on the building is going to be repaid. In the 2011 restructuring, the debt was carved into two pieces—a senior piece and a junior piece. The senior piece is worth $1.1 billion and the junior piece has increased since 2011 to over $300 million, because interest on it has been accruing.

Kushner executives have been arguing that only the senior debt on the building has to be repaid, partly because 666 Fifth isn’t worth the total $1.4 billion of debt on the building.

The recent history of the building is remarkable.

The property has taken numerous twists, both financial and political. Kushner Cos. sold a controlling stake in the retail space for more than $500 million a few years after it purchased the tower in 2007, using most of the proceeds to repay debt.

But that wasn’t enough to shore up the property in the post-crash years. In 2011, Kushner Cos. renegotiated what was then $1.2 billion in debt and brought in Vornado as a 49.5% partner.

In 2017, soon after Mr. Trump took office, Mr. Kushner’s father, Charles Kushner, was negotiating with Anbang Insurance Group, a Chinese insurer with connections to Beijing government. The elder Mr. Kushner’s plan at the time was to use Anbang’s capital in a $7.5 billion plan to convert 666 Fifth Ave. into a 1,400-foot-tall mixed use skyscraper with retail, hotel and condominiums.

Soon after, the Anbang talks soon collapsed. Since then, Kushner Cos. has steered clear of any deals with sovereign funds, a decision which has made the firm rein in its ambitious plans for the site. The family also faced a deadline: the debt on the building needs to be repaid next year.

And thanks to Brookfield, that will no longer be Jared’s problem any more.

Source: ZeroHedge

Who Does America Really Belong To?

Not to Americans…

(Paul Craig Roberts) The housing market is now apparently turning down. Consumer incomes are limited by jobs offshoring and the ability of employers to hold down wages and salaries.  The Federal Reserve seems committed to higher interest rates – in my view to protect the exchange value of the US dollar on which Washington’s power is based.  The arrogant fools in Washington, with whom I spent a quarter century, have, with their bellicosity and sanctions, encouraged nations with independent foreign and economic policies to drop the use of the dollar.  This takes some time to accomplish, but Russia, China, Iran, and India are apparently committed to dropping  or reducing the use of the US dollar.

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A drop in the world demand for dollars can be destabilizing of the dollar’s value unless the central banks of Japan, UK, and EU continue to support the dollar’s exchange value, either by purchasing dollars with their currencies or by printing offsetting amounts of their currencies to keep the dollar’s value stable.  So far they have been willing to do both.  However, Trump’s criticisms of Europe has soured Europe against Trump, with a corresponding weakening of the willingness to cover for the US.  Japan’s colonial status vis-a-vis the US since the Second World War is being stressed by the hostility that Washington is introducing into Japan’s part of the world.  The orchestrated Washington tensions with North Korea and China do not serve Japan, and those Japanese politicians who are not heavily on the US payroll are aware that Japan is being put on the line for American, not Japanese interests.

If all this leads, as is likely, to the rise of more independence among Washington’s vassals, the vassals are likely to protect themselves from the cost of their independence by removing themselves from the dollar and payments mechanisms associated with the dollar as world currency.  This means a drop in the value of the dollar that the Federal Reserve would have to prevent by raising interest rates on dollar investments in order to keep the demand for dollars up sufficiently to protect its value.

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As every realtor knows, housing prices boom when interest rates are low, because the lower the rate the higher the price of the house that the person with the mortgage can afford. But when interest rates rise, the lower the price of the house that a buyer can afford. 

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If we are going into an era of higher interest rates, home prices and sales are going to decline.

The “on the other hand” to this analysis is that if the Federal Reserve loses control of the situation and the debts associated with the current value of the US dollar become a problem that can collapse the system, the Federal Reserve is likely to pump out enough new money to preserve the debt by driving interest rates back to zero or negative. 

Would this save or revive the housing market?  Not if the debt-burdened American people have no substantial increases in their real income.  Where are these increases likely to come from? Robotics are about to take away the jobs not already lost to jobs offshoring. Indeed, despite President Trump’s emphasis on “bringing the jobs back,” Ford Motor Corp. has just announced that it is moving the production of the Ford Focus from Michigan to China.  

Apparently it never occurs to the executives running America’s off shored corporations that potential customers in America working in part time jobs stocking shelves in Walmart, Home Depot, Lowe’s, etc., will not have enough money to purchase a Ford.  Unlike Henry Ford, who had the intelligence to pay workers good wages so they could buy Fords, the executives of American companies today sacrifice their domestic market and the American economy to their short-term “performance bonuses” based on low foreign labor costs.

What is about to happen in America today is that the middle class, or rather those who were part of it as children and expected to join it, are going to be driven into manufactured “double-wide homes” or single trailers.  The MacMansions will be cut up into tenements.  Even the high-priced rentals along the Florida coast will find a drop in demand as real incomes continue to fall. The $5,000-$20,000 weekly summer rental rate along Florida’s panhandle 30A will not be sustainable.  The speculators who are in over their heads in this arena are due for a future shock.

For years I have reported on the monthly payroll jobs statistics.  The vast majority of new jobs are in lowly paid nontradable domestic services, such as waitresses and bartenders, retail clerks, and ambulatory health care services. In the payroll jobs report for June, for example, the new jobs, if they actually exist, are concentrated in these sectors: administrative and waste services, health care and social assistance, accommodation and food services, and local government.

High productivity, high value-added manufactured jobs shrink in the US as they are offshored to Asia.  High productivity, high value-added professional service jobs, such as research, design, software engineering, accounting, legal research, are being filled by offshoring or by foreigners brought into the US on work visas with the fabricated and false excuse that there are no Americans qualified for the jobs.

America is a country hollowed out by the short-term greed of the ruling class and its shills in the economics profession and in Congress.  Capitalism only works for the few. It no longer works for the many.

On national security grounds Trump should respond to Ford’s announcement of offshoring the production of Ford Focus to China by nationalizing Ford.  Michigan’s payrolls and tax base will decline and employment in China will rise. We are witnessing a major US corporation enabling China’s rise over the United States. Among the external costs of Ford’s contribution to China’s GDP is Trump’s increased US military budget to counter the rise in China’s power.

Trump should also nationalize Apple, Nike, Levi, and all the rest of the offshored US global corporations who have put the interest of a few people above the interests of the American work force and the US economy.  There is no other way to get the jobs back.  Of course, if Trump did this, he would be assassinated.

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America is ruled by a tiny percentage of people who constitute a treasonous class. These people have the money to purchase the government, the media, and the economics profession that shills for them. This greedy traitorous interest group must be dealt with or the United States of America and the entirety of its peoples are lost.

In her latest blockbuster book, Collusion, Nomi Prins documents how central banks and international monetary institutions have used the 2008 financial crisis to manipulate markets and the fiscal policies of governments to benefit the super-rich.

These manipulations are used to enable the looting of countries such as Greece and Portugal by the large German and Dutch banks and the enrichment via inflated financial asset prices of shareholders at the expense of the general population.

One would think that repeated financial crises would undermine the power of financial interests, but the facts are otherwise. As long ago as November 21, 1933, President Franklin D. Roosevelt wrote to Col. House that “the real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.”

Thomas Jefferson said that “banking institutions are more dangerous to our liberties than standing armies” and that “if the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

The shrinkage of the US middle class is evidence that Jefferson’s prediction is coming true.

Source: ZeroHedge

Bitcoin Whale Blows Up, Leading To Forced Liquidation, “Bail-Ins”

We may have found the reason for Bitcoin’s persistent weakness over the past week.

After hitting a price above $8,000 thanks to recent Blackrock ETF speculation, the cryptocurrency has dropped 10% in the past week, dropping as low as $7,300 today, leaving traders stumped what was causing this latest selloff in the absence of market-moving news.

It turns out the reason may have been a good, old-fashioned margin call forced liquidation, because as Bloomberg reports a massive wrong-way bet left an unidentified bitcoin futures trader unable to cover losses, resulting in a margin call that has “bailed-in” counter parties forced to chip in and cover the shortfall, while threatening to crush confidence in yet another major cryptocurrency venues.

According to a statement posted by Hong Kong’s OKEx crypto exchange on Friday, a long position in Bitcoin futures that crossed on Monday, July 30, had a notional value of about $416 million. After Bitcoin prices dropped sharply in subsequent days, OKEx moved to liquidate the position on Tuesday, “but the exchange was unable to cover the trader’s shortfall as Bitcoin’s price slumped.”

The exchange, which identified the problem trader only by an anonymous ID number 2051247, said the position was initiated at 2 a.m. Hong Kong time on July 31.

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“Our risk management team immediately contacted the client, requesting the client several times to partially close the positions to reduce the overall market risks,” OKEx said. “However, the client refused to cooperate, which lead to our decision of freezing the client’s account to prevent further positions increasing. Shortly after this preemptive action, unfortunately, the BTC price tumbled, causing the liquidation of the account.”

The exchange was forced to inject 2,500 Bitcoins, roughly $18 million at current prices, into an insurance fund to help minimize the impact on clients. And since OKEx has a “socialized clawback” policy for such instances, it also forced other futures traders with unrealized gains this week to give up about 18 percent of their profits.

As Bloomberg notes, “while clawbacks are not unprecedented at OKEx, the size of this week’s debacle has attracted lots of attention in crypto circles.”

The episode underscores the risks of trading on lightly regulated virtual currency venues, which often allow high levels of leverage and lack the protections investors have come to expect from traditional stock and bond markets. Crypto platforms have been dogged by everything from outages to hacks to market manipulation over the past few years, a period when spectacular swings in Bitcoin and its ilk attracted hordes of new traders from all over the world.

“Everyone is talking about it,” said Jake Smith, a Tokyo-based adviser to Bitcoin.com, in reference to the OKEx trade.

And while everyone also wants to now how much capital was actually at risk, the biggest question is just how much margin there was in the trade. The problem here is that the exchange – ranked No. 2 by traded value – allows clients to leverage their positions by as much as 20 times.

For those who rhetorcially tend to ask “what can possibly go wrong” after every bitcoin slump, well now you know.

What happens next?

OKEx, which requires traders to pass a quiz on its rules before they can begin investing in futures, outlined planned changes to its margin system and liquidation procedures that it said would “vastly minimize the size of forced liquidation positions” and make clawbacks less frequent.

According to Bloomberg, clawbacks are unique to crypto markets and expose the exchanges who use them to reputational risks when clients are forced to absorb losses, said Tiantian Kullander, a former Morgan Stanley trader who co-founded crypto trading firm Amber AI Group.

“It’s a weird mechanism,” Kullander said.

Finally, judging by the bounce in bitcoin, the market appears relieved that it has identified the culprit of the selling, and with no more liquidation overhang left, is once again pushing prices across the crypto space higher.

source: ZeroHedge

Leaving Illinois: How Simple Math Chased Away A Village Mayor & His Family

If there was one guy you’d think wouldn’t succumb to the pressures of living in Illinois, it’s Lakewood Mayor Paul Serwatka.

He’s a reformer and a fighter. In the past year he’s succeeded where most politicians refuse to go. He lowered the Village of Lakewood’s property taxes by 10 percent and eliminated a TIF district, going against the trend of higher spending and bigger tax bills in communities across the state. And he did all that without cutting services. He was showing Illinoisans what reform-oriented leadership could look like.

But every family that’s chosen to flee Illinois in recent years hit a breaking point and Serwatka finally hit his. For him, it was the risk he wouldn’t be able to care financially for his growing family.

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You can’t blame him and those families that have already left. For many, it’s become too expensive to live in Illinois. For others, good-paying working class and manufacturing jobs have disappeared. And for yet others, they’re tired of being taken for granted and mistreated by their politicians.

At the core of the decision for many families to leave is the burden of higher property taxes. They’ve become punitive in too many parts of the state, as Wirepoints has covered in detail.

That’s true even in Lakewood, a city of nearly 5,000 people located in McHenry County. Residents in that county pay some of the state’s – and the nation’s – highest effective tax rates, measured as a percentage of household incomes.

Serwatka has four young children to think about – ages 3 to 8 – and he did the basic math that many Illinois families are doing in their kitchens or family rooms. They’re comparing what their property taxes are in Illinois to what they could be in other states – and what they could do with all the money they save.

For Serwatka, his comparison city was Decatur, Alabama.

There his family found 10 acres and a house that’s 25 percent bigger than their current Illinois home, all at roughly the same cost. The Alabama house also has access to a private lake shared by some 60 homeowners. And his home in Decatur is only 20 miles from Huntsville, which is booming in all kinds of ways.

What are his Alabama property taxes going to cost him? Just $2,200 a year. That’s a lot lower than the $15,400 he’s paying on the home in Lakewood.

If Serwatka saves that $13,000 difference every year and invests it at 6 percent annually for the next 20 years, he’ll have accumulated savings of more than $600,000 dollars.

It’s a difference Serwatka and his wife, Robin, just couldn’t ignore.

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Sadly, Illinois politicians continue to push property tax rates to record levels. They are the highest in the nation, double the rate in Missouri and three times higher than those in Indiana.

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*  *  *

Serwatka is confident he’s delivered on the promises he made when he took office. Residents who were looking for reforms, lower taxes and more respect from their politicians got exactly that from him

.

But in the end, the savings he produced as the mayor of a small town weren’t enough to offset the tax increases coming from the school district and the other myriad of local governments, not to mention the state itself.

Those taxes are now so high they’re chasing out even the reformers – those bold enough to buck the system in Illinois.

The reality is, Illinois’ failed policies discriminate against no one. People are being forced to do what’s best for their families. And if that means leaving, they’re doing it. 

Source: ZeroHedge