US billionaires paid lower tax rate than working class in 2018

Ken-1122

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The links provided did have some examples of that happening.

The mistake many people make is that they assume that if poor peoples' incomes have risen by more than the rate of inflation, that must mean "the poor are less poor than they were before"
How is that a mistake?

In order for that to be true, the cost of all goods & services (especially critical ones like housing) would have to rise at a rate that's lower, or equal to, the rate of inflation.
No, if the cost of housing is off set by (example) the cost of gas, or visa versa, it’s a wash and the increase of housing will be more than the rise of inflation because the cost of gas is lower thus when they are both factored in, the inflation rate will be somewhere between the two.

BTW much of the rise in housing costs and rent we see today is because during the last recession the cost of housing dropped drastically as well as rental costs. So when the economy began to improve, we see housing costs and rent play catch up to where it should have been had the recession never happened.
 
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Ken-1122

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Still, WOW. What do you think income inequality is??? That's the 21st century term for THE RICH GETTING RICHER WHILE THE POOR GET POORER.
No. Income inequality is when the financial gap between the rich and the poor widens. This has nothing to do with the poor getting poorer.
 
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Ken-1122

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They're factored in, however, housing costs as a whole are only around 35% of the cumulative CPI, and rent prices are are just subset of that (coming in at just over 15% of the cumulative CPI).

Rent price history from 2000 through 2019

There are numerous articles outlining and going into detail about housing and rent costs are rising at a rate that's significantly higher than the overall/avg rate of inflation. In some locales, they're rising at a rate that's double the rate of overall inflation.

Why that's such an important distinction is because things like housing and transportation are critical, while things like toys, dining out, electronics, etc... are not.

If a person on a tight income has their rent increase by 30% over a period of 5 years, even with 3% annual raises over that time period, and even if the cost of all other goods & services went down by an inflation-adjusted 3%, they're sill worse off.

The reason why they're worse off is simple, how much one can take advantage of lowered costs of everything else is dictated by how much money they have leftover after critical/core things are covered.

A simple math exercise can illustrate this

2014:
If a person who takes home $1300 a month was paying $850 for rent.
(they have $450 2014 dollars to work with after rent is covered for other purchases)

2019:
If they consistently got that aforementioned 3% raise every year, for 5 years, that now puts them at just over $1500 month. With the 30% rent increase, their rent is now $1105 per month
(they now have $395 2019 dollars to work with after rent is covered...you adjust that for inflation to compare it to put it in 2014 dollars, it's actually ~$365)

Even if the inflation adjusted amounts of everything else got cheaper by 3%, they're still worse off.
The fact that their 2014 $100 (adjusted for 2019 inflation $108.46) grocery bill had a CPI reduction of 3%, thus putting it at $105.20 in 2019 (instead of the $108.46 it would've been had it trended with inflation) does very little to offset that rent increase.
It appears according to the chart in the link you provided, rent in 2014 was at 3.15% and now 2019 it is down to 2.17%.
 
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ThatRobGuy

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It appears according to the chart in the link you provided, rent in 2014 was at 3.15% and now 2019 it is down to 2.17%.

Those are the yearly increase amounts in the chart, that doesn't mean it's only 2.17% higher in 2019 than it was in 2014.

upload_2019-10-13_10-27-52.png


Let's say the starting rent price was $850 like in my other example...
+ 3.15% = $876.77
+ 3.57% = $908.07
+ 3.77% = $942.31
+ 3.81% = $978.21
+ 3.62% = $1,013.62
+ 2.73% = $1,041.29
 
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ThatRobGuy

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How is that a mistake?
...because they have less post-housing buying power than they did before, thus meaning they'd not going to be able to take advantage of the CPI reduction in other areas.

A person with $1400/month income, in an environment where the cheapest rent option is $1100 is in worse shape than a person with $1200/month income, but with rent options that are around $850.

If you only have $200 leftover after all the critical expenditures are covered, it really doesn't matter if those non-necessity items are $220 instead of $240, you can't capitalize on that particular price reduction.

No, if the cost of housing is off set by (example) the cost of gas, or visa versa, it’s a wash and the increase of housing will be more than the rise of inflation because the cost of gas is lower thus when they are both factored in, the inflation rate will be somewhere between the two.

It's not a true offset...it's only offset if the person had enough to buy those other things, in addition to housing costs, both before and after the CPI adjustments.

It's only potentially a wash for non-poor people whose housing/rent costs only make up 1/3 to 1/2 of their monthly expenditures and have enough money to buy a lot of other things and luxury items after housing, food, and transportation costs are covered


The inflation-adjusted prices/CPI of the rest of their typical monthly expenditures would had to have dropped by around 18% in order to offset that and put them at "even Steven"...which they haven't.

For instance, when compared to the national cumulative/average inflation rate...

(these are summed totals from the past 5 years, by comparing the individual CPI inflation rate compared to the overall for each year, then getting the totals)

(Section A - critical things)
Rent is up +21.5%
The food inflation-adjusted CPI is only about -4%
The rate for household paper products is only down by around -6.2%
For clothing (including footwear), that number is -3.5%
Transportation is actually up by +4.5%
Utility prices are up +3.6%

The areas that have dropped significantly, (which is where the "overall average has gone down" you mentioned...) are things like
(Section B - non-critical, luxury things)
Electronics -17.2%
Jewelry -8.5%
Toys -12%
Recreation -6.5%


If someone someone's in a position where they have the funds to partake of both sections above, equally, then yes, they're reaping some benefit.

However, that's not the position that a poor person is in... if a person's in a position where 80+% of their monthly budget goes toward Section A, the fact that Television, jewelry, toy, and recreation/vacation (inflation adjusted) prices have gone down is of no real benefit as what few electronics & toys they may be able to buy with their leftover money at the end of the month isn't going to be able to be offset the increase their critical expenditures.
 
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Ken-1122

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...because they have less post-housing buying power than they did before, thus meaning they'd not going to be able to take advantage of the CPI reduction in other areas.

A person with $1400/month income, in an environment where the cheapest rent option is $1100 is in worse shape than a person with $1200/month income, but with rent options that are around $850.

If you only have $200 leftover after all the critical expenditures are covered, it really doesn't matter if those non-necessity items are $220 instead of $240, you can't capitalize on that particular price reduction.
The cost of housing isn’t the only critical expenditure or required coverage; the cost of gas is just as important. If the cost of gas goes down, that makes rent increases less difficult. Every since the USA became the #1 producer of oil in the world (surpassing Saudi Arabia and Russia) the cost of fuel seems to be a little more stable.

It's only potentially a wash for non-poor people whose housing/rent costs only make up 1/3 to 1/2 of their monthly expenditures and have enough money to buy a lot of other things and luxury items after housing, food, and transportation costs are covered
Still not getting it; the increase in housing is a potential wash if the cost of food and transportation decreases. Also the recent increase of housing cost (last 5-6 years or so) is due to the decrease in housing cost during the last recession; things are getting back to where they would have been had the decrease not happened.
 
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ThatRobGuy

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The cost of housing isn’t the only critical expenditure or required coverage; the cost of gas is just as important. If the cost of gas goes down, that makes rent increases less difficult. Every since the USA became the #1 producer of oil in the world (surpassing Saudi Arabia and Russia) the cost of fuel seems to be a little more stable.

It's not the only critical expenditure, but it's by far the largest and arguably the most important
58d43cbb112f7078158b65af


...and that's especially true for those in the poorer economic brackets.

Still not getting it; the increase in housing is a potential wash if the cost of food and transportation decreases. Also the recent increase of housing cost (last 5-6 years or so) is due to the decrease in housing cost during the last recession; things are getting back to where they would have been had the decrease not happened.

It's only a potential wash if one's food expenditures and transportation expenditures were the same sized portion of their budget that their rent is.

If you look at the chart above, that's not the case.
For the bottom 20 percent, food & transportation, combined only total 29.9% of their monthly expenditures, while housing alone is 40.4%.

So, even if we just zero in on the categories you mentioned.

With the rates of rent inflation over the past 5 years, as I outlined in a previous post...
The price of rent has increased by 24% over that time period.
The price of food has decreased by 4%
For transportation, the price of vehicles has gone up by 4%, while the price of gas is down by 19%

Just to use nice even numbers to work with.
John Doe has $1500/month to work with.

40.4% goes to rent = $606
15.4% goes to food = $231
14.5% goes to transportation (but only 30% of transportation costs are gasoline, the rest is the car payment itself = $217 * .30 == $65

Leaving John with $598 left over after those 3 things (obviously some of that would be going toward the other smaller line times shown in the graph above)


After the aforementioned changes took place.
Rent is now $751
Food is now $221
Gas costs are now $52

John now has $476 to work with after those 3 expenditures are covered.


To your other point about the recession housing cost decrease, that really only comes into play for people buying a home vs. renting...which, in the context of people who are poor, isn't an option in most cases, the overwhelming majority of poor people rent instead of own.

With regards to renting, the rental inflation rate has been higher than the overall inflation rate more times than not from 1984 to present day.

upload_2019-10-13_21-21-57.png



From 2000 till present, here's how it's played out
(overall inflation rate on the left, rent inflation rate on the right)
upload_2019-10-13_21-32-55.png


16 years out of the last 20, the rent inflation rate has been higher than the overall national inflation rate...combined with the fact that it accounts for over 40% of a poor person's budget...

The numbers speak for themselves...
 
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Ken-1122

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It's not the only critical expenditure, but it's by far the largest and arguably the most important
58d43cbb112f7078158b65af


...and that's especially true for those in the poorer economic brackets.



It's only a potential wash if one's food expenditures and transportation expenditures were the same sized portion of their budget that their rent is.

If you look at the chart above, that's not the case.
For the bottom 20 percent, food & transportation, combined only total 29.9% of their monthly expenditures, while housing alone is 40.4%.

So, even if we just zero in on the categories you mentioned.

With the rates of rent inflation over the past 5 years, as I outlined in a previous post...
The price of rent has increased by 24% over that time period.
The price of food has decreased by 4%
For transportation, the price of vehicles has gone up by 4%, while the price of gas is down by 19%

Just to use nice even numbers to work with.
John Doe has $1500/month to work with.

40.4% goes to rent = $606
15.4% goes to food = $231
14.5% goes to transportation (but only 30% of transportation costs are gasoline, the rest is the car payment itself = $217 * .30 == $65

Leaving John with $598 left over after those 3 things (obviously some of that would be going toward the other smaller line times shown in the graph above)


After the aforementioned changes took place.
Rent is now $751
Food is now $221
Gas costs are now $52

John now has $476 to work with after those 3 expenditures are covered.


To your other point about the recession housing cost decrease, that really only comes into play for people buying a home vs. renting...which, in the context of people who are poor, isn't an option in most cases, the overwhelming majority of poor people rent instead of own.

With regards to renting, the rental inflation rate has been higher than the overall inflation rate more times than not from 1984 to present day.

View attachment 264984


From 2000 till present, here's how it's played out
(overall inflation rate on the left, rent inflation rate on the right)
View attachment 264993

16 years out of the last 20, the rent inflation rate has been higher than the overall national inflation rate...combined with the fact that it accounts for over 40% of a poor person's budget...

The numbers speak for themselves...
The cost of rent is calculated into the inflation rate. Are you saying the inflation rate is inaccurate?
 
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ThatRobGuy

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The cost of rent is calculated into the inflation rate. Are you saying the inflation rate is inaccurate?

Not at all, I'm saying that the rent inflation rate is a bigger piece of the pie for poor people than it is for everyone else, so for them, the reductions in other areas don't offset the rent inflation. The overall inflation rate breakdown doesn't represent a "one size fits all" for every person's budget.

I'll repost what I posted before:
With the rates of rent inflation over the past 5 years, as I outlined in a previous post...
The price of rent has increased by 24% over that time period.
The price of food has decreased by 4%
For transportation, the price of vehicles has gone up by 4%, while the price of gas is down by 19%

Just to use nice even numbers to work with.
John Doe has $1500/month to work with.

40.4% goes to rent = $606
15.4% goes to food = $231
14.5% goes to transportation (but only 30% of transportation costs are gasoline, the rest is the car payment itself = $217 * .30 == $65

Leaving John with $598 left over after those 3 things (obviously some of that would be going toward the other smaller line times shown in the graph above)


After the aforementioned changes took place.
Rent is now $751
Food is now $221
Gas costs are now $52

John now has $476 to work with after those 3 expenditures are covered.



When something (rent) that accounted for over 40% of a person's overall monthly expenditures increases by 24% over a period of 5 years, a decrease of 4% in something that was only accounting for 15% of their expenditures combined with a 19% decrease in something that was only accounting for 5% of their expenditures doesn't offset that...not even close.

It's simple math based on ratios & proportions...

Gasoline + Food only account for 20% of a person's expenditures
Rent accounts for 40%

Therefore, any percentage increase in rent would have to be offset by percentage reduction in gasoline + food that's double the amount that the rent increased in order to be a true offset and keep the person at the same baseline.

Therefore, if rent CPI increased by 24% over the past 5 years (which it has), the gasoline + food CPI would have to decrease by 48% in order to offset that (which it hasn't)

We'll use a nice even number here just to make things simple
$1000 (A)
X 40% of A
Y 20% of A

If X increases by 24%, that's an additional 96
Y would need to decrease by 48% to offset that 96
 
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Ken-1122

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Not at all, I'm saying that the rent inflation rate is a bigger piece of the pie for poor people than it is for everyone else, so for them, the reductions in other areas don't offset the rent inflation. The overall inflation rate breakdown doesn't represent a "one size fits all" for every person's budget.

I'll repost what I posted before:
With the rates of rent inflation over the past 5 years, as I outlined in a previous post...
The price of rent has increased by 24% over that time period.
The price of food has decreased by 4%
For transportation, the price of vehicles has gone up by 4%, while the price of gas is down by 19%

Just to use nice even numbers to work with.
John Doe has $1500/month to work with.

40.4% goes to rent = $606
15.4% goes to food = $231
14.5% goes to transportation (but only 30% of transportation costs are gasoline, the rest is the car payment itself = $217 * .30 == $65

Leaving John with $598 left over after those 3 things (obviously some of that would be going toward the other smaller line times shown in the graph above)


After the aforementioned changes took place.
Rent is now $751
Food is now $221
Gas costs are now $52

John now has $476 to work with after those 3 expenditures are covered.



When something (rent) that accounted for over 40% of a person's overall monthly expenditures increases by 24% over a period of 5 years, a decrease of 4% in something that was only accounting for 15% of their expenditures combined with a 19% decrease in something that was only accounting for 5% of their expenditures doesn't offset that...not even close.

It's simple math based on ratios & proportions...

Gasoline + Food only account for 20% of a person's expenditures
Rent accounts for 40%

Therefore, any percentage increase in rent would have to be offset by percentage reduction in gasoline + food that's double the amount that the rent increased in order to be a true offset and keep the person at the same baseline.

Therefore, if rent CPI increased by 24% over the past 5 years (which it has), the gasoline + food CPI would have to decrease by 48% in order to offset that (which it hasn't)

We'll use a nice even number here just to make things simple
$1000 (A)
X 40% of A
Y 20% of A

If X increases by 24%, that's an additional 96
Y would need to decrease by 48% to offset that 96

So if I understand you correctly, you’re saying because the cost of housing cost takes a bigger percentage of the poor’s budget than anyone else, and since the cost of housing usually out paces inflation rate, the inflation rate for the poor could out pace whatever increases in pay they get resulting in the poor getting poorer while everyone else gets richer; sorta the point made in post #160.

So this could result in the rich getting richer while the poor getting poorer even though one has nothing to do with the other. Most people seem to assume the rich gets richer because they take from the poor, and the poor gets poorer because they are stolen from by the rich, but inflation is the culprit, not someone taking from someone else.
 
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ThatRobGuy

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So if I understand you correctly, you’re saying because the cost of housing cost takes a bigger percentage of the poor’s budget than anyone else, and since the cost of housing usually out paces inflation rate, the inflation rate for the poor could out pace whatever increases in pay they get resulting in the poor getting poorer while everyone else gets richer; sorta the point made in post #160.

So this could result in the rich getting richer while the poor getting poorer even though one has nothing to do with the other. Most people seem to assume the rich gets richer because they take from the poor, and the poor gets poorer because they are stolen from by the rich, but inflation is the culprit, not someone taking from someone else.

Correct, I wasn't implying that it's a zero sum game where there's a finite amount of wealth, and the only means of them getting richer is by taking it from everyone else.

There are certainly scenarios in which new wealth can be created, and everyone can benefit from the top to the bottom. ...and that's the way it used to be for quite a while.


Like what you've been pointing out (if I understand your point correctly), the rich getting richer doesn't have to mean the poor have to get poorer, as with the creation of new wealth, the rich can get richer without having to take a dime from the poor.

However, with the current exploitation that goes on with regards to rent prices, that's how its currently working out in these cases, as they're turning bigger and bigger portions of their paycheck over to cover rent, and that money is going directly to the property owners (which, in many cases, are property management companies that are child-companies of larger corporations - typically investment firms - that buy entire apartment complexes, and use them as investments...that investment being, that they can raise prices by > 20% every five years, and move the money over to their primary parent company to use as a means to increase profits which, in turn, increases stock values and returns to investors.

The last townhouse I lived in (prior to buying the condo I live in now) had that happen.

It was a local guy who originally owned the entire complex, and the rent prices were reasonable, with only modest price increases in the 3 years I lived there when he owned it. A property management LLC, that was a child company of an investment firm out of Cleveland bought it from him (along with two other apartment complexes in the city I live in), and in the 3 years to follow, the rent prices went up $35/month each year...which is why I decided to bail lol.

...but I was able to do so because I have a decent job, and had options. For people who were on a tighter budget, they didn't have that luxury.


Another sneaky trick these property management companies like to pull, is they'll own 2 or 3 really nice properties, and a dozen or so not-so-nice ones, and they'll jack up the prices on the lower-class ones, and use the money to put upgrades into the nice ones (IE: charge the poorer people more money every month, without giving them anything for it, and then taking that money, and using it for putting in nicer granite counter tops and a new fitness center in the apartment that's occupied by people who already have a lot of money)
 
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Ken-1122

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Correct, I wasn't implying that it's a zero sum game where there's a finite amount of wealth, and the only means of them getting richer is by taking it from everyone else.

There are certainly scenarios in which new wealth can be created, and everyone can benefit from the top to the bottom. ...and that's the way it used to be for quite a while.


Like what you've been pointing out (if I understand your point correctly), the rich getting richer doesn't have to mean the poor have to get poorer, as with the creation of new wealth, the rich can get richer without having to take a dime from the poor.
Usually when the rich gets richer, the poor gets a few dimes as well! Like under the current economy.

However, with the current exploitation that goes on with regards to rent prices, that's how its currently working out in these cases, as they're turning bigger and bigger portions of their paycheck over to cover rent, and that money is going directly to the property owners (which, in many cases, are property management companies that are child-companies of larger corporations - typically investment firms - that buy entire apartment complexes, and use them as investments...that investment being, that they can raise prices by > 20% every five years, and move the money over to their primary parent company to use as a means to increase profits which, in turn, increases stock values and returns to investors.

The last townhouse I lived in (prior to buying the condo I live in now) had that happen.

It was a local guy who originally owned the entire complex, and the rent prices were reasonable, with only modest price increases in the 3 years I lived there when he owned it. A property management LLC, that was a child company of an investment firm out of Cleveland bought it from him (along with two other apartment complexes in the city I live in), and in the 3 years to follow, the rent prices went up $35/month each year...which is why I decided to bail lol.

...but I was able to do so because I have a decent job, and had options. For people who were on a tighter budget, they didn't have that luxury.

Another sneaky trick these property management companies like to pull, is they'll own 2 or 3 really nice properties, and a dozen or so not-so-nice ones, and they'll jack up the prices on the lower-class ones, and use the money to put upgrades into the nice ones (IE: charge the poorer people more money every month, without giving them anything for it, and then taking that money, and using it for putting in nicer granite counter tops and a new fitness center in the apartment that's occupied by people who already have a lot of money)
I find it interesting you attempt to make an argument of the super rich ripping off the poor, and your example of super rich are landlords. I can’t speak for where you live, but all the landlords I know are not rich, they are just regular guys trying to invest their money in a way they have control over. Do you know all the added expenses landlords have to face? In my city many of the cities pet projects include raising property taxes. Is the landlord expected to foot his bill by himself? Then there is a liberal city counsel that imposed rent restrictions on all land lords forbidding them from raising rent no more than 5% per year. However they don’t restrict themselves from raising taxes 5% per year, last year property taxes raised nearly 50%! Is the landlord expected to foot this bill himself? Then there are laws that make it difficult to evict somebody; it can easily cost $5,000 to evict somebody.

Then there are “Squatters right laws” I know a landlord who was in between tenants, and was showing the place for potential tenants. One day vagrants broke into his house, set up shop and refused to leave. The vagrants apparently knew of the squatters rights of the city because when they broke the lock to get in, they quickly repaired everything so there was no evidence of break in, that way the cops won’t arrest them for illegal entry. The land lord knew if he physically removed them, he would be charged with assault, and if he physically removed all their stuff, he could be charged with theft! He had to legally evict them, ($5000.00) then had to clean up the mess and repairs they left behind (thousands more). You don’t know what landlords are going through so I find it unfair to point them out as oppressors of the poor.

If you wanna talk about the rich taking from the poor, explain what Bill Gates is doing to take from the poor? What is Microsoft and personal computers doing to make the poor poorer? What about Jeff Bezos? What did he do? What about Warren Buffet, Mark Zukerberg, and all those other super rich people? How did these people take from the poor to amass their fortunes?
 
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ThatRobGuy

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I find it interesting you attempt to make an argument of the super rich ripping off the poor, and your example of super rich are landlords. I can’t speak for where you live, but all the landlords I know are not rich, they are just regular guys trying to invest their money in a way they have control over.

In my example, I wasn't referring to independent landlords, I was referring to the property management LLCs that buy the properties from those independent landlords.

There are fewer and fewer independent landlords as many apartment complexes are being bought out by these property management companies. Thus the reason the rent CPI has gone through the roof compared to the CPI in other areas (like, food, clothing, transportation, and electronics). So much so, that a person has be in a financial position where their rent only accounts for < 1/3 of their overall expenditures in order to be able to be able to leverage the CPI reductions in other areas to offset it.

If you wanna talk about the rich taking from the poor, explain what Bill Gates is doing to take from the poor? What is Microsoft and personal computers doing to make the poor poorer? What about Jeff Bezos? What did he do? What about Warren Buffet, Mark Zukerberg, and all those other super rich people? How did these people take from the poor to amass their fortunes?

I didn't say all rich people were doing that.

"The Rich" aren't a monolith.

Usually when the rich gets richer, the poor gets a few dimes as well! Like under the current economy.

I've already explained a few different ways that's misleading.

Getting a few extra dimes doesn't mean much when the number #1 expenditure, that accounts for nearly half of their overall monthly budget increases by well over 20% over a period of 5 years.

The poor, as a whole, aren't doing better now. The rent & education gouging (thus limiting upward mobility) was a trend that started back in the early 80's, and hasn't really deviated from trend.
 
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Ken-1122

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In my example, I wasn't referring to independent landlords, I was referring to the property management LLCs that buy the properties from those independent landlords.
Are the members of these LLC’s super rich? Or are they just middle class people pooling their money together for investment purposes? Because your claim is about the super rich who make their money by stepping on the backs of the poor; right?

I didn't say all rich people were doing that.
"The Rich" aren't a monolith.
I didn’t ask you to comment on all rich people, just name a few who are doing this. Certainly you can name at least one; can’t you?

I've already explained a few different ways that's misleading.
Your explanation was about expensive rent; which has nothing to do with the super rich. again; can you give any examples of the rich gouging the poor when they make money? Because every time I see the super rich making money, the poor more often than not will benefit from it; but perhaps I’m missing something. Do you know something I don’t ?
 
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ThatRobGuy

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Are the members of these LLC’s super rich? Or are they just middle class people pooling their money together for investment purposes? Because your claim is about the super rich who make their money by stepping on the backs of the poor; right?

I didn’t ask you to comment on all rich people, just name a few who are doing this. Certainly you can name at least one; can’t you?

Your explanation was about expensive rent; which has nothing to do with the super rich. again; can you give any examples of the rich gouging the poor when they make money? Because every time I see the super rich making money, the poor more often than not will benefit from it; but perhaps I’m missing something. Do you know something I don’t ?

Actually, these LLCs are typically child business entities that are owned by large corporations and investment firms, and they use surplus cash from the increased rent to edify the parent corporation, or in the case of investment firms, increase share values for the shareholders.

The reason why the leverage an LLC is so that if, the operation goes belly up, they can walk away from it and the parent company's assets can't be touched.

...but if you're looking for just the names of some people
CEO's of any of these companies would be a good start
https://www.propertymanagerinsider.com/the-10-largest-apartment-management-companies/

If you go to the "investment" pages of any of their websites, you'll see a reoccurring theme. They all mention "value-add" as a core strategy.

They all describe it in a slightly different way that sugar-coats the process...

However, in plain real-estate investment terms, the definition is:
'Projects that aim at repositioning a property to a higher price point, resulting in increased net operating income (NOI).'


GreyStar, the largest company on that list doesn't even sugar coat it all that well

Here's how they word it:
Greystar focuses on well-located apartment communities that exhibit significant value-add potential. Greystar value-add vehicles invest in markets with strong fundamentals where high barriers-to-entry limit supply. These strategies seek to provide investors with the opportunity to participate in significant value creation through strategic capital improvements and operational upside.

That's the nice way of putting it...

What that's actually saying is "We buy an apartment complexes that currently charge $800, and over a relatively short period of time, will increase it to $1000, and due to the limited supply of apartments in this area (IE: no other vacancies, no where else available to move to), the tenants will have no choice but to suck it up because there's no where else available for them to move...

They're basically capitlizing on the fact that apartments are in short supply in many areas, so they buy it, put some relatively modest upgrades in, in order to justify jacking up the price, then the tenants who are there have no choice but to suck it up because there's nowhere else to go.
 

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Ken-1122

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Actually, these LLCs are typically child business entities that are owned by large corporations and investment firms, and they use surplus cash from the increased rent to edify the parent corporation, or in the case of investment firms, increase share values for the shareholders.

The reason why the leverage an LLC is so that if, the operation goes belly up, they can walk away from it and the parent company's assets can't be touched.

...but if you're looking for just the names of some people
CEO's of any of these companies would be a good start
https://www.propertymanagerinsider.com/the-10-largest-apartment-management-companies/

If you go to the "investment" pages of any of their websites, you'll see a reoccurring theme. They all mention "value-add" as a core strategy.

They all describe it in a slightly different way that sugar-coats the process...

However, in plain real-estate investment terms, the definition is:
'Projects that aim at repositioning a property to a higher price point, resulting in increased net operating income (NOI).'


GreyStar, the largest company on that list doesn't even sugar coat it all that well

Here's how they word it:
Greystar focuses on well-located apartment communities that exhibit significant value-add potential. Greystar value-add vehicles invest in markets with strong fundamentals where high barriers-to-entry limit supply. These strategies seek to provide investors with the opportunity to participate in significant value creation through strategic capital improvements and operational upside.

That's the nice way of putting it...

What that's actually saying is "We buy an apartment complexes that currently charge $800, and over a relatively short period of time, will increase it to $1000, and due to the limited supply of apartments in this area (IE: no other vacancies, no where else available to move to), the tenants will have no choice but to suck it up because there's no where else available for them to move...

They're basically capitlizing on the fact that apartments are in short supply in many areas, so they buy it, put some relatively modest upgrades in, in order to justify jacking up the price, then the tenants who are there have no choice but to suck it up because there's nowhere else to go.
It looks like your complaint is not that the super rich are making money by gouging the poor, but corporations that people of various income levels can invest, in are doing this. Is this a correct assumption?
 
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Ken-1122

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ThatRobGuy

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Do all of these apartment companies rent to the poor as their main base? If not, how can you make the claim that they are gouging the poor?
Their core business model is to buy properties that are "not so great" (often times inhabited by poor people), make modest upgrades, then jack up the prices.

If you look at how another company from the list I sent before worded it (I believe it was the number 2 or 3 company on the list), these are their target properties for acquisition.

315064_ec8bc435b3d0e4336714a5fbcf78fbc8.png


An example of that would be...
Let's say you an area where there are 5 apartment complexes.
2 are "luxury apartments" that poor people could never afford ($1700+/month)
1 is moderately priced at $1200/month
1 is reasonable $900/month, but filled up and with a waiting list
1 doesn't look the greatest, but is $750/month.

The last one on the list (inhabited by the people who are tighter on cashflow) would be the kind they target. (based on their own statements)

They'd make some modest upgrades to the units and slap a new coat of paint on the outside, and use that as justification for bumping the prices up $850/month.

Now, if you're a poor person living there, they've increased the price as such, where you don't really have any other option but to suck it up and stay there. There's no way you could afford 3 of them, and the one that's even remotely in the same price range is filled up.
 
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ThatRobGuy

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It looks like your complaint is not that the super rich are making money by gouging the poor, but corporations that people of various income levels can invest, in are doing this. Is this a correct assumption?

To say that "people at various income levels can invest" isn't accurate. These aren't like stocks where middle class person can take a few thousand, and go buy some shares.

You'll find that most of the companies from the list I sent before aren't even on the stock exchange. These sort of investments are the kind where rich people are scouted out by them, and invited to fancy banquets in order to try to get them to invest serious amounts of cash.

When my grandfather still worked as regional director for Sun Oil, it goes without saying that he did alright for himself...he got invites on more than one occasion to attend one of these potential investor dinners when property management companies were zeroing in on the Northeast Ohio region a few decades back.

They weren't even moderately interested in investors who wouldn't be willing to pony up at least $100k toward the project(s). And even then, they'd be looking to narrow it down to a small group of 10 or so investors.
 
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