BANKS TO THE RESCUE!!

 

Our Wealth Overflows.
Our Wealth Overflows.

BRADFROMSALEM

Nearly every state has problems with balancing their budget. As a result schools suffer from a lack of funding, state and local roads crumble from the weight of trucks and SUV’s . Other infrastructure and citizen needs go unmet, because the state and/or the local government cannot afford to pay for it. Some of these expenses possibly can be pushed back to the Federal government to fund, but that would not entirely help. Even here in the so-called Peoples Republic of Massachusetts we have a flat income tax, a sales tax, and locally there are property taxes. All regressive taxes, hurting the functioning of government from modernizing traffic lights to updating the technology available to schools to making sure that all departments in critical areas such as Family services, court evidence labs, and compounding pharmacy oversight are fully staffed and oversight of the work being performed is in place. Other states also have similar problems.  One solution, of course, is to eliminate all regressive taxation completely, and replace it with a progressive tax rate on income.  But the hue and cry, especially from the Right, would be unbearable, unless! Unless we couple that with another source of state revenue. In my home state, Massachusetts, the state has authorized casinos to be built to provide for additional revenue. Unfortunately, the holistic data is pretty incomplete as to whether or not casinos actually generate a net gain in tax revenue once all the associated costs incurred are factored in. No, we want a sure thing.

The answer is rather simple. A state run banking system.

Banks are very profitable, it appears. Nearly everyone needs to do business with a bank at some time. Taking on a mortgages, buying a car or starting  a small business requires you do business with a bank. Only with a state bank, the profits (or the interest paid) goes back to the state. Think about that for a second. A state run bank would mean that instead of a bank taking a profit on your mortgage, your monthly payment actually reduces your state taxes. Profits over reserves goes into the state coffers, the rest is used to either increase state spending or lower taxes Once local government and state government agencies also use the state bank for capital spending, the money being returned to the state becomes significant.

Sure, big business will still do business with commercial banks, but you can go to a state bank for your home mortgage, which can be offered at better rates than commercial banks for ‘qualified’ home buyers. It also allows from some creative financing to occur. For example, a city may choose to offer owners of homes that are in disrepair to participate in a neighborhood home improvement project. Any home would be eligible to get a loan up to 50% (or maybe 25%) of the home’s appraised value. The loan is only paid back when the home sells. The payback is from the sale. So a city would lend a person 25K for repairs on a home appraised for 100K. If the house sells for 300K after the repairs and 5 years later, the city gets back 37.5K or 1/2 of the amount loaned prorated.  The numbers here may need to be tweaked for this example to work, but by having a state bank; the state, it’s communities, and it’s people get a bigger say in where money is invested.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s