mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Sunday, July 27, 2008

Yet another reason to hate the housing bailout...

So there is this housing bailout bill that looks like it's going to become law. Now, I'm generally against the housing bailout in general - my thought is that the best thing to do is let the market find bottom and correct itself. It doesn't help that the bill seems to help those who didn't buy (by offering a tax credit to first-time homebuyers) or who bought way more than they should have (by bailing out people with ARM's and IO mortgages that are readjusting) while doing absolutly nothing for people like me who bought with a fixed-rate loan - people who are paying their mortgage but can't sell without taking a major hit.

But the bill goes beyond that. It also attacks a group of people who aren't looking for a bailout, but rather are out hustling to make some extra bucks. I'm talking about eBayers. The bill adds a provision that requires payment processors like PayPal to report people to the IRS who have over 200 transactions and $10,000 in revenue a year.

Now, I realize that in theory, people selling on eBay should be reporting their income to the IRS. Of course, people are also supposed to drive the speed limit, not download music, and pay sales tax to their state on stuff they buy online.

For many people, myself included, eBay is something that is more than a hobby but less than a real business. I run my eBay sales as a hobby - I don't keep track of how much I pay for stuff, how much I make, or how much of my time and money I spend tracking down items, cleaning/fixing them, listing them, shipping them, ect. When I get paid for items, I transfer the money to my savings account and watch it grow.

This bill puts a huge burden on people like me - and requires a lot of people to spend a whole lot more time keeping records and trying to figure out how much money they actually make. It's also tricky for people like me who often mingle person stuff with stuff purchased for resale - while much of what I sell I bought planning to sell, I also often sell used items of my own or stuff I bought that I decided I wasn't going to use.

My guess is that when the law takes effect, lots of ebayers will suddenly have sales of 199 items a year and revenue of $9,999 or so. If you are borderline for being affected by the law, it makes sense to reduce your sales so you aren't affected.

I've already shifted a chunk of my selling to hamfests - specialty or rare items go on eBay, but the cheaper/commodity stuff goes to hamfests and is paid for in cash. I also might start looking to craigslist for selling stuff.

I don't think the bill will generate as much money as the government hopes - it will be very easy for ebay sellers, who often buy merchandise for cash, to fudge the numbers on how much they paid for stuff, and I think people will also move away from eBay towards in-person sales.

Now, some people may figure this is good - that those greedy eBayers deserve to be taxed. That is a reasonable view, although not one I embrace. But the fact that this was snuck into a bill that has enormous political pressure to get passed, and that it's received almost no attention from the media because of this, suggests that the government doesn't want people debating the merits of this bill - which suggests that I'm probably not the only person who doesn't like it.


At 10:21 AM, Blogger tralatrala said...

blah blah blah ebay...i nearly spit fire when i heard about the $7500 tax credit.

also, how are they going to take a loan that is already too large to begin with and put it into a fixed rate mortgage for people? are we going to see the beginning of the 50 and 60 year mortgage?

i'm actually incredibly angry about this bailout, and i never thought i'd agree with you about stuff like this :P


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