well he is a ceo/chairman of a public company..he can not be all doom and gloom...he has to worry about his share price.

Toll brothers is building in my area right now which is a buyers market. They know how to get them sold, they offer plenty of incentives and just keep building.

novahomesick: "So let's see...50% for Housing, 20% for Retirement, 5% for Healthcare (in a good year), 46% for federal, state, local taxes...Hmmm, 121% of income gone before buying food, clothes, utilities, automobiles, gas, entertainment, and stuff. Heaven help the American economy if Mr. Toll is right.

How can such a well-educated, seemingly successful guy be such a dope?"

Well, for one thing, who pays 46% in federal, state & local taxes? I doubt that many people pay even close to half that much. Secondly, not many people put away 20% of their income into retirement accounts (although they should). I think the personal savings rate is actually less than 2%. I realize that you were being somewhat facetious, but your figures arent't even close to reality.

Yes Bethesdamadman, I was being utterly facetious even indulging in a little hyperbole to make a point.

Who pays 46% in federal, state, & local taxes? Well, I did, last year and the year before...in real dollars. Mix up 37 cups of federal, state, local income taxes, toss in a handful of payroll taxes, fold in a large amount of property tax, finish with a soupcon of AMT - and you have a recipe for a 46% tax bite.

But then, I lived in a high tax state. Virginia should be a wee bit kinder this year. I bet more people come closer to that rate than you think. State and local taxes and the AMT impact can be real wild cards.

Secondly, you're right...not may people do put away 20% of their income away for retirement. Yes, they should. The median 401k balance is dismal and, to me, quite frightening.

But can you imagine just how worse that number would be if the vast majority of Americans were shelling out 50% of their income for housing? As an aside, I don't believe the personal savings rate accounts for investment ie: retirement savings but the number is still discouraging.

Even if I were in favor of a large scale federal bailout for stuck homeowners, we can't afford it. And our future can't afford the moral hazard message a bailout would send to all the people who are not saving for their old age. The number of homeowners and renters paying 50% or more for housing, while small, is growing. Long term, I find that alarming.

So, on a serious note, Robert Toll's vision of an America in which housing consumes 50% of income with little left over for consumption, investment, or savings sounds ludicrous to me...and very sad.

I think that novahomesick's numbers are accurate for more people than you might think. They just don't make the news.

Who pays 46% in federal, state, & local taxes? Well, I did, last year and the year before...in real dollars.

I doubt that very seriously. I think that you (and valtog) are confusing your marginal tax rate with the actual percentage of your income that you paid in taxes. You need to take the actual dollar amount of taxes that you paid and divide it by your total gross income. I'll bet that you'll find that you were nowhere near 46%. For example, the comnbined income for my wife and I last year was just over $206,000. Upon review of my income tax forms I find that I paid exactly $23,015 in federal income tax, and a combined $10,370 in state & county income tax for a total of $33,385. That works out to roughly 16.25% total. Even if I throw in payroll taxes it still comes out to significantly less than 46%.

Bethesdamadman, thanks for the lesson in the difference between marginal and effective income tax rates. As a CFP and tax preparer, I do know the difference. And yes, my full tax freight was 46% in effective not marginal dollars for 2005 and 2006. Before property taxes at a mill rate of $2.08/thousand, I paid $118,000 in federal, state, local income and wage taxes. Our AGI's are not proportionately that different. That is as far as I'm willing to go on a public forum. You may choose to believe it or not.

Perhaps, I am a unique example...most of my tax work is performed pro bono for the elderly and their rates tend to be quite low. But, I have to say I envy your tax position.

Sidebar: The Tax Foundation estimates that the average American carries a tax burden of 32% but they throw in all kinds of things including consumption taxes.

I'm truly sorry if I offended you, novahomesick. As stated previously, I assumed that you were erroneously referring to your marginal tax rate. If you say you actually paid 46%, that's fine. I believe you. However, that said, it doesn't change my initial opinion that most taxpayers aren't anywhere near even half that.

bethesdamadman, count me in as another one of the 46% club (actually 45 point something or other). As valtog said, it is more prevalent then you think - it just doesn't make the news.

Bethesdamadman, no insult was taken from your post. I reserve my sense of offense for the AMT that disallows the vast majority of deductions those caught in its evil clutches no longer get to enjoy. I hope it never comes to a theater near you.

For fun, try recalculating your tax rate w/o deductions for dependents, state and local property/income taxes, investment expenses, business expenses etc. etc. or having your capital gains taxed at an effective 26% instead of 15%. A whole lot of upper middle income folk in high tax states are paying much higher effective tax brackets than the normal tax system suggests.

But that's a letter to my Congressmen (another one) and way off the original theme of this thread.

Anyway, I just hoped Toll would be less of an industry spinmeister but he does build a decent house.

IMO the builders denied there even WAS a housing crash for some time. Then they suddenly flipped. Then as I suspected they started angling for a mortgage interest rate cut, i.e. a bailout by the feds, so they could resume selling overpriced houses again. NOTHING these guys say is just an opinion. It's professionally spun and has a purpose. In this case I think the builder is trying to convince people to buy now, for one thing. Heck--on one of the nahb's news articles it even said they had a multi-million dollar grant fund to help builders start a "Buy Now" ad campaign.

I think you guys are doing some funny math or you have absolutely horrible tax preparers. I am not going to put my income out, but I will say that it is such that I have almost 1/2 my itemized deductions wiped out and all my exemptions have been phased out. When I include federal taxes + fica I come out to 31.5%. If I had a state income tax to pay, say 7%, it would only take it to 37% (assuming I can deduct 1/2 of 7% and also using a flat 7% which most states are progressive, so the amount would be less in real life). Even if my income doubled and I had the same state tax, I would be at only 41%.

As for Mr. Tolls vision, he is only trying to make the case for governments to lessen the building and zoning restrictions that he sees as roadblocks to Toll Brothers success. No local government wants to see its people spending +50% of their income on housing. Toll wants to build houses, lots of houses and wants to eliminate or shift as much development costs as he can to make better profits, which is his duty to shareholders.

Are people in Britain and Western Eurpoe really paying 45-50% of their incomes towards housing costs?

Toll sounds a lot like Greenspan/Bernanke...a whole lot of words that appear to have no cohesive meaning but are actually ciphers for the finance crowd.

IMO...in states such as NJ...if one considers housing costs to include a mortgage, insurance, PROPERTY TAXES, heat, cooling, electricity, maintenance, sewer/water fees and in many cases exhorbitant HOA fees, the 40% to 50% for many is here and now.

I think that Mr. Toll is right. Homes usually aren't bought by absolute price but by the monthly price as a percentage of the income.

If the mortgage companies approve a income to house debt ratio of 50%, people will buy homes costing that much.

Mr. Toll wouldn't be happy with me though, because I spend only about four percent of my monthly income on housing (=property taxes + insurance + utilities. house paid off)