[HN Gopher] High property taxes are good
___________________________________________________________________
High property taxes are good
Author : brockwhittaker
Score : 161 points
Date : 2022-07-20 16:50 UTC (6 hours ago)
(HTM) web link (brooock.com)
(TXT) w3m dump (brooock.com)
| hedora wrote:
| The article overlooks one important factor: Raising property
| taxes would lower house values, reducing loan sizes, and
| therefore bank profits. We can't have that money being squandered
| on social services or infrastructure.
| commandlinefan wrote:
| How would raising property taxes lower house values?
| frankbreetz wrote:
| When people take out a mortgage, they normally only care
| about total monthly cost. If the property tax increases they
| can afford to spend less on a house for the same monthly
| payment.
| nrmitchi wrote:
| I'm not disgreeing that there can be valid benefits of higher
| property taxes.
|
| The problem with it though is that it is a very regressive tax,
| especially in states that get the majority of their income from
| property tax as compared to income taxes (I'm looking at you
| Texas).
|
| > They can be adjusted annually based off the needs of a local
| market
|
| Or, in the case of Texas, a very large portion of property taxes
| in urban centers ends up as recapture and goes into a state-
| controlled slush fund. These portions (school taxes) are not
| actually adjusted at all.
|
| > the money collected from property taxes doesn't evaporate from
| a local area
|
| See above statement again. This may be true for city-level
| property taxes though.
|
| > Retirees and low income individuals are often able to make
| cases to reduce their tax burden
|
| I would disagree with this. There are exceptions written into the
| law that provide exemptions for some of these groups (which are
| often abused and disincentivise "good" use), but overall lower-
| end properties have many more comparables to set value based off
| of, and tends to be much closer to "market". These residents also
| don't tend to have the funds to many these arguments, and
| commission-based tax-appealers don't stand to make much money
| taking on these cases (the absolute dollar value is relatively
| low). Further, high-value properties without many comparables are
| the easiest ones to argue for lower tax burden on.
|
| Finally, when property values actually do decrease (due to
| central bank action on interest rates, etc) it can be difficult
| to get the assessed value lowered without an actual sale.
|
| Tldr, the current implementation of property taxes in many
| locations is extremely regressive.
| eternityforest wrote:
| Why are these taxes not progressive? Homeowners shouldn't pay a
| ton of tax just to stop speculation and airbnb.
| ahallock wrote:
| Not if you're retired on fixed income. My parents' property taxes
| kept going up year after year in upstate NY -- one of the
| deciding factors when they moved. It's a shame because my dad put
| so much into that property.
| kumarski wrote:
| If you analyze how tax dollars are spent, you'd disagree.
|
| 50% of US GDP is about to become US gov't expenditure.
| TimPC wrote:
| The analysis doesn't go far enough. If you want to stop
| speculation you should tax land not property.
| killjoywashere wrote:
| Brock, would you please date your articles?
| pessimizer wrote:
| Funding local public schools through property taxes is terrible,
| and makes sure that kids from wealthier neighborhoods get better
| public schools. Kids are a special case; we even expect people
| without kids to pay for kids. Public education should be uniform
| and high-quality, not dependent on local political dynamics and
| neighborhood wealth (and wealth disparities.)
| rcpt wrote:
| Where does it happen like that? I. California we stopped local
| school funding with Serrano v Priest 50 years ago
| jdhawk wrote:
| Texas, but its more complex because we distribute tax revenue
| from wealthy districts to less wealthy districts. Its
| imperfect, to say the least.
| beefman wrote:
| This article argues that _relatively_ high property taxes are
| good. It 's a geographically zero-sum situation. Real estate is a
| rivalrous good and people will pay as much as they can afford to
| buy it. High property taxes put political pressure on interest
| rates, which in turn have broad effects on the economy.
|
| Economic mechanisms like this, which don't change anything in the
| physical world, almost never have any long-term impact, positive
| or negative, since the economy is a densely-connected network.
| Findings of large effects depend on stopping accounting
| somewhere, and you can get positive or negative findings
| depending on where you stop.
|
| Money juggling is a great distraction from what really matters:
| physical quantities and actions.
| tptacek wrote:
| High property taxes are clearly not intrinsically good; they're
| passed on to renters, and so they decrease affordability. Land
| value taxes sidestep this (increasing density decreases marginal
| tax burden on tenants), but they're not going to happen. You have
| to design policy for the world we actually have, not the one
| you'd prefer to live in.
|
| (Property taxes are a real problem where I live; we're an upper-
| middle-class enclave directly adjacent to the roughest part of
| Chicago, and affordability issues prevent people in Chicago from
| moving across the border to get our services. In the world we
| actually live in, _annexing the Village I live in_ would make
| more public policy sense than raising property taxes, which gives
| you a sense of how clumsy those taxes are as an intervention.)
| dleslie wrote:
| LVTs are a panacea for the concerns paper wealthy. They fear
| taxes on stock trades, capital gains taxes, and other forms of
| paper wealth tax; a LVT lets them point at the homes of the
| masses and say "Look, there is an easy to track and tax asset
| class, sink your teeth into that and not my stock portfolio or
| trades."
| tptacek wrote:
| It just doesn't matter. Land value taxes aren't going to
| happen. We need to make smarter decisions with the policy
| levers we actually have, and not pretend we'll have levers we
| don't.
| zamalek wrote:
| While true, renting is a roach motel no matter what property
| taxes are.
| tptacek wrote:
| Obviously this isn't true at all.
| njarboe wrote:
| Maybe subsidizing 30 year mortgages with low down payments is not
| such a great idea for the general populous. Imagine if house
| payments were similar but you paid off your mortgage in 10-15
| years instead of 30. That would be a much better state of
| affairs.
| EddieDante wrote:
| What's the deal with Brock Whittaker's website at brooock.com,
| anyway? It only seems to have one page:
| <http://brooock.com/a/property-taxes-are-good>. There's no home
| page, no list of other posts. Kinda disappointing, really, since
| I was curious to see what else this guy had to say.
| brockwhittaker wrote:
| sorry I just made this site this morning to post this article.
| it's just a simple node-http server! I don't write much :)
| freedude wrote:
| Coming from a state with a higher property tax rate I can qualify
| this by saying higher is not better. Taxes are always a
| disincentive. While the author claims it is a disincentive to
| sitting on a property and is comparing it to the effect on price
| like the FED's interests rates, these comparisons are myopic. He
| misses the bigger picture of longevity of private property
| ownership, the Constitutional protections of a property owner,
| and the inevitable results of the state seizing the property for
| back taxes. The long term benefits of the first two are long
| proven and the cold destruction of a member of a community the
| result of the last.
|
| Oh yeah, and the higher tax gets passed to the renter/leasee in
| higher rents and is a further disincentive to usage and
| investment.
| curious_cat_163 wrote:
| Agreed on the taxes being (at least partially) passed on to
| renters in a typical case.
|
| However, don't understand how you are linking constitutional
| protection of property ownership with tax rates... it is
| obviously not an absolute because we do pay property taxes...
| so this is a matter of degrees.
|
| Free society chooses to find the right level. It does not imply
| negation of bill of rights...
| veritas20 wrote:
| it saddens me that we have not put more thought into this topic
| and we constantly put our education, safety, and services on the
| economic roller coaster.
|
| no matter how much your home is worth today or in ten years you
| and other in the community want a standard level of education,
| safety, and services from your local governments. this should be
| priced as a service based on the cost to provide it to the
| members of the community and not based on dynamically changing
| home values
|
| property taxes should have a baseline cost to cover the essential
| services (schools, critical infrastructure, safety, etc.) that is
| the same for everyone (no exemptions) and a variable cost for the
| non-essential services (parks, beautification projects, etc.)
| (very limited exemptions) that can be based on the value of your
| home or land
|
| this way the essential services are always funded and not
| impacted by economic downturns or property appraisal
| disputes/challenges and local governments don't have to play the
| game of increase the millage rate to make up costs for essential
| services
| dmfdmf wrote:
| Property taxes are unconstitutional and immoral. They are an
| implicit nationalization of all property because there is no way
| to own property unencumbered. Implicitly the govt owns all the
| land and charges you rent. The level, high or low, is irrelevant
| to the principle.
| EddieDante wrote:
| I'm gonna blow your mind right now: the foundation of all law
| is the government's monopoly on violence. Might makes right.
| The only "social contract" in force is, "Obey and be protected.
| Defy us and die."
| danans wrote:
| > The only "social contract" in force is, "Obey and be
| protected. Defy us and die."
|
| That same contract is also in force in the absence of a
| government monopoly on violence, with the difference that the
| "and die" part gets implemented far more frequently.
|
| That's why anarchists (of any stripe - left or right)
| shouldn't be trusted, since what they are really aiming for
| is to destroy democratic institutions and replace them with
| an authoritarianism that enforces only their preferences.
| EddieDante wrote:
| Corollary: the difference between a government and a
| warlord/organized crime syndicate is the time/money/effort
| spent on propaganda.
| danans wrote:
| > Corollary: the difference between a government and a
| warlord/organized crime syndicate is the
| time/money/effort spent on propaganda.
|
| Only when the government is authoritarian. You can't vote
| out a dictator, king, warlord, or mob boss.
| dmfdmf wrote:
| Yes, I agree anarchy is a dead end. The original idea was
| govt has monopoly on force to avoid anarchy (and the
| violence and injustices it entails) but the Constitution
| was originally designed to _limit_ when the govt can
| validly use force. We have obviously drifter far away from
| that ideal.
| dmfdmf wrote:
| Mind not blown. I agree with that and argue the point with
| people all the time. At the bottom of all the govt regs and
| laws is a gun. It seems like an obvious point to me but some
| people struggle with it.
|
| In my view the govt necessarily has a monopoly on the use of
| force which is unavoidable. The important part of the "social
| contract" is when is it valid for the govt to use that force.
| The US Constitution originally laid out when the use of that
| force was moral. Using force to extract tax payment from
| property owners is not on that list and turns the govt into
| criminals operating under the color of the law which is
| terrible situation.
| btilly wrote:
| And, thanks to Proposition 13, California has entirely removed
| this policy tool from consumer housing.
|
| A tremendous amount of our problems, from high rent to gridlock,
| can be traced back to this decision.
| anonymousiam wrote:
| Prop 13 solved two problems at once. It forced a reduction in
| the out-of-control government spending, and it saved seniors
| from losing their houses. IMHO the only problem with Prop 13
| was the "grandfathering" clause. The cuts should have been
| perpetual and across the board.
| zip1234 wrote:
| It created a landed gentry in California and has caused out
| of control housing prices. The world changes, trying to
| insulate one particular group from change is deeply unfair.
| bcatanzaro wrote:
| Grandma is a millionaire. She can take out a reverse mortgage
| to pay her taxes and she'll still be a millionaire. Or she
| can agree to a lien that pays her taxes upon her death or
| move. We don't need to worry about grandma losing her house.
| jen20 wrote:
| You do have to worry about working families losing their
| houses in gentrifying areas though. The UK gets "property"
| tax right in the form of council tax. It's low, paid for by
| the person living in the property, and often is punitively
| high for the owners of empty properties.
|
| When people say that the US is a "low tax economy" they
| seem to forget property taxes, which make the effective
| rate in almost _all_ US states higher than the UK (and much
| of the rest of Europe) if you own a home. It's just a "poor
| value for money" economy instead.
| nomel wrote:
| > Grandma is a millionaire.
|
| You must come from a privileged family.
| rcoveson wrote:
| In California, being a millionaire at "grandma" age is no
| more privileged than average.
| throwthroyaboat wrote:
| Doesn't Prop 13 also apply to commercial property? And
| second/third/30th houses? I think they smuggled a bear in as
| a rabbit with this one.
| btilly wrote:
| It does, but commercial property tends to change ownership
| and undergo construction more often. Therefore property
| taxes on commercial property tends to be higher.
|
| As a result, cities have an incentive to build commercial
| property over residential homes. The result is that the
| people working in those offices are competing for limited
| residential space (leading to high prices) and often have
| to settle for long commutes (leading to gridlock).
| abeppu wrote:
| Even if commercial property is changing hands, there are
| well-known loopholes to structure that as multiple
| transactions, none of which transfer more than a 50%
| stake, and which therefore do not trigger a Prop 13
| Reassessment.
|
| https://journal.firsttuesday.us/change-the-law-close-
| prop-13...
| mdorazio wrote:
| > commercial property tends to change ownership and
| undergo construction more often
|
| Definitely going to need to see a reference on that one.
| larkost wrote:
| Prop. 13 means that a commercial renter can rent out the
| land to one tenant after another virtually forever
| without the taxes going up very much at all (way below
| inflation). At some point it gets to a point where it is
| never economically advantageous for either renter or
| landlord to ever have the landlord sell... the situation
| is only disadvantageous for the city/community (which is
| getting far less in taxes than other places).
|
| Remember that companies never die of old age.
| lapetitejort wrote:
| When was the last time Disneyland changed hands?
| rcpt wrote:
| The intent of the law was malicious. That's why it applies
| everywhere.
|
| Angry voters wanted a "tax revolt". Jerry Brown's Prop 8,
| on the same ballot, would have given homeowners a specific
| break but they wanted blood.
| mdorazio wrote:
| > It forced a reduction in the out-of-control government
| spending
|
| No, it didn't. California just kept adding taxes everywhere
| else to make up the difference and still had an annual
| deficit most of the 13 years I lived there.
|
| > It saved seniors from losing their houses
|
| Why are seniors magically allowed to be immune to basic
| market forces when no one else is?
| anonymousiam wrote:
| I lived in California for most of my life and I remember
| the effects of Prop 13. Before Prop 13 the parks had
| recreation coaches, the libraries were open seven days a
| week, and schools had more than enough teachers. As is
| typical with any forced budget reduction, the changes were
| targeted for maximum effect on public perception.
|
| The federal government went through a similar activity a
| few years later when Reagan slashed budgets. Everyone
| survived.
|
| The state/federal budgets today are astronomically higher,
| even after accounting for inflation.
|
| Below is a newspaper article I saved from over 30 years
| ago:
|
| --
|
| See Dick and Jane-and Simple Simon-Solve the School Budget
|
| By ALICE J. GLASSER
|
| Once upon a time, a very long time ago, there was a
| schoolhouse with a few children and a teacher. The children
| went to school to learn and the teacher went to teach. It
| was all very simple.
|
| Then a few more kids came, so they hired another teacher.
| Now, with two teachers, they needed someone to supervise.
| So they hired a principal. (Meanwhile, a lot more kids
| came, but just one more teacher.)
|
| So the principal hired an assistant. But still more kids
| came, so they built another school and hired another
| principal. And now, with two principals, they needed
| someone to supervise. So they hired a superintendent, an
| assistant superintendent, a supervisor of Here and a
| supervisor of There. And since they needed a place for all
| these people, they built their own building and called
| themselves Unified. And they were happy until someone
| pointed out that there wasn't enough for them to do. So
| they hired a director of This and a director of That to
| develop pages and pages of things for them to do.
|
| But there still was a problem. Unified had no one to
| implement these pages and pages of plans. So they hired
| coordinators of This and coordinators of That to decide
| which of the pages and pages of plans they should
| implement. (Meanwhile, a lot more kids came but just a few
| more teachers.)
|
| Now Unified needed a bigger building for all their people.
| So they bought a really big place. So big that they hired a
| few more Heres and Theres and Thises and Thats to fill up
| the space. And they were happy until they realized that
| they had run out of money. Their budget didn't balance.
| (Meanwhile, a lot more kids came and an occasional
| teacher.)
|
| So they hired a financial expert of This and a resource
| planner of That, and Unified came up with a Plan to balance
| the budget. They would break down all the walls between all
| the classrooms and once again have just one schoolroom.
| Only this time there would be 500 kids and one teacher. Of
| course, the teacher couldn't really teach and the kids
| couldn't really learn, but Unified was happy. Their budget
| was balanced. It was all very simple.
|
| ----
|
| As chairperson of the Mar Vista School Site Council in West
| Los Angeles, Alice J. Glasser has been wrestling with Los
| Angeles Unified School District budgeting problems. By
| profession, she is a physician.
|
| Update: I found it online here:
| https://www.latimes.com/archives/la-
| xpm-1992-07-08-me-1359-s...
| Supermancho wrote:
| > Why are seniors magically allowed to be immune to basic
| market forces when no one else is?
|
| Because they have fixed incomes (generally). This income is
| immune to market forces. That's why.
|
| While many elderly invested wisely (and at the right time)
| to become wealthy, especially when leveraging dips (like
| during the 80s), it doesn't change the average case. Living
| month to month on a fixed income is the norm after
| retirement.
| abeppu wrote:
| Except, while it was always rhetorically useful to talk
| about seniors with limited and fixed incomes being able
| to stay in their homes, Prop 13 also benefits people with
| multiple homes, landlords with rental properties, kids
| inheriting their parents house and running it as an
| AirBnb, etc. It benefits _corporations_ and non-
| residential property. Corporations can also skirt around
| it by not triggering a reassessment by not transferring
| ownership all at once.
|
| Meanwhile, why are only senior home owners worthy of that
| stability? Why do seniors who rent not get rent
| stabilization as a matter of law?
|
| If this were really motivated out of altruistic concern
| for vulnerable retirees, the law would look very
| different.
| arrosenberg wrote:
| That doesn't mean they should be excused from paying
| their fair share, especially since the elderly make
| greater use of public services. Float the tax rates to
| the market level and allow fixed income elderly to accrue
| a lien against the property that can be paid out of the
| estate when they die.
| negamax wrote:
| I do not think elderly invested wisely. Cities grew. They
| got lucky. It's as simply as that. The remote working is
| taking pressure off the cities. And you can see many
| crying about return to office, who have multi year
| leaseholds or own the buildings.
| Supermancho wrote:
| I specifically called out that this is a minority
| situation, so the characterizatiin you put forward seems
| like a wild overstatement.
|
| Some seniors bought post ww2 bonds at phenomenal rates.
| There were many ppl who made wise investments,
| regardless. Patience turned thousands into hundreds of
| thousands outside of the housing prices.
| Victerius wrote:
| Early born privilege.
| spicymaki wrote:
| This is local democracy in action. Vested landowners can put
| up barriers to entry to prop up their investments. They can
| also hand it down to their family, entrenching wealth for
| generations. Sucks to be an outsider.
| jeffbee wrote:
| Local example of this in action. In Berkeley there were two
| candidates for District 4 supervisor in 2022: the
| incumbent, who owns two houses, each worth over $2 million,
| and the challenger, a renter. The challenger had to
| withdraw from the race because his rent was increased to a
| level he can no longer afford.
| parineum wrote:
| The biggest barrier to entry for first time home buyers is
| by far mortgage rates.
|
| Low mortgage rates cause house values to go up because
| value is based on what an affordable monthly payment for
| that house.
|
| Low rates means value goes up to equalize payments which is
| mostly superfluous for people with only one home and good
| for anyone with investment property but it causes a 20%
| down payment to be an unsurmountable barrier to entry for
| those looking to enter the market.
|
| Home ownership is one if not the best way for families to
| generationally escape poverty.
| rahimnathwani wrote:
| "They can also hand it down to their family, entrenching
| wealth for generations."
|
| Not any more.
| gnicholas wrote:
| I think this new rule only applies to property that is
| inherited and not lived in by the inheritor (e.g., rental
| property or vacation home). If you inherit a home and
| live in it, I think you can still keep the old property
| tax basis. There may be some dollar value limitations or
| other rules I'm not remembering though.
|
| EDIT: just checked, the property value can go up by $1M
| from when it was purchased without the inheritor owing
| additional tax. [1] Beyond that, tax is due on the
| incremental additional appreciation. In reality, this
| will only affect properties in a few metro areas (Bay
| Area, LA, OC, SD) and certain beachside properties. This
| isn't to say that the law is good or bad, just to
| describe the scope of its likely impact.
|
| 1: https://www.cunninghamlegal.com/california-legal-
| services/ca...
| rahimnathwani wrote:
| IIRC the taxable value (not sure of the technical
| term)goes up by up to $1MM
| gautamdivgi wrote:
| You can via trusts. If you have a $2m house put it in a
| trust.
| HWR_14 wrote:
| Why not? What changed?
| rahimnathwani wrote:
| Prop 19
| karaterobot wrote:
| > And perhaps, the best attribute: the money collected from
| property taxes doesn't evaporate from a local area like it does
| when borrowers pay higher interest rates. It goes back into the
| local neighborhood, leading to better local infrastructure and
| higher quality schools.
|
| This much is demonstrably false, at least where I live. I don't
| even pay property taxes to the city, I pay them to the county.
| There's no tie between those funds and my neighborhood. Then, a
| lot of the taxes are passed from the county up to the state as
| well, where it's further spread out.
| notacoward wrote:
| > I don't even pay property taxes to the city, I pay them to
| the county.
|
| The county is still a _lot_ more local than a bank that might
| have an HQ across the country and is barely accountable even
| there. Also, most people 's property taxes do go to their town
| or city, so your sample-of-one is not really a basis for a
| policy statement.
| m0llusk wrote:
| These remarks about interest rates having an impact on real
| estate prices are not universally accepted.
| fleddr wrote:
| I'm struggling to make sense of the cause and effect in the
| article:
|
| "The high cost of property taxes have long pushed away
| speculative investors as it has pushed the carrying cost beyond
| what is profitable to hold as a passive investment long-term."
|
| Alright, so now the speculative buyers are gone and we're dealing
| with ordinary home buyers that actually occupy their home. These
| genuine owners are paying high property taxes. Next:
|
| "This has led to is a glut of high quality housing at very low
| prices. The amount of money one needs to save up for a
| downpayment in Chicago on a 2BR in the city center is 5x lower
| than in San Francisco or New York."
|
| How does specifically a high property tax for genuine buyers lead
| to lower prices? Because of less demand from speculators? If so,
| why not just get rid of speculative buying (simply make it
| illegal)? What does it have to do with property tax for ordinary
| citizens?
|
| And what on earth does Chicago have to do with San Francisco or
| New York?
| 8ytecoder wrote:
| Even if this provable, why not having a progressive property
| tax rate? Owner occupied properties can be charged half the
| rate of rented properties. Rather than increase it for everyone
| and making it harder on the very people who are likely to sell
| it to a speculative investor.
| negamax wrote:
| What author is saying is that if a property has a high yearly
| ongoing costs, it becomes tougher to just hold onto it and not
| put it into the market i.e. this causes increase in supply. If
| I have a $10k/year expense on a property, I am forced to at
| least generate a yearly $10k+ from the property. This would
| keep the rentals and property prices in the area in check
| skybrian wrote:
| On the other hand, it also increases the demand to rent
| property on AirBnB, if that's allowed and it's a desirable
| area. Tourists can pay more than locals.
|
| In general, as costs go up, the more there is incentive to
| try to cater to wealthier customers.
| cryptonector wrote:
| That can be right in the short term, but in the long term
| you'd expect developers to stay out of the market, so how is
| it that Chicago has a "glut of high quality housing at very
| low prices"?
| cryptonector wrote:
| I doubt speculator demand has anything to do with anything in
| the long term.
|
| I also doubt that developers would bother with a market like
| the one described. Why not go to some other state/city where
| construction costs are low and property taxes are also low?
| washadjeffmad wrote:
| Blackrock is currently propping up residential property
| prices in Atlanta to keep the bottom from falling out of the
| housing market. As the "cheapest of the Big 6", once Atlanta
| falls, other cities will, as well.
|
| General contractors don't just do general contracting, and
| it's not like tech where you can pick up and move anywhere
| there's internet.
| gruez wrote:
| >Blackrock is currently propping up residential property
| prices in Atlanta to keep the bottom from falling out of
| the housing market
|
| source? On one hand they could be as you said, but the
| alternative could be that investors think that "cheapest of
| the big 6" makes real estate there undervalued and
| therefore a good investment.
| beefman wrote:
| Threads about real estate are invariably overrun by clueless
| 20-somethings who think 'muh zoning' will let them afford
| property in the [elite metropolitan neighborhood]. Statistically
| none of you will be able to afford a home here; my advice is to
| leave while the leaving's good.
|
| Especially if you were lured here by some VC who sold you a
| metric ton of variance and went to the bank with the drift. But
| hey, they're on your side with the whole zoning thing.
|
| When you strip away the politics and bogus economics, house
| pricing is just the adult version of lunch table drama. That
| drama is actually a microcosm -- everyone in the cafeteria was
| selected at the real estate level.
|
| You may have been raised to think you could be elite, but only a
| small minority can be. And if you're downvoting comments because
| they imply you're not...
|
| It _is_ cruel, but changing it would require far more drastic
| measures than proposed here.
| Fauntleroy wrote:
| I'd settle for home prices in [way out there suburb of a
| delapidated major urban area] to be relatively affordable. You
| might be surprised to know that many of the "twenty somethings"
| that make it out to the big city actually have brains inside
| their heads.
| newaccount2021 wrote:
| djfobbz wrote:
| Said no one EVER!
| monksy wrote:
| There is a lot of frustration over the blanket example they used
| for Chicago. Is Chicago cheaper than NYC/SFO? Yes.. does that
| mean it's affordable for the area? No. We have encountered quite
| a lot of inflation in the housing market due to people from the
| HLOCs moving in. It's screwing us over pretty badly.
|
| The prices are like that due to the labor market and that we've
| been a blue collar city for the longest time.
| binarymax wrote:
| An effective 2.5% property tax, such as the example given for
| Chicago, is not high.
|
| Try living in NY, where effective tax is between 3.5% and 5%
| (mine is 3.8 in the city of Rochester). It's really hard for
| people to become homeowners at that rate, especially when the
| market goes up and an appraiser can show up at any time and re-
| assess your value and raise your taxes.
| kristjansson wrote:
| Wow, that's nearly another mortgage payment. Forever! For the
| privilege of living in Rochester, NY?
| throwaway0a5e wrote:
| That's probably part of how they keep the kind of people they
| don't want living long term in Rochester out of Rochester.
| binarymax wrote:
| Not sure what you mean by this. The city itself is quite
| diverse. Who are "they"?
|
| Also this is all of NY, not just Rochester, that has rates
| such as these.
| googlryas wrote:
| But what do Chicagoans get from their high property taxes that
| New Yorkers don't get with their low property taxes? Services
| seem about similar in both places to me(though, there is a huge
| swath I don't have experience with, like services for the poor or
| school services).
| conjecTech wrote:
| The tax burden is similar (maybe slightly lower in NY), but
| collected through different means. NYC has a city income tax,
| Chicago doesn't.
|
| If we're going to pick a means of collecting the same amount,
| encouraging good use of land and discouraging excess
| consumption seem like nice side effects.
| googlryas wrote:
| I actually like the concept of a city income tax - you don't
| get to use all the resources for free just because you take a
| bus in from across a river.
| brockwhittaker wrote:
| I'm not sure that's how it works--at least in the case of
| NYC. The ~4% tax only applies to those with residence
| within the city's limits. If you live in Westchester
| however and work in Manhattan, you escape the 4% income tax
| (but instead pay higher property taxes).
|
| https://tax.custhelp.com/app/answers/detail/a_id/571/~/i-do
| n...
| SoftTalker wrote:
| Rich Aldermen.
| BLO716 wrote:
| The real estate industry is a closed looped system, and because
| its monopolistic, anti-free market, and dealing with a finite
| product that simply trades hands its golden age was done after
| the great expansion of the United States after the Louisiana
| Purchase and the Mexican Treaties of 1848.
|
| This a foundational industry that pitted the upstate New Yorkers
| and the agrarian Virginians against Alexander Hamilton at almost
| every corner of his life in the establishment of free markets
| disruptions with the Bank of New York and later the Department of
| Treasury.
|
| Disruption can be seen in vertical markets of big cities and land
| creation like that of China in the South China Sea with man-made
| islands and expansion of territorial rights, but outside of that
| it's golden age is gone and the taxation will only become more
| intrusive for programs as our populous grows and the need to
| extract support for the expansion from the adult working class is
| through taxation.
|
| Hopefully this isn't rambling, but rather insight into how
| perverse the market has become because of no more land, and way
| more people.
| ryan93 wrote:
| There is an incredible amount of land not to mention upzoning
| and vertical development. Not to mention there is no monopoly
| on housing unit production. In fact many companies want to
| build but can't due to approval processes and zoning.
| salawat wrote:
| The market didn't become more perverse because no more land. It
| was perverse from it's inception, you just wouldn't come across
| the scaling issue until such time as population seeking space
| outstripped finite supply of land.
|
| Any market will run into this fundamental problem. The issue is
| apriori to market facillitated resource allocation systems.
| Whatever unit you use to represent value or as the unit of
| transaction; it will inevitably centralize once demand starts
| outstripping supply, and rent extraction becomes an effective
| capital amplifier.
|
| It's the magic of power laws. Everybody without capital assets
| pays everyone who has it. Those with it lift the prices by
| virtue of the fact they too are factored into average buying
| power amongst the potential set of transactors. That justifies
| higher asks, which decreases your non-capital owning members
| supply of transaction medium to devote to acquiring more
| capital which increases your rent extractors capability to
| diversify, rinse, repeat.
|
| There. Is. No. Escape. Except estate taxes, assuming no
| immortal legal fictions. In the presence of such, you're hosed
| for recreating a level playing field for latecomers.
| sinecure wrote:
| There is so much incompetence and political game playing
| regarding property taxes. I work in commercial real estate
| development. We negotiated a TIF district in a small midwestern
| town to help redevelop their vacant mall. In theory, if we could
| redevelop the mall and fill it with new stores, the sales taxes
| and property taxes from this growth would greatly benefit the
| city over the long term and help finance this risky project.
|
| First we came into battle with the school district. They would
| not allow us to build apartments on the mall site because
| "renters don't contribute to property taxes for the school", even
| though the citizens of this town need rentals because not
| everyone can afford a home. It then came to light that the city
| had been paying the school district out of their operating
| budget... which is illegal, schools can only be funded by
| property taxes. But would any politician want to go to war with
| the school district because they had accidentally been paying
| them illegally with taxpayer dollars? No way, they'd be voted out
| for attacking schools. So the school district continues draining
| the operating budget from the city to this day, while also
| getting their share of property taxes.
|
| Enter the county assessor. We went back through all the
| assessment records and discovered that the county assessor had
| not re-assessed the commercial properties in the area for 8
| years... meanwhile jacking taxes up on single family homes
| annually. Essentially they were giving businesses a freeze on
| property taxes while shifting the burden onto homeowners. If the
| county wasn't reassessing commercial real estate, than our TIF
| development couldn't demonstrate growth as the taxes would not
| change! So we tried to shake the hornets nest and let the county
| and city know that their taxpayers were being taken advantage
| of...
|
| What was the end result? Why had they not been reassessing
| commercial properties? Incompetence, the assessor was some idiot
| who was voted in because he had the "D" next to his name and did
| not know anything about assessing property taxes and argued that
| he was simply "too understaffed" to assess commercial properties
| for the last 10 years.
|
| Now imagine a whole country where massive, expensive errors like
| this can play out without anyone noticing for nearly a decade...
| it's frightening how broken, corrupt, or incompetent our
| government is in the United States.
| PeterisP wrote:
| In theory, decentralized government delegating various
| decisions closer to the people allows for more oversight and
| flexibility. In practice, in most places the oversight doesn't
| happen and just results in local politicians doing what they
| want, and simply enforcing a one-size-fits-all rule of law
| would be an improvement.
| jrm4 wrote:
| Sorry this was annoying and messy for you, but I look at many
| other countries and on balance this doesn't sound too bad, and
| certainly not "broken or incompetent" as if the US was on the
| verge of collapse because of things like this.
|
| If anything, this sounds like a system working, and you doing a
| bit of whining. Yeah, there's political game playing, that's
| called the price of localism and democracy.
| sinecure wrote:
| A city breaking the law for decades by paying the school
| district illegally and no one doing anything about it out of
| fear of getting bad PR for their election campaign... or
| mishandling property assessments for 8 years are all pretty
| huge examples of incompetence and are not something I expect
| in a first world country.
|
| It's the exact opposite of the system working. It's people
| being given power because of their party rather than their
| qualification and it indicates a greater sickness in politics
| in which we have become binary sports fans rooting for our
| team no matter the cost or quality of the candidate.
|
| To be fair I have no clue how broken property taxes are in
| Europe or Japan or other first world places, but this ordeal
| was eye opening to me having grown up assuming our local
| governments were held to a higher standard.
| vanilla_nut wrote:
| In my region of northern New Hampshire, there are a lot of
| retired folks with houses rising from $200k-ish values to closer
| to $500k-ish values in the last 5-10 years.
|
| As such, there's a lot of discussion around lowering property
| taxes to help these retirees.
|
| In my opinion? Fuck 'em. Property taxes are a brilliant method of
| perfectly progressive taxation: you can always choose to live in
| a cheaper home. If your home is so expensive that you can't
| afford the property tax, downgrade. Those of us who can't afford
| property will shed no tears.
| francisofascii wrote:
| Or, they can simply get a reverse mortgage using the $300K free
| appreciation they realized.
| et-al wrote:
| Who would want to settle down in an area that is trying to
| churn you out though?
|
| Sure, the "fuck 'em" attitude has been used by NIMBYs forever.
| But now we're using it to deprioritise the existing residents
| that might've sculpted the community. E.g. "Artists who can't
| the 200% rent increase? Fuck 'em."
|
| Most folks like some sense of stability with their housing. Not
| everyone's a 20 y/o digital nomad.
| flyingfences wrote:
| > you can always choose to live in a cheaper home
|
| I'm not sure if you've looked around northern New England
| recently, but there are practically no cheaper homes left.
| bombcar wrote:
| Strange, around here property taxes are allocated based on
| proportional value, true, but the total amount collected is set
| by the township budget.
|
| So if they collected $10m last year, and will collect $10.1m
| this year, it doesn't matter if the houses have tripled in
| value, you'll pay roughly the same dollar amount.
| ceejayoz wrote:
| This is how they work pretty much anywhere; the locality aims
| to collect a certain amount in total taxes, and sets a
| per-$1000 tax rate based on the total value of all taxable
| property in their jurisdiction.
|
| People think doubling house value doubles property tax, but
| the bill could go _down_ if double is less than the average
| increase for the area.
| fundad wrote:
| I'd say Fuck the idea of making it cheaper to live forever in
| the exact house when you could downsize and make the home
| available for a family.
|
| If the area was underutilized when they bought in cheap, they
| earned their windfall. I hope they didn't prevent apartment
| buildings from being built in their area.
| vanilla_nut wrote:
| Thank you -- this is a more concise version of my thoughts.
| If your house goes up in value, you just earned likely
| hundreds of thousands of dollars in the resulting windfall
| when you sell. Why on earth should I feel bad for you? I
| understand that communities change when this sort of thing
| happens, but pushing out the retired couple living in a
| multi-bedroom apartment for a small family is a healthier
| thing for the community. You don't want to freeze communities
| in time, they need to grow and evolve.
| throwaway9980 wrote:
| > Fuck 'em. Progressive taxation.
|
| At least you're honest about how you want to wield the cudgel.
| ahallock wrote:
| That's a very callous attitude, especially for people who have
| put a lot into their property. Being forced out due to taxation
| is no choice at all.
| scifibestfi wrote:
| Yeesh, lack of empathy much?
|
| Imagine you bought a house and worked diligently for 30 years
| to pay it off. Now in retirement your cost of living
| skyrockets, through no fault of your own, such that you can no
| longer afford to live there in your 70s and 80s. How is that in
| any way fair or just?
| medvezhenok wrote:
| Now imagine the same exact thing but instead of buying a
| house, the person rented for 30 years (probably would have
| been forced out of the neighborhood much sooner). Are you
| still empathizing?
|
| What about the people who couldn't get a loan in the
| 1940s-70s because of redlining and ended up having to rent
| for the same amount of time?
|
| All of this "empathy" talk hides real wealth redistribution
| towards property owners. Just holding on to a piece of
| property should not increase your share of real productive
| capital disproportionately.
| stephencanon wrote:
| Over here in Hanover they've gone from $500k up to $1M, and
| honestly the 2% tax rate is the only thing that kept prices
| somewhat in check in the presence of near-zero interest rates.
| woofyman wrote:
| //Those of us who can't afford property will shed no tears.
|
| Move somewhere cheaper.
| [deleted]
| HWR_14 wrote:
| I thought:
|
| a) NH (like CA) didn't revalue land for property tax purposes
| as long as you continue to own it.
|
| b) NH had a generous homestead exemption based on the median of
| the area in which you live.
| tclancy wrote:
| Southern NH here and I would be interested to see if NH's eye-
| watering property taxes (when you only have one lever, it gets
| used a lot) have a similar effect as Chicago. Personally, being
| somewhat involved in city politics, while I appreciate your
| take, it does mean pricing people out of their forever homes
| when they've done nothing more than retire to a fixed income in
| the middle of a bubble. I don't have the answer, but I can
| definitely imagine the fear of the unknown seeing you will not
| only be forced out of your home but your town and region to
| find something affordable.
| corpMaverick wrote:
| I lived in Nashua. There is zero new construction going on,
| lotes are very big so there is a lot of wasted space. The
| result is that housing is too expensive.
| commandlinefan wrote:
| > you can always choose to live in a cheaper home ... Those of
| us who can't afford property
|
| If there are cheaper homes for these privileged retirees to
| move into, why don't you buy those homes yourself?
| happytoexplain wrote:
| There's a reasonable and holistic argument to be made for the
| generalized version of your position, but specifically wanting
| people to be removed from their homes by forces they can't
| control under the rationale, "fuck 'em", is counterproductive
| and - I don't think it's uncalled for to say - immoral. It's
| important to have a base level of humanity for people,
| regardless of what side of which broken social dynamic they are
| lucky or unlucky enough to be on. Choosing not to do so will in
| fact _hurt_ our chances of fixing systems in most cases,
| regardless of how righteous it _feels_.
|
| >you can always choose to live in a cheaper home
|
| Here also - you're oversimplifying. Yes, you can always choose
| to engage in all manner of frustrating, saddening, and
| burdensome life changes. But it's unfair to imply it is easy.
| You may cite the burdens of others as justification for forcing
| such a change, but it's a complicated, emotional, difficult,
| subjective argument that you do no justice by abbreviating into
| hostile quips. You sound like you're sure this group of people
| you're imagining is the enemy, and not simply equal human
| beings, _some of whom_ may have voted in a selfish way on some
| policy that arguably increased the strain of the situation. It
| 's simply not enough to justify your tone. It's unrealistic to
| attack every individual who does not always act in perfect
| unselfish harmony with the greater society, especially when
| such balance is impossible to objectively define. I.e. it is
| reasonable to expect individuals to make various concessions
| for society, but it is not reasonable to expect people not to
| fight as hard as they can to keep their home (even though it
| may ultimately be that they must lose it).
| zip1234 wrote:
| Why should one group be immune from change just because they
| happened to own property in an area first?
| medvezhenok wrote:
| The main problem is that in America, the tax structure is
| very much tilted in favor of home-owning at the expense of
| renters, that collectively, the homeowner class is receiving
| subsidies from the renter class (and the homeowner class
| already has greater net worth and everything else).
|
| There are multiple ways to reduce the impact of the problem.
| All of them would reduce property values and some might
| displace existing homeowners. All redistribution is painful
| and surely people will lose out, the same way that savers
| lose purchasing power to inflation. Nevertheless, I think it
| is a necessary rebalance of a system that has been favoring
| owning over renting for too long.
|
| (1) Tax on imputed rent when owning (imputed rent should not
| be pre-tax)
|
| (2) Land Value Tax
|
| (3) Remove the mortgage interest deduction
| landemva wrote:
| #3. Yes, remove it and help simplify personal income tax
| filings.
| Victerius wrote:
| > removed from their homes by forces they can't control
|
| A caveat here is that many of these people vote against
| denser zoning in their neighborhood. So, in a way, the
| appreciation of their primary home is due to factors that
| they do control.
| cjmb wrote:
| "in a way" -- the region in question is northern New
| Hampshire.
|
| on balance, the housing price appreciation, and therefore
| tax burden, on "these people" is functionally entirely due
| to external macroeconomic factors, which you can clearly
| see on the Zillow Housing price index by typing in "New
| Hampshire" or any relevant zip code:
| https://www.zillow.com/home-values/
|
| The average NH home increased $7k-$10k in value per year
| linearly for the last 10 years!
|
| Then it increased $25k Jan '20 -> Jan '21.
|
| Then it increased *$53k* Jan '21 -> Jan '22.
|
| 10 years worth of price appreciation, and therefore tax
| appreciation, occurred in a 2 year window.
|
| I understand many people have a pet housing policy issue
| they care about, but trying to attribute this step-function
| change in tax burden to "New Hampshire zoning laws" and
| "these people" as opposed to the massive increase in demand
| caused by Covid urban flight/WFH & relaxed monetary policy
| is completely unreasonable.
| googlryas wrote:
| If the only thing that changes are home prices going up, why
| wouldn't property taxes(as a percent of home prices) go down?
| It's not like the city is offering new services because housing
| prices are rising?
| unethical_ban wrote:
| So, politicians get voted in, raise property taxes to extort
| established neighborhoods into selling because they can no
| longer afford the government's shakedown of their residence, so
| the corrupt politicians' business associates can purchase the
| properties and rent them.
| toomuchtodo wrote:
| Alternatively, have them pay for an appraisal and finance the
| progressive property taxes out of home equity. Upon death, the
| property is sold and the equity used to pay progressive taxes
| is repaid.
|
| This prevents the generational wealth transfer of subsidized
| senior housing tax rates with the benefits going to next of
| kin, who sells the asset and receives the proceeds.
| exclusiv wrote:
| I disagree.
|
| The local budget shouldn't change much from year to year, but
| when values go up, they are quick to reassess high on, many
| times, artificially inflated values. When values go down, then
| they aren't too quick to reassess accurately downward.
|
| In this situation, you just end up displacing retirees which is
| not good.
|
| I'm not talking about having special rules for retirees, just
| saying the politicians feast when home values skyrocket and
| cities need to have a reasonable balanced approach to be able
| to have great services and departments for the community, but
| not try to optimize for their budget.
|
| So many great cities have been destroyed from high property
| taxes. They jack up prop taxes, then lose families and are left
| with mostly older citizens, and there's a breaking point and
| they leave.
|
| Home values plummet along with property taxes. So what they
| thought might be good for the community ended up being a poor
| decision.
|
| Also property taxes are not perfectly progressive. Only areas
| with nice homes have good schools.
| chadash wrote:
| > You can always choose to live in a cheaper home.
|
| So your 90 year old grandpa has been living in a two bedroom
| apartment on the lower east side for 65 years. When he moved in
| at age 25, it was considered a crummy but affordable
| neighborhood, but now it's expensive and desirable. You want a
| 90 year old to have to move? I agree that maybe a 65 year old
| couple no longer needs to be in a 3,000 square foot home, but
| there are a lot of cases that make this complicated.
| vanilla_nut wrote:
| Why does grandpa get to live in a two bedroom apartment in
| the LES during retirement when so many other people can't
| afford it _despite working for a living_?
|
| If he owns, you'd think that he could sell the two bedroom
| and downgrade to a one bedroom to keep the monthly cost down.
| Or even a studio. But at some point it's an incredibly
| desirable, expensive neighborhood and I'm not sure anyone
| deserves the privilege to live where they want as long as
| they want.
| tzs wrote:
| Would you apply that argument to other property besides
| land/houses?
|
| For instance suppose when Grandpa was a young man in 1950
| he bought a used 1940 Martin D-45 guitar for a little under
| $400. That's equivalent to around $4800 in today's money.
|
| He's still got that guitar and has kept it in good shape.
| Vintage D-45s from 1942 and earlier go for insane amounts
| on the collector market, and he could sell that for over
| $100k, probably over $150k.
|
| Why should Grandpa have the privilege of owning a vintage
| 1940 Martin D-45 as long as he wants when so many other
| people who would like to play a vintage D-45 cannot afford
| too despite being working musicians?
|
| Should we therefore have a periodic instrument value tax on
| musical instruments to keep people from keeping their
| instruments too long? Grandpa can sell the vintage D-45 and
| use a fraction of the proceeds to buy a new acoustic guitar
| or even hire a luthier to build him a custom guitar so its
| not like having to give up his 1940 D-45 would keep him
| from having a guitar.
| pmontra wrote:
| > I'm not sure anyone deserves the privilege to live where
| they want as long as they want.
|
| You'll grow older and possibly understand. There are things
| that must be experienced, they can't be learned in any
| other way.
| rcpt wrote:
| Great! I'd like to experience living until old age and
| owning a tax advantaged two bedroom in Manhattan that has
| appreciated wildly through no effort of my own. Where do
| I sign up?
| chadash wrote:
| Because 90 year old grandpa can't move as easily as us
| youngins and it's not his fault that the neighborhood
| gentrified around him. At this point he can't afford to the
| taxes on a studio either. But anyway, the process of moving
| is really pretty tough at that age, even the logistics of
| finding a new apartment and hiring movers. Now, you move
| out to the suburbs because you can't afford the city
| anymore, but you don't drive because you are 90, so it
| isn't so easy to buy groceries anymore. You gotta find a
| new ophthalmologist, cardiologist and primary care doctor
| instead of seeing the folks you've been going to for the
| last 10 years.
|
| Maybe 65 is too young for retirement age, but I certainly
| feel that there is an age at which old people should start
| getting special privileges, like the right to not have to
| move. And the rest of us can wait our turns and hope that
| we get to take advantage of those privileges some day.
| medvezhenok wrote:
| First, grandpa will have to move eventually. 90 year olds
| in Ukraine got caught up in a war they had nothing to do
| with and had to move.
|
| Second, if the neighborhood gentrified around grandpa,
| his house value has gone up - he can sell at a good
| profit and use the money for his retirement as he wishes.
|
| Third - consider the counterfactual renter who was living
| in the same place and working just like grandpa, but had
| to move at the age of 60 because he couldn't afford the
| rent anymore. Why does grandpa get to stay but the other
| person, who is a renter with the same life story get
| forced out of the neighborhood?
| Kon-Peki wrote:
| Just to be clear, though:
|
| Grandpa has a senior exemption that reduces his property
| tax, and if he is also low-income he also gets a senior
| tax freeze that keeps his taxes low enough to pay them.
| If his health was failing and things were really, really
| tight money-wise he could apply to not pay his taxes at
| all and instead put a lien on his property that gets paid
| when he passes and the kids sell it.
|
| High taxes don't have to be cruel. The real question is -
| what are they doing with the money? Are you getting a
| good value from your taxes? I mean, everyone knows that
| these governments are wasteful. But they are still
| spending the money on things. It's happening. Do you get
| any value from that?
|
| I just moved out of Chicago last year. I am not going to
| claim that Chicago is well run or a model of efficiency.
| But they have a lot of programs that they spend money on.
| The library system in Chicago is incredible. It is
| undeniably world class. Where I live now, youth hockey
| costs $500 for a session. In Chicago, it was $175 - with
| better coaches and the random NHL player showing up to
| show how to do drills and such. Piano lessons cost twice
| as much. The list goes on. But you know, grandpa is
| probably not taking piano lessons or playing hockey. So
| maybe he's not getting the best deal. I don't know.
| cableshaft wrote:
| > 90 year olds in Ukraine got caught up in a war they had
| nothing to do with and had to move.
|
| I don't think this is a good example of why all grandpas
| will have to move eventually. We're not in a world war,
| at least not officially, and certainly not at all points
| in history.
| karaterobot wrote:
| > other people can't afford it despite working for a
| living?
|
| He bought the house by working for a living. The "fuck 'em,
| give me his house" argument isn't convincing me.
| BlargMcLarg wrote:
| Grandfathering until the chickens come to roost hasn't helped
| the vulnerable either, yet that same party largely consists
| of individuals proposing that solution to the vulnerable.
|
| It's cruel, but that same cruelty is deemed acceptable
| towards 'have nots'.
| yellowapple wrote:
| If Grandpa rents that apartment instead of owning it, he'd if
| anything stand to benefit (especially if we tax land value
| specifically and not the building).
| chadash wrote:
| My point is that a lot of (and maybe most) 90 year olds are
| not really capable of moving. Moves are a pretty big pain
| in the ass in your 20s and 30s, but doing the process of
| finding a new apartment and physically moving are much
| harder at that age. And then you move to somewhere cheaper
| because the whole point is you can't afford the city
| anymore, but now you need to find all new doctors (many 90
| year olds have multiple doctors they see regularly), figure
| out how to see family (perhaps you remained in your old
| place because your family lived nearby), get to the grocery
| store (you're 90... you likely can't drive). It's not
| practical.
| yellowapple wrote:
| > My point is that a lot of (and maybe most) 90 year olds
| are not really capable of moving.
|
| And mine is that a lot of (and maybe most) 90 year olds
| wouldn't need to move. The ones who _would_ be motivated
| to move are also largely the ones who are wealthy enough
| to do so.
| gedy wrote:
| > Those of us who can't afford property will shed no tears.
|
| You seem to believe the fallacy that not being able to afford a
| home is other homeowners fault, and not due to poor government
| planning (likely by the same politicians you willingly vote
| for.)
| dangerlibrary wrote:
| One can very convincingly make the argument that state and
| national governments are undemocratic and difficult for
| individuals or local groups to influence. But on the scale of
| a county, small town, or city government, that's less the
| case. Individual voters who have repeatedly NIMBY voted
| against densification have absolutely caused their own home
| values to inflate.
| lijogdfljk wrote:
| I took their statement differently; rather, that they aren't
| concerned for the fallout of the Haves at the sacrifice for
| the HaveNots.
|
| I am uninformed in this game, so this is not a statement by
| me: However i've been told that one issue is squatters, land
| being used purely as investment and with low costs you can
| easily afford to buy land and squat it till a time when you
| later sell it in the market.
|
| As someone looking to buy land to build a home on, i've
| noticed quite a lot of property seemingly being used purely
| for investment. Flipped through the years for profit with no
| real added value, in an area of the country (PNW) that is
| very, very expensive due to limited supply. It is very cheap
| to keep land, tens of dollars a year for 10 acres (the lot
| size i'm familiar with) iirc.
|
| Inhibiting this behavior seems beneficial.
|
| Though i imagine more interesting (than simply "high") taxes
| could help more. Ie something like a higher tax on unimproved
| and uninhabited land. Encourage usage, not squatting.
|
| But.. i don't know anything here. I just have experience
| looking to buy land, and watching what goes up for sale.
| gedy wrote:
| > Encourage usage, not squatting.
|
| Yes agreed, though I do think people conflate things and
| vilify wrong targets, which sounds a lot like the OP.
|
| E.g. in California it's en vogue to rail against "Prop 13"
| without considering why it was passed, or how it helps
| people on fixed incomes remain in their homes. , or more
| importantly how the financialization of homes has made
| things bad globally.
| zip1234 wrote:
| Just because it was passed for a good reason does not
| make it a good policy. Prop 13, whatever the good
| intentions, is a disaster and has created a modern landed
| gentry in California.
| crisdux wrote:
| I think you are missing something. It's not about blame, that
| doesn't matter. People are lashing out. It's about anger at
| the system. It's becoming increasingly obvious that recently
| a large part of our personal prosperity is based on
| incumbency. Our government is routinely breaking social
| contracts which maintain order. That makes people angry at
| the system, government and their fellow citizens.
| gedy wrote:
| > That makes people angry at the system, government and
| their fellow citizens.
|
| The "system" and governments frequently prefer angry people
| direct their rage at other citizens instead of them! QED
| [deleted]
| rjbwork wrote:
| And the same politicians that those homeowners vote for. And
| lobby. Especially retirees who have time to do things like
| endlessly harangue their local councils to implement NIMBYist
| policies to prevent increasing housing supply in order to
| drive their housing prices higher. Of course, couched in
| language like "preserving the historical character of the
| neighborhood" and "keeping the riff raff out".
| [deleted]
| lettergram wrote:
| Almost anyone can afford property... provided you're willing to
| move.
|
| I'm where I live it costs $40-$50k / acre up to $150k / acre.
| 30 min away it's $3-4k / acre.
|
| I personally am opposed to property taxes. I think it basically
| implies rent of the land. Then again, I'm basically opposed to
| all taxes except tariffs and perhaps licensing fees.
|
| For instance, you could implement a licensing fee to use the
| public roads. Or add a tax on import / export of goods across
| the protected border(s). But beyond that I view all taxes as
| far too intrusive. Why should my land be assessed? Why should I
| provide any details to the government so they can tax me? The
| "government" is infact my "neighbors" and I simply don't think
| it's their business what my assets are.
| yellowapple wrote:
| > I think it basically implies rent of the land.
|
| That's already implied from the existence of land deeds and
| the enforcement thereof: you're renting a subset of a nation-
| state's sovereign territory.
| int_19h wrote:
| Do you expect the government to protect your assets if
| someone threatens them?
| mutatio wrote:
| Isn't your envy/entitlement misplaced, by your own argument
| "you can always choose to live in a cheaper home".
| fundad wrote:
| Low taxes incentivizes a retiree to stay in possible a more
| spacious home than they need instead of selling to a young
| family. If you are a retired couple or a single without any
| large adult children living with you, you're better off with
| less to maintain.
| derekp7 wrote:
| But the absolute home value shouldn't affect property taxes. It
| should only be the relative home value. The county takes the
| entire budget, and divides it by the total of all the home
| values in the county to determine the basis for assessing
| taxes.
|
| The problem comes when a given home goes up in value more then
| their neighbors, or when one neighborhood increases more than
| other ones.
| jherskovic wrote:
| If there was a supply of cheaper housing, I'd agree with this
| wholeheartedly. Part of the problem is that, in a lot of places
| (SF, NYC, Seattle, etc) you can price folks into homelessness.
| Sure, no one is entitled to live in a specific area, but for
| those who built their lives there, have a community, family,
| it's cruel to tell them "move to Nowheresville, OH so you can
| afford a roof"
| Workaccount2 wrote:
| And who are the ones that voted against building that cheaper
| housing?
| igorkraw wrote:
| I mean, either you are cruel to home owners who have capital
| or you are cruel to poor people. I know where my priorities
| would be. Or we could of course try to remove the cruelty
| completely by not using a market system to manage a natural
| monopoly (space in a community). But if you choose cruelty,
| at least be cruel to those that can _choose_ to suffer as
| opposed that cannot really escape
| vxNsr wrote:
| You were just told that your plan will cause people to
| become homeless and your response is "I'll worry about them
| when they're homeless." You're a perfect politician: make
| plans with no thoughts to unintended consequences even when
| you're warned about them.
| igorkraw wrote:
| They won't become homeless. They will have to move after
| selling and incredibly expensive house. As opposed to
| those who are homeless but are not receiving any tax
| benefits for _not_ having a home, they will have capital
| to rent for a long time and /or buy a new one in a cheap
| area
| mgraf1 wrote:
| How would a non market based system work for housing
| though? How do we decide who gets to live in places like
| Honolulu or Boulder?
| igorkraw wrote:
| That's the hard question. Once you have a community that
| decides to so it differently, you can use democratic
| consensus or voting (partial exampl Vienna, lots of
| counter-market public housing), but to get there you
| either need force or political will for places like
| boulder (think cutting off any subsidies for private home
| ownership and replacing then with mandates to have public
| bodies or cooperatives build dense-but nice housing in
| their own backyard. Corruption management would of course
| be an issue, but at least in my country construction is
| famously corrupt even in the private sector...). For
| Honolulu I don't know...but is that actually an issue?
| cableshaft wrote:
| > I mean, either you are cruel to home owners who have
| capital or you are cruel to poor people.
|
| False equivalence. There's no reason you have to be cruel
| to either.
|
| You can always build more housing or provide financial
| services to help poorer people buy homes. Or just, you
| know, lower the cost of homes so property taxes don't have
| to be astronomical and force older people out of their
| homes to begin with.
|
| If housing costs and property taxes are so high it forces
| older people out, I don't see how that somehow benefits
| poor people anyway. They still can't afford those stupid
| expensive houses.
| igorkraw wrote:
| If you disincentivise individual ownership of expensive
| land and buildings, building dense housing becomes more
| profitable. Also, you can pay for social programs with
| the tax revenue.
| mjmahone17 wrote:
| On the other hand: if you own property, you could take a loan
| out in order to turn your single family home into a rent-
| collecting multi-unit house. That's what people did all the
| time before zoning laws, and it's a reasonable way for a
| retiree to earn an income.
|
| The problem is the zoning laws: we don't allow people to let
| out part of their property, so they're forced either to
| attempt to downsize into a non-existent market, or get
| evicted for not being able to afford their taxes.
| xnx wrote:
| Would reverse mortgages be an option?
| ketchupdebugger wrote:
| property taxes are used to pay for services that the local
| government provides. when property taxes are high, it means that
| either the local government is proving more services, the local
| government is in debt and needs to raise taxes to finance its
| debt, or the cost of those basic services has risen. At the end
| of the day your local government needs to spend almost every
| penny it gets. If they have extra money, they are going to spend
| it on stupid things like tanks for the police.
|
| High property taxes will make housing cheaper, but it wouldn't
| make housing affordable. Sure that house might only costs 100k
| but with a 2k per month property tax, no one can afford it.
| parineum wrote:
| Property taxes paying for local services keeps poor people
| poor. I don't understand why people think this is ethical.
|
| Property tax is possibly the worst way to fund the government.
| The only thing it's really good at is imposing a market force.
| It's largely regressive. In fact it's almost identical to gas
| tax.
|
| All flat taxes are regressive.
| ketchupdebugger wrote:
| on the contrary, property tax is actually a good way for
| people to pay for what they voted for. If your town voted to
| increase the education budget, your property tax directly
| goes into that. You are not paying for something that your
| town did not vote for.
|
| Property tax can be regressive within a community, but can
| often be progressive within a county/state. Different towns
| can have different property tax rates. Rich people would
| actually prefer a higher property tax to a certain degree to
| keep the poor out. If the avg property tax is 2k a month,
| then everyone living there needs to make at least 6 figures.
| recursivedoubts wrote:
| High property taxes are good on non-owner occupied homes.
| belligeront wrote:
| This is a regressive tax. It forces higher taxes on renters (as
| a class, less wealthy than homeowners) than homeowners.
| mikeyouse wrote:
| Nah, rents aren't determined by owners' costs (except at the
| margin where property owners are debating whether to 'stay in
| the game') - they're determined by bog standard supply/demand
| and usually set to the maximum rate the market will bear.
| nomel wrote:
| > Nah, rents aren't determined by owners' costs
|
| I don't understand this. The owners have pay mortgage,
| taxes, insurance, and repairs. How can it be decoupled? The
| landlords I know would have to sell if they lost their
| renters, or if the rental income fell below a certain
| amount.
| arrosenberg wrote:
| If the market cost of renting a unit drops below the
| landlords' cost to maintain the unit, the renter doesn't
| go "oh well, that's a shame, I guess I will pay the
| higher amount."
|
| The landlord either eats the loss or gets out of the
| game. Since vacancy is the worst possible outcome for a
| landlord, they can't just hold their units off the market
| to get the price they want.
| nrmitchi wrote:
| This assumption (which is largely correct) gets thrown out
| the window when the entire tranche of supply is hit with a
| cost increase all at the same time (and every participant
| knows it).
|
| The point of this "margin" you mention gets rather
| deterministically and uniformily raised across the board.
| mikeyouse wrote:
| Some sort of tax structure like;
|
| "x% LVT, y% Improvements tax on all properties with 50%
| reduction for your primary residence"
|
| Would be great.
| Ekaros wrote:
| Also it should be used as tool to increase densification. Just
| increase if property is not sufficiently dense, maybe to some
| 20%. At that point people are free to choose either to allow
| redevelopment to happen or support local community.
| Elof wrote:
| Residential real estate represents 5% of the GDP (in the US),
| 25% of an individuals wealth, and 65% of the homes are owner
| occupied. A 20% tax even if only for property deemed
| underdeveloped would bankrupt a ton of people (myself
| included) and throw the entire market into chaos. Most people
| who were hit with this wouldn't be able to redevelop because
| of the expense, so they would be forced to sell. The market
| would get flooded and drive down the value. Investors would
| snatch everything up, redevelop, and start driving up rental
| prices. We need change but this would be horrible in so many
| ways.
| firloop wrote:
| This article doesn't provide any reasons why a property owner
| should want lower property taxes; why would you want to constrain
| prices and prevent speculation?
|
| I don't own any property myself and am sympathetic to the idea of
| raising property tax, but many arguments for LVT/raising property
| taxes don't paint a convincing argument for why property owners
| should vote against their self interests.
| newaccount2021 wrote:
| brockwhittaker wrote:
| This is totally my personal bias, but I'm unsure that
| speculation has a positive value in the housing market, and I
| think governments should largely try to ensure that as many
| people as possible can afford homes, rather than ensuring that
| people can profit off the sales of their homes.
|
| In the United States, people have long seen real estate as a
| path to wealth (unlike Japan, for example), so it's difficult
| to reason that people's primary homes shouldn't be their escape
| hatch into retirement (e.g. the dream of someone buying a house
| in 1980s Palo Alto and selling it in 2022).
| int_19h wrote:
| There isn't one. Land, and thus real estate, is an inherently
| limited pie, so any market disbalance like what we have right
| now can only be corrected by taking some of the pie away from
| those who have too much of it. The only argument you can make
| to the former is that it's fairer that way. If they don't find
| it persuasive at face value, you can remind that, once enough
| people are sufficiently desperate to reach for torches and
| pitchforks, property owners would lose a lot more that any such
| tax.
| datavirtue wrote:
| Neighborhood a few minutes from me has an insane tax rate. It
| comes to $1000 a month for a $325k house.
|
| Keeps the riffraff away...and me...but they can afford their
| roads so...
| exclusiv wrote:
| That's crazy and that city is doomed.
|
| My in-laws spend more than that but their home is worth more.
| They've owned it free and clear for like 20 years but they are
| getting out this year.
|
| Their city used to be full of families, much higher values,
| lots of great local businesses and some big business
| headquarters. That's all gone and it's not desirable at all.
| goatcode wrote:
| Here's a crazy idea: 0% for primary residence, 50% for income
| properties (rentals, etc.). Will it kill renting? Heck no, not
| for property owners who live in one of their own units, at least.
| It might affect individuals and entities who hoard and exploit
| people, though.
| [deleted]
| social_quotient wrote:
| Maybe instead of messing with the money via the fed and then
| finding volatility in housing we should just end the fed. Housing
| becomes a safe haven asset to avoid the other ramifications of
| fed policy namely inflation and the machinations of policy qe/qt,
| contractions and tightening. Yes it's not in a vacuum but... we
| didn't get here by accident.
|
| Taxing and taxing higher on property is an assault on our ability
| or "own" property which is a freedom. Free societies have
| property ownership. Higher taxes whilst monetary devaluation
| seems like the system now wants to take away our ability to own
| things.
|
| https://en.m.wikipedia.org/wiki/End_the_Fed
|
| https://thehill.com/opinion/finance/570895-the-debate-we-sho...
| anm89 wrote:
| No need for discussion I guess. Someone from the internet has the
| correct conclusion...
|
| Hard to take stuff like this seriously.
| pmontra wrote:
| The house where one lives: no taxes. Other houses, tax them a lot
| especially if they are not rented.
| jelliclesfarm wrote:
| I have generally found it to be true that only those who don't
| pay property taxes..that is, those who don't own property by
| virtue of paying for it and/or have inherited property..are
| usually the ones who clamour to increase property taxes as a
| punitive measure.
|
| In other words, the assetless classes support taxing those with
| earned fixed assets.
|
| When reframed this way, the article reads to me as a high falutin
| petty and bitter whine.
|
| All taxes are theft. The only justifiable tax is a tax on
| consumption and perhaps a tax on children because population
| increases exponentially. That would take care of all the bundle
| of taxes and simplify the tax code.
| hahaxdxd123 wrote:
| High property tax gets us to closer to a land value tax, so yes.
| stewarts wrote:
| crikeyjoe wrote:
| clintonwoo wrote:
| I agree with this article, housing shouldn't be an "investment"
| but rather a place to live and have a good life.
|
| By taxing it, it provides disincentive for people to use it as an
| income generating or speculative asset.
|
| We shouldn't view housing as a way to "get rich" but housing
| actually provides much better utility if it's price is stable and
| not prone to boom bust cycles. Since more people would be able to
| buy at any given time for their budget if prices stay low.
| abeppu wrote:
| If you want to tamp down on speculation, can't we be a little
| more creative and targeted than just high vs low property tax
| rates?
|
| - Some cities are already getting into vacancy taxes; here the
| problem seems to be enforcement. No one's going door to door in
| luxury condo buildings looking for empty ones.
|
| - Can a tax due when a property is sold be based on how long the
| seller owned the property? If you lived there for 20 years and
| now you're moving to downsize, you pay a low rate. If you held it
| for 9 months to renovate and flip it, pay a high rate.
|
| - Can a tax rate due when a property is sold be based on the
| number of homes the seller has been purchased in the past 5
| years? If you've been a resident homeowner, low rate. If you're a
| development company bought subdivision land and is now able to
| sell dozens of houses, low rate. If you're a speculator who has
| bought several homes, and are flipping them, high rate.
| throwaway742 wrote:
| The problem is once you start making complex rules people will
| start finding loopholes and ways to work around it.
|
| Like you pointed out vacancy taxes are very difficult to
| actually enforce.
|
| If taxes are based on how long you have owned the property
| maybe instead of selling the property I give you a transferable
| 20 year rent to own lease or create a corporation that owns the
| property and sell you that corporation so that the ownership
| never changes.
|
| If taxes are based on how many properties you purchase in a
| year then maybe you create a separate corporation that
| purchases each property. No single entity has purchased more
| than one home.
|
| I am not a lawyer and these examples probably aren't that good,
| but I think you get the point. The simpler the rules are the
| harder they are to work around.
| abeppu wrote:
| I don't think vacancy taxes are _actually_ hard to enforce,
| but I think there are a lot of noisy objections from people
| who don't want them enforced, and that can be enough to sway
| municipal government.
|
| I agree that simpler rules are generally harder to work
| around.
|
| _However_, I notice that argument is almost always made to
| claim that governments shouldn't try to change behavior in
| line with the preferences of their electorate. Tax laws have
| loopholes, regulations have loopholes and push jobs and
| industries overseas, etc. The logical end point seems to be
| that democratic processes are doomed to be ineffective and we
| should just trust everything to the invisible hand of the
| market.
|
| What if the real problem is that the mindset that improving
| policy is so hard that governments shouldn't even try, itself
| dooms us to bad policies?
|
| What if 20 years ago we had all said, "making complex rules
| to identify and block spam emails is too hard; there will
| always be some way for the spammers to get through. So let's
| not waste resources on it."
| intrasight wrote:
| Where I live, the government only re-appraises every ten years.
| So it's a pretty crappy market signal.
| cbm-vic-20 wrote:
| Land value taxes are even better. Property taxes provide a
| disincentive to making the land more productive. A land value tax
| would incentivize residential landowners to build more units
| which provides more supply and would lower rents.
| Retric wrote:
| I don't think that's a meaningful difference. It would take an
| extreme property tax to actually incentivize an empty field
| over productive use of that space.
|
| It might in theory make a difference when considering replacing
| a 40 story building with a 42 story one, but in practice you
| really don't see that kind of construction project. In that
| context pushing for larger jumps before replacement might
| actually be economically and environmentally beneficial.
| wizofaus wrote:
| In Australia at least local government rates are based on
| "improved property value", i.e. you get taxed more from
| building a house on your land. It absolutely does lead to
| land-sitting even in higher density inner-city suburbs.
| trgn wrote:
| Taxing improvements is a proxy for progressive taxation.
| ie. rich should pay more. LVT is effectively a flat tax on
| acreage normalized by community wealth. To the broad middle
| class, taxing improvements "feels" more fair.
| xhxhsjjsjsnz wrote:
| It's not just empty fields. It's also empty buildings. A
| grocery store sized unit sat vacant in my San Francisco
| neighborhood for over a decade. Cheap property tax due to
| Prop 13. Owners wanted to wait for the "right offer" to
| develop it.
| zip1234 wrote:
| Many of the abandoned houses in Detroit are owned by
| speculators who will do nothing with it but wait for land
| prices to increase.
| sudden_dystopia wrote:
| And that's worse than them just being abandoned how?
| Nobody else wanted them, nearly anybody could have bought
| dilapidated houses in poverty stricken neighborhoods
| extremely cheaply.
| zip1234 wrote:
| They are still abandoned. They are instead now owned by
| people that have the means, but no intention of making
| them better.
|
| It has been shown that LVT reduces blight:
| https://www.pewtrusts.org/en/research-and-
| analysis/blogs/sta...
| InitialLastName wrote:
| > It has been shown that LVT reduces blight
|
| Did you mean to post a different source? The one you
| posted doesn't "show" anything, equivocates on whether
| LVT actually reduces blight in the few instances where
| it's been practiced, and makes meaningful suggestions for
| solutions other than LVT that it indicates have been
| shown IN PRACTICE to reduce blight (e.g. a land bank).
| yucky wrote:
| Many of the houses abandoned in Detroit were abandoned
| (and often torched) due to the ridiculously high property
| taxes and lack of value returned by the city for those
| taxes.
|
| It's hard to justify telling land owners to pay high
| property taxes when the city delivered the highest crime
| rates and worst performing schools in the nation in
| exchange for those tax dollars.
| laverya wrote:
| Have you ever seen a flat parking lot in the downtown of a US
| city?
|
| Low property tax (because it's unimproved) plus real estate
| speculation.
| jimmaswell wrote:
| Unimproved? Building a parking lot isn't cheap and it does
| make the land more useful.
| yellowapple wrote:
| > Building a parking lot isn't cheap
|
| It's cheaper than an actual building...
|
| > and it does make the land more useful.
|
| ...and less useful than one, too.
| salawat wrote:
| Usefulness comes in many guises. Think of a parking
| structure as an enzyme to catalyze transactions with
| people hailing from a further distance away. Without that
| space, the exchange can't happen.
| quartesixte wrote:
| The drive (no pun intended) here is to make that an
| unnecessary or at least facilitated through different
| means.
|
| You want people hailing from further distances via public
| transit and rail, and you want the majority of the
| businesses in an area servicing a highly dense, local
| community that can all walk there within 10-15 minutes.
|
| This enzyme must be removed, the American Urban Body
| reworked to reject suburban thinking like this.
| JOnAgain wrote:
| Trivially cheap compared to a 10 story apartment
| building.
| deepdriver wrote:
| If your goal is to put up an apartment building, it's
| cheaper to rip up asphalt than to demolish a multi-level
| concrete and steel parking structure.
| spywaregorilla wrote:
| It is comparatively cheap and comparatively less useful
| jimmaswell wrote:
| Or if you don't want your neighborhood more crowded, it's
| actually more useful.
| Retric wrote:
| You might be surprised just how profitable those parking
| lots can be.
|
| Putting in a 10 to 25+ million dollar multiple level
| parking garage can pay off, but only if there is enough
| demand for it and you can get zoning permission.
| TimPC wrote:
| We aren't talking multi-level though we are talking about
| an actual flat parking lot in the middle of a downtown
| core which is what speculators do and have done in my
| city while they wait to sell expensive land.
| Retric wrote:
| To be more clear. Depending on the location, those flat
| parking lots can be pulling in 1+ million per year in
| profit.
|
| That doesn't mean building a multi level parking garage
| in that same space is actually a good investment because
| demand isn't unlimited. What you see as wasted space can
| therefore actually be a highly efficient business.
| imtringued wrote:
| Yes it is profitable to wait for land to appreciate.
| Thrymr wrote:
| > Have you ever seen a flat parking lot in the downtown of
| a US city?
|
| Houston.
| chadash wrote:
| The biggest problem (IMO) is that it's not so simple to value
| land. Where I live, being two blocks over can make a huge
| difference. It's easy to say "you paid $500k for your house, so
| we're gonna tax you on $500k". It's much harder to accurately
| say what someone _would_ have paid for the land were it not
| developed. I understand the benefits of LVT, but how do you
| solve this? Are there any good examples of governments that use
| LVT in practice [1]? What do they do?
|
| [1] In practice and as a _primary_ means of property taxation.
| For example, proponents of wealth taxes talk about Switzerland,
| but the percentage of wealth that gets taxed there is quite
| small and nowhere near what proposals for wealth taxes in the
| US are aiming for. In other words, what 's a good country to
| look at to see LVT used effectively?
| raldi wrote:
| Just let property owners declare a value for their land, and
| give anyone the right to buy it for 120% of that value at any
| time, with the existing owner given a grace period where they
| can restate their estimate.
| bko wrote:
| That sounds awful. Imagine being forced to move every few
| years or giving people with money that much power over you.
| Seems crazy that this idea is so popular. I'm guessing the
| people who like this idea are very young and mobile.
| Imagine telling grandma she has to move and sell her house
| and have police show up at the door when she doesn't want
| to. It's basically the abuses of eminent domain except done
| privately.
| imtringued wrote:
| Most LVT proposals usually make concessions to owner
| occupied housing e.g. tax rebates if it is owner
| occupied. A citizen's dividend is also effectively a tax
| exemption for individuals instead of companies.
| turbinerneiter wrote:
| What makes you think this idea is popular?
|
| I don't even think the author is fully behind it, seemed
| more like a thought experiment as a reply to grandparent.
|
| Regarding grandma: I don't want to kick her out of the
| house. But there is a real issue here: young families
| can't find affordable places, while old families live in
| places, that are too big for them because the kids left.
| If they rent, they also pay significantly less than the
| younger family, since they are on older contracts. Once
| new people move in, rent is raised to the new level. The
| older people don't want to move out, because they would
| have to pay more for their new, smaller place, than the
| old, bigger place. Meanwhile the young family also has to
| finance the pensions for that old family.
|
| Noone is being evil here, but ... it sucks. And every
| idea to work on it is shut down as being unfair to the
| people who already own houses. Even building new houses
| is usually opposed by the people who already have houses
| in the area. If I never get the chance ever to own one, I
| don't really feel like I have to protect the interest of
| house owners.
| nayuki wrote:
| What about land that already has buildings on it? The buyer
| can't just take the land without the building. So how do
| you take the building's value into account?
| bbbobbb wrote:
| I don't get the joke. So in your scenario people are
| basically not allowed to own land and the benefit is what?
| imtringued wrote:
| To be fair that idea is worse than auctioning land leases
| for a fixed period.
| horsawlarway wrote:
| There is no benefit, this is a terrible plan.
|
| Marginally shorter cycles before property becomes more
| useful in exchange for completely fucking over the
| elderly, marginalized groups, and those without free
| capital.
|
| It's a bonkers bad idea.
| horsawlarway wrote:
| My strong suspicion is that this will completely fuck over
| the elderly and marginalized communities.
|
| It also requires property owners to do EXTENSIVE research
| and information gathering _CONSTANTLY_ to ensure that the
| number they put down is reasonable.
|
| Many of them literally can't (ex: my 87 year old Neighbor
| Phylis doesn't care what her house is worth, because she
| plans to die in it, and isn't seeking to maximize utility.
| Instead she wants to pass peacefully in the house she
| remembers raising her kids in, and has lived in for the
| last 50 years. She has no car, is in a wheelchair, and uses
| basically no online services - how is she going to go
| evaluate the right value for her house?).
|
| ---
|
| Basically - this plan sounds great for 5 seconds and then
| you realize people would _literally_ revolt the second you
| pass it.
| at_compile_time wrote:
| The poor widow argument against land value taxes has been
| a mainstay of the landowning class for over a century.
| [Winston Churchill had had enough of it back in 1909.](ht
| tps://web.archive.org/web/20010728120002/http://home.vicn
| e...)
|
| Guaranteeing that people can take up the same space that
| they did when the population was half its current level
| is a great way to ensure that future generations have
| nowhere to live.
| lolinder wrote:
| The person you're replying to isn't arguing against land
| value taxes in the abstract, they're arguing against an
| implementation of LVTs that would force most homeowners
| to decide between overpaying taxes by a wide margin or
| suddenly losing their home.
| mring33621 wrote:
| "It also requires property owners to do EXTENSIVE
| research and information gathering CONSTANTLY"
|
| Every year in Chicago.
|
| My house has been, and still is, assessed for 600K over
| what I paid in Nov. 2021. It had been on the market since
| 2016, until I bought it. The price I paid is the value of
| the house.
|
| First assessment appeal denied.
|
| Second appeal lost in the system.
|
| We have to fight against an unfair and arbitrary tax
| system EVERY year.
|
| Now they are going to index the tax rate to inflation.
|
| Maybe other communities are under-taxed, but mine is not.
| allenrb wrote:
| I'm with you, mring33621. Cook Co. is ridiculous. Bought
| our home (in 2018) just north of Chicago, out of
| foreclosure. Taxes jumped far beyond what they'd been
| trying (and failing) to sell for prior to foreclosure.
| Similar experience last year with an apartment building
| being valued at more than twice what I'd paid (in rough
| condition) in an open, arms length transaction literally
| months earlier.
|
| AFAICT, hiring an attorney is the way to go. Then you
| still have to pay, but much less overall. I'm about 80%
| convinced that the tax assessors are in it with the
| appeal attorneys to almost literally write themselves
| checks. Not that such misdeeds would ever occur in
| Chicago/Cook...
| monksy wrote:
| You forgot the major rule. Hire an attorney that has
| serious connections with the alderman(s) and plays golf
| with the daileys.
| renewiltord wrote:
| The usual solution to that is a property tax deferral to
| death or transfer. Phylis would pay nothing, but her
| estate would be required to.
|
| People will revolt anyway. For instance, in California
| they revolted when we attempted to remove Prop 13 for
| businesses.
| [deleted]
| somethoughts wrote:
| It will be interesting to see if Texas ends up with some sort
| of Proposition 13 equivalent given property values and
| property taxes have been increasing a pretty significant
| rate.
|
| Fight over increased property taxes in Texas becoming
| political https://www.youtube.com/watch?v=gzUwoFVUc_I
|
| Texas voters to decide on 2 propositions that could impact
| property taxes https://www.youtube.com/watch?v=Nz67VXkjRfg
|
| It seems like the Texas Homestead Exemption Act is starting
| to morph into something analogous to Prop 13. Perhaps if
| there's enough growth in tech jobs (and more billionaires
| start hiding out there) they'll end up with an income tax
| like California and New York.
| jamiek88 wrote:
| Having lived in Texas for 20 years I find that hard to
| foresee as no state income tax is such an often used flex
| there but stranger shifts have happened.
|
| I moved from an ostensibly low tax state, Texas, to one
| with an income tax but my overall burden for state costs is
| pretty much the same or slightly lower as property taxes
| are low and there is no sales tax (8%+ in Texas).
|
| I was paying over $1500 month in property taxes in Houston
| burbs.
|
| They'll get you somehow!
| cryptonector wrote:
| Texas already has a homestead exemption.
| rcpt wrote:
| https://astralcodexten.substack.com/p/does-georgism-work-
| par...
|
| Had a good summary of land valuation problems
| bbatha wrote:
| Outside of California "you paid $500k for your house, so
| we're gonna tax you on $500k" is not how property taxes work.
| The town/city/county typically does property assessments on
| regular basis (usually annually). These are based on doing
| comparisons with like houses in your neighborhood and are
| equal prone to "2 blocks over is way more desirable".
| Arainach wrote:
| In the short term, it does. Sale prices are a big factor in
| property appraisals in every state. In Washington, "I just
| paid X" or "My neighbor just paid X" is pretty much the
| only way you can successfully appeal a state appraisal.
| rcpt wrote:
| This happens in California to. When you buy the state still
| decides the value of the land (else people would do under
| the table cash deals like they do with cars).
|
| Usually the assessment and sale price are not far off.
| toast0 wrote:
| In California, the county tax assessor assesses the value
| of newly conveyed property, but the intended valuation is
| "the amount it would sell for in an arms length
| transaction involving knowledgeable parties neither of
| which could take advantage of the exigencies of the
| other" and often the transaction meets those requirement,
| so the sales price is prima facie evidence of that price.
|
| If the difference in assessed value and the transaction
| price are significant, there needs to be a good reason.
| Of course, after that, in a lot of places, future year's
| assessments aren't so important as the Prop 13 limits
| come into play pretty quickly.
|
| I agree that (at least in my experience) reporting of
| true sales prices for houses in California happens as a
| matter of course, but not for cars, but I'm not sure
| assessment is the reason. Some states value cars based on
| tables and not reported sales prices, so if it were a
| large issue, California could change to that system as
| well. But also, a car sale often just has two parties
| where a home sale typically has the seller and the buyer,
| the two real estate agents, and a title and escrow agent.
| All five would need to collude to report a lower value
| for the sale while exchanging a higher value, and for the
| amount to be meaningful relative to the transaction
| requires a lot of trust. Reporting of the transaction
| happens to the IRS, the State, the County, and maybe the
| City; defrauding the DMV is one thing, defrauding all
| levels of government is another. Plus, there may be
| questions at the bank about the $100,000 in cash I
| deposited. If it comes up in an audit, it's going to be a
| big mess. Of course, in some locales, it's common to sell
| houses with some amount of money over the table and an
| additional amount under the table; but that usually means
| the economy has a lot of under the table money; which
| isn't the case (to my knowledge!) in most of the US.
| hammock wrote:
| Difference without a meaningful distinction. Houses are
| bought on credit, that credit isn't approved without an
| appraisal that supports the price being paid, and that
| appraisal is done using comps similar to a tax assessment.
| TimPC wrote:
| My city assesses land and structure value separately as
| part of property taxes so having them assess just land
| instead seems like less work not more.
| googlryas wrote:
| Mine does that too, but the process is clearly flawed
| because you can't buy land for the assessed price, and
| you can't build a structure on that land for the assessed
| value.
| aidenn0 wrote:
| Rebuild cost and current value are different, given that
| new construction is worth a premium
| TimPC wrote:
| Just because it's not possible to separately buy the
| structure or the land doesn't mean the numbers are wrong.
| The point still stands that taxing land disincentivizes
| nothing while taxing structures discourages building
| them. Many towns in Pennsylvania had a pretty good track
| record with this. They implemented a mixed tax system
| that focused more taxes on land and less on structures
| because they wanted to make people sitting on empty land
| and not using it pay more. They also didn't want to
| penalize people for upgrading their home. The system was
| extremely successful in its aims.
| freeone3000 wrote:
| These end up with wildly differing figures. Somehow my
| purchase price is $772k, my insured price is $225k, my
| property tax valuation is $302k, and the market price now
| is either $800k or $1200k, depending on if you're asking
| to sell it or use it as collateral! Nobody agrees on what
| property is worth.
| arrosenberg wrote:
| Insured price is based on the structure, not the land. If
| your house burns down, that's the part they need to spend
| money replacing. Valuing a structure's replacement cost
| is (fairly) straightforward based on materials, current
| labor costs, etc.
| tesseract wrote:
| And so there _is_ a way to get a reasonable approximation
| of land value: Subtract the insured value of the
| improvements (which should be accurate by virtue of being
| determined by a profitable insurance company in a
| competitive market) from the appraised property value
| (which there are generally accepted methods for
| figuring).
| devonkim wrote:
| It's not 100% foolproof but just a rough guide because
| demolition and waste disposal costs are non-zero. For
| someone else to use the land my house sits on someone
| would need to deal with the asbestos likely in various
| walls. Additionally, things get tricky if the land is
| found to have historical / archeological relevance which
| can stop development indefinitely. Commercial developers
| carry an insurance policy for this I believe.
| giaour wrote:
| Sort of, but that would give you the "social value" of
| the land, which it only has because of its present use
| and its proximity to other land used for specific
| purposes. E.g., the land under my house is worth $X
| because it's in a residential area in a major
| metropolitan area. If I were to build a dense mixed use
| complex on a large plot of land, I would probably
| increase the land value (since density would make it a
| desirable area).
|
| Does LVT look at a piece of land's productive value
| instead (i.e., how much food you could grow on it or how
| many minerals you could mine out of it)?
| [deleted]
| bbatha wrote:
| However, credit isn't approved every year so it goes out
| of date which is why cities, usually yearly, do regular
| property value reassessments.
| amanaplanacanal wrote:
| Wikipedia has some examples of places where it is used:
| https://en.m.wikipedia.org/wiki/Land_value_tax
| chadash wrote:
| I looked there and a bunch of the examples show places
| where it _used to be used_ (which is probably a good
| indication of how hard it is in practice). The rest have
| very vague details and none of the examples there really go
| into any depth on the details of how they value land in
| practice. So I 'm wondering if anyone knows which country
| has a good model to look further into.
| bobthepanda wrote:
| Based on the examples listed, I would imagine that it
| would probably easiest to look up those Australian states
| like Victoria.
| enaaem wrote:
| Proposed mechanism: You declare the value of your land, but
| the government can buy it at the declared price if they want
| to. This also makes land acquisition for infrastructure
| straightforward and transparant.
|
| There is a risk that the government will increase taxes such
| that people can't declare high land prices, which allows the
| government to buy up land for cheap. I haven't found a
| mechanism for that yet.
| buzzdenver wrote:
| How would that work if you build a house on your land that
| you cannot just move to a different lot?
| naasking wrote:
| I'm not clear on how land value taxes would incentivize the
| right kinds of units. For instance, would a land value tax
| incentivize the creation of tiny bachelor apartments, or larger
| apartments that families can use? We need incentives for both,
| and larger units are not very common these days.
| colinmhayes wrote:
| The only thing land value tax incentives is raising the
| building value to land value ratio. It says nothing about
| what kind of building is optimal.
| naasking wrote:
| It doesn't _explicitly_ say anything no, but what does an
| LVT entail given how humans tend to value property? For
| instance, in NYC would it incentivize building a bunch of
| shoeboxes or actual livable space?
| colinmhayes wrote:
| It would incentivize building a comparatively more
| expensive building that maximizes the developers profit.
| Whether that means shoeboxes or livable space depends on
| how much those things cost to build and how much people
| are willing to pay for them.
|
| If you just want single family homes with a big lawn you
| probably shouldn't be living in Manhattan, which is the
| point of lvt.
| tptacek wrote:
| Why does tax policy need to directly influence the mix of
| 1bdr and 3bdr apartments? Renters who need 3bdr apartments
| have enormous influence over the market already.
| landryraccoon wrote:
| Can you say more about the influence of renters?
|
| It seems to me to be the opposite. The mortgage interest
| tax deduction is a massive regressive government subsidy
| for homeowners, and penalizes younger people who rent or
| cannot afford to buy a home.
|
| So I'm curious what suggests to you that renters have
| political power. To me it seems the opposite - tax policy
| massively prefers owners over renters.
| tptacek wrote:
| I agree with you about the mortgage interest deduction.
| I'm not saying renters have outsized political power;
| they have, more likely, undersized political power. I'm
| saying very narrowly that in the market for multifamily
| building construction, people that need more bedrooms are
| an important market force, one the market has to pay
| attention to.
|
| The whole 1bdr vs. 3bdr thing is a total sideshow; the
| actual issue, again, is SFZ.
| sokoloff wrote:
| Renters are overwhelmingly living in properties that have
| mortgages against them and commercial loans are always
| deductible. The deduction for mortgages on owner-occupied
| property serves to put prospective owners (including
| current renters) on a more equal footing when bidding
| against landlords for property.
| tptacek wrote:
| It is an immense giveway to the top income quintiles,
| which receive between 70-80% of the benefit, and giving
| "prospective owners" preference over "landlords"
| practically by definition reduces density and thus
| affordability.
| sokoloff wrote:
| It's not about _giving preference_ to owner-occupants; it
| 's about _neutralizing the preference_ to landlords that
| would otherwise result.
| tptacek wrote:
| Again, that is inherently a policy decision that reduces
| density and affordability; by definition, "landlords" are
| people that own and operate multi-family dwellings. You
| could just as easily ask "why not give more of a
| preference to landlords?"
|
| It's probably useful for you to understand my, uh,
| priors? about this, which include the fact that I live in
| an overwhelmingly SFZ community that actively works to
| prevent the construction of multi-family dwellings, often
| with appeals to the evil of "landlords".
| sokoloff wrote:
| There's plenty of landlords who own SFRs as well.
| Building for building, I don't think tax policy should
| favor landlords over owner-occupants.
|
| How zoning should work is an orthogonal question in my
| view.
| tptacek wrote:
| Most owner-occupants own SFZ lots. Every owner of a
| multi-family dwelling is a landlord.
| sokoloff wrote:
| I'd prefer that an owner-occupant be able to write off
| the interest on N/N units on a parcel, just the same as a
| landlord is able to write off the interest on N/N units.
|
| That's true for N=1 (SFR), N=2 (duplex, half-occupied by
| the owner), N=3 (triple-decker with owner living in one),
| or N=50.
| [deleted]
| naasking wrote:
| If tax policy is not designed with these considerations in
| mind, then it will incentivize an improper mix and
| deteriorate the livability of the city. For instance, where
| I live the city core has been abandoned by families because
| no family-sized units have been built in something like 40
| years. So families move out of the cities and then commute
| which causes all sorts of traffic problems, wastes their
| time in these commutes, creates more pollution and carbon
| emissions, and so on.
| [deleted]
| tptacek wrote:
| Why is that necessarily the case? The market has much
| better information about the demand for 3bdr apartments
| than cities and counties do. Mostly we have the opposite
| problem: top-down policy from local governments impedes
| the construction of 3bdr apartments.
| naasking wrote:
| It's a mistake to assume that builders are responding to
| demand. All actors in a market have only partial
| information. To take my city as an example, the housing
| market started heating up, so builders started
| constructing condos and tried to pack as many units into
| their building as possible, thus improving supply. This
| created a vibrant urban centre for young people who live
| on their own in modest apartments and drove up demand
| among that cohort even further, thus incentivising
| further construction of those same units, creating a
| self-reinforcing cycle.
|
| But young people aren't the only ones who need to be
| downtown, as I said, and families were driven out to the
| suburbs for suitable housing. They have to commute
| instead, which has caused all sorts of gridlock and the
| usual problems with urban sprawl.
|
| If the right incentives existed for mixed housing, tax
| incentives included, then this wouldn't happen, and
| people of all ages could afford to live closer to where
| they work, thus alleviating many of those issues and
| creating more livable cities.
|
| Here in Canada we already do this in one sense by mixing
| government housing among more affluent neighbourhoods.
| This has prevented the formation of ghettos, but this
| same approach hasn't been applied to create an
| appropriate mix of housing for all different living
| arrangements.
|
| So given a land value tax incentivises certain kinds of
| land use, my question is whether it would incentivise
| using land to make urban centres more livable for all
| types of people, rather than only certain kinds of people
| or lifestyles.
| tptacek wrote:
| The premise of a market is that everybody is acting with
| partial information, and the market aggregates and
| allocates over time. I'm no anti-government squish, but
| there is no evidence, and a lot of countervailing
| evidence, that local governments can effectively (or even
| non-harmfully) make policy to influence the housing mix.
|
| When it comes to housing construction and tax incentives,
| what they need to do is (1) set tax incentives to
| discourage egregious misuse and encourage density, and
| (2) get out of the way.
|
| As someone living in the middle of one of these debates
| right now, the idea that we need to carefully control the
| mix of 1bdr apartments vs 3bdr apartments is... risible?
| The frontline of this issue is SFZ, not what _kind_ of
| apartments we build.
| naasking wrote:
| > I'm no anti-government squish, but there is no
| evidence, and a lot of countervailing evidence, that
| local governments can effectively (or even non-harmfully)
| make policy to influence the housing mix.
|
| I disagree. No planning has lead to many ghettos. The
| planning we've done here has avoided ghettos. I think the
| data is very clear on that.
|
| > When it comes to housing construction and tax
| incentives, what they need to do is (1) set tax
| incentives to discourage egregious misuse and encourage
| density, and (2) get out of the way.
|
| Except as I've been saying, if you encourage too much
| density your cities become unlivable for families, and
| you encourage urban sprawl and all of it's subsequent
| problems.
|
| > the idea that we need to carefully control the mix of
| 1bdr apartments vs 3bdr apartments is... risible?
|
| Who said anything about "carefully controlling" anything?
| Certainly not me.
| tptacek wrote:
| I see no evidence at all that increased density is a
| livability problem for families, and plenty of --- in
| fact, overwhelming --- that inadequate density is a bar
| for access to communities in the first place. So, no, I
| reject this argument outright.
| naasking wrote:
| As the other poster said, the urban sprawl and ridiculous
| commutes that you see in every city are overwhelming
| evidence. The lack of family-suitable housing in urban
| centres is to blame, and the prioritization along single
| metrics, like obsessing over "density-only" because it
| generates more returns on investment, shares a lot of the
| blame. Density is not the only metric to consider.
| tptacek wrote:
| No, they're not. Urban sprawl is the result of
| _deficient_ density. People who want low density can
| commute. For any fixed population, decreasing density
| must, obviously, increase commute times and sprawl. This
| isn 't complicated, though appeals to "return on
| investment" cloud the issue.
|
| Of course, part of the subtext of these discussions is
| that proponents of SFZ and owner-occupancy tend also to
| believe that their favorite cities should have controlled
| population growth. It's just not a good look to say that
| out loud.
| frumper wrote:
| The evidence is that people would rather drive 2 hours
| each way so their family can have less density where they
| live. They vote with their time and wallet. This isn't
| some theory, it's true all over the US
| tptacek wrote:
| They can do that. But people who live 15 minutes from
| downtown _also_ want to have less density where they live
| --- most homeowners would! --- and that is a problem.
| frumper wrote:
| You just said increased density isn't a problem for
| families and then describe people wanting less density a
| problem. If it's a problem for society that families want
| less density, then it's a problem for families if society
| want more density.
| tptacek wrote:
| I don't believe it is a problem, but people can have
| preferences for things that don't rise to the level of
| public policy problems, and if they'd prefer to live out
| in the country, God bless them.
|
| A _lack_ of density closer to cities is a real problem:
| it makes living close to where you work prohibitively
| expensive, and promotes sprawl.
| imtringued wrote:
| It doesn't, the only thing it does is remove the tax per
| apartment which means building more apartments on the same
| lot becomes cheaper per apartment.
| conductr wrote:
| > A land value tax would incentivize residential landowners to
| build more units which provides more supply and would lower
| rents
|
| Zoning usually dictates what's allowed and is indifferent to
| tax rates
| theluketaylor wrote:
| One of the many reasons exclusionary zoning needs to die in a
| fire. The urban housing crisis has been allowed to grow for
| decades, so we're long past any single solution, but I'm
| increasingly convinced no combination of fixes can succeed
| while exclusionary zoning still exists.
|
| Japanese-style inclusionary zoning splits the difference
| nicely between making sure people don't live next to loud,
| potentially dangerous industry and allowing lots of mixed-
| use, human scale developments of varying density.
|
| http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
| staringback wrote:
| US home ownership: 65%
|
| Japan home ownership: 61%
|
| Yet there is such a housing crisis in the states due to the
| "zoning" bogeyman
| dpe82 wrote:
| I'm not sure what your point is? Does development policy
| not affect the supply and location of housing?
| AmVess wrote:
| There is zoning, and then also the cost of development. Here,
| the reason why no starter homes are being built is because
| the cost to develop a subdivision is so high that no one can
| make a profit selling inexpensive homes.
| dpe82 wrote:
| Where is "here"?
| yellowapple wrote:
| Exclusionary zoning exists because of NIMBYism. NIMBYism
| exists because of the financial incentive to raise land
| values. That financial incentive exists because of a lack of
| taxation on land value.
| conductr wrote:
| Not sure I agree. Or doesn't fit with my
| experience/city/state.
|
| All zoning is exclusionary to my knowledge. That's the
| entire point. It's not necessary but it exists because it
| exists. And, it's sticky. It was established most likely
| when the entire city was raw land and undeveloped; so it
| served as a plan for development. There was no NIMBY
| because people were building their BY. Because there was a
| plan, you could decide where you wanted to build that BY.
|
| Once you have developed the land, raised family, lived in a
| house for decade(s), and the city around you develops and
| changes. Now, your property maybe better utilized as a
| multifamily complex or a nuclear reactor, or anything
| really. But, it's your home and you shouldn't be taxed out
| of it. Rezoning as a process is may difficult and probably
| should be. There's a lot of stakeholders/neighbors who are
| impacted by a change. They should have some say. It just so
| happens that those people who bought a single family house
| in a single family neighborhood tend to prefer it to stay
| that way so they get called NIMBY but it's a completely
| rational perspective to have if you were in their shoes.
| Thus, an introduction of this tax only serves to displace
| the current owners who can not afford the new tax bill and
| does nothing to change the actual zoning. So the result is,
| richer people with bigger tax-bill budgets move in and your
| even further into the NIMBYism trap not even realizing
| you're in a zoning trap.
|
| If you open up the zoning (and perhaps the building
| restrictions), the best and highest uses can actually
| prevail.
| kashkhan wrote:
| property taxes are terrible for old people. you should be able
| to buy a reasonable amount of land tax free.
|
| USA has about 2.5 billion acres. 1/4 acre per person in an
| average area tax free is reasonable.
| schumpeter wrote:
| Most states and counties I've lived in in the southeast US
| either exempt or minimize property taxes on residents that
| are over 65.
|
| In fact, my current area (Cobb county, GA) nimbys keep trying
| to block assisted living residences. The argument is that old
| people move in, don't pay into local funds, but the burden is
| hoisted on other younger families instead.
| CrazyStat wrote:
| Sure, I'll happily give you a quarter acre in rural Nevada
| tax free.
|
| A quarter acre in Palo Alto, though?
| jpollock wrote:
| Property Taxes aren't terrible for old people. How the mille-
| rate is set is terrible for old people.
|
| A fixed mille-rate results in taxes going up as value goes
| up. This might be difficult to plan for and manage. However,
| many cities will simply put a lien on the property and
| collect when the property is sold/transferred/person dies.
|
| However, this isn't necessarily how things need to be done.
| In New Zealand, the mille-rate is set to clear the budget.
| That way, the mille-rate changes with the city's budget, not
| valuations.
|
| If the city wants to do more, they put it into the budget and
| say "do you want to pay for it?". Then the mille-rate is
| changed and everyone's taxes change.
|
| If your house changes value, your taxes don't change! Unless
| your neighborhood changes its relative valuation, then it
| might go up or down.
| waterlaw wrote:
| Cities would stop caring about new residents then (as
| they've done in Canada.)
|
| They mostly cater to the existing residents that own homes
| and partake in municipal voting.
|
| They'll stop creating new housing developments and put
| massive permitting fees on proposals for new construction.
| jpollock wrote:
| No, it doesn't stop development. New houses increase the
| value of the land it is sitting on, so the tax from that
| plot of land will go up.
|
| The entire goal should be to encourage residents to
| partake in municipal voting. That's everyone's
| responsibility as citizens.
| Aunche wrote:
| 1/4 acre is the roughly the footprint of 432 Park Ave which
| is worth billions of dollars. There's no way a single old guy
| should be able to squat on that tax free.
|
| The lack of property/land value taxes hurts anyone who isn't
| retired. I care much more about poor young people who get
| priced out of moving to a better job in the city than an old
| person who is "forced" to sell their multi-million dollar
| single family home. If an old person insists on living in a
| place where they can't afford property taxes, there are
| plenty of people willing to pay their property taxes until
| they pass in exchange for a stake in equity of their home.
| lief79 wrote:
| Fairly sure this is to increase population density in the
| area, so selling old homes for tear downs would be a net
| gain.
|
| The more reasonable approach to this would be discounts for
| the primary residence, and possibly discounts for populated
| units, depending on if you are targeting home owners /
| overall population and housing cost.
|
| Quarter acre per family might make sense across the US as a
| whole with large swathes of empty land across the middle, but
| it makes no sense if you look at the average individual given
| the percentage of the country living in urban areas.
| rcpt wrote:
| In many states low income seniors can opt out of property
| taxes and take a lien on the house instead. This way they
| feel zero tax pressure no matter what happens to the local
| economy.
|
| Examples are California Tax Postponement Program and New
| Jersey senior freeze.
| Originami wrote:
| Just allow the elderly to accrue property/land tax debts
| against the value of the property, redeemed when
| sold/transferred or on death.
| ct0 wrote:
| Boulder Colorado comes to mind with this idea. Live in the
| city for a certain amount of time and be over a certain age
| and your taxes are cut in half. Much better than paying the
| tax and the government giving it back.
| slt2021 wrote:
| reverse mortgage should do the same trick
| Aunche wrote:
| Agreed. Reducing or eliminating the property tax benefits
| the beneficiaries more than the elderly themselves.
| dwater wrote:
| The way people in the US plan for old age and retirement, and
| the way they are treated by society, is terrible and property
| taxes are aspect of that. But the only way you should be able
| to own land tax free is if there are no government services
| provided on that land. No utilities, no public road, no
| emergency services, no municipal services. I don't know of
| anywhere in the US where that is an option. Unless you're
| saying you want that funding to come from a different source,
| which would mean a total restructuring of the tax system in
| the majority of localities.
| kashkhan wrote:
| The traditional (neoclassical economics) view is that taxes
| pay for services, but that's not how it really works. The
| federal government buys these services with money it
| creates, and then only later does it tax it back.
|
| For state an local governments this is mostly true but even
| there the federal government helps out.
|
| What you want is for the wealthy to pay for the poor and
| old and those without much wealth or income.
| zdragnar wrote:
| State and local governments in the US cannot create
| money. They either tax it first or run a debt by selling
| bonds.
| landemva wrote:
| I live in a town like this. 'Roads' are actually reciprocal
| easements to allow all other land owners to pass. Each lot
| has water well and septic, though one group of houses has a
| large shared water system which pools the individual well
| permits.
|
| Electricity and gas and internet are private companies
| using an easement.
|
| Police and fire can easily be funded by sales tax, just
| like the public transit. Alternatively, land owners can
| voluntarily pay yearly for police and fire, or opt-out just
| like people are not forced by government to buy homeowner
| insurance.
| Loughla wrote:
| If you don't mind me asking, where do you live? Because
| my area is very similar, but all 'reciprocal easements
| allowing owners to pass' are all based on county/state
| law, and enforced via such. Anything paved, tar/chipped,
| graveled, or traveled via dirt is a county road and
| subject to county maintenance and oversight.
| landemva wrote:
| > subject to county maintenance and oversight.
|
| Incorporate a town and do what you want. After
| incorporating, set up contract to pay county to do
| maintenance until the town has time to bid it out.
|
| Curious thing here is that with the limited ability of
| the town to meddle, town council election is occasionally
| cancelled because it is not contested. There is little to
| fight over, so not a lot of grift or power.
|
| Am west of Mississippi river.
| landemva wrote:
| An easement is a form of a property contract, not a law.
| It is enforceable in court by parties to the easement.
|
| Maybe look into the lot lines and confirm if they extend
| through the 'road'. Then go to county clerk and recorder
| and find what easements were filed there. Lots of
| misunderstanding about this, even in local government.
|
| Have those laws been tested? Published appellate cases
| specific to the law may be very interesting. An
| encumberance or taking requires compensation. Also, be
| careful to not use motor vehicle laws and words like
| 'drive', as you can do what you want on private property.
| My child was practicing use of movement via a personal
| conveyance when 11 years old, in what looks like a car on
| what looks like a road.
| zbyte64 wrote:
| Probably don't have bears in the area:
| https://newrepublic.com/article/159662/libertarian-walks-
| int...
| zdragnar wrote:
| Wait, why on earth is the article advising you to flee
| from a black bear? You literally cannot outrun a black
| bear- I've driven along side one that was running
| parallel to the road at around 30 miles an hour.
|
| If there aren't cubs around, you yell, clap and raise
| your arms. It'll run in a heartbeat. If there are cubs
| around, you back away slowly- running will just make it
| chase you. If it follows, stop moving.
| Dig1t wrote:
| > If it follows, stop moving.
|
| and then what!?
| zdragnar wrote:
| That's when you play dead, to get used to how you'll be
| in a minute.
|
| Realistically, it is a game of chicken. If you stop,
| you're signaling to the bear that you aren't intimidated.
| As long as it has an escape route, it'll back down.
| landemva wrote:
| Brown and black, though not grizzly. The moose are more
| dangerous. There are benefits to shared services, the
| question is how to fund the services and if it should be
| voluntary.
| rat87 wrote:
| Sounds absolutely terrible. I'm sorry. Hope your town
| gets it's shit fixed
| landemva wrote:
| Am enjoying coffee by the creek right now. It's awesome,
| but to each his/her own.
| [deleted]
| SoftTalker wrote:
| Sounds quite nice to me. A good example of how private
| agreements such as easements can solve a lot of problems
| that people think require "government" solutions.
| sudden_dystopia wrote:
| Yes, get rid of property taxes and completely overhaul the
| tax system. You could easily replace property taxes with a
| VAT which I would find much preferable because it's more
| flexible. Illinois property taxes robbed my family of a
| farm that had been in our family for 200 years. My
| grandparents simply couldn't afford $20k in taxes every
| damn year. Patently absurd.
| landemva wrote:
| I experienced VAT in Europe for some years and it is an
| overly complex sales tax. Simply have a sales tax which
| excludes uncooked food at grocery stores and excludes tax
| on some reasonably small amount of household energy each
| month. Then delete other taxes.
| nisegami wrote:
| That's obviously not ideal for your family, but it's
| precisely what property taxes (or more directly a land
| value tax) is designed to do. If your grandparents
| couldn't use the land in a way that covered the property
| taxes, then the argument is that the use of the land is
| likely inefficient and it would be better overall if the
| land was being used more productively. It sounds like the
| system did exactly what it was supposed to do.
|
| Edit: not to mention that VAT and sales taxes are
| considered regressive taxes that disproportionately
| burden the less wealthy. I would much quicker remove VAT
| than property taxes.
| SoftTalker wrote:
| It's Illinois. The state is a financial disaster. They
| are jacking property taxes because they don't know of any
| other way. Certainly spending less and rooting out the
| massive systemic corruption do not appear to be on the
| table.
| ROTMetro wrote:
| It may be what property taxes are designed to do but the
| social agreement that allows them is that taxes are
| designed to raise funds, not force people out of their
| homes. The Romans tried this. They ended up with their
| citizen farmers walking off the land because of the
| taxes, and ended up going from some of the most advanced
| farmers to not being able to feed themselves.
| jjoonathan wrote:
| > tax free if there are no government services provided on
| that land
|
| You're still giving the "it's property" framing waaay more
| credit than it's due. Remember, granting someone
| exclusivity to a contested resource means preventing other
| people who would like to use the resource from using the
| resource. It's entirely reasonable for those people,
| represented in aggregate by the government, to ask for
| compensation in return, even if the government provided the
| landowner no additional services beyond the exclusivity.
|
| The entire concept of "owning" land is just a hustle to
| argue against paying taxes on it.
| SoftTalker wrote:
| Maybe we should be honest and say that you can't "own"
| land? Government always has eminent domain, and power of
| seizure for unpaid taxes. You are effectively renting the
| land from the government. Why not just call it that. Give
| people a 99 year lease instead of a mortgage and property
| tax. If you do nothing with the land, your lease can be
| terminated. If you improve the land (build a house on
| it), you can depreciate that on your taxes as a leasehold
| improvement.
| oasisbob wrote:
| The complexities in land "ownership" are widely
| acknowledged and commonly taught:
|
| https://en.m.wikipedia.org/wiki/Bundle_of_rights
| jjoonathan wrote:
| Yes, exactly.
|
| The details need to be hashed out. I'm not convinced that
| 99 years is right, it's long enough to ignore and then
| pretend to be surprised when it comes up for renewal.
| Perhaps 35 years and no termination clauses, to make it
| easier to plan around? It would allow one house for
| having children and one house for retirement. The
| improvements mechanism would likewise need iteration.
|
| I am interested to see how the various global experiments
| in these directions will pan out, though it looks like
| right now the market is betting that the 99 year leases
| will turn into perpetual ownership. That's unfortunate,
| because perpetual ownership is directly responsible for
| most of the largest perverse incentive problems in the
| real estate industry, not to mention ongoing gigantic
| deadweight loss.
| [deleted]
| 6gvONxR4sf7o wrote:
| Why not solve it like social security? You pay in over most
| of your life, then retire. If you call the fire department
| after you've retired, they'll still come because you spent
| a life time paying into it.
| nomel wrote:
| > Why not solve it like social security?
|
| For the same reason that I'm planning my retirement
| without social security. Politicians can't be trusted
| long term. They'll write laws to allow them to use funds
| that were previously protected.
| Johnny555 wrote:
| _USA has about 2.5 billion acres_
|
| I don't see how that's relevant, not all land is equally well
| suited for housing, especially among the elderly who are
| likely to need some sort of living assistance and regular
| access to healthcare.
|
| _property taxes are terrible for old people. you should be
| able to buy a reasonable amount of land tax free._
|
| I think something like California's Prop 13 that puts a cap
| on property tax increases is a better idea -- but it should
| only apply to owner occupied primary residences, not second
| homes or investment properties.
| kashkhan wrote:
| land use must be fair. You should tax excessive ownership
| of land.
|
| Most old do not live in assisted care. ANd healthcare is
| independent of land ownership.
|
| CA is extremely screwed up on how it taxes. I used to live
| in Cupertino where some people were paying taxes on 2
| million dollar lots valued at 100k.
| Johnny555 wrote:
| Land is not equally valuable so you can't look at the
| total land area of the USA and declare that everyone
| should be entitled to one tax free plot of land, land in
| the middle of Manhattan has a different value than land
| in the middle of a mountain range that's covered in 20
| feet of snow half the year and is only accessible by
| helicopter.
|
| _Most old do not live in assisted care. And healthcare
| is independent of land ownership._
|
| I didn't say "assisted care" my father lived almost his
| entire life on his own, but still had assistance from his
| children and occasionally a home healthcare worker - this
| is a lot harder to do if his allocated tax-free plot of
| land is 100 miles from family or healthcare services.
| Healthcare is independent of land ownership, but isn't
| independent of location - after one medication change, he
| had to go back to the doctor daily for monitoring for a
| couple weeks, then weekly after that for 6 months. How
| would he do that it it was a 4 hour round trip to the
| nearest healthcare facility?
| ROTMetro wrote:
| Yes, people who have the property value go up around them
| should be kicked out of their homes. Goodbye old people
| and minorities who live in affordable neighborhoods that
| become gentrified. Kick them out on the street for
| failing to plan for possible future dynamics in their
| neighborhoods. It's the only fair thing to do.
| dragonwriter wrote:
| > I think something like California's Prop 13 that puts a
| cap on property tax increases is a better idea
|
| Prop 13 is one of the worst ideas in taxation ever. It
| would be better just to let the aged and disabled freely
| defer property taxes beyond a certain, income-based level
| (and maybe also to let other people do the same with
| certain limits on total deferred amount relative to
| assessed value for time-unlimited deferrals, and total time
| for value-unlimited deferrals.)
| rcpt wrote:
| We have that already. The California Tax Postponement
| Program. It stacks on top of Prop 13.
|
| Prop 13 is just a handout, it could disappear overnight
| and grandma wouldn't have to pay a dime.
| dragonwriter wrote:
| > We have that already.
|
| Roughly, yes (it's not exactly what I am describing, but
| pretty close); I'm saying if you are looking for a model
| to stop that problem elsewhere that has neither, copying
| Prop 13 (or even just the assessment increase limit, even
| if applied only to owner occupied primary residence)
| isn't the thing you should reach for.
| rcpt wrote:
| Right. But the thing to realize about Prop 13 is that it
| was passed in malice. Angry voters wanted a "tax revolt"
| because they were upset with the state. That's why it
| expands to all property and not just primary residences
| (Jerry Brown's Prop 8 on the same ballot in 1978 was
| targeted but voters shot it down).
|
| Of course nowadays it's easier to hire behind grandma
| than it is to defund school buses.
| yellowapple wrote:
| > property taxes are terrible for old people. you should be
| able to buy a reasonable amount of land tax free.
|
| When LVT is used to fund UBI, that ability is automatic: the
| "break even" point (where your taxes minus dividends are
| zero) would represent you owning a "reasonable amount of
| land" (as measured by value). If you own more than that, you
| pay for it; if you own less than that, you're paid for it.
| seanmcdirmid wrote:
| > Land value taxes are even better. Property taxes provide a
| disincentive to making the land more productive.
|
| I could get on board with this if cost to build and demolish
| were considered. We have a lot of SFHs that don't make sense to
| turn into town homes yet because the value of the home on
| property + demolition costs + cost to build new townhomes on
| property is greater than what those townhomes could sell for.
|
| More to the point, a blind land value tax could create a lot of
| waste through otherwise unproductive land repurposing (only
| productive because the tax makes it so).
| awillen wrote:
| That seems like the point, though - the land tax makes it so
| that it is productive to add more density. We want people to
| demolish that SFH and turn it into a townhome because we need
| more housing, so that's a feature of the tax, not a bug.
| seanmcdirmid wrote:
| > That seems like the point, though - the land tax makes it
| so that it is productive to add more density.
|
| It will still force density eventually as the home's
| structure value depreciates (demo costs are the same no
| matter how much the home is worth). Any new structures will
| be pushed into higher value uses.
|
| BUT let's say we instituted a blind land value tax
| tomorrow: many people would be forced out of their homes
| AND could not sell the home for what it was worth: a buyer
| would still have to either live in the house and pay the
| higher land value tax or tear down the structure and build
| something more profitable...the haircut they would
| otherwise have to take in either case would be reflected in
| just paying less for the house in the first place (assuming
| they've done their homework).
|
| This could even happen after the land tax is implemented.
| That the land value rises above the point of its use but
| below the point of where the land could be re-developed
| into the higher value use case. Then....you are kind of
| stuck in a bad spot until your situation changes or you go
| bankrupt.
|
| We actually already see this in the market: land with a
| tear down will cost less than land that is completely
| clear. The costs to develop are just less in the latter
| case. Also, people are forced by the construction market to
| settle for less valuable structures on high value land
| because there is just a shortage of material and talent to
| redevelop everything that we want redeveloped already.
| samatman wrote:
| Jumping straight from one tax regimen to another is a
| recipe for suffering, sure.
|
| Instead, we might imagine a State shifting from 10%
| income tax to N% land value tax, by lowering the income
| tax 1% per year, and raising the LVT 1 * (N/10)% per
| year, until a decade later, the State's income is land
| value tax, not income tax.
|
| That should give everyone the opportunity to make plans,
| and adjust over time.
| jwarden wrote:
| The advantages of a land-value tax is the central idea of
| Georgism/Distributism. There have been some interesting
| discussions about this on HN. Recently:
| https://news.ycombinator.com/item?id=29493005
| beefman wrote:
| Almost all property people buy and sell is productively used,
| and separating the value of land and improvements is
| practically impossible.
|
| Edit: As a weird example, subtracting what it would cost to
| build my California house from its current market value gives a
| value for the lot _far_ lower than the actual market price of
| an empty lot in this location. This isn 't just due to the
| depreciation of the construction (2012) but to market
| inefficiencies. It's actually the norm in our town. Only
| developers with economies of scale can really afford to build
| here, modulo a few wealthy families who are building their
| dream home without concern for ROI.
| JumpCrisscross wrote:
| > _gives a value for the lot far lower than the actual market
| price of an empty lot in this location_
|
| Retrofitting or tearing down a house in California is
| expensive. Particularly if it's an old house where there
| could be _e.g._ lead or asbestos. Clean lots (presuming it
| wasn 't previously a laundromat) command a value from the
| baggage they clearly don't bring.
| beefman wrote:
| There's no teardown required here. Developing an empty lot
| and selling the result will lose you a $1M+ in my town.
| Spec home development ceased here in 2019.
| JumpCrisscross wrote:
| > _no teardown required here. Developing an empty lot and
| selling the result will lose you a $1M+ in my town._
|
| Lots of people want to design their own homes. For them,
| paying up for an empty lot is worth it. Put another way:
| those buying empty lots are developers or rich. With
| rates rising, the latter set marginal pricing in
| desirable places.
|
| So no, there is no teardown required. But a teardown is
| desirable to some people. They bid up empty lots. Hence
| the deviance you notice, which is well documented in
| other places rich people like building designer homes.
| (Hamptons, Jackson Hole, _et cetera_.)
| beefman wrote:
| Not sure how you're using the term "teardown" here.
| Earlier, you mentioned the cost of the tearing down being
| a factor. And as I said, I already factored it out
| entirely.
|
| I mentioned the custom home premium upthread. It's not
| the cause of the deviance either.
| zip1234 wrote:
| What area is this? Are homes being built anywhere in the
| area?
| kspacewalk2 wrote:
| >separating the value of land and improvements is practically
| impossible.
|
| is routinely done in countries in which variants of land
| value tax are implemented.
| beefman wrote:
| It's routinely done in appraisals where I live too. Doesn't
| mean it's in any way accurate, as required to make the
| mechanism in the grandparent comment work.
| zip1234 wrote:
| Valuing a building+land is already done and used for
| property tax purposes. Why do you think it would be worse
| or less accurate to just remove building part?
| kuang_eleven wrote:
| Land value taxes are not functionally different than just
| regular property taxes in the places where it matters. In all
| of the areas that are in the worst of the housing crisis,
| property value is already dominated by land value; LVT doesn't
| really change much.
|
| The problem, just like the source says, is that the tax is too
| low, not mention the absolute disaster that is Prop 13 in
| California.
| dominotw wrote:
| > disincentive to making the land more productive.
|
| Isn't that like saying income tax disincentives people from
| making more money.
| Dracophoenix wrote:
| What's the difference between the two in reality?
| Theoretically, with a land value tax, "improvements" (however
| that's defined) aren't added to the final tax calculation.
| However better-looking homes are then a signal that drive up
| demand for (and therefore price of) land so ultimately it seems
| LVT does punish improvements if only indirectly.
| JumpCrisscross wrote:
| > _What 's the difference between the two in reality?_
|
| Land value tax incentivises turning a single-family home into
| a multi-unit building. Property tax explicitly discourages
| that.
| Dracophoenix wrote:
| Instead, I see LVT incentivizing the production and
| purchase of mobile homes, RVs, and hotels. You could live
| tax free if you don't have a permanent abode.
| indecisive_user wrote:
| If everyone on the block turns their homes into multiplexes
| or high rises, this would attract businesses/restaurants to
| cater to the new residents which would ultimately increase
| the value of the land and the corresponding taxes, so I'm
| confused how it's different than property taxes in that
| regard
| colinmhayes wrote:
| Unless every property in the area is owned by the same
| person each individual owner will want to build a more
| expensive building because their individual action has
| minimal effect on land value. Basically if you don't
| build big someone else will and you r lvt will go up
| either way.
| JumpCrisscross wrote:
| > _this would attract businesses /restaurants to cater to
| the new residents which would ultimately increase the
| value of the land and the corresponding taxes_
|
| Lot more steps. Developing a property is risky. The
| double whammy of eating the development cost in addition
| to increased property tax bill dissuades homeowners from
| taking the risk. (Yes, theoretically, prices should go
| down as easily as they go up. In reality, obviously, no,
| no city does that.)
|
| By the time your land value has increased, you've already
| made money. (Or ridden on your neighbours' investments.)
| yellowapple wrote:
| > What's the difference between the two in reality?
|
| One taxes the land and the building(s) on it. The other only
| taxes the former.
|
| In practice, this means that while property taxes and land
| value taxes both penalize speculation, LVTs more precisely do
| so, without the side effect property taxes have of penalizing
| construction.
|
| > However better-looking homes are then a signal that drive
| up demand for (and therefore price of) land so ultimately it
| seems LVT does punish improvements if only indirectly.
|
| Even assuming that effect does happen, it'd be considerably
| worse under a property tax.
| Dracophoenix wrote:
| > Even assuming that effect does happen, it'd be
| considerably worse under a property tax.
|
| So your answer is to dismiss my position without evidence?
| Your point that property tax is worse than LVT isn't
| justified by your claim. If land values are determined by
| government assessment like property values are, then you're
| still paying property tax, albeit with an obfuscated input
| for improvement in the calculation which may be higher or
| lower or just the same as a regular property tax.
| yellowapple wrote:
| > So your answer is to dismiss my position without
| evidence?
|
| My evidence is your evidence. If you're arguing that a
| parcel of land increases in value due to the existence of
| improvements on neighboring parcels, then so, too, would
| improvements on the parcel in question be more valuable
| (since they're already built in a desirable location).
| Hence: the impact for land tax + improvement tax would be
| worse under your premise than the impact for land tax
| alone.
|
| In reality, the "niceness" of surrounding homes is hardly
| a factor; proximity to economic centers (be it directly
| or by proximity to rapid transit) is typically one of the
| two primary drivers of land values (the other being
| geography).
| Dracophoenix wrote:
| Not just neighboring parcels. Any improvements on one's
| own property (separate from the land itself) would be
| factored into LVT through an indirect tax on improvements
| via a higher assessment value. While certains areas can
| be "nice", not all homes in a given area are equally
| "nice". Some parcels of land will have their values
| "propped up" by the home that is sitting on it as well as
| proximate homes while others are "weighed down" in the
| same manner. This would result in unequal LVT assessments
| even for parcels of the same acreage and quality within a
| given area. As a result, It's difficult to assess the
| "actual" land value seperatley. From this, one can
| conclude that an LVT on a parcel with less valuable
| property or (a property proximate to less desirable
| property) plus an improvement tax can be lower in cost
| than an LVT in on a parcel with property that is more in
| demand.
|
| > In reality, the niceness of surrounding homes is hardly
| a factor; proximity to economic centers (be it directly
| or by proximity to rapid transit) ...
|
| Homes can be valuable precisely because they're located
| away from economic centers. That too is geography in
| action. And if COVID telecommuting is an indication of
| market preferences, home-owning adults prefer small, out-
| of-the-way towns with plenty of space, low property
| taxes, and good internet connections. So I'd hardly think
| that proximity to economic centers (usually cities) is as
| relevant it used to be.
| havblue wrote:
| This would certainly impact people with older houses
| disproportionately relative to the wealthier folks doing the
| teardowns, though. Probably a political downside.
| zip1234 wrote:
| Where they implement such taxes, people with homes often get
| lower taxes because the tax on vacant or underutilized
| properties makes up for it.
| cryptonector wrote:
| In Texas property tax functions as an income tax by proxy, as the
| state lacks an income tax but redistributes property tax monies
| from rich school districts to poor ones. Therefore property taxes
| are high. Well, high compared to many other states, though not
| compared to, say, New Jersey. This is not really healthy.
| justinzollars wrote:
| This community is deranged. All forms of taxation are messed up,
| the funds end up in grifters pockets, funding wars, or in black
| holes.
|
| The last place I want my money is in a politicians pocket. But
| this community overwhelmingly supports this concept.
|
| If a slave is taxed at 100% and an indentured servant is taxed at
| 20% - what does that make you?
| mdcds wrote:
| What was the original mandate for the US Fed Gov? Focus on
| international affairs and waging war, and let states handle the
| rest?
| honkycat wrote:
| You realize that was almost 250 years ago at this point.
|
| Constitutionaliam is a grift run by conservatives to smoke
| screen their agendas. Nobody argues it in good faith.
| mdcds wrote:
| idk, never heard of Constitutionaliam.
|
| So what the mandate of Fed Gov should be and how long TTL?
| humanistbot wrote:
| You might enjoy Somalia.
| justinzollars wrote:
| I live in very high tax San Francisco, which is similar to
| Somalia in many ways. Our politicians are corrupt (Nancy
| Pelosi is a world class Options trader), we have a meteoric
| increase in crime, and we let people die on the streets -
| 1,300 over the last 2 years [1].
|
| 1. https://www.sfchronicle.com/sf/article/San-Francisco-drug-
| ov...
| honkycat wrote:
| People on the left are viscous critics of the democratic
| machine politicians. Pointing to them isn't an effective
| critique because: yes I agree. Liars and crooks all of
| them.
|
| Running to the right and embracing authoritarianism is much
| preferable to the politicians than, say, a general strike
| and a unionization movement. Which would actually harm the
| people in power instead of squishing those at the bottom.
| avgDev wrote:
| So, what is your solution for building infrastructure? Funding
| the military? Social programs? Snow removal? Libraries?
| Education?
| justinzollars wrote:
| Governments in the West have grown tremendously. In the
| United States the footprint of Government is 44% of GDP. 44%!
|
| This community is "Hacker News" not "Socialist News" or "Red
| State".
|
| Government should be able to function much better with much
| less. And it is no Hackers interest for its footprint to
| continue its endless expansion.
| EddieDante wrote:
| You realize that there _is_ a website called Red State and
| that it 's a right-wing propaganda outfit, right? I
| personally think it's hilarious that the "godless Reds"
| used to be commies, and now they're Republicans.
| honkycat wrote:
| Or producing meat, or maintaining prisons, or building
| security critical CPUs, or funding medical research...
|
| These people think the market exists, but really we just have
| a fucked-up version of socialism that privatizes the profits
| while subsidizing the risk. It supports toxic industries
| while fucking everyone else over.
|
| In this case, particularly talking about agriculture and the
| prison industrial complex... or the huge scam with the covid
| loans where they just used the money for stock buybacks.
| boredumb wrote:
| High taxes are bad
| curious_cat_163 wrote:
| I would want to see statistical backing for this. Kindly share if
| you know of any reasonable models that have studied this.
|
| --
|
| FWIW: Chicago has high property tax rate and it does seem to
| correlate to relatively steady median price movements.
|
| But that is just one example...
|
| There are likely other factors at play in Chicago as well: number
| of units of supply per capita and quality of public
| transportation come to mind as two that might have some bearing
| on housing prices.
| mdcds wrote:
| If speculation is the problem, then making expected return from
| real estate investments less than expected return from risk-free
| or low risk investments should fix it.
|
| Something like, if 10 or 20-year US Treasury bond pays more than
| you'd make being a landlord and you expect little to zero asset
| appreciation, then there is no incentive getting into real
| estate.
|
| And it's possible to discourage house flipping by introducing
| some sort of friction. Like a high tax of some sort that is
| applied only if you sell sooner than X number of years (let's say
| 5)
| always2slow wrote:
| This article doesn't take into account the negative migration
| that's been happening from Cook county for the past two decades.
| Less demand means lower prices.
|
| Also the claim that Chicago even has high property taxes for
| housing isn't really true. See here:
| https://www.rosenfeldinjurylawyers.com/news/chicago-property...
| and here:
| https://www.lincolninst.edu/sites/default/files/pubfiles/50-...
|
| Currently trapped renting in a high property tax area because the
| monthly tax bill would be as high as the mortgage payment. This
| rent trap is starting to feel real permanent because any raise in
| the property tax just gets passed through to the renter when they
| raise the rent each year.
| brockwhittaker wrote:
| They label property taxes as an absolute value paid, rather
| than as a percentage. Illinois per the Tax Foundation had the
| second highest rate*. In fact, it speaks to Illinois' and
| Chicago's affordability** that with such a high marginal rate,
| their property taxes as a dollar amount are on-par with many
| other states.
|
| * https://taxfoundation.org/how-high-are-property-taxes-in-
| you... **
| https://resources.oxfordeconomics.com/hubfs/Housing_affordab...
| always2slow wrote:
| I'm not sure what you're saying, yes Illinois property taxes
| are high but that's mainly because of the collar counties
| around cook (https://www.civicfed.org/civic-
| federation/blog/2017-effectiv...). It's hilarious that you
| think that high taxes has done anything good for Illinois.
| the state is bankrupt and in absolute shambles financially.
| The taxes are high on everything to try to dig out of the
| hole (which will never happen), effective sales tax in the
| Chicago area is now over 10%!! All of this nets reduced
| buying power so yeah, housing will probably be slightly
| cheaper on average but at the cost of standard of living all
| around. Your argument is absolutely clueless to the reality
| on the ground. High property taxes just look good on a
| spreadsheet.
| [deleted]
| exabrial wrote:
| Ok what if you're a poor person and you want to buy a home in a
| rich neighborhood? Ope, guess you can't! Government is going to
| fine you for wanting something better for yourself.
| jmyeet wrote:
| This is one area where (I hate to say it) the red states have
| tended to do a better job than the blue states.
|
| Take Texas as an example. Up until this last year at least, Texas
| had relatively low property values but high property taxes. But
| high property taxes on a $200,000 house aren't the end of the
| world.
|
| But here's a big one: in Texas, seniors (65+) can defer their
| property taxes to be settled upon their death. This allows
| seniors to stay in their house if they really want but
| incentivizes seniors to downsize to avoid passing on that
| liability onto their children.
|
| This is exactly what you want.
|
| Compare that to California, for example. "But what about the
| Seniors?" led to Prop 13, which was a massive tax giveaway to
| Disney and affluent property holders. Capping property taxes
| deprives the state of taxes to fund services for no good reason.
|
| Even worse, when your children inherit that house, they inherit
| the house on a stepped up basis (meaning they pay no capital
| gains tax and the capital tax base gets reset to the market value
| so if you sell immediately you won't pay any CG tax) and children
| and grandchildren can inherit the artifically low property tax
| rates.
|
| New York has a different set of problems. A big one is that
| single family homes are subsidized. A $1m SFH will pay less than
| half the property tax of an equal value condo. And there's all
| sorts of caps on property taxes on SFHs too.
|
| Additionally a $100m condo only pays about 10-15x the property
| tax of a $1m condo in NYC.
|
| I'm a big fan of making property speculation less lucrative. High
| property taxes are a good thing. We need to stop giving away
| money under the auspices of "but what about the Seniors?"
| twobitshifter wrote:
| Instead of taxes, I prefer depreciation terms (see japan),
| which incentivizes new construction and does no harm to those
| that continue to occupy the land in old age. you'll also find
| that older houses go down in value as expected.
| chiefalchemist wrote:
| > "This has led to is a glut of high quality housing at very low
| prices."
|
| Yes, but this (obviously) doesn't mean this housing is more
| affordable. It's not. Sure the razor is less but the blades
| (i.e., taxes) count as well. Both come out of the same pocket, so
| to speak.
|
| Housing prices are a function of affordability, and that is the
| collective sum of all associated payments, _not just mortgage_.
|
| So while we're on the topic, this is why the "college loan debt
| means more people can't afford to buy" logic (?) doesn't work.
| Eliminate that debt and prices will go up. Why? Simple! Because
| the market can bear higher prices.
|
| Roughly the same can be said for raising the minimum wage.
| Eventually, housing will eat that up as well. It just takes
| longer because leases are one-year cycles (and perhaps other
| local rent-increase limits).
|
| What we need is more supply. The only way to truly lower prices
| is to increase supply. Anything else is smoke & mirrors.
| edmcnulty101 wrote:
| I think someones FIRST house should be property tax free up to a
| certain amount that is reasonably indexed to some home value
| inflation metric.
|
| Any houses or value after that should be taxed.
|
| I think that the government constantly threatening to take your
| basic shelter that that you PAYED FOR already and put you out on
| the street... even though.. I repeat.. you PAYED FOR THE PROPERTY
| ALREADY..is outright fascism.
| nayuki wrote:
| > High property taxes are good
|
| Not necessarily. I've learned that at least in Toronto, the
| property tax rate is derived from the budget instead of the other
| way around. Let this article explain:
| https://torontoist.com/2016/12/how-property-taxes-work-toron...
|
| > With sales and income taxes (which can only be levied
| provincially and federally) governments establish a tax rate, and
| then see how much money that brings in.
|
| > Each year municipalities decide how much money they need to
| bring in, and then set their property tax rates accordingly, to
| ensure they collect the requisite sum. They start from the total
| they need to raise, in other words, and work backwards to figure
| out what tax rate will yield that amount.
|
| Because of this "backward" system of tax calculation, if every
| single building doubled in value, the tax rate will be halved,
| and the city will receive the exact same revenue.
|
| So if you raise the property tax rate more than what it should
| "naturally" be, what will you do with the budget surplus? What
| will you spend it on?
| mech987 wrote:
| Weird to see Chicago used as an example of good governance.
| js2 wrote:
| From https://en.wikipedia.org/wiki/Land_value_tax
|
| > Property taxes discourage construction, maintenance, and repair
| because taxes increase with improvements. LVT is not based on how
| land is used.
|
| From https://www.strongtowns.org/journal/2019/3/8/if-the-land-
| tax...
|
| > The problem is that the land tax component of a traditional
| property tax is too small to deter land speculation. Although
| property taxes vary from place to place, they are typically
| between 1% and 2% of the property's total value paid annually. If
| inflation is low, then for longtime property owners, this amounts
| to roughly the same cost as if they paid a one-time sales tax on
| the property of between 10% and 20%. Thus, the property tax
| applied to building values inflates their price by between 10%
| and 20%. And the property tax applied to land value allows 80% to
| 90% of publicly-created land value to accrue as a windfall to
| landowners. Thus, typical land taxes are too weak to discourage
| land speculation.
|
| Etc.
| https://duckduckgo.com/?q=economist+land+use+vs+property+tax...
| jpollock wrote:
| Doesn't this presume that all property is taxed at a flat rate?
| Wouldn't the answer be to split the property based on what the
| city wants to accomplish? Then empty land can be taxed at a
| different rate to property with a residence on it (or whatever
| priority the city would apply).
|
| Check out all the different tax rates that Wellington, New
| Zealand applies to a property [1]. I count 50!
|
| [1] https://wellington.govt.nz/property-rates-and-
| building/rates...
| mjmahone17 wrote:
| Property taxes discourage existing inventory from being taken
| off the market in order to speculate via property holding, at
| the expense of also discouraging new building.
|
| Land value tax discourages holding vacant or under-built
| property, at the expense of lowering the cost of the land. This
| means existing homeowners won't be able to sell their old homes
| for as much as they could if fewer surrounding properties are
| developed (more modern, better built, larger, with more units),
| because their old home is closer to being worth the raw value
| of the land.
|
| If you want to sell a $50,000 home for $500,000 because it sits
| on land that grew from being worth $10,000 to $450,000, then a
| LVT is terrible for you: you need to put in actual work
| improving your property rather than just sitting on a decrepit
| old building and selling it for a profit. The problem in the US
| is that the voters who mostly own their home can't stomach
| their home value decreasing: that reduces their paper wealth as
| well as their ability to take out loans and second mortgages
| for things like college or car payments. So politically it's a
| hard solution to push for (even if, on net, it would help the
| community be stronger).
| jacksnipe wrote:
| I always thought the low property taxes in NYC were twofold:
|
| 1. The absolutely staggering incomes at the top top end in NYC
| make income taxes a more effective revenue source.
|
| 2. In addition to property taxes, if you own an apartment in a
| building, there are a lot of other monthly costs. As I'm writing
| to this, it occurs to me that they may be completely equivalent
| to the maintenance costs on a house, but I suspect that condo and
| co-op boards are not nearly that efficient.
| kmeisthax wrote:
| If the homevoter hypothesis is true then the counterargument to
| this is just the argument itself. Property taxes cool
| speculation, _but I 'm me_, and _I_ bought into the neighborhood
| and thus want to see line go up.
|
| Yes, local politics is inherently more tailored, but it's also
| more vulnerable to conflicts of interest. Most local town
| councils are controlled by an oligopoly of the loudest homeowners
| who will vote down anything that is perceived to impact their
| home prices. The people who want affordable housing are not part
| of the voting quorum because they do not live or own the
| neighborhood.
|
| In other words, _don 't say the quiet part out loud_!
| kkfx wrote:
| I _totally_ disagree because high property taxes means people
| would be pushed toward small and small, bad and worst houses. As
| a result instead of encouraging remote work and energy saving
| high taxes encourage crappy popular housing that waste much more
| energy AND can 't be improved.
|
| At maximum I agree about taxing homes depending on their energy
| consumption (all sources) to encourage modern house development.
| But definitively not high taxes on properties. I'm Italian and
| I've seen the effect of them _destroying_ the market AND pushing
| people toward crappier and crappier homes. It 's not just a
| personal idea.
| timcavel wrote:
| jeffbee wrote:
| I have nothing against property taxes and I think they are good
| and should be higher - as the article says, the price of the
| houses stays the same and the government gets a bigger cut at the
| expense of land speculators. That's a good thing.
|
| However the arguments feels defective because it uses Chicago as
| an example. Surely the reason housing is plentiful and affordable
| in that city is because it has been slowly depopulating for
| decades and it currently only 75% as populous as it was at its
| peak.
| mr_beans wrote:
| tosser0001 wrote:
| "interest rates are a powerful tool to help control home prices"
|
| Unless you're paying cash, most people think in terms of what
| their monthly payment will be. So driving down the price may not
| make any particular house any more affordable.
| mrcarruthers wrote:
| There's also the downpayment to think of. While the monthly
| payments may not have changed all that much, the downpayment
| certainly has.
| sudden_dystopia wrote:
| High property taxes are only "good" in this stupid system that we
| have to reduce speculation. But what would really be good is if
| we could stop using housing as investments that drive the prices
| of homes higher via inflationary mechanisms so that the prices of
| homes remain more stable over longer periods of time. Which is
| exactly how a lot of other countries housing markets work. In a
| better system, property taxes should be relegated to the dustbin
| because it turns property ownership into property leasing which
| is antithetical to the idea of private property.
| naasking wrote:
| > But what would really be good is if we could stop using
| housing as investments that drive the prices of homes higher
| via inflationary mechanisms so that the prices of homes remain
| more stable over longer periods of time.
|
| Housing only becomes a good investment if supply is
| sufficiently limited such that demand can't be met. NIMBYism
| and decades of artificially low interest rates are mostly to
| blame here, although I agree that in the short-term, penalties
| on speculation can help keep costs in line.
|
| > In a better system, property taxes should be relegated to the
| dustbin because it turns property ownership into property
| leasing which is antithetical to the idea of private property.
|
| I disagree 100%. Protecting property costs money, and the
| government is in charge of protecting your property rights. It
| seems perfectly reasonable that you should have to pay a fee
| proportional to the value of the property as an "insurance"
| against its loss.
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