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Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

theguardian.com

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Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#71

Post by AnthonyMouse »

icebraining wrote: post #39
AnthonyMouse wrote: post #25

Earlier quoted context omitted.

> Property taxes could be eliminated and other taxes raised for a revenue neutral solution. The perfect solution for this is to eliminate both property tax and the mortgage interest tax deduction and let them cancel each other. For most people it makes no difference, but we stop kicking little old ladies out of the homes they own just because they can no longer afford the property taxes.

Would they cancel each other? In value, I mean? Seems like the property tax would cover much more than mortgaged houses.

The numbers depend on several variables, but they seem to be in the same ballpark.

The amount people owe on their mortgages is generally in the neighborhood of the assessed value of their homes. People may make some headway into actually paying off the mortgage, but the tax deduction makes that financially unattractive (better to pay off all other debt before the mortgage because the interest rate is lower and the interest is tax deductible) and housing crisis notwithstanding the assessed value is generally lower than what people pay for houses to begin with.

So you're really comparing tax rates against approximately the same base. Then you only need to know the mil rate, the marginal income tax rate and the loan interest rate. Plug in typical numbers and they end up within an order of magnitude of each other one way or the other (e.g. somewhere around 2%).

Unless your point is that property tax applies to more than single family homes, but there is no reason we have to eliminate property tax for e.g. commercial property.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#72

Post by Scramblejams »

AnthonyMouse wrote: post #22
corysama wrote: post #12

Earlier quoted context omitted.

So, the solution is: Don't pay your taxes. Wait for your house to go to auction. Hope no one buys it. Pay $500 to effectively erase your three year tax debt. Repeat. That apparently currently works. It's a clear market signal to the government that it has no alternative but to put up with you not paying your taxes. But, I expect if it became widespread, the tax man would see it as a loophole to be closed.

There is also clearly something fishy going on there. The only way you get to pay $500 is if no one else offers to pay more than that, i.e. the market value of the house is only ~$500. For a dilapidated house in a bad neighborhood that is entirely possible, but then why are the taxes on such a low value piece of real estate so high that the occupant can't afford them?

Agreed. Other government housing auctions have been recently documented in the press as bearing signs of bidder collusion. A closer look here would be welcome.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#73

Post by fargolime »

sitharus wrote: post #52
thrownaway2424 wrote: post #45

Earlier quoted context omitted.

The question is whether the pensioner provided enough benefit during their career to justify their pension. In a lot of cities the retirement benefits are completely out of proportion to the benefit provided by the government employee. The social contract works both ways. We're supposed to provide for the security of old people in retirement, but they were also supposed to leave a better future for young people. If t…

The problem with that is these people planned for what was promised to them. As a younger person in a skilled occupation, like most HNers I expect, I have no expectation on the state to provide for me and consequently have my own provisions for retirement savings. I've been placing a percentage of my income aside for a while now to fund me later in life. My grandparent's generation (in the UK) however were promised s…

Gotta use a throwaway because I'm going against the hive-mind.

People were promised pensions on the backs of future generations; the money wasn't set aside for the pension. That's a form of Ponzi scheme. Considering how much harm they do to others, pensioners should be happy to get a payout and not cry if it doesn't. Just as unfair as reneging on a pension is expecting today's workers to forgo retirement to pay the pensioners.

The people to blame are the previous generations who allowed this mess to form, not the current workers struggling under the weight of the pensioners. Today's younger workers didn't agree to the contract the pensioners had. They were born into the unfair system.

The cover needn't be pulled out. Many of these people are effective millionaires getting $US70K or more a year for the rest of their life. They'll still survive when that's cut in half.

Downvote away!

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#74

Post by fargolime »

mullingitover wrote: post #64
thrownaway2424 wrote: post #45

Earlier quoted context omitted.

The question is whether the pensioner provided enough benefit during their career to justify their pension. In a lot of cities the retirement benefits are completely out of proportion to the benefit provided by the government employee. The social contract works both ways. We're supposed to provide for the security of old people in retirement, but they were also supposed to leave a better future for young people. If t…

> The question is whether the pensioner provided enough benefit during their career to justify their pension. Hilariously wrong. The question is whether the city entered into a labor contract with the pensioner, and whether they fulfilled their end of the contract. Do you go to a restaurant, eat a seven course dinner, then skip out on the bill because you don't think the price was reasonable?

The better analogy is, you get the bill and discover you're supposed to also pay for the old couple who ate there. You didn't agree to do that. Instead the old couple's generation agreed that you'd have to pay for them when they reached a certain age. And oh yeah: you don't get the same deal when you're old.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#75

Post by fargolime »

themartorana wrote: post #40
bluedino wrote: post #36

Earlier quoted context omitted.

Not to mention the insane amounts that municipalities are paying towards the massive pensions and benefits for retired workers. How many existing police officers are cut in order to pay the pensions of the previously retired?

Edit: rant ahead, not aimed directly at bluedino I will never understand this. I agree life-time pensions are unsustainable. I argue constantly for a) all new public employees being enrolled in a 401k and pensions being phased out and b) offering younger workers buy-outs, allowing them to invest their contributions themselves in reward for opting out of the pension system. But that said - every pensioner out there wo…

I gave you an upvote, but the problem with your logic is that today's young workers didn't agree to forgo their retirement to pay for the teachers' retirements. The teachers of yesteryear got sweetheart deals that should be strictly honored only by those who agreed to them as voters when the deals were made, and by younger workers only if they explicitly agree to them now.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#76

Post by mullingitover »

Scramblejams wrote: post #69
mullingitover wrote: post #67

Earlier quoted context omitted.

> It doesn't have to be by a tax that in the case of arrears results in eviction of the property owner, and many taxes can be made as progressive as you like. As a renter, I have a hard time feeling sympathy for the downtrodden landowning class. While there may be cases where an unfortunate landowner is forced to liquidate and find a place to live that's in line with their income, there are more cases where a drop in…

If there's a big enough reduction in property taxes, the market will adjust, absent other dominating effects, and your landlord's margin will be reduced. Also consider that the vast majority of the landowning class consists of a person or family that owns one SFR, and most-to-all of their wealth is tied up in it. Those are the people that will get hurt if they can't keep up with property taxes, and it includes most o…

> If he can't cover his property taxes, then I'm the one who gets the boot.

That's a funny way to spell rent increase ;)

Forcing retirees out of their homes is pretty unpalatable, I'll agree. However, this is really easily solved through policy: place a tax lien on the property instead of confiscating it. The taxes owed can be collected when the property is passed on and no one gets put out on the street.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#77

Post by Scramblejams »

mullingitover wrote: post #76
Scramblejams wrote: post #69

Earlier quoted context omitted.

If there's a big enough reduction in property taxes, the market will adjust, absent other dominating effects, and your landlord's margin will be reduced. Also consider that the vast majority of the landowning class consists of a person or family that owns one SFR, and most-to-all of their wealth is tied up in it. Those are the people that will get hurt if they can't keep up with property taxes, and it includes most o…

> If he can't cover his property taxes, then I'm the one who gets the boot. That's a funny way to spell rent increase ;) Forcing retirees out of their homes is pretty unpalatable, I'll agree. However, this is really easily solved through policy: place a tax lien on the property instead of confiscating it. The taxes owed can be collected when the property is passed on and no one gets put out on the street.

And if I and the local market can't bear a rent increase for a time?

A lien has the problem that, for a retiree who probably won't need another credit line, there isn't much incentive to pay. They could just let that go on until they die. Local governments would eventually get upset.

You can pile on all the rules you want, but every rule has unintended consequences. Best not to set up rules that force people out of their homes in the first place.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#78

Post by [deleted] »

themartorana wrote: post #40
bluedino wrote: post #36

Earlier quoted context omitted.

Not to mention the insane amounts that municipalities are paying towards the massive pensions and benefits for retired workers. How many existing police officers are cut in order to pay the pensions of the previously retired?

Edit: rant ahead, not aimed directly at bluedino I will never understand this. I agree life-time pensions are unsustainable. I argue constantly for a) all new public employees being enrolled in a 401k and pensions being phased out and b) offering younger workers buy-outs, allowing them to invest their contributions themselves in reward for opting out of the pension system. But that said - every pensioner out there wo…

[deleted]

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#79

Post by themartorana »

fargolime wrote: post #75
themartorana wrote: post #40

Earlier quoted context omitted.

Edit: rant ahead, not aimed directly at bluedino I will never understand this. I agree life-time pensions are unsustainable. I argue constantly for a) all new public employees being enrolled in a 401k and pensions being phased out and b) offering younger workers buy-outs, allowing them to invest their contributions themselves in reward for opting out of the pension system. But that said - every pensioner out there wo…

I gave you an upvote, but the problem with your logic is that today's young workers didn't agree to forgo their retirement to pay for the teachers' retirements. The teachers of yesteryear got sweetheart deals that should be strictly honored only by those who agreed to them as voters when the deals were made, and by younger workers only if they explicitly agree to them now.

It's an interesting argument, but the deal is with the state. That's like saying I never agreed to the laws that passed before I could vote, so they shouldn't apply to me.

It's tough, though, I agree - who bears the brunt of the pain? At the same time, new workers can reject a contract's terms by not accepting a job. Old workers have no options.

Re: Detroit gentrifiers face daunting task buying $500 homes evicting poor residents

#80

Post by fargolime »

themartorana wrote: post #79
fargolime wrote: post #75

Earlier quoted context omitted.

I gave you an upvote, but the problem with your logic is that today's young workers didn't agree to forgo their retirement to pay for the teachers' retirements. The teachers of yesteryear got sweetheart deals that should be strictly honored only by those who agreed to them as voters when the deals were made, and by younger workers only if they explicitly agree to them now.

It's an interesting argument, but the deal is with the state. That's like saying I never agreed to the laws that passed before I could vote, so they shouldn't apply to me. It's tough, though, I agree - who bears the brunt of the pain? At the same time, new workers can reject a contract's terms by not accepting a job. Old workers have no options.

When the law takes away your retirement to provide a cushy retirement to the older generation, it shouldn't apply. Laws that are blatantly unfair to you, that you didn't agree to, shouldn't apply to you.

Most pensioners would do fine on half their pension. After all, the ones their age who don't have a pension are surviving on one-fourth or less the amount. The pensioners could keep the condo but forgo the cruises.

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