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High property taxes are good

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Re: High property taxes are good

#421

Post by wizofaus »

trgn wrote: post #369
wizofaus wrote: post #196

Earlier quoted context omitted.

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.

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.

Then why not do it properly? Only levy extra taxes if the value of any building constructed on the property exceeds a certain threshold...

Re: High property taxes are good

#422

Post by ccooffee »

enaaem wrote: post #387
chadash wrote: post #95

Earlier quoted context omitted.

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 t…

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.

This mechanism would just get gamified. Some oligarch is gonna claim the property is worth nothing, and use their expensive legal team to prevent any attempts to purchase the property.

It'll also allow the government to bully anyone they want by evicting them, even if the price were fair. Local reporter digs up dirt on city council? Well, the city council just reviewed property tax claims, and decided that the reporter's house is "undervalued".

Re: High property taxes are good

#423

Post by Supermancho »

arrosenberg wrote: post #358
Supermancho wrote: post #306

Earlier quoted context omitted.

> 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 ret…

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.

The question was why, and fixed income is the rationale. How effective it is or what you or I or the voters think is fair, is incidental.

Re: High property taxes are good

#424

Post by danielheath »

fleddr wrote: post #384

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 propert…

How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence?

Nobody is willing to pay as much up front for housing that has higher ongoing costs.

Re: High property taxes are good

#425

Post by paconbork »

cryptonector wrote: post #392
negamax wrote: post #390

Earlier quoted context omitted.

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

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"?

My guess is that this probably indicates that the primary obstacle to construction currently isn't developer capital. It could be that housing construction is still profitable, as there's comparatively less political resistance and less of the budget has to go to legal fees and bribes.

In the interest of being intellectually honest though, that's probably not the full story. It's worth pointing out that Chicago's population peaked in the 50's and that property taxes were probably lower back then.

Also worth pointing out that there's a lot of directions for sprawl to help meet housing demand. I actually grew up in Indiana and my dad worked in Chicago. We lived in Indiana because the property tax was significantly lower even though housing prices were comparable.

Re: High property taxes are good

#426

Post by danielheath »

8ytecoder wrote: post #401
fleddr wrote: post #384

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 propert…

Even if this is provable, why not have 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.

Now you need to police whether people are living in specific houses. This is simple and much harder to get wrong.

Re: High property taxes are good

#427

Post by imtringued »

dominotw wrote: post #156
cbm-vic-20 wrote: post #6

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.

> disincentive to making the land more productive. Isn't that like saying income tax disincentives people from making more money.

A land value tax discourages people from owning land and an income tax discourages people from working.

Re: High property taxes are good

#428

Post by imtringued »

parineum wrote: post #302
spicymaki wrote: post #54

Earlier quoted context omitted.

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.

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 bar…

How would you value a perpetuity?

If the present and future are worth the same, then the value of land is practically infinite because millions of generations of humans can use it. The obvious problem in this case is that nobody should own land forever.

Re: High property taxes are good

#429

Post by kbelder »

freeone3000 wrote: post #322
hammock wrote: post #174

Earlier quoted context omitted.

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.

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.

Sidenote... you're almost certainly under-insured, especially if you're in California. If a fire sweeps through, you won't be able to rebuild much with $225k. Might want to check that out.

Re: High property taxes are good

#430

Post by imtringued »

Supermancho wrote: post #306
mdorazio wrote: post #280

Earlier quoted context omitted.

> 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?

> 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 ret…

Fixed incomes while complaining that their land is going up in value which lead to high property taxes? That kind of thing?
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