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High property taxes are good

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Re: High property taxes are good

#461

Post by CorpOverreach »

jfim wrote: post #454
KerrAvon wrote: post #438

Earlier quoted context omitted.

The elephant in the room is the amount of housing supply being held by banks and private equity in an effort to shore up housing prices. They can afford high property taxes. Your elderly parents might not be able to. Obama should have let the bankers twist in the wind when the citizenry was out for blood in 2008. They repaid him by channeling money to Republicans. Put them all in jail.

> They can afford high property taxes. Your elderly parents might not be able to. Texas has an interesting solution to this. Homeowners over 65 can elect to defer the payment of their property taxes indefinitely, although the taxes eventually get paid when the house changes owners.

So it's basically taking an interest-free home equity loan against the property, in a round-about way? You're basically de-valuing the property since whoever buys it next will have to pay a lump sum in taxes to take ownership.

I guess that doesn't matter to you if you're dead.

What happens if the deferred taxes exceed the cost of the house?

Re: High property taxes are good

#462

Post by JustSomeNobody »

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…

If I have $10M to spend on property to take out of the market and hold for a period, do I buy where it will cost me 250k per year in taxes or 50k per year in taxes?

Re: High property taxes are good

#463

Post by BirdieNZ »

social_quotient wrote: post #407

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…

Right now we have lots of income tax, but most countries have very low land value tax/property tax. This means you don't "own" all the fruits of your labour, but you "own" land, which derives its value from the labour of society as a whole around the land.

The Georgist proposal is that you should own all the fruit of your personal labour (no income tax) but that the proceeds of the labour of society should be returned to society at large, through a land value tax that captures the rental value of the land.

The current status quo in most countries is that you can own a piece of land in the middle of a metropolis and do no labour, and yet reap significant reward. This is in essence a theft from society, as the citizens of the metropolis are labouring and building capital that creates value for the piece of land, yet the land-owner proportionally does very little to create value for their land. If you want to discourage theft and encourage keeping the fruits of your labour, the Georgist proposal is fantastic.

Re: High property taxes are good

#464

Post by tmnvix »

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…

>> 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.

Homeowners are concerned with the size of the deposit required, the size of the loan needed, and ongoing costs (inc taxes). This tax will likely mean a smaller deposit and loan than would otherwise be the case. This could be offset by higher ongoing costs by the property tax.

For a speculator, they have the same concerns as a homeowner, but most significantly the potential for capital gains. Yield also comes into it, but let's face it - without strong capital gains no one would be paying these prices (homeowners included).

Lower potential for capital gains effects speculator demand more than homeowner demand.

Re: High property taxes are good

#465

Post by imtringued »

ryan93 wrote: post #125
BLO716 wrote: post #103

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 almo…

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.

Incredible amount of land = running away from the rent seekers = urban sprawl

Re: High property taxes are good

#466

Post by marcosdumay »

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 does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators?

Speculators are forced to sell, because the cost of keeping too many houses locked down is high and starts to show on their books, so they have to explain it to the investors, that go away unsatisfied, and so on.

Of course, that only makes a difference if there are many unused houses.

Also the idea is that as prices fall, the absolute value of the tax falls, but speculators still do not have a motivation to buy them, because the price isn't expected to rise.

> If so, why not just get rid of speculative buying (simply make it illegal)?

Because you will need an entire book of rules, that lawyers will use to get a lot of money, and rich people will use to make the tax not apply to them. (But there are some simple rules that can only be gamed a bit. Maybe those are enough.)

Re: High property taxes are good

#467

Post by raymondh »

My experience of high property taxes is that it no longer feels like you own a home. You pay rent on it forever. At any time the rent can rise to more than you can afford. I own my home outright but likely won't be able to stay when I retire.

Re: High property taxes are good

#469

Post by EddieDante »

danans wrote: post #309
EddieDante wrote: post #150

Earlier quoted context omitted.

Corollary: the difference between a government and a warlord/organized crime syndicate is the time/money/effort spent on propaganda.

> 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.

I can't vote out the people who decide who gets on the ballot, either.

Re: High property taxes are good

#470

Post by jjav »

JustSomeNobody wrote: post #462
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…

If I have $10M to spend on property to take out of the market and hold for a period, do I buy where it will cost me 250k per year in taxes or 50k per year in taxes?

If you're a speculator, you'll buy it wherever the expected profit, after taking out all expenses, is the highest.

If the tax is high in a location where they think they can flip the house for a 50% gain in a few years that's still better profit than a lower tax in a place where they'll gain 5% in a few years. So the property tax doesn't, all by itself, matter to the speculator. It's just a cost of doing business.

A high property tax does, however, hurt the person who just wants a house to live in it and doesn't care about being a speculator.

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