641–650 of 691 posts
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Compared to states with comparable infrastructure but less tax.
And one of those would be....?
[1] https://www.usnews.com/news/best-states/rankings/infrastruct...
[2] https://infrastructurereportcard.org/state-item/california/
[3] https://www.usatoday.com/story/money/2019/07/08/states-that-...
California's tax regime is really backward. I suspect Tesla's departure is just the tip of the iceberg and that the repeal of the SALT deduction in 2017 really hastened this trend. High earners pay an effective tax rate of > 50%. They are partially picking up the slack from Prop 13, which artificially distorts the housing market by allowing longtime homeowners to pay property taxes based on decades-old assessed value…
The SALT deduction wasn't repealed (for which a coherent argument could be made, though it would still be a bad idea), it was capped (for which there isn't even a principled argument.)
> High earners pay an effective tax rate of > 50%.
“High earners pay high rates” isn't exactly a sign of a backward tax regime.
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Then why do it? That amount could pay for lots of schools to built etc
> That amount could pay for lots of schools to built etc I think if you research school costs in the jurisdiction in question, you’ll find $54 million could not pay for a lot of schools to be built. Maybe 1-2.
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They aren't even held accountable when they sell products that spark a nationwide overdose epidemic. "That may seem like a lot of money, but billionaire math can be deceptive. The Sacklers proposed to pay the $4.5 billion out over nine years. Their current fortune is estimated to be at least $11 billion. Conservatively, with interest and investments, this means they can expect a 5 percent annualized rate of return on…
The US has around 700 billionaires. That is comparable in size to the US House of Representatives. There are a lot more politicians than billionaires. Plus there is a lot more turnover in politicians than billionaires. It doesn't tell you anything that only 1 of them went to jail. Even assuming they are incarcerated at something close to the background rate (an unreasonable assumption) we would expect 0% of them to b…
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No you're paying rent. The idea that property tax is passed down to renters 1:1 is just something you made up. The concept you need to look into is called tax incidence: https://www.maxwell.syr.edu/uploadedFiles/cpr/efap/Notes%20o...
It’s true that landlords don’t directly pass property taxes down; this is part of why taxes on rent are occasionally floated as a way to make being a landlord less profitable. But, definitionally your rent must cover the mortgage and property tax of the property you occupy, plus profit. If you rent is less than property tax and mortgage, the land lord is underwater and will soon sell to someone else who will charge m…
In the current situation, when the realty appreciates at >10% per year (in Austin, at least) it's not a very smart decision to sell or renovate the house if you cannot find a tenant willing to cover all your expenses.
For example: Zillow shows my house appreciating 10K per month, my mortgage+tax+insurance is 3K, assuming Zillow is in the right ballpark, it makes sense for me to keep the house even if I can't find tenants for 3K (similar houses in the area used to rent for 2K-3K last time I've checked).
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Taxes for that home in TX would be equivalent to a $1.8M+ home in CA, though (and raise every year with the market), so it's not as simple as comparison. The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA.
> The monthly mortgage payment for a $900k in Austin is probably comparable to a $1.2-1.3M home in CA. Are you talking about paying property taxes via an escrow account that your mortgage lender takes care of for you? That's not your "mortgage payment", which is a function of your loan size, interest rate, and term, and nothing more. The monthly mortgage payment (assuming same term and interest rate) is the same in C…
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I really don’t think this is true. Being granted the stock is a taxable event, even if you don’t liquidate any of it, and even if that means you have to sell some to pay the taxes. Also, the methodology you’ve described for avoiding taxes is used to benefit from offshore holdings, not avoid paying taxes on locally held assets.
This scheme finances the personal spending of every American worth more than $50M. Sure, any time they're sloppy enough to personally receive real income, they pay taxes on it. Usually they are not that sloppy. The income goes to shells or other assets in which they've "invested". The assets become more valuable, and thus can be used as collateral for larger loans.
Even with interest rates low, the prime rate is 3.25 [0]. So isn’t it worse to pay 3% interest per year than a 15-25% capital gain once? I assume Musk thinks he’ll live more than 10 years.
[0] https://www.bankrate.com/rates/interest-rates/wall-street-pr...
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It’s true that landlords don’t directly pass property taxes down; this is part of why taxes on rent are occasionally floated as a way to make being a landlord less profitable. But, definitionally your rent must cover the mortgage and property tax of the property you occupy, plus profit. If you rent is less than property tax and mortgage, the land lord is underwater and will soon sell to someone else who will charge m…
It must not. "Being underwater" is a state that describes the value of your asset vs the loan. If your house is worth more than the mortgage balance then you cannot be underwater even if you don't rent it at all. In the current situation, when the realty appreciates at >10% per year (in Austin, at least) it's not a very smart decision to sell or renovate the house if you cannot find a tenant willing to cover all your…
Under less insane circumstances, a land lord who is charging less for rent than the house costs to own is going broke. As a general rule most land lords rent to make a profit, and therefore won’t charge rent below the cost of ownership.
0 - A poorly capitalized land lord will still go broke in this circumstance, since they’ll eventually fail to pay their mortgage without refinancing.
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It must not. "Being underwater" is a state that describes the value of your asset vs the loan. If your house is worth more than the mortgage balance then you cannot be underwater even if you don't rent it at all. In the current situation, when the realty appreciates at >10% per year (in Austin, at least) it's not a very smart decision to sell or renovate the house if you cannot find a tenant willing to cover all your…
Yes, your landlord can rent out for a loss when the house is gaining double digit percentages per year, assuming they’re well capitalized[0]. But let’s be honest, how long can houses gain 10% per year? And how often do you really think landlords rent at a loss in such hot real estate markets? Under less insane circumstances, a land lord who is charging less for rent than the house costs to own is going broke. As a ge…
It's not relevant to the current discussion though. Right now rents are lower than mortgages in general so the assertion that the tenant pays all landlord's expenses is demonstrably false.
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Rents in CA (bay area in particular) are a function of demand more than landlords' cost. When rents in CA go up by 40%, I guarantee you that's not because a landlord's taxes went up by 40%, but because demand has shot up and landlords can extract more profit from their renters. The big pandemic rent cuts in SF give a glimpse of what reasonable rents could look like here, if supply met demand (though even the lowest p…
> Rents in CA (bay area in particular) are a function of demand more than landlords' cost Exactly. In other words, especially where supply is constrained, the property tax is incident on the landowner rather than the tenant. > my take on that is that's more caused by NIMBYism and an unwillingness to build enough housing to meet demand Yes, the difference in land use is bigger than the difference in tax rates. However…
> However, when property taxes are higher, there is more incentive for cities and households to allow more housing.
True, and what tends to happen in CA is that cities will approve commercial development over residential, since they can get much more tax revenue out of commercial property.
But I don't think CA's property taxes are too low; from a little searching it seems like CA's average property tax rate is only slightly below the national average. Meanwhile, Texas' clocks in at several multiples of the national average.
I'm not really sure what you're getting on about with the rest of your post, though. Property taxes, as implemented pretty much everywhere in the US, are regressive. Full stop. It doesn't matter "who writes the check". Landlords will pass on the cost of property taxes to renters. I don't really see evidence that home prices are so much lower in Texas due to the high property tax. Lower, certainly, but I would still much rather buy a house in the bay area with its inflated prices over a house in Austin.
And I expect as demand goes up in Austin, home prices will go up (if slower), and tax rates will just help make homes even more unaffordable there for lower income folks. I expect it's easier to build in Austin, but it still takes time, and likely any new demand for housing in Austin isn't primarily in the outskirts of town where things are cheaper.
[0] https://www.motherjones.com/kevin-drum/2019/11/taxes-are-sur...