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Thread: Property Ownership (and Taxation)

  1. #1

    Default Property Ownership (and Taxation)

    Breaking this out of General Chat, where we started discussing OG's quest to buy a house and ended up in the morass of property taxes.

    http://www.theworldforgotten.net/sho...ll=1#post48656 that's just page 4

    Some say taxing property is unfairly taxing ownership of assets or wealth, regardless of what's being done with the land. Some say it's better to tax the activity on, or production of the land. Others want to tax only the improvements made (things built, sort of like a value-added tax?). Yet another group says taxing property ownership is the only right and fair thing to do, and makes more sense than taxing labor......



    Oh yeah, and since property taxes are being used to fund public education, is that working?
    Last edited by GGT; 09-27-2010 at 01:04 AM.

  2. #2
    Bringing the most recent other posts in that thread a-here:


    Quote Originally Posted by GGT View Post
    Depends on how you want to define land ownership, or how far back in time you want to go. But we don't have Homesteading any more. Squatters are legally evicted from vacant "unowned" land. The state lays claim on deeds when an owner can't be established. Then there's Eminent Domain.

    Personally, I'd love it if property taxes were paid once at time of purchase. They already add on a deed transfer tax, a recording tax, a sales tax, and other fees for title search and stuff just to get a deed. Whether the state "owns" the land or not, they have legal authority to require all sorts of things to prove ownership, to require zoning, and to tax. They set the hoops and we have to jump through them.

    Ditto for home ownership with a lien or mortgage---the bank owns it until we discharge the lien. We consider the house "ours" but it's really not.

    You can buy land 5 miles from a mall and farm it (or start a junk yard, or host raves or whatever) but you've already agreed to follow the zoning laws when you signed the papers, and agreed to get a permit for certain stuff. (I have to pay for a permit to hold a yard sale, and can't have one every weekend. I can't have goats to eat my grass, or put a produce stand at the curb to sell vegetables, either. etc etc)
    I agree with you at imposing purchase/deed transfer tax. At least it's a one-time fee, similar to a sales tax except there's 12 of them and you don't find out about them until closing. But in all seriousness, it makes more sense to me to impose those taxes on a purchase (and any economic activity on the land) than on the ongoing existence of the land.

    Quote Originally Posted by Ominous Gamer View Post
    On the flip side, businesses have a history of coming in, buying up as much property in a location as possible, letting it rot, causing property values to fall/collapse on the neighboring properties and then buying/eminent domaining those for far less then they are truely worth. Screwing the city out of proper property taxes, and the community out of proper developments. Pfizer did this in Connecticut, then walked away from it; they haven't decided if they want to sell or lease the land (corporate welfare via eminent domain ), and there was the famous case involving a marina that eventually went the other way, but the area was already ruined by the big business's shady practices.

    Cities/states expect a certain return on the land, partly to cover operating expenses, partly to stop people from hoarding land and screwing everyone else over.
    You and I agree on the corporate welfare/eminent domain issues. But I don't think that has as much to do with the existence of property taxes as much as regions competing for business and fighting with property tax rebates (which are itself probably indicative of how dysfunctional property taxes can get in some places).

  3. #3

  4. #4
    Okay, so lets say tomorrow you're exempt from paying taxes on a hypothetical 1 acre plot of land that you own because you're not making money off it. The day after that I'm going to start using it as a dump. Whats your course of action to prevent this from occurring?
    Yep. Or Dread buys one acre and uses it as a dump, causing the surrounding land values to plummet. At which time he picks up those lots for a song. Collecting land and sitting on it. Developers do that around here, buying adjacent land slotted for future road widening or exit ramps. Or buying foreclosed homes and letting them rot, so when they offer to develop the land they get "favors" from officials. They plan years ahead for what might be commercial property, and they use their clout to sway zoning officers and tax collectors. (As OG said)

  5. #5
    And another thing!

    Say we change the property tax structure and formulas. How do we do that and also fund public schools, roads, police and fire departments.....?

  6. #6
    Dread, I think you might have missed this part of my post earlier which addresses some of your concerns:

    Quote Originally Posted by wiggin
    One last point: I do feel that property taxes are to some extent a wealth tax, which I generally oppose (not to mention that you have to pay property taxes even if the property is mortgaged to the hilt!). Yet wealth is not a finite resource, while useful land most definitely is. I think governments have some reason to want to encourage the productive use of a limited resource by making a small penalty for owning the resource.
    Taxing something is the easiest way to make people reduce their use of it in favor of other alternatives. Thus, they'll use less land more productively. In the US, most regions don't have a shortage of land (yet), though certain regions do (notably the NE corridor and parts of California) but unrestricted land use leads to significant urban sprawl, expensive transportation infrastructures, environmentally poor results, etc, etc. In recent years, I've spent quite a bit of time in the Dallas-Ft. Worth area, and I'm always astonished at the sheer amount of wasted land, with all of its attendant issues.

    Of course, the same result (more efficient use of land) could be achieved by restrictive regulation rather than property taxes, but it's probably a toss-up about which is worse from an economic perspective. IMO it's better to let people come up with their own ways of optimizing land use by imposing taxation rather than through a byzantine set of regulations.

  7. #7
    wiggin, I remember you saying that property tax was a wealth tax, and you opposed wealth taxes. In land locked areas like NYC, owning land is definitely the same thing as being wealthy. In Texas, not so much.

    In NYC, you can "own" less than an acre and it's considered fertile land, because it can house hundreds of people and dozens of shops or businesses. All of whom pay yet more taxes.

    In Texas, you may have to "own" 50,000 acres that can produce oil. If it's oil barren land, then you can sell 5,000 acres at $4,000 an acre to a developer, who will charge $5,000 an acre to the guy who wants to build his McMansion.

    The intentions and results for "efficient use of land" doesn't really explain how property taxes work in the US. And I'm confused about how you can say it's best left to people to come up with their own ways of optimizing land use, than imposing taxation through byzantine sets of regulations. When the US leaves all those things to "the people", and we hope it's the people who decide the regulations.

    What is the byzantine part?

  8. #8
    Dude, it's not a wealth tax because you get wealthy from owning land, it's a wealth tax because you're taxing an owned asset rather than a transaction (e.g. sales tax, income tax, etc.).

    I don't approve of our current property tax regime because it incentivizes modest development of the land but not aggressive development (mostly because our property taxes generally tax both the underlying land value as well as the value of improvements/developments). Otherwise, I think it's just fine from the perspective of encouraging efficiency. As land value increases, property owners have an incentive to cause their land to yield more income to offset the increased taxes, so they'll develop it intensively. Depending on how high you set the taxes (and how valuable land gets), you can effectively control the equilibrium level of development.

    On the rest, individuals don't decide regulations, bureaucracies do. And they are rarely efficient in coming up with an optimal equilibrium. Furthermore, the more tweaking you do to get closer to that equilibrium, the more regulations you need to enact. A simple land value tax would result in the same thing without all of the wasted effort.

  9. #9
    Quote Originally Posted by wiggin View Post
    Dude, it's not a wealth tax because you get wealthy from owning land, it's a wealth tax because you're taxing an owned asset rather than a transaction (e.g. sales tax, income tax, etc.).
    And part of what defines "wealth" is owning land or assets that can be passed to heirs. Not the same to tax transactions in probate court as taxing true transfers between buyers and sellers. Ask anyone who has to buy land vs someone who inherited land. "Wealth" is definitely subjective, until the courts intervene.

    I don't approve of our current property tax regime because it incentivizes modest development of the land but not aggressive development (mostly because our property taxes generally tax both the underlying land value as well as the value of improvements/developments). Otherwise, I think it's just fine from the perspective of encouraging efficiency. As land value increases, property owners have an incentive to cause their land to yield more income to offset the increased taxes, so they'll develop it intensively. Depending on how high you set the taxes (and how valuable land gets), you can effectively control the equilibrium level of development.
    Sounds great, until you ask what the property taxes are used for. In most cases that's pubic education, with a smaller portion toward municipal services. You can't keep relying on development of land, or using land transfers, to fund basic services. That creates a bubble, an incentive to "flip" assets for a return. Doing that might fund necessary services, but it won't work over the long term, after the bubble has popped. We can't keep living on bubbles to fund the future, that's just insane.

    On the rest, individuals don't decide regulations, bureaucracies do. And they are rarely efficient in coming up with an optimal equilibrium. Furthermore, the more tweaking you do to get closer to that equilibrium, the more regulations you need to enact. A simple land value tax would result in the same thing without all of the wasted effort.
    Individuals elect bureaucratic leaders. We ARE the mess we complain about. But you mentioned simple land value tax, which made me remember the conversation I had with my son recently and he told me to look up Georgism. I'd never heard of it. He might be a young romantic hippie rebel, but he still teaches me things.

    http://en.wikipedia.org/wiki/Georgism

    Georgism, named after Henry George (1839-1897), is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. The Georgist philosophy is usually associated with the idea of a single tax on the value of land. Georgists argue that a tax on land value is efficient, fair and equitable, and will accrue sufficient revenue so that other taxes (which are less fair and efficient) can be reduced or eliminated.[1]

  10. #10
    Quote Originally Posted by GGT View Post
    Breaking this out of General Chat, where we started discussing OG's quest to buy a house and ended up in the morass of property taxes.

    http://www.theworldforgotten.net/sho...ll=1#post48656 that's just page 4

    Some say taxing property is unfairly taxing ownership of assets or wealth, regardless of what's being done with the land. Some say it's better to tax the activity on, or production of the land. Others want to tax only the improvements made (things built, sort of like a value-added tax?). Yet another group says taxing property ownership is the only right and fair thing to do, and makes more sense than taxing labor......



    Oh yeah, and since property taxes are being used to fund public education, is that working?
    Does anyone know if property tax is progressive? Do more expensive properties get higher rates or is it flat?
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  11. #11
    Quote Originally Posted by EyeKhan View Post
    Does anyone know if property tax is progressive? Do more expensive properties get higher rates or is it flat?
    Progressive, flat, and regressive don't fit particularly well in describing taxation of something static, like an asset. That said, AFAIK property taxes are usually flat and hence are technically regressive.
    Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"

  12. #12
    Since when is any asset considered static?

    Also, Fuzzy is in CA, just as Being. Right? You may not have the same type of property tax codes as the east coast. They are definitely NOT flat here, and we DO have elderly who can't meet the tax standards as they grow. We also don't have the kind of rent control that NYC has. Might be why so many PA retirees decide to move to Florida for their Golden Years?

  13. #13
    Quote Originally Posted by Illusions View Post
    Just to curtail a possible problem with understanding the idea of there being a difference between the value an object is assigned, and the amount of money you can make off of it, take the simple US dollar. Its agreed upon monetary value is a dollar. The amount of money I can make off a dollar can be more or less than its worth or value though depending on how I use it, whether I invest it, engage in currency speculation, change it for gold, buy stock with it, or use it to establish a business (might require multiple dollars), or loan it to someone (might never see that dollar again).
    . . .

  14. #14
    We should all do a collective shudder now. Who the hell would want to move to the US or try to get a workers Visa, knowing how fragmented things like income, cost of living, and taxes on labor are? Hell, we can barely figure out variations from state to state, and we were born and raised here.

    Go go USA #1!

  15. #15
    Quote Originally Posted by GGT View Post
    Since when is any asset considered static?

    Also, Fuzzy is in CA, just as Being. Right? You may not have the same type of property tax codes as the east coast. They are definitely NOT flat here, and we DO have elderly who can't meet the tax standards as they grow. We also don't have the kind of rent control that NYC has. Might be why so many PA retirees decide to move to Florida for their Golden Years?
    Higher value properties are taxed at a higher rate where you are?
    The Rules
    Copper- behave toward others to elicit treatment you would like (the manipulative rule)
    Gold- treat others how you would like them to treat you (the self regard rule)
    Platinum - treat others the way they would like to be treated (the PC rule)

  16. #16
    Quote Originally Posted by Illusions View Post
    Just to curtail a possible problem with understanding the idea of there being a difference between the value an object is assigned, and the amount of money you can make off of it, take the simple US dollar. Its agreed upon monetary value is a dollar. The amount of money I can make off a dollar can be more or less than its worth or value though depending on how I use it, whether I invest it, engage in currency speculation, change it for gold, buy stock with it, or use it to establish a business (might require multiple dollars), or loan it to someone (might never see that dollar again).
    Relating to your discussion with Dread, I think he's missing something. If you DO make money off your land - ie income - that money will be taxed, as income, and the value of your land will also be taxed based on its assessed value.
    The Rules
    Copper- behave toward others to elicit treatment you would like (the manipulative rule)
    Gold- treat others how you would like them to treat you (the self regard rule)
    Platinum - treat others the way they would like to be treated (the PC rule)

  17. #17
    Quote Originally Posted by EyeKhan View Post
    Higher value properties are taxed at a higher rate where you are?
    It may all be taxed at the same RATE, but what is taxed is controversial. Best example I can give is private septic vs public sewer. Currently, the municipality can only assess property owners for all the work done at the curb. No one was exempt while they dug the trenches and connected all the pipe. It was very expensive and took over a year. The township could assess for that work, but couldn't force people to connect to the system. Hence, they enacted a law stating anyone whose septic tanks failed would be required to hook up to public sewer.

    Guess who bought a home with 2 septic tanks that passed inspection, but then both failed the first month? wheee...yours truly.

    The previous owner had paid for all the assessments at the curb. Quite expensive on one acre located on a street curve. She had already paid the $20,000 + that the township required. That was a nice selling point, actually.

    But when the septic tanks failed, I had to legally hook up to public sewer. I had no idea (and no one told me) that it was prorated by feet, and that it was almost a football field to the nearest sewer connection at the curb. Or that I was above ground so they had to dig really deep to connect. Cost me just around $15,000 +/- for the whole shebang. Not including the soil shifting that cost more later. yee haw, welcome to suburbia!

    So anyway, if you look at homes for sale today in my area, the value is based on whether they have septic or public sewer. The taxes aren't much of a clue if the property is still on septic or well water. And it's not like brokers or realtors are helping the buyer. That's just municipal tax.......we don't even want to address school tax, do we?

  18. #18
    Quote Originally Posted by GGT View Post
    It may all be taxed at the same RATE, but what is taxed is controversial.
    Which is one of the reasons why I said that progressive, regressive, etc are not particularly good ways to try and understand the taxation of fixed assets. It's still implemented as a flat tax and if you put two taxed entities with identical property, one of them who just owns the property and the other who also, say, has lucrative stock holdings, the first one is proportionally hit harder by the tax, which makes it regressive. But the real world is a lot more complicated than that.

    *and for the record, your example has absolutely nothing to do with property taxes in the sense Chaloobi was using*
    Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"

  19. #19
    I view property tax as BS. I understand taxing income, including possibly income from the sale of a home. But to tax the ongoing existence of a piece of land. Uh-huh. Also, property tax is one of the main negative forces of gentrification. I saw this a lot when I was in Seattle. Old couples were essentially forced to sell and move, because they couldn't afford the skyrocketing property taxes on a home whose mortgage had already been paid off. Also, property taxes are one of those places where spineless politicians hide taxation that they don't have the balls to endorse.

    On the flip sides, it is one of the main ways that local governments have of raising revenues.

  20. #20
    Quote Originally Posted by ']['ear View Post
    But to tax the ongoing existence of a piece of land. Uh-huh.
    ...

    Your continued "ownership" of that piece of land is only possible due to the government, or as long as society agrees that you "own" that land (which in the United States is enforced by the government). You're also entitled to other services related and semi-related to your land ownership. These services cost the government money, therefore it is justified that you reimburse them. The easiest method of determining reimbursement is to assess the value of the land you own, and then have a service charge, or tax, proportional in some way to the value of that land. However, and this seems to be the part that Dreadnaught keeps tripping up on, this does not mean that the money they earn through taxing your land has to be directly spent on providing continued service. Money to provide for these services can come from elsewhere, and it is still justified to charge you for these services so long as they continue to be rendered. The services the government provides you in regards to your land ownership rights and privileges are vast, and apparently largely taken for granted, otherwise we wouldn't have people complaining that paying a tax for owning land is bullshit.

    Edit: If you'd like to argue against property tax, I'll give you the same hypothetical scenario I did Dreadnaught. Say tomorrow on a hypothetical 1 acre piece of land you own, you're no longer charged property tax. The next day I decide to use your land as a dump. What is your course of action for resolving this problem?

    Edit #2: I think an additional problem is that, at least Dreadnaught, is confusing my explanation for why property taxes are justified, as also endorsement of however much they currently are, when its just an explanation of how collecting property tax at all is justified...as opposed to what appears to be his stance and yours, which is that they are bullshit entirely...which I find odd. As if you consider ownership something real like air, or tangible like a stone, and not a concept which requires people to acknowledge it in order for it to have any weight.
    Last edited by Illusions; 09-27-2010 at 11:45 PM.
    . . .

  21. #21
    Quote Originally Posted by GGT View Post
    And another thing!

    Say we change the property tax structure and formulas. How do we do that and also fund public schools, roads, police and fire departments.....?
    Income taxes, sales taxes, gas taxes, etc. All the stuff we already tax based on what services we use and how much we make.

    Quote Originally Posted by wiggin View Post
    Dread, I think you might have missed this part of my post earlier which addresses some of your concerns:

    Taxing something is the easiest way to make people reduce their use of it in favor of other alternatives. Thus, they'll use less land more productively. In the US, most regions don't have a shortage of land (yet), though certain regions do (notably the NE corridor and parts of California) but unrestricted land use leads to significant urban sprawl, expensive transportation infrastructures, environmentally poor results, etc, etc. In recent years, I've spent quite a bit of time in the Dallas-Ft. Worth area, and I'm always astonished at the sheer amount of wasted land, with all of its attendant issues.

    Of course, the same result (more efficient use of land) could be achieved by restrictive regulation rather than property taxes, but it's probably a toss-up about which is worse from an economic perspective. IMO it's better to let people come up with their own ways of optimizing land use by imposing taxation rather than through a byzantine set of regulations.
    I would understand this rationale if I thought property taxes were part of social/land-use engineering. But the reality is that property taxes are simply levied as an easy revenue generator.

    Quote Originally Posted by Illusions View Post
    Just to curtail a possible problem with understanding the idea of there being a difference between the value an object is assigned, and the amount of money you can make off of it, take the simple US dollar. Its agreed upon monetary value is a dollar. The amount of money I can make off a dollar can be more or less than its worth or value though depending on how I use it, whether I invest it, engage in currency speculation, change it for gold, buy stock with it, or use it to establish a business (might require multiple dollars), or loan it to someone (might never see that dollar again).

    Quote Originally Posted by EyeKhan View Post
    Relating to your discussion with Dread, I think he's missing something. If you DO make money off your land - ie income - that money will be taxed, as income, and the value of your land will also be taxed based on its assessed value.
    The government doesn't tax you just for keeping a pile of gold in your house, even though it's theoretically worth something. They only tax you if you sell or perhaps transfer your gold.

    Why should property be different? One other reason property taxes don't pass a smell test is because of the system of "assessing" value to calculate a tax. The government creates a formula, then assigns value. Many people then appeal the semi-arbitrary valuation on semi-arbitrary grounds. And round and round it goes.

    In NYC the apartment property tax valuation is calculated by taking the theoretical cashflow one could get from renting every apartment in a building over five years. Then building is then valued as a business based on that theoretical cashflow. Granted, there is no rental cashflow per say, it's not a rental building. But don't let the facts get in the way of things. Then the city takes 8% of that valuation, multiples it by 14.55% and gives you a number. But because the underlying valuation is totally bullshit, there is a cottage industry of lawyers who appeal these valuations every year.

    My point-by-anecdote here is there's no real way to value property; its value exists in a marketplace, not a government ledger. Tax the income one may make on that property, but taxing empty space is silly.

    Quote Originally Posted by ']['ear View Post
    I view property tax as BS. I understand taxing income, including possibly income from the sale of a home. But to tax the ongoing existence of a piece of land. Uh-huh. Also, property tax is one of the main negative forces of gentrification. I saw this a lot when I was in Seattle. Old couples were essentially forced to sell and move, because they couldn't afford the skyrocketing property taxes on a home whose mortgage had already been paid off. Also, property taxes are one of those places where spineless politicians hide taxation that they don't have the balls to endorse.

    On the flip sides, it is one of the main ways that local governments have of raising revenues.
    Agreed. Obviously abolishing property taxes would leave a revenue hole, but I would prefer to live with the simplicity and fairness.

    Not to mention the regressive elements of property taxes that you mention. The San Antonio Independent School District v. Rodriguez case in the 1970s is another angle of why property taxes screw people over; if public schools are mandated by the state and you rely on property taxes for school funding, wealthier areas will get much better schools.

    Quote Originally Posted by Illusions View Post
    Edit: If you'd like to argue against property tax, I'll give you the same hypothetical scenario I did Dreadnaught. Say tomorrow on a hypothetical 1 acre piece of land you own, you're no longer charged property tax. The next day I decide to use your land as a dump. What is your course of action for resolving this problem?
    Because the government doesn't disappear when you eliminate a property tax. Just like governments don't disappear when you lower or raise a tax rate. As long as enough tax revenue is being collected, the government will exist.

  22. #22
    Property tax is like renting from the government. Also due to the way we use property taxes to fund schools it greats a lot of inequality in education. So giant thumbs down for property taxes from me.

  23. #23
    Quote Originally Posted by Dreadnaught View Post
    Because the government doesn't disappear when you eliminate a property tax. Just like governments don't disappear when you lower or raise a tax rate. As long as enough tax revenue is being collected, the government will exist.
    The government doesn't disappear in my scenario. You've decided there is no justifiable reason to pay property taxes, so my hypothetical government has allowed you to stop paying, under the condition that they will no longer feel justified in providing you with services and protection for your property. What is your course of action? I think your problem with property tax is due to being patently ignorant or unaware of what you are entitled to by paying it.

    Here's another keen thought. The reason the government doesn't tax you for non-land property you own that you are just holding onto is a problem of logistics. Which do you think is easier? Having the government or yourself keep track of everything you own from a spoon to a desk, or a pile of gold and having it evaluated every x amount of years, and then paying a tax on that, or paying one lump sum when you purchase an object? Very likely that one lump sum when you purchase it, which is a percentage of its current value (not how much money you the buyer could make off it). Now what does that sound like? Sounds an awful lot like a sales tax.

    ...land is easier to place a value on consistently. It doesn't move, or go anywhere. If you trade it, sell it, or buy it its still sitting in the same place. It doesn't change too drastically between evaluations. You can't lose it behind a desk, and its not going to go obsolete. Taxing it on a regular basis is fairly simple compared to taxing everything you own. So yes, you are taxed for the property you own that just sits around not making you any money. You just pay for it all up front because its easier and more convenient.
    . . .

  24. #24
    Senior Member Flixy's Avatar
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    Quote Originally Posted by Dreadnaught View Post
    Income taxes, sales taxes, gas taxes, etc. All the stuff we already tax based on what services we use and how much we make.
    Agreed that tax should be based on how much you use them, if possible. Gas taxes are a good indicator for how much you use the roads, for example. And property value is a way of indicating how much you need the government services related to that property (infrastructure, police, fire department, etc.).
    The government doesn't tax you just for keeping a pile of gold in your house, even though it's theoretically worth something. They only tax you if you sell or perhaps transfer your gold.
    I think they do, somewhat, here. Not sure about actual piles of gold, but I think all wealth is taxed at a small rate, if you exceed a certain threshold (on the flipside, I think income from wealth is not taxed). And if that is not the case in the US, why are some rich people hiding money from the IRS in places like Switzerland? Or used to, anyway.
    Why should property be different? One other reason property taxes don't pass a smell test is because of the system of "assessing" value to calculate a tax. The government creates a formula, then assigns value. Many people then appeal the semi-arbitrary valuation on semi-arbitrary grounds. And round and round it goes.

    In NYC the apartment property tax valuation is calculated by taking the theoretical cashflow one could get from renting every apartment in a building over five years. Then building is then valued as a business based on that theoretical cashflow. Granted, there is no rental cashflow per say, it's not a rental building. But don't let the facts get in the way of things. Then the city takes 8% of that valuation, multiples it by 14.55% and gives you a number. But because the underlying valuation is totally bullshit, there is a cottage industry of lawyers who appeal these valuations every year.

    My point-by-anecdote here is there's no real way to value property; its value exists in a marketplace, not a government ledger. Tax the income one may make on that property, but taxing empty space is silly.
    Your point-by-anecdote merely shows that NYC has a retarded way of taxing property, which is, I'm sure, a fair point. I am only defending the principle of property taxation, not how it's done in the US. As a comparison, I think our property tax rates here are ~1/50th of yours, and not based on how much money you could be making with the property.
    Not to mention the regressive elements of property taxes that you mention. The San Antonio Independent School District v. Rodriguez case in the 1970s is another angle of why property taxes screw people over; if public schools are mandated by the state and you rely on property taxes for school funding, wealthier areas will get much better schools.
    Like I said before, connecting a service like public schools directly to local property tax seems stupid to me.
    Because the government doesn't disappear when you eliminate a property tax. Just like governments don't disappear when you lower or raise a tax rate. As long as enough tax revenue is being collected, the government will exist.
    But you wouldn't be paying for the services you get from the government, other people would be paying for your protection. Which is exactly why I think there's nothing fundamentally wrong with the principle of property taxation, even if it is used in a shitty way where you live.
    Keep on keepin' the beat alive!

  25. #25
    Quote Originally Posted by Dreadnaught View Post

    Why should property be different?
    I'll defer to Illusions. As a property owner you, and your property, are an integral part of the local community, receiving services both directly and indirectly. Your property also loosely corresponds to your personal wealth. By taxing the value of your property, you are being asked to pay for the services the community renders you in accordance to the wealth you hold.

    EDIT: Note, in regards to valuation, if I were taxed based on the sale value of my house, I'd be paying a LOT more in tax. The assessed value of my home is always a great deal lower than the market value. Regarding the formulas, the local government concocts them. If you don't like it, write a letter, complain, vote. That might not be practical in NYC, but it likely is in my local township. As it is, I pay a lot in property tax, but I don't mind. It supports the community and I have a vested interest in a healthy community.
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  26. #26
    Senior Member Flixy's Avatar
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    I had a long reply but I accidentally browsed back and lost it
    Quote Originally Posted by Dreadnaught View Post
    Income taxes, sales taxes, gas taxes, etc. All the stuff we already tax based on what services we use and how much we make.
    Agreed that most taxes are/should be based on what you get in return from them. And for services like infrastructure, fire departments, police, property value is an indicator.
    The government doesn't tax you just for keeping a pile of gold in your house, even though it's theoretically worth something. They only tax you if you sell or perhaps transfer your gold.
    I think wealth above a certain threshold is taxed here (but income from wealth is not). Isn't it over there? Since the IRS wants bank info from Switzerland, it would seem to me they want to know how much wealth those people keep there.

    Why should property be different? One other reason property taxes don't pass a smell test is because of the system of "assessing" value to calculate a tax. The government creates a formula, then assigns value. Many people then appeal the semi-arbitrary valuation on semi-arbitrary grounds. And round and round it goes.

    In NYC the apartment property tax valuation is calculated by taking the theoretical cashflow one could get from renting every apartment in a building over five years. Then building is then valued as a business based on that theoretical cashflow. Granted, there is no rental cashflow per say, it's not a rental building. But don't let the facts get in the way of things. Then the city takes 8% of that valuation, multiples it by 14.55% and gives you a number. But because the underlying valuation is totally bullshit, there is a cottage industry of lawyers who appeal these valuations every year.

    My point-by-anecdote here is there's no real way to value property; its value exists in a marketplace, not a government ledger. Tax the income one may make on that property, but taxing empty space is silly.
    Your point-by-anecdote is more that the NYC method for property tax is stupid (and maybe in the US in general), not that the principle of property taxation is wrong. As a comparison, property taxes here are based purely on property value (market value if you sold it, or the replacement value), and not on what you could earn from that property. And the rates here are more in the order of 0.1%, which is significantly lower too (although we have different taxes for water services, which include managing rainfall and protecting against flood, keeping ground water in check, etc., but that's more of a Dutch specialty ).

    By the way, if you think about it, NYC makes a bit of sense with their tax policy to discourage disuse of property - it is full, property is limited, so they want to maximize the use of it, and taxing it encourages using it.
    Not to mention the regressive elements of property taxes that you mention. The San Antonio Independent School District v. Rodriguez case in the 1970s is another angle of why property taxes screw people over; if public schools are mandated by the state and you rely on property taxes for school funding, wealthier areas will get much better schools.
    As I said before, I think it's a stupid idea to link funding for a service like public schools directly to local property taxes.
    Because the government doesn't disappear when you eliminate a property tax. Just like governments don't disappear when you lower or raise a tax rate. As long as enough tax revenue is being collected, the government will exist.
    So you'd be taking advantage of services of the government while the taxes are paid by others. Didn't you start your post with saying that taxes should be connected to the services they provide? Which would lead to property taxes!
    Keep on keepin' the beat alive!

  27. #27
    Quote Originally Posted by Illusions View Post
    ...


    Edit #2: I think an additional problem is that, at least Dreadnaught, is confusing my explanation for why property taxes are justified, as also endorsement of however much they currently are, when its just an explanation of how collecting property tax at all is justified...as opposed to what appears to be his stance and yours, which is that they are bullshit entirely...which I find odd. As if you consider ownership something real like air, or tangible like a stone, and not a concept which requires people to acknowledge it in order for it to have any weight.
    Their objection, which I'm sure Wiggin explained quite well in that other thread, is the basic problem inherent to taxes on fixed assets. You can *and will* tax the asset beyond its value, simply because it is relatively fixed, and the tax gets levied regularly. This is inevitable, and it makes no sense. Very few economists think property taxes, or other regularly levied wealth taxes are any sort of good idea, though most can't see a way to get rid of them that won't end up quite painful itself. Even if, as you allege, they are justified for other reasons they're still a shitty solution.
    Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"

  28. #28
    What about an exemption for parcels of land that serve as your primary residence (maybe with some size limits)? I wouldn't be surprised if that's currently the majority of the revenue right now, but assuming it were politically feasible, even if it meant upping the taxes on other properties, but it seems like that'd take the majority of the hurt out of the policy without losing the incentive it creates to use the land or sell it.
    Last edited by Wraith; 09-28-2010 at 05:15 PM.

  29. #29
    Quote Originally Posted by Wraith View Post
    What about an exemption for parcels of land that serve as your primary residence (maybe with some size limits)? I wouldn't be surprise if that's currently the majority of the revenue right now, but assuming it were politically feasible, even if it meant upping the taxes on other properties, but it seems like that'd take the majority of the hurt out of the policy without losing the incentive it creates to use the land or sell it.
    Doesn't the US tax code have enough loop holes already?
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  30. #30
    Not enough that I get to use!

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