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8 hours ago, bdeller said:

Couldn't think of a less relevant forum than people who live at sea but hey what the hell. This is very interesting

https://astralcodexten.substack.com/p/does-georgism-work-is-land-really

 

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Some readers of the book review were understandably skeptical that Georgism actually works in practice, so this week I'm going to empirically assess "the big three" critiques that come up the most often:

  1. Land might have been a big deal in 1879, but it just doesn't matter much today

  2. Landlords will just pass Land Value Tax (LVT) on to tenants, so it won't work

  3. In real life you can't accurately assess land value separately from improvements, so even if LVT would work in theory, it doesn't work in practice

 

 

I'd agree with number 1.

I already do pass property taxes and every other cost along to tenants. That's what you do with costs. That's not going to change.

It's easier to assess the value of a vacant lot than one with buildings because buildings require lots of inspections and you still can't know what's hidden inside. In real life, I pay taxes on vacant land and on improved land and the property appraisers somehow figured it out when I put a couple of buildings on vacant land and the taxes went way up. So pretty much everything about point 3 contradicts my real life experiences.

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1 hour ago, Lochnerian Tom said:

I already do pass property taxes and every other cost along to tenants. That's what you do with costs. That's not going to change.

Maybe you live in an alternate reality. In the economic reality rents are set by supply and demand. So you will not have a choice in the matter of passing LVT along to tenants. Bookkeeping might be arranged to make appear that you pass it thru, but in reality you will not be able to. It is not permitted to violate the basic supply-demand curve. You would be forced to profit from your improvements alone rather than passively from the land. 

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3 minutes ago, El Borracho said:

Maybe you live in an alternate reality. In the economic reality rents are set by supply and demand. So you will not have a choice in the matter of passing LVT along to tenants.

Sure I would. I pass it along or go out of the business.

The thing about business is, if you can't cover costs, it doesn't work. And despite any attempted window dressing, taxes are a cost.

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29 minutes ago, Lochnerian Tom said:

Sure I would. I pass it along or go out of the business.

The thing about business is, if you can't cover costs, it doesn't work. And despite any attempted window dressing, taxes are a cost.

What they mean is the burden of the tax is on you, the landlord. Maybe like using gold-plated fasteners in the construction of the rental units. The cost would only burden you as it would make no difference to the tenants.

LVT would certainly be disruptive. Typical landlords making largely passive income from old, inefficient or dilapidated units on expensive land would get hammered. As they should. Capital presently stranded in land investment would seek productive uses. 

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2 minutes ago, quod umbra said:

That is always the case. Taxes are paid by the consumer, always.
Whenever a politician stands before you and says "Corporations MUST pay their fair share!" What they are really saying is "We are requiring corporations to collect taxes from the consumer on behalf of the government."

Yet voters fall for it every damn time.

But workers pass their tax expense on to their employers, right? You over simplify to make some point. 

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27 minutes ago, El Borracho said:

What they mean is the burden of the tax is on you, the landlord. Maybe like using gold-plated fasteners in the construction of the rental units. The cost would only burden you as it would make no difference to the tenants.

Right up until the market would no longer support the rent I'd need to cover the tax cost. At that point, despite your assertion to the contrary, I do have a choice: go out of the business.

29 minutes ago, El Borracho said:

Capital presently stranded in land investment would seek productive uses. 

Uh huh. When do-gooders want to decide what a better investment would be and use government to enforce their wishes, we've (or at least I've) seen the results in the Kelo thread. As I said over there, Justice Thomas pointed out who "underutilizes" property: poor people, often black. Systematically targeting them serves the public purpose of enhancing the tax base. That's the main lesson of the topic case and this is the legacy of it.

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  • In real life you can't accurately assess land value separately from improvements, so even if LVT would work in theory, it doesn't work in practice

In real life, I signed these checks:

WillowPropTaxes.jpg

Construction was completed in 2018, but not before January 1, so I got a "free ride" on the building for part of the year.

But look what happened in 2019. When your property tax bill goes up by that much because a building was added and then a video game analyst asserts that this just can't happen "in real life" it makes me want to send him the bills. After all, they're not real and that land portion isn't even a cost at all!

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1 hour ago, Lochnerian Tom said:

Sure I would. I pass it along or go out of the business.

The thing about business is, if you can't cover costs, it doesn't work. And despite any attempted window dressing, taxes are a cost.

We have "legacy" property taxes in many areas here, so someone that has owned a house for 40 years will pay a fraction of what someone that owns the house next to it pays that has only been in that house for 4 years.

At least back when rentals were soft, we had the weird circumstance where some houses were renting for less than the property tax on that same house if you bought it, so you ended up with renting being cheaper than getting the house for free :rolleyes:

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11 hours ago, bdeller said:

Couldn't think of a less relevant forum than people who live at sea but hey what the hell. This is very interesting

https://astralcodexten.substack.com/p/does-georgism-work-is-land-really

I am still making my way through this. It is quite interesting, it would seem to be the antidote to actually housing the population vs. making land one more investment for the wealthy to play with. There is probably a catch or two in here somewhere. In the past many of these schemes to change and "simplify" the tax code have, upon close inspection, had enormous loopholes that a Rolls Royce would fit right through :rolleyes:

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2 hours ago, kent_island_sailor said:

We have "legacy" property taxes in many areas here, so someone that has owned a house for 40 years will pay a fraction of what someone that owns the house next to it pays that has only been in that house for 4 years.

And this is how it should be...  In California, it is called Proposition 13. In my view, someone that has been in a house for the past 40 years is not putting that much of a burden on what property taxes are generally used for.

With the market being what it is these days, the tax rolls have almost tripled in the past ten years, sadly many of those that are the stewards of the revenue are spending it like drunken sailors... 

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7 minutes ago, Ventucky Red said:

And this is how it should be...  In California, it is called Proposition 13. In my view, someone that has been in a house for the past 40 years is not putting that much of a burden on what property taxes are generally used for.

With the market being what it is these days, the tax rolls have almost tripled in the past ten years, sadly many of those that are the stewards of the revenue are spending it like drunken sailors... 

I wasn't saying it was good or bad, but it does produce odd distortions.

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1 hour ago, Ventucky Red said:

And this is how it should be...  In California, it is called Proposition 13. In my view, someone that has been in a house for the past 40 years is not putting that much of a burden on what property taxes are generally used for.

 

Personally, I think property tax should be used to pay for national defense.  I'd like to see a national tax across all real estate classes, expressly for that purpose.

If defending the nation isn't defending the land, I'm not sure what else it really is.

 

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14 hours ago, bdeller said:

"I'd pass the tax onto my tenants" this is the topic of the next post in the series

https://astralcodexten.substack.com/p/does-georgism-work-part-2-can-landlords

tldr if landlords could charge more rent and still win tenants they'd do it right now

Another assertion that fails the reality test. Several of my rentals are at below market rates right now because the market has shot up and I haven't kept up with it. My choice, I like my tenants and change carries risk. I'll take a lower return instead of more work and more risk.

OTOH, if all of us have another cost to bear, we'll all pass it along or go out of business, because again, the thing about business is, if you can't cover costs, it doesn't work.

6 hours ago, El Borracho said:

Maybe economic theory is only concerned with rational actors. 

Yes, I stupidly majored in business/econ in college and vaguely remember that stuff.

Economists make what one prof called "heroic" assumptions of rationality and they do often work. Often. Then you get to things like buying boats, that really don't make a lot of sense. But my favorite example is the glass artist Chihuly. If something sits in his gallery for a year without selling, the price goes UP! Knowing that this will happen, the market actually reacts to it in advance and people buy up the stuff that didn't sell because the price is about to go up. It's brilliant, should not be possible, and makes economists' heads explode.

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21 hours ago, El Borracho said:

Maybe you live in an alternate reality. In the economic reality rents are set by supply and demand. So you will not have a choice in the matter of passing LVT along to tenants. Bookkeeping might be arranged to make appear that you pass it thru, but in reality you will not be able to. It is not permitted to violate the basic supply-demand curve. You would be forced to profit from your improvements alone rather than passively from the land. 

Your reality seems strange.  Rents are indeed set by supply and demand.  So is the cost of the land and improvements.

Whether an owner decides to become a landlord is set by the same thing.

If you buy a property with a sitting tenant you need to consider what income is possible in the current rental market when agreeing to a price.

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I don't think taxes are why Americans can't afford homes.  In fact, real estate taxes are pretty low compared to the value of the underlying asset.  My actual tax bill - in a high tax state after all the funny math that goes on because 'reasons' - is actually going to end up being 1%, or ~ $350/month.  Again, this is IN a high tax state.

The reason Americans can't afford houses is that American soil - at least in certain areas of the US - is worth more as as a "store of value" for the global economy than a place to live for actual Americans.  Capital appreciation in those areas is detached from reality.

One of the big reasons I'm in favor of a national real estate tax is because if you're some Russian oligarch and you want to shelter your money from bad man Putin, it's going to cost you.  10 Aircraft carriers aren't free Yevgeny - pony up.

America has 18 Million Millionaires - out of a base of ~350,000,000 people.  If your property is worth a million, you're already in the top 5% of Americans.  Congratulations!  You won!  You ARE the elite, whether you feel like it or not.

 

 

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10 minutes ago, Saorsa said:

Your reality seems strange.  Rents are indeed set by supply and demand.  So is the cost of the land and improvements.

Whether an owner decides to become a landlord is set by the same thing.

If you buy a property with a sitting tenant you need to consider what income is possible in the current rental market when agreeing to a price.

But the land has a fixed supply. Every last tiny bit of it has been indexed and cataloged. It is interesting how the LVT uses this fact to change, and perhaps improve, the taxation of property.

I didn’t make this stuff up. Rather my open and inquisitive mind accepted the new information. The facts. Good information for me as an owner of considerable undeveloped land.

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57 minutes ago, El Borracho said:

But the land has a fixed supply. Every last tiny bit of it has been indexed and cataloged. It is interesting how the LVT uses this fact to change, and perhaps improve, the taxation of property.

I didn’t make this stuff up. Rather my open and inquisitive mind accepted the new information. The facts. Good information for me as an owner of considerable undeveloped land.

Unfortunately, it requires attributing some value to non-producing assets.

Yes, we have identified and cataloged the land.  We know where the ocean is too.  We know where there is coal and oil and potable water.

We don't know the value until that is put to some use.  An acre in death valley does not have the same value as an acre in downtown LA.  If all you want to do is assign some arbitrary value so that you can use it to confiscate wealth then at least admit it.

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3 hours ago, Lochnerian Tom said:

...   ...

Yes, I stupidly majored in business/econ in college and vaguely remember that stuff.

Economists make what one prof called "heroic" assumptions of rationality and they do often work. Often. Then you get to things like buying boats, that really don't make a lot of sense. But my favorite example is the glass artist Chihuly. If something sits in his gallery for a year without selling, the price goes UP! Knowing that this will happen, the market actually reacts to it in advance and people buy up the stuff that didn't sell because the price is about to go up. It's brilliant, should not be possible, and makes economists' heads explode.

Actually, it doesn't.

I know you like to pretend that pointy-head intellectual libby-rulls don't know shit, but the economics branch of Pointy-Head Intellectual Libby-Rulls Inc. has it all sorted out. https://en.wikipedia.org/wiki/Artificial_scarcity

- DSK

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9 minutes ago, Saorsa said:

Unfortunately, it requires attributing some value to non-producing assets.

Yes, we have identified and cataloged the land.  We know where the ocean is too.  We know where there is coal and oil and potable water.

We don't know the value until that is put to some use.  An acre in death valley does not have the same value as an acre in downtown LA.  If all you want to do is assign some arbitrary value so that you can use it to confiscate wealth then at least admit it.

The value of the land is simply the market price of the entire property less the value of the improvements. The improvement value is basically depreciated cost without regard to location, schools, view or other externals. Can get close enough with just square footage, quality and condition.

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13 minutes ago, El Borracho said:

The value of the land is simply the market price of the entire property less the value of the improvements. The improvement value is basically depreciated cost without regard to location, schools, view or other externals. Can get close enough with just square footage, quality and condition.

And road access, and available utilities, and nearness to desirable amenities... it's not an exact science

IMHO valuing construction and improvements seperately is a mugs game. Yes you can move a house off a given property and set it somewhere else, but it's a major PITA and a significant expense. Then there are things like we have here, hurricane-trashed houses that are tear-downs but still carried on the tax rolls.

- DSK

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16 minutes ago, quod umbra said:

Either you live in a dump or you do not actually live in a high tax state.

Westchester County NY we pay $1210 per month and live in a modest home of 1700 sqft or so.

Translation: QU does not understand the macro economic principle of land being a store of value for under utilized capital, globally... but he can't resist hurling insults at those he considers WRONG just because he thinks they're goddam libby-rulls

- DSK

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1 hour ago, Saorsa said:

Unfortunately, it requires attributing some value to non-producing assets.

Yes, we have identified and cataloged the land.  We know where the ocean is too.  We know where there is coal and oil and potable water.

We don't know the value until that is put to some use.  An acre in death valley does not have the same value as an acre in downtown LA.  If all you want to do is assign some arbitrary value so that you can use it to confiscate wealth then at least admit it.

Who is "you"?

Did you actually read the article and the comments? There is no plan there for an arbitrary value per acre, the Death Valley land owner would pay very little tax because the land is worth very little. Land gets bought and sold all the time too, there are ways to assign a value to it.

This is not "confiscating wealth" any more or less than any other tax scheme is. The IRS confiscates the shit out my "wealth" every April right now without any help :rolleyes: That is the price to pay for living a 1st World existence. The comments are really key once you understand the basis of the plan, the plan may be good or bad, but the transition would be enormously destructive if not very carefully managed.

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1 hour ago, El Borracho said:

The value of the land is simply the market price of the entire property less the value of the improvements. The improvement value is basically depreciated cost without regard to location, schools, view or other externals. Can get close enough with just square footage, quality and condition.

That's correct.  It is the human valuation of the land that you want to tax.  You are creating a wealth tax and that will allow the politicians to define your wealth.

All they need to do is rezone it and you suddenly get hit with a higher rate.  Agricultural vs. commercial vs. residential for example.

Most ad valorem taxes are based on most recent sales.

 

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42 minutes ago, kent_island_sailor said:

Who is "you"?

Did you actually read the article and the comments? There is no plan there for an arbitrary value per acre, the Death Valley land owner would pay very little tax because the land is worth very little. Land gets bought and sold all the time too, there are ways to assign a value to it.

This is not "confiscating wealth" any more or less than any other tax scheme is. The IRS confiscates the shit out my "wealth" every April right now without any help :rolleyes: That is the price to pay for living a 1st World existence. The comments are really key once you understand the basis of the plan, the plan may be good or bad, but the transition would be enormously destructive if not very carefully managed.

There is no plan there for an arbitrary value per acre, the Death Valley land owner would pay very little tax because the land is worth very little.

Those two sentence are in conflict.  If you are establishing worth as the basis of taxation you are assigning value.

Are the tax rates higher for waterfront on Kent Island?   Does land zoned commercial differ in tax rate from that zoned residential?

 

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49 minutes ago, kent_island_sailor said:

Who is "you"?

Did you actually read the article and the comments? There is no plan there for an arbitrary value per acre, the Death Valley land owner would pay very little tax because the land is worth very little. Land gets bought and sold all the time too, there are ways to assign a value to it.

This is not "confiscating wealth" any more or less than any other tax scheme is. The IRS confiscates the shit out my "wealth" every April right now without any help :rolleyes: That is the price to pay for living a 1st World existence. The comments are really key once you understand the basis of the plan, the plan may be good or bad, but the transition would be enormously destructive if not very carefully managed.

The IRS taxes your income, not your wealth.

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29 minutes ago, Venom said:

Are you telling us that you have never heard of someone being forced to sell their home because they can no longer afford the taxes based on current market value? 

I think at this point, I'm suppose to quote "Weak hands to strong hands?"  Don't you BELIEVE in Free Markets or are you one of those commie types?  :) <snark snark>

Relative to being forced to sell, reverse mortgage and pay the taxes from the asset, like the rich folk do with their stock/options.  Settle up when you're dead.  That's a 'go do' - no magic there.  If your asset (house) doesn't have enough value to justify the taxes, then you don't actually own your house anyway - you just live there.  That's a whole different question.

As a true question though, do you actually believe in inheritance tax or some other mechanism that forces a realized capital gain?  Otherwise, you're basically saying that once someone buys a piece of property, it's theirs to own in perpetuity.  Which is a fine position to take, feel free to advocate.  But I think you'd discover within a few generations, that world would kinda suck. 

--------------------

Personally, my goal in taxes is to be as simple as possible with as few loopholes as possible.  That makes arguing about rates at least semi-sensible.   The options are either wealth taxes, income taxes, or consumption taxes.

A pure income system is tax system "Taxes should be based only on income generated or capital gains (not unlike trading stocks) when you sell. " - means that income tax receipts would have to basically double across the fed/state/local.  My biggest disagreement with that system is again, it's just a back-door boon to the incumbents.  We've borrowed our way to prosperity and leaving that tab to be covered by income taxes on Millennials/Zoomers seems pretty janky.  Haven't the Boomers already gotten enough advantages?  Do they really need ANOTHER participation trophy? ;)

I see real estate as (a) a wealth bucket and (b) a foreign money tax shelter.  Tax the fuckers hiding their money.  Don't like Putin or Xi but aren't angsty enough to get rid of him?  Fine, we'll protect your money, but its gonna cost you.  As I said, 10 Aircraft carrier groups ain't free.  Exempt the first $300K from taxes. 

I appreciate that the incumbents of home ownership have enjoyed unnatural property value growth - good for them, they got lucky - but what that has done is create an unnatural bottleneck in family formation that is going to break down, one way or another.

 

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2 hours ago, Venom said:

Yes having a roof over your head is indeed an asset! 

Taxes should be based only on income generated or capital gains (not unlike trading stocks) when you sell.

Are you telling us that you have never heard of someone being forced to sell their home because they can no longer afford the taxes based on current market value? 

Then their current market value will have gone up, considerably. So don't feel too sorry for them.

In CA, we have the stupidity known as Prop 13 which follows your bleeding heart conservative argument. What it ends up meaning is that grandma gets grandfathered with a low low property tax and then their grandchildren, or someone's grandchildren, pay full freight and then some. If that weren't bad enough, grandma can be a corporate person. Tom will be so happy.

Or we could just treat people equally. I know, such a concept.

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7 hours ago, Venom said:

Taxes should be based only on income generated or capital gains (not unlike trading stocks) when you sell.

Are you telling us that you have never heard of someone being forced to sell their home because they can no longer afford the taxes based on current market value? 

Why do you want to penalize (burden) income generation? Seems very much counter-productive to discourage the revered captains of industry.

One result of income tax is that capital gets sequestered in land. Unproductively, much like gold. The cost of land, being of fixed supply, is driven very much upward. The ultimate result tends toward a feudal system of barons, lords, etc.

The experiments with an LVT is that land prices plummet as the lords run from the tax burden. The land price bubble pops. 

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9 hours ago, Saorsa said:

That's correct.  It is the human valuation of the land that you want to tax.  You are creating a wealth tax and that will allow the politicians to define your wealth.

All they need to do is rezone it and you suddenly get hit with a higher rate.  Agricultural vs. commercial vs. residential for example.

Most ad valorem taxes are based on most recent sales.

 

I don’t think that simply rezoning a parcel would change the tax. There would need to be an increase in actual market value. But you are not wrong. Some people would be forced out. Perhaps relocating would be easier as the present near-feudal system falls apart. Why would Jethro want to live in his trailer when surrounded by apartment blocks and shopping malls? Take the profits and move on.  

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11 hours ago, Steam Flyer said:

And road access, and available utilities, and nearness to desirable amenities... it's not an exact science

IMHO valuing construction and improvements seperately is a mugs game. Yes you can move a house off a given property and set it somewhere else, but it's a major PITA and a significant expense. Then there are things like we have here, hurricane-trashed houses that are tear-downs but still carried on the tax rolls.

- DSK

I think road access, utilities, schools are all in the land value not the improvements. Assessors can get very close to a fair value of improvements from the curb or peeking over a fence. Assessing the value of unimproved land is well-established. Plus, the citizens have been shown to accept 1000-fold discrepancies in valuation without a whimper so long as it favors the wealthy (see @bdeller link above).

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4 hours ago, El Borracho said:

I don’t think that simply rezoning a parcel would change the tax. There would need to be an increase in actual market value.

But rezoning usually does increase the market value.  Land you can put houses on usually is worth more than land zoned for agricultural use only.

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Wealth taxes, including but not limited to property, are more efficient and equitable. 

Progressives want to tax income less and wealth more. 

There is a ton of research supporting this thesis. 

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8 hours ago, valis said:

But rezoning usually does increase the market value.  Land you can put houses on usually is worth more than land zoned for agricultural use only.

But what are the people who live there going to eat? Were we throwing away the food grown on that land?

- DSK

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8 hours ago, valis said:

But rezoning usually does increase the market value.  Land you can put houses on usually is worth more than land zoned for agricultural use only.

Yes. The change in market value would raise the tax burden. Might be argued that it amounts to an improper taking of property. 

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11 minutes ago, El Borracho said:

Yes. The change in market value would raise the tax burden. Might be argued that it amounts to an improper taking of property. 

It already does that for virtually every local government and the taxes raised are spent locally where the citizens can keep an eye on the government.  I think that's a great idea.  Not so much for the 535 political elite in DC.

If you want to increase federal revenue from rich folks, just eliminate the tax deduction for state and local taxes.

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25 minutes ago, Saorsa said:

It already does that for virtually every local government and the taxes raised are spent locally where the citizens can keep an eye on the government.  I think that's a great idea.  Not so much for the 535 political elite in DC.

If you want to increase federal revenue from rich folks, just eliminate the tax deduction for state and local taxes raise the marginal income tax rates back up to where they should be, and classify short-term capital gains as regular income.

FIFY

- DSK

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1 hour ago, Steam Flyer said:

FIFY

- DSK

What's your argument for keeping the tax deduction for state and local taxes?  Other than supporting party, I'm not sure there's an actual philosophical argument.    Double taxation itself exists up and down the tax code so that's not a consistent reason unless you want to get rid of all double taxation on principle, which is one of those pesky libertarian concepts that tends to leak in.  The individuals most likely to benefit also have the highest incomes so it's not particularly progressive position either.

FWIW:  I do believe the SALT cap is a cynical political ploy by Republicans to hurt Democrats in general elections.  But I think repealing the cap ad hoc is equally cynical.   I'm absolutely a realist and power does have its privileges.   Democrats are in charge and if they want to repeal it, fire away.  Such is politics.  Power itself is amoral.

https://www.brookings.edu/blog/up-front/2021/06/24/note-to-bernie-the-8-arguments-for-restoring-the-salt-deduction-and-why-theyre-all-wrong/

Brookings summarized the arguments.  I got rid of their counter narratives - mostly I think the list is a nice summary of the most common reasons.  Is there one they missed?

  1. “Democrats want to lift the SALT cap because it was enacted by Republicans who wanted to unfairly punish blue states. Why are you supporting a dirty political move by the GOP?”
  2. “Lifting the SALT cap is good because blue states are ‘donor states’ to red states. It is only fair for blue states, who are net contributors to federal coffers, to get a break on their taxes.”
  3. “The SALT deduction protects against double taxation. Why are you in favor of double taxation of U.S. citizens?”
  4. “The SALT deduction allows states the fiscal room to spend. Without SALT, there would be a ‘race to the bottom’ in terms of state tax rates and a decline in state spending—netting a regressive result.”
  5. “Democrats need to win as many rich suburban voters as they can. I would much rather lift the SALT cap than risk the Republicans winning votes in these areas.”
  6. “Millionaires will flee from high tax states like New York and California and hurt state revenues—leading to less money for progressive state spending”
  7. “Money doesn’t go as far in expensive cities. The people who would benefit from lifting the SALT cap really aren’t that rich.”
  8. “We can just lift the SALT cap and pay for it with progressive revenue raisers, such as higher marginal rates.”

 

 

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The disagreement with the policy of double taxation is pretty much self explanatory IMHO. In the absence of some provided service, I'd be in favor of getting rid of it. I'd be in favor of massively simplifying our tax code, too.

It is true that there is some movement of people and business in response to taxes, but it's not consistent. Why didn't millionaires flock to Kansas during the Brownback years? Why do any millionaires live in New York City?

- DSK

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20 hours ago, El Borracho said:
On 12/29/2021 at 12:02 AM, valis said:

But rezoning usually does increase the market value.  Land you can put houses on usually is worth more than land zoned for agricultural use only.

Yes. The change in market value would raise the tax burden. Might be argued that it amounts to an improper taking of property. 

I had a long talk with our head of zoning a couple of years ago about a property I wanted to sell. It's on the main highway and makes sense as a commercial property. He agreed with that and told me his office would support it, but that I had no chance at all because of the "urban services line" that was placed in the middle of the road years ago. Moving that line requires cooperation from State officials and likely and Act of God, I was told.

It would have definitely increased the market value and the tax would have gone up. Not sure how that's a buyback, but you could always drop by the Kelo thread and explain it to me.

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40 minutes ago, Lochnerian Tom said:

I had a long talk with our head of zoning a couple of years ago about a property I wanted to sell. It's on the main highway and makes sense as a commercial property. He agreed with that and told me his office would support it, but that I had no chance at all because of the "urban services line" that was placed in the middle of the road years ago. Moving that line requires cooperation from State officials and likely and Act of God, I was told.

It would have definitely increased the market value and the tax would have gone up. Not sure how that's a buyback, but you could always drop by the Kelo thread and explain it to me.

Seems like greed on your part. Your Kelo thread is bleak. Not going there. 

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14 minutes ago, El Borracho said:

Seems like greed on your part.

 

On 12/28/2021 at 6:37 AM, El Borracho said:

Good information for me as an owner of considerable undeveloped land.

Do you want to sell it for more or less money, should you sell?

Yes, I admit wanting to sell for more. If you're interested in selling for less for some reason, I can probably make you very, very happy, so let's talk business.

Of course, your messenger attack leaves out the head of zoning endorsing my greed. Why would he do that? Perhaps because he knows that higher tax revenues would result? Those are a "public purpose," you know. Or maybe you don't know, but you would if you visited that bleak thread and told me why the nutjobs were wrong.

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11 hours ago, Lochnerian Tom said:

Yes, I admit wanting to sell for more. If you're interested in selling for less for some reason, I can probably make you very, very happy, so let's talk business.

Your reaction to my accusation of greed makes you sound like a socialist. Not selling. Already very very happy.

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  • 3 months later...
On 12/27/2021 at 4:47 AM, Pertinacious Tom said:

I already do pass property taxes and every other cost along to tenants. That's what you do with costs. That's not going to change.

Most everyone does that. And yet, the tenants don't get all those glorious tax deductions, so they pay the unsubsidized rate for these costs. Worse, law enforcement, code enforcement, fire protection and education is less beholden to those who pay the unsubsidized rate.

This is an example of institutional racism that needs to be corrected.

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On 12/30/2021 at 4:28 AM, Pertinacious Tom said:

Yes, I admit wanting to sell for more. If you're interested in selling for less for some reason, I can probably make you very, very happy, so let's talk business.

Now that you mention it Normy, I remember as a boy, perusing the fishing counter at my local LaBelle's catalogue store and they had the very first digital fishing reel. Simple thing, just a distance cast and retrieval counter, but helpful to find a sweet spot, Not antique, but vintage. Do you have an example of that reel?

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3 hours ago, mikewof said:

Most everyone does that. And yet, the tenants don't get all those glorious tax deductions, so they pay the unsubsidized rate for these costs. Worse, law enforcement, code enforcement, fire protection and education is less beholden to those who pay the unsubsidized rate.

This is an example of institutional racism that needs to be corrected.

So suggest a correction.

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6 hours ago, Pertinacious Tom said:

So suggest a correction.

I've been pushing for that in my counties in my State. So far, little traction with my representatives, though some BLM folks told me they like the idea. The real change needs to come from the IRS and they need to offer parity for renters who all pay the unsubsidized property tax, unlike the owners. But that current lack in the IRS code is a pure example of institutional racism.

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29 minutes ago, mikewof said:

I've been pushing for that in my counties in my State. So far, little traction with my representatives, though some BLM folks told me they like the idea. The real change needs to come from the IRS and they need to offer parity for renters who all pay the unsubsidized property tax, unlike the owners. But that current lack in the IRS code is a pure example of institutional racism.

Urf.  You'd have to figure out who the renter of record is and from when to when.  Not impossible but that's definitely getting into the weeds.   Home ownership changes a lot slower than rental agreements.  I know in principle computers could certainly handle it but I'm not sure humans can hold up their end of the bargain.

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22 minutes ago, BeSafe said:

Urf.  You'd have to figure out who the renter of record is and from when to when.  Not impossible but that's definitely getting into the weeds.   Home ownership changes a lot slower than rental agreements.  I know in principle computers could certainly handle it but I'm not sure humans can hold up their end of the bargain.

Not to mention whether/how much tax the owner actually paid, and when. I pay in November for the discount.

I don't get why mike thinks this expense of ownership is different from any other. I pass along every expense, just like any business that wants to survive. Should my tenants (or maybe their temporary roomates) get a tax credit when I buy a roof or a water treatment system?

There's a much easier correction, and one I've been fearing for a while now. Several of my tenants could fix the whole problem by buying their own places. They just choose not to.

10 hours ago, mikewof said:

Worse, law enforcement, code enforcement, fire protection and education is less beholden to those who pay the unsubsidized rate.

This is particularly funny because one of those is a lawyer for the County. The house he rents is throwing distance from the fire dept/police station. Like I said, he could buy a place if he wanted to do it. He's not an idiot and knows the tax consequences. By the way, it's a white guy I'm oppressing this way.

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33 minutes ago, Pertinacious Tom said:

Not to mention whether/how much tax the owner actually paid, and when. I pay in November for the discount.

I don't get why mike thinks this expense of ownership is different from any other. I pass along every expense, just like any business that wants to survive. Should my tenants (or maybe their temporary roomates) get a tax credit when I buy a roof or a water treatment system?

There's a much easier correction, and one I've been fearing for a while now. Several of my tenants could fix the whole problem by buying their own places. They just choose not to.

This is particularly funny because one of those is a lawyer for the County. The house he rents is throwing distance from the fire dept/police station. Like I said, he could buy a place if he wanted to do it. He's not an idiot and knows the tax consequences. By the way, it's a white guy I'm oppressing this way.

The expense of ownership is different for you versus your tenants. You get to deduct things like tax costs, interest costs and other costs from the properties that you own, especially from your primary residence. But renters tend not to get those benefits. You get the "subsidized" rate for your expenses, they don't. When you pass on the costs of your new roof or water treatment system to your tenants, they do pay for those costs, but they don't get the deduction for those costs.

As to renters solving this problem by buying their own place, undoubtedly some can, depending where in the country they live, I don't know what costs are like in your area of Florida. But in expensive areas of the country, people most often rent because that is the option available to them. Should they own their own place? Let them eat cake. You seem out of touch with these realities ... to buy property tends to require things like a checking account, a credit rating, a few thousand dollars for the down-payment, and an intrinsic understanding and trust of the process. Renters I have known pay their rent by cashing their paycheck at the check-cashing place, and then drawing a money order at the supermarket. And now, miracle of miracles, some of them can use Venmo and CashApp even though they can't get a bank account because of judgements against them. There is a kind of commercial tax on poverty, most everything is more expensive for people in poverty. Not all renters are in poverty, but many are. In my area, homelessness climbs as there are fewer rentals that people can afford ... they then live in dismal weekly motel rentals or raise a child from the inside of a green 1992 Buick Skylark parked behind a county sand facility, since the rear differential barely has another ten miles left in it.

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1 hour ago, BeSafe said:

Urf.  You'd have to figure out who the renter of record is and from when to when.  Not impossible but that's definitely getting into the weeds.   Home ownership changes a lot slower than rental agreements.  I know in principle computers could certainly handle it but I'm not sure humans can hold up their end of the bargain.

To audit a bloc, yes. But for the renter to self-report via HR Block, or TaxAct, TurboTax, etc., they just answer the survey questions and the preparer or computer feeds the numbers into the calculation. I get all kinds of deductions as a homeowner that I never got as a renter.

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Mike you have this all wrong. Let’s keep this simple. I own property that you rent for $1,00 a month. My costs are $750 a month. Net profit $250. Now let’s say that the feds/state/county, etc give me a tax break of $100 per month. And that all the other property owners got the same break. Who is benefiting when I lower your rent to $900 to be competitive with my fellow land barons? My profit is still $250 but you are now only paying $900!

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1 hour ago, Gangbusters said:

Mike you have this all wrong. Let’s keep this simple. I own property that you rent for $1,00 a month. My costs are $750 a month. Net profit $250. Now let’s say that the feds/state/county, etc give me a tax break of $100 per month. And that all the other property owners got the same break. Who is benefiting when I lower your rent to $900 to be competitive with my fellow land barons? My profit is still $250 but you are now only paying $900!

100%, you are correct here. In that case, the generous property owner would socialistically share his or her wealth with his or her tenant.

In that case, the generous property owners become the success of where the government has failed. I assume that you do what you describe, I do something similar, in my attempts to not add to our area's homeless problem. But if only a handful of property owners share their profits like this, then in order to move our country to a more equitable place, this effort you describe might be better encoded into the tax law.

Given my druthers, I would much rather people do things like what you describe, because it's the right thing to do, rather than because the law essentially compels them to do so. Every law that is added, tends to add to the frictional cost of government.

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2 hours ago, mikewof said:

To audit a bloc, yes. But for the renter to self-report via HR Block, or TaxAct, TurboTax, etc., they just answer the survey questions and the preparer or computer feeds the numbers into the calculation. I get all kinds of deductions as a homeowner that I never got as a renter.

Wouldn't it be easier to just get rid of the Mortgage deduction outright?

 

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10 minutes ago, BeSafe said:

Wouldn't it be easier to just get rid of the Mortgage deduction outright?

Get rid of the mortgage, interest and tax deductions? The housing industry would skin us alive!

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5 minutes ago, mikewof said:

Get rid of the mortgage, interest and tax deductions? The housing industry would skin us alive!

I would like to see them gone.

I believe that the tax code is far too byzantine to be useful.

If we want to include a 'housing credit' - some money from the government to everyone because they're alive and presumably have to live somewhere then that's worth at least a conversation.  But the existing system is dumb.

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2 minutes ago, BeSafe said:

I would like to see them gone.

I believe that the tax code is far too byzantine to be useful.

If we want to include a 'housing credit' - some money from the government to everyone because they're alive and presumably have to live somewhere then that's worth at least a conversation.  But the existing system is dumb.

That's a good idea. I like it better than extending the costs to renters. Simplifies the code, removes that form of institutional racism.

Maybe even find a way for some kind of housing EBT, for homeless people without having to hit the Section 8 lottery?

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Just now, BeSafe said:

I would like to see them gone.

I believe that the tax code is far too byzantine to be useful.

If we want to include a 'housing credit' - some money from the government to everyone because they're alive and presumably have to live somewhere then that's worth at least a conversation.  But the existing system is dumb.

Byzantine is a good description, labyrinthine is another. Outrageously voluminous?

If printed out in small but legible font, the US tax code would fill a 2,500 sq ft house right up to 10ft ceilings, and spill over into the garage. This is simply ridiculous. It's one of the booby-traps of modern life. It also cannot be reliably enforced, which means that every year, everybody cheats a little more.

We need to toss that fucker out and start over. There is no reason why our tax code, including that for corporations, need occupy more than a few pages. Individual wage earners should be able to do their taxes with 4 lines of simple arithmetic... maybe 5... on an index card (OK, we can take turns helping Mikey with his). Our tax code should be easy to enforce and should encourage compliance. It should also generate revenue to invest in the country's infrastructure.

- DSK

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4 hours ago, mikewof said:

As to renters solving this problem by buying their own place, undoubtedly some can, depending where in the country they live, I don't know what costs are like in your area of Florida. But in expensive areas of the country, people most often rent because that is the option available to them. Should they own their own place? Let them eat cake. You seem out of touch with these realities ...

Completely.

Now, if you'll excuse me, I have to go sign another owner financing deal that will turn another person who would get laughed out of a bank into a property owner. How many property owners have you started on their way?

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29 minutes ago, Pertinacious Tom said:

Completely.

Now, if you'll excuse me, I have to go sign another owner financing deal that will turn another person who would get laughed out of a bank into a property owner. How many property owners have you started on their way?

More let them eat cake ... you own a sufficient amount of debt-free property to owner-finance. That's good. 

I have started three to five on their way, I know that three succeeded, not sure about two of them. I did what I could to help them get their 3.5% FHA-secured downpayment by returning their deposit even with the damage and kicking them a month or two of free rent, I couldn't afford more. And I tried that and failed at least once, tenant moved into weekly motel, couldn't get her life together sufficiently to get the FHA loan.

Owner financing is good, it's the domain of people who tend to own unencumbered property. Not all of us are so fortunate.

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11 hours ago, mikewof said:

More let them eat cake ... you own a sufficient amount of debt-free property to owner-finance. That's good. 

I have started three to five on their way, I know that three succeeded, not sure about two of them. I did what I could to help them get their 3.5% FHA-secured downpayment by returning their deposit even with the damage and kicking them a month or two of free rent, I couldn't afford more. And I tried that and failed at least once, tenant moved into weekly motel, couldn't get her life together sufficiently to get the FHA loan.

Owner financing is good, it's the domain of people who tend to own unencumbered property. Not all of us are so fortunate.

Heh. What I'm selling off at the moment is a little patch of a poor Panhandle county. Our cars are worth more than the remaining lots. Anyone who could buy a car could do what I'm doing. You buy a big piece of really cheap land, cut it up and sell the pieces with owner financing. In practice it's a bit more complex but not much. Sometimes it doesn't go well but my experience leads me to believe banks are missing out by laughing at the idea of loaning these people money. By and large, they pay their debts. Sometimes slowly and irregularly, but more make it than not by a fair margin.

So your guess that I know nothing about a market where I participate was wrong and your guess that only the super-rich could do what I'm doing is also wrong. Want to make more guesses or are you ready to start asking instead of asserting my beliefs?

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Yes, this is definitely an interesting article, but I fundamentally disagree with the author of the article. The earth and soil are not infinite, and all people want to eat. I would say that buying territories where you can grow something is the safest purchase of territory in the world. Because no matter what happens, people will always need food, and no matter what happens, you will be able to feed yourself thanks to your possessions. I have been doing Land purchase for a long time and this business is the most profitable of all the businesses that I have done. Yes, it is more complicated, but it is the most stable. That is why the purchase of land will never cease to be an actual and safe transaction for a businessman. That's why the author of the article is wrong.

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5 hours ago, Pertinacious Tom said:

Heh. What I'm selling off at the moment is a little patch of a poor Panhandle county. Our cars are worth more than the remaining lots. Anyone who could buy a car could do what I'm doing. You buy a big piece of really cheap land, cut it up and sell the pieces with owner financing. In practice it's a bit more complex but not much. Sometimes it doesn't go well but my experience leads me to believe banks are missing out by laughing at the idea of loaning these people money. By and large, they pay their debts. Sometimes slowly and irregularly, but more make it than not by a fair margin.

So your guess that I know nothing about a market where I participate was wrong and your guess that only the super-rich could do what I'm doing is also wrong. Want to make more guesses or are you ready to start asking instead of asserting my beliefs?

We used to have a lot of owner financing in the ranchlands when I was a kid. Those days are gone. The counties won't let the owners divide it up willy-nilly due to the water restrictions, and every property needs to have its own driveway and leaching field before even a two-ball treehouse can be built. The most affordable small plot in my area are the weirdly-shaped mining claims, last time I checked they go for about $40k per acre. No water, no power, if you want water, you apply for a drilling permit and then at 7,000-some feet, you wait for a $95/foot full rig to get out to you, and hope against hope that they hit the table on their first try in something less than a couple hundred feet. If not, spend another $20k or so. And then you'll still need to build the leaching field, if you want to run power, that will cost anywhere from $10k up to ten times that, depending on how far away the easement is.

But the reality here is that our minimum wage is only a couple bucks more than Florida. There is an emerging level of poverty and homelessness in these Western states that is nothing like what I saw on the East Coast. The winters are tough, the housing prices are insane, the police are aggressive with ticketing and fining people who fall asleep on trains to stay warm for the night, or sneak into an abandoned building to keep from freezing to death when it's minus-20 with the wind chill. In NYC, the homeless people were more often those with addictions, illness. Here? It's often regular people who often work 30-some hours per week and spend 20 hours per week waiting for the bus to get them across town to the job. Panhandling might be different in the Panhandle, but here, some folks can make more more standing by the off-ramp of the Valley Highway than they can make getting taxes and social security withholding removed from their minimum wage.

So okay Normy, you can help some folks and make a few bucks in the process, and do it without a tremendous amount of capital. But unless you have some deep family hundred-year-old money in my area, you can't. Your suggestion that people should just buy a house and quit renting obviously has validity in your Florida Panhandle Low Value Land. But it is far from reality where I am.

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We have some of those rules about land and water here too, which is why I mentioned that things get a bit more complex than my initial outline. My own property, like all my neighbors', has a 50 foot wide "driveway" strip. The actual driveway runs on part of mine but we all have to have them to be a buildable lot. Similarly, these people we sell to do shit. They need, but can't afford, a well and septic system. So we buy those and build the cost into the financing.

If there are too many rules and they prevent you from helping poor people, maybe move to a state where doing business with the poor is allowed?

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  • 2 weeks later...

Most countries have much higher property taxes than the UK - including the USA. If we introduced a land tax it would look like a "reversion to normal" to the Americans. One of the major reasons foreign millionaires are so keen to buy here is that they only pay a couple of thousand in tax a year so it's a good place to "park" money in a tangible form. Personally, I support a Land Area Tax, not a Land Value Tax. I am reading different informative content like this.

https://consumeradvisory.co.uk/can-landlord-increase-rent/

I don't care whether you've got a shack or a mansion on the land, I only care what square footage you're calling "yours". I far as I'm concerned you're renting that from the rest of us.

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On 4/5/2022 at 4:00 PM, Pertinacious Tom said:

We have some of those rules about land and water here too, which is why I mentioned that things get a bit more complex than my initial outline. My own property, like all my neighbors', has a 50 foot wide "driveway" strip. The actual driveway runs on part of mine but we all have to have them to be a buildable lot. Similarly, these people we sell to do shit. They need, but can't afford, a well and septic system. So we buy those and build the cost into the financing.

If there are too many rules and they prevent you from helping poor people, maybe move to a state where doing business with the poor is allowed?

I get calls constantly from real estate people who want to sell family properties. I'm fortunate that I make a penny or two as a physicist and I don't need to do that, because the outcome would immediately be a homeless family. Maybe someday when the bubble here breaks, I might be able to get rid of some of the rocks around my neck, but definitely not now.

It isn't the rules that have created the homeless problem in my area as much as the rapid expansion of the economy once weed became legal here, and insufficient affordable housing, in part because this is a high-country desert and getting a buildable lot requires sufficient water that builders and county tax codes don't encourage affordable housing.

The counties tax the way they do because they have limited taxable base, and they have limited taxable base because there is limited water.

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