4 ms·

They neglected the impact of property taxes, which are regressive (independent of income). Here in NJ for example, my property taxes are now at 25% of my incom

They neglected the impact of property taxes, which are regressive (independent of income). Here in NJ for example, my property taxes are now at 25% of my income, and that's before other taxes and fees (income tax, sales tax, gas tax, tolls, etc.). As homeowners go bankrupt or walk away from their homes, the tax rate is raised to keep the local fiefdom's income level stable.

pjkundert 16y ago
The opposite of "progressive" taxation (tax rate is linked with income) is NOT "regressive". It would be something like "non-indexed", I guess. Are you suggesting that the taxation of property should not be tied to its market value?
- macemoneta 16y ago
  Regressive is the term used here for describing property taxes. While not entirely appropriate, for the sake of communication commonly agreed upon terminology is used by politicians and the media. Yes, the taxation of property needs to be tied to market value, but it needs to be capped in some manner to prevent abuse. For example, pro-rating the tax against a sliding scale based on income. The problem is that people get old. Bizarre concept, I know. Once people retire, their incomes tend to be fixed. As property tax rises uncontrolled (and unpredictably) year to year, the people that are the foundation of the community are forced out. Friends and neighbors leave - not because they want to - but because they have no choice. When the taxes on your home become 30%, 40% or more of your gross on the home you've lived in all your life, what do you do? It still might not be so bad if new people moved in. However, if the taxes are too high home sales in a recession become difficult or impossible. Homes sit empty as people walk away from the properties. They become run-down, and the neighborhood degrades. To compensate for the loss of revenue, local government raises the tax rate continuing the cycle.

pjkundert 16y ago

The opposite of "progressive" taxation (tax rate is linked with income) is NOT "regressive". It would be something like "non-indexed", I guess. Are you suggesting that the taxation of property should not be tied to its market value?

macemoneta 16y ago
Regressive is the term used here for describing property taxes. While not entirely appropriate, for the sake of communication commonly agreed upon terminology is used by politicians and the media. Yes, the taxation of property needs to be tied to market value, but it needs to be capped in some manner to prevent abuse. For example, pro-rating the tax against a sliding scale based on income. The problem is that people get old. Bizarre concept, I know. Once people retire, their incomes tend to be fixed. As property tax rises uncontrolled (and unpredictably) year to year, the people that are the foundation of the community are forced out. Friends and neighbors leave - not because they want to - but because they have no choice. When the taxes on your home become 30%, 40% or more of your gross on the home you've lived in all your life, what do you do? It still might not be so bad if new people moved in. However, if the taxes are too high home sales in a recession become difficult or impossible. Homes sit empty as people walk away from the properties. They become run-down, and the neighborhood degrades. To compensate for the loss of revenue, local government raises the tax rate continuing the cycle.