3 ms·

Wouldn't increased property taxes, combined with increased ability of renter's to pay, cause rents to increase?

by ggcdn 7y ago

stale2002 7y ago
No, that doesn't make any sense. If workers are always only paying the amount that they are able to pay, no more and no less, then that means that any increase in salary, will cause rents to increase. BUT, it also means that the opposite is true. If salaries decrease, such as because if a tax, then rents will also equally decrease. Or in other words, the tax is purely borne by the landlord. So it makes perfect sense to tax the landlord in that case.
- mlyle 7y ago
  In practice there is actually some elasticity.
- AdrianB1 7y ago
  Except that the landlord recuperates (passes) the taxes via the rent, so the renter pays it all. It makes no sense to tax the landlord.
  - stale2002 7y ago
    You can't have it both ways though, is my point. Either the taxes are passed through to the renter, or the price of rent is determined by a renter's ability to pay. These are conflicting statements that both can't be true. If renters are already paying the most that they can, and increases in wages only causes rents to go up, then it is not possible for them to pay that extra tax.
    - AdrianB1 7y ago
      In most cases both can be true; "renter's ability to pay" is usually not the limit of what they can pay, but what they are willing to pay. If you put a tax that would increase the rent 10%, some people will pay (cut on other expenses), some will move out and someone else will move in and pay. At the end of the day, any tax is passed to the consumer, so it is never helping the consumer.
      - stale2002 7y ago
        No, it can't both be true. In economics, if a consumer always pays as much as they are able to, IE, it is a constant willingness to pay, then this is called perfectly elastic demand. The situation of taxes being passed in to consumers, would only happen if consumer demand is perfectly inelastic. It is literally the opposite situation. Demand can't both be perfectly elastic and also perfectly inelastic at the same time. They are opposites!

Wouldn't increased property taxes, combined with increased ability of renter's to pay, cause rents to increase?

by ggcdn 7y ago

Wouldn't increased property taxes, combined with increased ability of renter's to pay, cause rents to increase?

stale2002 7y ago

No, that doesn't make any sense. If workers are always only paying the amount that they are able to pay, no more and no less, then that means that any increase in salary, will cause rents to increase. BUT, it also means that the opposite is true. If salaries decrease, such as because if a tax, then rents will also equally decrease. Or in other words, the tax is purely borne by the landlord. So it makes perfect sense to tax the landlord in that case.

mlyle 7y ago
In practice there is actually some elasticity.
AdrianB1 7y ago
Except that the landlord recuperates (passes) the taxes via the rent, so the renter pays it all. It makes no sense to tax the landlord.
- stale2002 7y ago
  You can't have it both ways though, is my point. Either the taxes are passed through to the renter, or the price of rent is determined by a renter's ability to pay. These are conflicting statements that both can't be true. If renters are already paying the most that they can, and increases in wages only causes rents to go up, then it is not possible for them to pay that extra tax.
  - AdrianB1 7y ago
    In most cases both can be true; "renter's ability to pay" is usually not the limit of what they can pay, but what they are willing to pay. If you put a tax that would increase the rent 10%, some people will pay (cut on other expenses), some will move out and someone else will move in and pay. At the end of the day, any tax is passed to the consumer, so it is never helping the consumer.
    - stale2002 7y ago
      No, it can't both be true. In economics, if a consumer always pays as much as they are able to, IE, it is a constant willingness to pay, then this is called perfectly elastic demand. The situation of taxes being passed in to consumers, would only happen if consumer demand is perfectly inelastic. It is literally the opposite situation. Demand can't both be perfectly elastic and also perfectly inelastic at the same time. They are opposites!