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> Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? Well why would someone who bought a 2M house today be expected to p

by cactus2093 7y ago

> Why would someone who bought a house for 100k be expected to pay taxes on 2M years later? Well why would someone who bought a 2M house today be expected to pay taxes on it? Because the community has a lot of expenses - fire fighters and police will protect their valuable asset, the school system needs to pay its teachers to live somewhere in the vicinity of this expensive neighborhood, the lawmakers (who these homeowners have elected) need money to regulate vaping and plastic straws and run the most inefficient homeless services in the country. Someone who bought a house 30 years ago is getting all these same benefits as someone who just bought a house. And since they've been voting there longer, they're arguably an even bigger part of the reason that all these costs exist than the newcomers. They're also a much bigger part of why the housing supply is so constrained, they've been going to community hearings for decades to block any new construction. Why shouldn't they have to pay for it? If anything I would be more convinced by an argument that newcomers should pay a lower tax rate than people who've been there a long time. But that's obviously quite an extreme position, I would settle for everyone paying the same property tax rate that our elected officials have set. If we think that's too high, then lower it for everyone equally.

ericmay 7y ago
A question I have here is are we asking for people to pay taxes on the value of the home because it is at some dollar amount, or are we asking to pay taxes for the cost of services? If my modest home (really it’s modest) doubled in value, I’m not using “double the services”. Why would my property taxes increase? What if it’s an entire neighborhood? Maybe salaries go up for firefighters and teachers... ok? What if they don’t live in my neighborhood? Let’s say we want higher property taxes to subsidize/provide services for other areas. Why not just raise their property taxes as well? This would offset the price of the homes and make them cheaper. I’m getting the feeling part of the issue lies in people realizing the true costs for things. I don’t have the first clue how much it costs to have a fire department, or a school. They always just want more money (which I basically always vote to give them - maybe I shouldn’t ?).
- yonran 7y ago
  Like all progressive taxation, the property tax is not solely a fee for government benefits received by the taxpayer. The property tax is a tool to reduce inequality—especially when it is applied to gains in land value. If we did not have property taxes (or when we protect existing landowners regardless of land rent increases under Proposition 13), then increases in land value from increased population would be entirely a zero-sum transfer from the new renters or buyers to the old owner, resulting in greater wealth inequality, since unlike capital the supply of land at a particular location is purely inelastic (see the first 4 chapters of Rethinking the Economics of Land and Housing for more https://www.amazon.com/Rethinking-Economics-Land-Housing-Ryan-Collins/dp/1786991187 https://www.amazon.com/Rethinking-Economics-Land-Housing-Rya...).
  - ericmay 7y ago
    You’ll have to summarize any key points from the book, since I don’t own a copy. You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go. Maybe some small portion goes to the state, but I believe all go directly toward local projects, firefighters, police, and schools. Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons. The fact that the property has increased in value is an unrealized gain, are we sure it makes sense to increase property taxes? If my income stays the same, and as you say, property taxes is a progressive tax to reduce inequality, what more income do I have to give?
    - yonran 7y ago
      > You’ll have to summarize any key points from the book, since I don’t own a copy. The first few chapters of Rethinking the Economics of Land and Housing describe the distinction between competitive capital (whose price signals the economy to create more) and land (which cannot be created) and thus why they should be taxed differently. I think it is mostly based on this essay by Mason Gaffney: “Neo-classical Economics as a Stratagem against Henry George” (http://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf http://masongaffney.org/publications/K1Neo-classical_Stratag...) > You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go Broadly speaking, progressive taxation is all about taxing any income that is above and beyond what the average wage-earner earns from wages and competitive capital, and using it to fund services that are used by everybody. Virtually everyone has their own labor, whereas income from ownership of natural resources and monopolies is concentrated, so taxation of income above and beyond wages and interest reduces inequality. Increases in land rent are unearned income that are not due to the owner’s wages and do not incentivize the creation of capital, so it is fair game to tax it as part of a progressive income tax system. If we don’t tax it using property taxes, then land value increases only become a windfall to the owner, leading to greater wealth inequality. > Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons The subject of this article is California’s ”severe shortage of houses.” What you are supposed to do in response to the price signal is expand the building so that more people can live on your lot.

ericmay 7y ago

A question I have here is are we asking for people to pay taxes on the value of the home because it is at some dollar amount, or are we asking to pay taxes for the cost of services? If my modest home (really it’s modest) doubled in value, I’m not using “double the services”. Why would my property taxes increase? What if it’s an entire neighborhood? Maybe salaries go up for firefighters and teachers... ok? What if they don’t live in my neighborhood? Let’s say we want higher property taxes to subsidize/provide services for other areas. Why not just raise their property taxes as well? This would offset the price of the homes and make them cheaper. I’m getting the feeling part of the issue lies in people realizing the true costs for things. I don’t have the first clue how much it costs to have a fire department, or a school. They always just want more money (which I basically always vote to give them - maybe I shouldn’t ?).

yonran 7y ago
Like all progressive taxation, the property tax is not solely a fee for government benefits received by the taxpayer. The property tax is a tool to reduce inequality—especially when it is applied to gains in land value. If we did not have property taxes (or when we protect existing landowners regardless of land rent increases under Proposition 13), then increases in land value from increased population would be entirely a zero-sum transfer from the new renters or buyers to the old owner, resulting in greater wealth inequality, since unlike capital the supply of land at a particular location is purely inelastic (see the first 4 chapters of Rethinking the Economics of Land and Housing for more https://www.amazon.com/Rethinking-Economics-Land-Housing-Ryan-Collins/dp/1786991187 https://www.amazon.com/Rethinking-Economics-Land-Housing-Rya...).
- ericmay 7y ago
  You’ll have to summarize any key points from the book, since I don’t own a copy. You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go. Maybe some small portion goes to the state, but I believe all go directly toward local projects, firefighters, police, and schools. Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons. The fact that the property has increased in value is an unrealized gain, are we sure it makes sense to increase property taxes? If my income stays the same, and as you say, property taxes is a progressive tax to reduce inequality, what more income do I have to give?
  - yonran 7y ago
    > You’ll have to summarize any key points from the book, since I don’t own a copy. The first few chapters of Rethinking the Economics of Land and Housing describe the distinction between competitive capital (whose price signals the economy to create more) and land (which cannot be created) and thus why they should be taxed differently. I think it is mostly based on this essay by Mason Gaffney: “Neo-classical Economics as a Stratagem against Henry George” (http://masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf http://masongaffney.org/publications/K1Neo-classical_Stratag...) > You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go Broadly speaking, progressive taxation is all about taxing any income that is above and beyond what the average wage-earner earns from wages and competitive capital, and using it to fund services that are used by everybody. Virtually everyone has their own labor, whereas income from ownership of natural resources and monopolies is concentrated, so taxation of income above and beyond wages and interest reduces inequality. Increases in land rent are unearned income that are not due to the owner’s wages and do not incentivize the creation of capital, so it is fair game to tax it as part of a progressive income tax system. If we don’t tax it using property taxes, then land value increases only become a windfall to the owner, leading to greater wealth inequality. > Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons The subject of this article is California’s ”severe shortage of houses.” What you are supposed to do in response to the price signal is expand the building so that more people can live on your lot.