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I never really thought about that, or put 2 and 2 together on taxes. Why don't we have annual dynamic taxes? I'm sure there is a lot of nuance that would have

I never really thought about that, or put 2 and 2 together on taxes. Why don't we have annual dynamic taxes? I'm sure there is a lot of nuance that would have to be worked out, but it seems like an excellent method for smoothing volatility.

seanmcdirmid 7y ago
Property taxes sort of are dynamic (they can go up or down depending on property values), interest rates are definitely supposed to be dynamic. It would probably be a good thing to apply to income taxes, but they are already progressive and if you lose your job, well...you don’t have to pay them. Obama’s temporary payroll tax cut was a bit clever in this regard, as lower income people pay mostly payroll taxes anyways (directly or indirectly).
- rdtwo 7y ago
  Incorrect, property taxes don’t go down because government spending always goes up. If property values go down the city government finds a way to not adjust down or increase rates. You could sue and get them to readjust down but next year they will just reset you back and you have to do it again guaranteed that it will cost you more to fight than to pay.
  - seanmcdirmid 7y ago
    Property taxes have actually gone down before, but in order for the government to remain solvent, they often raise the rate for the next year if they can do it automatically. Or they can play shenanigans with appraisal values, but then fairness comes into play (e.g. if my $100k house is taxed as much as the $200k house nearby, but the $200k house is taxed exactly as it should be). For property taxes to play their secondary role of forcing people to put their property to productive use (as opposed to using them for speculative investing), the tax is perfectly able to go up and down depending on the assessed value of the property. Of course, local governments also depend on the revenue, which becomes their primary purpose these days. However, societies that lack a property tax (e.g. China) suffer from a lot more speculative bubbles, making the tax useful in itself even if its revenue wasn’t significant.
dodobirdlord 7y ago
Taxes are such an important and partisan issue that they are instituted in ways that are deliberately difficult for future legislative bodies to interfere with. Any sort of dynamic system would give some institutional body the ability to control tax rates without having to succeed in passing legislation, which is not something legislators want. Consider the Federal Reserve, which dynamically sets interest rates. Congress has very little input on this process (which is good!) and the tenure of the Chair is long enough that entire sessions of Congress can go by without Congress having any input at all. It’s hard to convince legislators that they should hand over power like this on issues that effect their chances of re-election, even when it’s correct.

seanmcdirmid 7y ago

Property taxes sort of are dynamic (they can go up or down depending on property values), interest rates are definitely supposed to be dynamic. It would probably be a good thing to apply to income taxes, but they are already progressive and if you lose your job, well...you don’t have to pay them. Obama’s temporary payroll tax cut was a bit clever in this regard, as lower income people pay mostly payroll taxes anyways (directly or indirectly).

rdtwo 7y ago
Incorrect, property taxes don’t go down because government spending always goes up. If property values go down the city government finds a way to not adjust down or increase rates. You could sue and get them to readjust down but next year they will just reset you back and you have to do it again guaranteed that it will cost you more to fight than to pay.
- seanmcdirmid 7y ago
  Property taxes have actually gone down before, but in order for the government to remain solvent, they often raise the rate for the next year if they can do it automatically. Or they can play shenanigans with appraisal values, but then fairness comes into play (e.g. if my $100k house is taxed as much as the $200k house nearby, but the $200k house is taxed exactly as it should be). For property taxes to play their secondary role of forcing people to put their property to productive use (as opposed to using them for speculative investing), the tax is perfectly able to go up and down depending on the assessed value of the property. Of course, local governments also depend on the revenue, which becomes their primary purpose these days. However, societies that lack a property tax (e.g. China) suffer from a lot more speculative bubbles, making the tax useful in itself even if its revenue wasn’t significant.

dodobirdlord 7y ago

Taxes are such an important and partisan issue that they are instituted in ways that are deliberately difficult for future legislative bodies to interfere with. Any sort of dynamic system would give some institutional body the ability to control tax rates without having to succeed in passing legislation, which is not something legislators want. Consider the Federal Reserve, which dynamically sets interest rates. Congress has very little input on this process (which is good!) and the tenure of the Chair is long enough that entire sessions of Congress can go by without Congress having any input at all. It’s hard to convince legislators that they should hand over power like this on issues that effect their chances of re-election, even when it’s correct.