7 ms·

Lower-Income Americans Get Cheated on Property Taxes

78 points by greesil 6y ago

bluecalm 6y ago
It should be land value that is taxed, not property value anyway so it's not much of a problem. Taxing people more because they have built a nicer house/building on the same land is not only unjust but also leads to people making their building worse on purpose. The author runs into a contradiction as well. First they call assessing property values a basic task the government fails at but then goes on how it's not actually easy to assess. The new kitchen example given is the prime reason it's a completely impossible as well as pointless task. Assessing land value though is actually quite easy. As value land tax is easier to implement, more fair and doesn't misalign incentives (let's ruin our kitchen or demolish part of the house so we don't need so taxes are lower problem) I guess what happens is that actual property evaluation is mainly based on land value anyway. We don't want nor can afford government officials going around (and inside) houses to assess how much they are worth. As a European I find it also quite disgusting how race angle is added to every article possible. Yesterday I read an article in Bloomberg about traffic fatalities in US. The author was blaming white men for regulations that encourage speeding and carelessness. She then followed giving examples of solutions from countries like Germany and Netherlands. The irony of this was completely lost on her. Same in property tax example. It's about rich, middle class and poor not about white, black or Hispanic.
- dominotw 6y ago
  > leads to people making their building worse on purpose. does this actually happen in practice? > I find it also quite disgusting how race angle is added to every article possible. I think ppl are aggressively building their 'anti-racism' cred. Slights are judged on your overall past history. Like the science writer at Nytimes who got fired for saying the word in sentence. It wasn't just about using the word but lack of his past 'anti racism' capital that led him to get fired. Its very similar to govt records on individuals in soviet union. your slip ups might be forgiven if you have a strong history of supporting the party. Pppl would try to give pro party speeches in local neighborhood meetings to get that on their record, like a future insurance. Modern day example is Putting your pronouns in your bio at work like like wearing stalin pin on your shirt, gives you some level of protection, but not putting pronouns might make you 'wavering' entity.
  - cammikebrown 6y ago
    Well, it’s probably not what OP was talking about, but in California, thanks to Prop 13 people will deliberately not improve their home so they can continue to pay low property taxes, since they only go up a certain amount a year. Lots of long-time homeowners are paying ridiculously low property taxes, shifting the burden to new homeowners.
    - kingsuper20 6y ago
      ..or you simply don't pull a permit. 'Round these parts, it's more common than not to simply avoid getting the county involved when possible, although I don't doubt the building department uses satellite data to catch the more outrageous avoidance. You do have to wonder why your taxes go up if it were based simply on assessed value. Should the total .gov take go up simply because property values increased? I'd be more attracted to the idea if you took the government budget and parceled it up based on your property's comparative value. For one thing, people would keep a lot closer eye on expenditures than they do given a system where the tax never changes (or slowly increases over time).
  - Glyptodon 6y ago
    I don't know about making buildings worse, but there are definitely those who avoid repairs and improvements, but I think it's often more complicated than just property taxes.
  - washadjeffmad 6y ago
    Your examples are what we call loyalty tests, and they're used to manufacture consent. They're only effective when one side fully controls the argument, which is why questioning and debating are forbidden; either you accept even their most extreme and hyperbolic points, or you're a traitor to the cause. It's coercive anti-democracy in sheep's skin at its finest.
  - beervirus 6y ago
    >does this actually happen in practice? At the margin, some people definitely will.
  - 6y ago
- bradleyjg 6y ago
  > Assessing land value though is actually quite easy. I agree that land taxes are ideal from an abstract point of view but strongly disagree that they are easy to ascertain, particularly in cities and suburbs that are completely built out. The best an assessor can hope for are tear down sales, but even those are few and far between in a place like Manhattan.
  - Glyptodon 6y ago
    I think they way it works is you value the potential economic activity that could occur there given neighboring economic activity and realistic development options. IE if there's a single family home in the middle of a commercial district where each property has millions of dollars in commerce a month, the property is value is assessed along those lines regardless of the current use. Then the single family owner has to sell because paying taxes on land at that valuation/rate won't make sense, and it gets redeveloped to join the commercial district.
    - bradleyjg 6y ago
      Going from a top down model like that is going to produce terribly inaccurate results. Property tax systems that use methodologies like that are exactly the ones that end up with the pathologies discussed in the article. Comps is the only decent—-note decent, not great—-way to do property tax assessments. (You can check model quality by looking at predicted value vs actual sales.) With land taxes there frequently are no comps and so there’s no way to get to even the decent level.
- eplanit 6y ago
  Woke-ism is about seeing the world through a strictly narrow set of prisms: race, ethnicity, gender, sexual identity and orientation, and the intersections thereof. Media editors and publishers filter out anything nonconforming. So, if you're trying to make it as a "journalist", then you have to be on board, ideologically and substantively in your work. And, if you don't agree then you are a racist. If you write such an opinion, then good luck finding or holding a job writing (i.e. an unemployed racist).
- Glyptodon 6y ago
  The main issue with land value taxes is it's easy to convince people that they're unjust. Think about the Pixar movie Up, where the old man doesn't want to sell his house. With land-value tax systems someone with enough money can drive up land values and instantly force people to move or sell, since, if the system is done right, the land is basically as valuable as the most productive economic use that someone wants to be doing on it would make it. This is, unfortunately, why land value tax systems do make sense to many: the most valuable land is taxed in a way that forces it to be turned over to a party that will develop it accordingly, but Americans (I think) already regard property taxes as somewhat unjust (witness how things are in CA), and I don't think a system that would make the perceived problem (that you ought to be able to buy a home once and live your life there regardless of surrounding economic growth) potentially worse is likely to win a marketing campaign. If anything, it will be claimed to be a worse version of eminent domain.
  - rcpt 6y ago
    otoh never feeling pressure to move despite economic growth hugely favors long time landowning families (read: white people) and locks out newcomers from needed economic opportunities. Prop 13 disparately impacts minorities, arguably to the point where it's illegal under the fair housing act [1], and imo the racism angle could win out in a marketing campaign in today's climate. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012949 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012949
    - kingsuper20 6y ago
      "Prop 13 disparately impacts minorities" Well, that's sort of a stretch. I expect to the extent that's true, it's because the state was a lot whiter in 1978, although scarcely any people have owned a house for 42 years. Makes for a good headline though. Just imagine the papers you could write showing racial disparities for any metric involving age as I would think that older trends whiter in California.
      - rcpt 6y ago
        It's not a stretch. If you don't want to read the paper here's evidence in tweet form https://twitter.com/alfred_twu/status/1327821019931787264?s=21 https://twitter.com/alfred_twu/status/1327821019931787264?s=... And disparate impact rulings don't matter the intent of the law -- that's what the 14th amendment is for -- even though the law was pitched as a way to assist the old if it's hitting minorities harder the fair housing act still applies.
- kingsuper20 6y ago
  "As a European I find it also quite disgusting how race angle is added to every article possible." Oh well, that's what sells lately, along with doom porn. Eventually everyone will get tired of it or we'll have a civil war or something. Generally, I'd say that property tax doesn't have to be fair in any way, it's used because it works. People have a large, illiquid asset that's relatively easy to measure. It's a store of wealth that's difficult to hide and can be seized. It could be that our future as a surveillance society will lead to all assets becoming more transparent and property tax will morph into a more general tax on wealth.
  - bluecalm 6y ago
    The problem with it if that it rewards land speculators or inefficient use of land (make it a parking lot and wait for the price to increase while minimizing taxes) while punishing people actually making efficient use of it.
- lozenge 6y ago
  As a European, you have no idea how bad the history of race is in America and how strongly it still affects people today. Read about redlining and how it-- and related policies-- are the main cause for white families' wealth to have gone up over the last 50 years and black families' hasn't. Eg https://www.theatlantic.com/magazine/archive/2014/06/the-case-for-reparations/361631/ https://www.theatlantic.com/magazine/archive/2014/06/the-cas...
  - bluecalm 6y ago
    A lot of problems that are attributed to race in US also exist in Europe. Making everything about race is just not accurate and serves to amplify social tension. If something affects poor people more doesn't mean it's about race but you can always make it so if you buy "disproportionately affects minorities" argument.
  - hackeraccount 6y ago
    Americans talk about race as a proxy for class.
readflaggedcomm 6y ago
>it’s clear that it would be relatively easy for local governments to address these problems This source of the author's gall is completely unsupported here. There is no data on what reassessment costs. Maybe leaving sticky assessments in place and adding a universal exemption would work better, like the federal income tax. Of course, taxing illiquid wealth which a body relies on for shelter is itself problematic, but the author doesn't seem to consider that.
- bradleyjg 6y ago
  How illiquid is it given the widespread availability of HELOCs?
  - OldTimeCoffee 6y ago
    A house can't be sold readily. Even if you get in contract ASAP, it's usually 30 days until closing. It's illiquid because 30 days isn't 'readily'. To contrast this with something 'liquid', with a stock you can sell and wire the funds same day if you needed to, 2-3 days if you use ACH instead. HELOC is a loan and doesn't have anything to do with how liquid the asset is.
    - deleted 6y ago
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  - readflaggedcomm 6y ago
    Credit has little to do with convertability.
    - bradleyjg 6y ago
      Why not? The argument is that someone sitting on a $2 million house isn’t “really” rich and shouldn’t have to pay taxes on their house. But they are “really” rich and can easily access that wealth. They’d just prefer not to.
      - 6y ago
Drunk_Engineer 6y ago
Wait until you hear about California's Prop 13...
- HarryHirsch 6y ago
  That was the point, wasn't it, real estate investment companies dodging taxes with a bone thrown to Grandma.
  - pydry 6y ago
    The Howard Jarvis Taxpayers Foundation - the primary lobby group behind prop 13 - sold it to voters almost entirely on the basis of not kicking grandma out of her home. Since then they've lobbied to slash California state pensions on the basis of balancing the budget. If Grandma was a teacher she can go f*k herself, apparently.
- rcpt 6y ago
  For the uninitiated https://www.taxfairnessproject.org/ https://www.taxfairnessproject.org/ But honestly if you're happy living in California ignorance is bliss on this one
  - HarryHirsch 6y ago
    Why are they talking about homeowners but not about shopping malls and office buildings? The whole point of Proposition 13 was to lock in taxation on commercial real estate which is rarely sold.
    - mindslight 6y ago
      It's the standard pattern of corporate activism, dividing people into groups and encouraging them battle one another. The outraged people demand more oppression on the other group to level the playing field, and invent justifications like how it would be economically sensible to make longtime residents move out of their family homes by raising the taxes to reflect an imagined paper asset valuation - in other words even if you own your home outright, you still shouldn't be able to escape the economic treadmill (the crab bucket mentality in action). The people in the crosshairs then have to fight back to keep what they have, while the corporations escape most scrutiny. When the conflict boils over to the point where a law might be passed, the corporations pay off the politicians to grant them an exception, and continue unhindered. Heck, our whole system is set up this way. For example why is it even taken as some given that property taxes need to continually go up in the first place?! The setup has been made big enough such that most people won't work to understand the whole thing to critique it, instead giving up to focus on the individual actors they most strongly perceive. The overall situation becomes "nobody's fault" and just the way things are - oppression by construction while us plebs fight over scraps.
jl2718 6y ago
The primary useful function of government is to protect personal safety and property rights[1]. Some property is more expensive to protect than other property. Consider the cost of protecting urban homes vs rural land. Some property, like contracts, debt, copyright etc, is extremely expensive to protect, and some property, like a crypto key, is not protected at all by the government. From this perspective, there are massive inequities in tax cost:benefit across asset classes. Some of the most expensive assets pay nothing, and the cheapest pay the most. But I don’t think it goes in the direction the author wants it to. [1] https://www.nobelprize.org/prizes/economic-sciences/1991/press-release/ https://www.nobelprize.org/prizes/economic-sciences/1991/pre...
- deleted 6y ago
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- bradleyjg 6y ago
  The justification for taxing real property taxes but not chattels is that real property is scarce and capable of producing positive externalities. Taxing it is one way to insure that it is put to efficient use.
- qzw 6y ago
  This seems tangential to the NYT article, which is specifically calling out differences in the assessed values of the same type of assets as a function of their actual market value. Particularly they’re comparing houses that are often assessed by the same government entity under what are supposed to be uniformly applied standards. The consistent under assessment of high value homes versus the simultaneous over assessment of low value homes, across a number of different geographical locales would seem to point to some kind of systemic issue. I don’t think we should so quickly dismiss it. And anecdotally, in my area, I see a lot more police patrols in the pricier neighborhoods than the cheaper ones. In most middle class neighborhoods you have speed bumps in the road, the higher end ones get regular police presence to deter speeding so they don’t need to put up with such aesthetic blemishes.
datavirtue 6y ago
There is a neighborhood in my area that uses insanely high taxes to redline itself. $325k house in my metro area generally carries a tax of $4500 per year. The "redline district," we'll call it, charges $11k per year for the same valuation. That is $930 a month in real estate tax. A desirable neighborhood firmly surrounded by minority communities. The message is clear.
- kjjjjjjjjjjjjjj 6y ago
  Does that neighborhood also have better schools, police, and fire department? Are you absolutely sure its redlining or are you just assuming that?
  - kjjjjjjjjjjjjjj 6y ago
    Adding to this: similar thing seemingly happens in my town. Our taxes are higher than surrounding towns and of course the people are richer and "nicer". Except take 5 minutes to dig into the metrics and you see how much our police are paid (and it shows in their behavior and how much they care), the schools are better, the services and commercial spaces are better, etc.
- qzw 6y ago
  That seems like a terribly inefficient way of achieving exclusivity, if that’s the goal. If the neighborhood is indeed more desirable, wouldn’t the higher value of the houses themselves (which would also result in higher prop taxes anyway) serve the same function? In fact, the artificially high property tax must have a depressive effect on the house values in that neighborhood. I can’t think of why relatively well off people would voluntarily move into such a neighborhood. If anything, the high tax rate sounds punitive toward those who live there.
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  - Dracophoenix 6y ago
    >>That seems like a terribly inefficient way of achieving exclusivity, if that’s the goal. It's not a goal, it's a secondary consequence that happens often enough to be commented upon. >>If the neighborhood is indeed more desirable, wouldn’t the higher value of the houses themselves (which would also result in higher prop taxes anyway) serve the same function? Yes and no. Some people can save enough money to purchase a house from a middle class job or making it big in short-term/seasonal high-risk, high-reward activities (e.g. professional gambling, oil drilling, undersea welding, etc.) if there is only a large (but not untenable) one-time cost. However a property tax is a subscription fee on the basis of an invented metric that is as elastic as what the tax assessor can get away with. Paying thousands of dollars every year for the "privilege" of living in your own property would make doing the kinds of jobs that were adequate for purchaser, insufficient or unsustainable for a resident. The result, at best, is being house rich and cash poor. >>In fact, the artificially high property tax must have a depressive effect on the house values in that neighborhood. Sometimes they do, sometimes they don't. High property taxes can be seen as a form of economic signaling in areas like Manhattan or Beverly Hills. They can also be a result of local politics run amok. The former creates self-sustaining bubbles that will take a long time to (but will eventually) burst. The second will cause residential flight to lower cost areas as is currently happening with San Franciscans moving to Austin at first sight of a downturn. >>I can’t think of why relatively well off people would voluntarily move into such a neighborhood. If anything, the high tax rate sounds punitive toward those who live there. It's not that people want to move to higher property tax areas because they want higher taxes. These areas tend to be much safer and family-friendly, have better schools and amenities, are (in some cases) closer to one's workplace, and look aesthetically pleasing. A property tax, just like purchase price, is one factor in the equation of "is it worth it?". It's just not the factor, punitiveness notwithstanding.
deleted 6y ago
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wyldfire 6y ago
> Their average assessed value before the sale was $151,585. I don't know quite how to analyze this data. But an average is an oversimplification of a series of years during which the properties' values were changing. What if they started at 200k at the beginning and then eventually sold for 100k at the end? Not necessarily unreasonable or unfair that they were assessed higher than 100k in that case. And because of differences among the properties it might at least be sane to do a median of each property's average-over-years. NYT is probably right that there's an issue but '07 to '16 is probably not the best time period to sample.
maxharris 6y ago
Rich people get cheated on income taxes by progressive taxes rates.
- oceanghost 6y ago
  It's a great problem to have...
tptacek 6y ago
It gets worse than this. At least in Illinois, the way property taxes work is, you add up the cost of all the functions of local government. You offset those costs with non-tax revenue, like permit fees. Whatever's left is the levy, and it's divided through the assessed value of all the property in the area to work out the tax rate. Which means that as areas become economically troubled, their tax rates can go up; the same basic services need to be payed more and more from property taxes on residents because there's less and less permit revenue from investment. As property taxes increase, the value of homes drops; people have a fixed amount they can spend on housing. Fewer residents, less investment, vicious cycle.
- lotsofpulp 6y ago
  Is it any different anywhere else? Non federal government’s outgoing cash flow has to from somewhere, and it’s going to come from various sources such as property taxes, fees, tolls, income tax, business and occupation taxes, debt, etc. Exactly how the burden is allocated depends on the political power of the various groups of payers. In Illinois’ case, the taxes especially go up in an economically distressed area because they local and state governments are heavily indebted so there’s less room for local governments to cut expenses. As I understand they try to remedy this by increasing various sales taxes and tried for marginal income tax rates last year, but didn’t succeed.
  - tptacek 6y ago
    I doubt that it is different elsewhere; it's a phenomenon of how property taxes generally work, not something uniquely bad about Illinois. I just don't want to write that it works this way everywhere and have someone tag me with a comment about some weird levy formula Kansas uses.

78 points by greesil 6y ago

It should be land value that is taxed, not property value anyway so it's not much of a problem. Taxing people more because they have built a nicer house/building on the same land is not only unjust but also leads to people making their building worse on purpose. The author runs into a contradiction as well. First they call assessing property values a basic task the government fails at but then goes on how it's not actually easy to assess. The new kitchen example given is the prime reason it's a completely impossible as well as pointless task. Assessing land value though is actually quite easy. As value land tax is easier to implement, more fair and doesn't misalign incentives (let's ruin our kitchen or demolish part of the house so we don't need so taxes are lower problem) I guess what happens is that actual property evaluation is mainly based on land value anyway. We don't want nor can afford government officials going around (and inside) houses to assess how much they are worth. As a European I find it also quite disgusting how race angle is added to every article possible. Yesterday I read an article in Bloomberg about traffic fatalities in US. The author was blaming white men for regulations that encourage speeding and carelessness. She then followed giving examples of solutions from countries like Germany and Netherlands. The irony of this was completely lost on her. Same in property tax example. It's about rich, middle class and poor not about white, black or Hispanic.

dominotw 6y ago
> leads to people making their building worse on purpose. does this actually happen in practice? > I find it also quite disgusting how race angle is added to every article possible. I think ppl are aggressively building their 'anti-racism' cred. Slights are judged on your overall past history. Like the science writer at Nytimes who got fired for saying the word in sentence. It wasn't just about using the word but lack of his past 'anti racism' capital that led him to get fired. Its very similar to govt records on individuals in soviet union. your slip ups might be forgiven if you have a strong history of supporting the party. Pppl would try to give pro party speeches in local neighborhood meetings to get that on their record, like a future insurance. Modern day example is Putting your pronouns in your bio at work like like wearing stalin pin on your shirt, gives you some level of protection, but not putting pronouns might make you 'wavering' entity.
- cammikebrown 6y ago
  Well, it’s probably not what OP was talking about, but in California, thanks to Prop 13 people will deliberately not improve their home so they can continue to pay low property taxes, since they only go up a certain amount a year. Lots of long-time homeowners are paying ridiculously low property taxes, shifting the burden to new homeowners.
  - kingsuper20 6y ago
    ..or you simply don't pull a permit. 'Round these parts, it's more common than not to simply avoid getting the county involved when possible, although I don't doubt the building department uses satellite data to catch the more outrageous avoidance. You do have to wonder why your taxes go up if it were based simply on assessed value. Should the total .gov take go up simply because property values increased? I'd be more attracted to the idea if you took the government budget and parceled it up based on your property's comparative value. For one thing, people would keep a lot closer eye on expenditures than they do given a system where the tax never changes (or slowly increases over time).
- Glyptodon 6y ago
  I don't know about making buildings worse, but there are definitely those who avoid repairs and improvements, but I think it's often more complicated than just property taxes.
- washadjeffmad 6y ago
  Your examples are what we call loyalty tests, and they're used to manufacture consent. They're only effective when one side fully controls the argument, which is why questioning and debating are forbidden; either you accept even their most extreme and hyperbolic points, or you're a traitor to the cause. It's coercive anti-democracy in sheep's skin at its finest.
- beervirus 6y ago
  >does this actually happen in practice? At the margin, some people definitely will.
- 6y ago
bradleyjg 6y ago
> Assessing land value though is actually quite easy. I agree that land taxes are ideal from an abstract point of view but strongly disagree that they are easy to ascertain, particularly in cities and suburbs that are completely built out. The best an assessor can hope for are tear down sales, but even those are few and far between in a place like Manhattan.
- Glyptodon 6y ago
  I think they way it works is you value the potential economic activity that could occur there given neighboring economic activity and realistic development options. IE if there's a single family home in the middle of a commercial district where each property has millions of dollars in commerce a month, the property is value is assessed along those lines regardless of the current use. Then the single family owner has to sell because paying taxes on land at that valuation/rate won't make sense, and it gets redeveloped to join the commercial district.
  - bradleyjg 6y ago
    Going from a top down model like that is going to produce terribly inaccurate results. Property tax systems that use methodologies like that are exactly the ones that end up with the pathologies discussed in the article. Comps is the only decent—-note decent, not great—-way to do property tax assessments. (You can check model quality by looking at predicted value vs actual sales.) With land taxes there frequently are no comps and so there’s no way to get to even the decent level.
eplanit 6y ago
Woke-ism is about seeing the world through a strictly narrow set of prisms: race, ethnicity, gender, sexual identity and orientation, and the intersections thereof. Media editors and publishers filter out anything nonconforming. So, if you're trying to make it as a "journalist", then you have to be on board, ideologically and substantively in your work. And, if you don't agree then you are a racist. If you write such an opinion, then good luck finding or holding a job writing (i.e. an unemployed racist).
Glyptodon 6y ago
The main issue with land value taxes is it's easy to convince people that they're unjust. Think about the Pixar movie Up, where the old man doesn't want to sell his house. With land-value tax systems someone with enough money can drive up land values and instantly force people to move or sell, since, if the system is done right, the land is basically as valuable as the most productive economic use that someone wants to be doing on it would make it. This is, unfortunately, why land value tax systems do make sense to many: the most valuable land is taxed in a way that forces it to be turned over to a party that will develop it accordingly, but Americans (I think) already regard property taxes as somewhat unjust (witness how things are in CA), and I don't think a system that would make the perceived problem (that you ought to be able to buy a home once and live your life there regardless of surrounding economic growth) potentially worse is likely to win a marketing campaign. If anything, it will be claimed to be a worse version of eminent domain.
- rcpt 6y ago
  otoh never feeling pressure to move despite economic growth hugely favors long time landowning families (read: white people) and locks out newcomers from needed economic opportunities. Prop 13 disparately impacts minorities, arguably to the point where it's illegal under the fair housing act [1], and imo the racism angle could win out in a marketing campaign in today's climate. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012949 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012949
  - kingsuper20 6y ago
    "Prop 13 disparately impacts minorities" Well, that's sort of a stretch. I expect to the extent that's true, it's because the state was a lot whiter in 1978, although scarcely any people have owned a house for 42 years. Makes for a good headline though. Just imagine the papers you could write showing racial disparities for any metric involving age as I would think that older trends whiter in California.
    - rcpt 6y ago
      It's not a stretch. If you don't want to read the paper here's evidence in tweet form https://twitter.com/alfred_twu/status/1327821019931787264?s=21 https://twitter.com/alfred_twu/status/1327821019931787264?s=... And disparate impact rulings don't matter the intent of the law -- that's what the 14th amendment is for -- even though the law was pitched as a way to assist the old if it's hitting minorities harder the fair housing act still applies.
kingsuper20 6y ago
"As a European I find it also quite disgusting how race angle is added to every article possible." Oh well, that's what sells lately, along with doom porn. Eventually everyone will get tired of it or we'll have a civil war or something. Generally, I'd say that property tax doesn't have to be fair in any way, it's used because it works. People have a large, illiquid asset that's relatively easy to measure. It's a store of wealth that's difficult to hide and can be seized. It could be that our future as a surveillance society will lead to all assets becoming more transparent and property tax will morph into a more general tax on wealth.
- bluecalm 6y ago
  The problem with it if that it rewards land speculators or inefficient use of land (make it a parking lot and wait for the price to increase while minimizing taxes) while punishing people actually making efficient use of it.
lozenge 6y ago
As a European, you have no idea how bad the history of race is in America and how strongly it still affects people today. Read about redlining and how it-- and related policies-- are the main cause for white families' wealth to have gone up over the last 50 years and black families' hasn't. Eg https://www.theatlantic.com/magazine/archive/2014/06/the-case-for-reparations/361631/ https://www.theatlantic.com/magazine/archive/2014/06/the-cas...
- bluecalm 6y ago
  A lot of problems that are attributed to race in US also exist in Europe. Making everything about race is just not accurate and serves to amplify social tension. If something affects poor people more doesn't mean it's about race but you can always make it so if you buy "disproportionately affects minorities" argument.
- hackeraccount 6y ago
  Americans talk about race as a proxy for class.

readflaggedcomm 6y ago

>it’s clear that it would be relatively easy for local governments to address these problems This source of the author's gall is completely unsupported here. There is no data on what reassessment costs. Maybe leaving sticky assessments in place and adding a universal exemption would work better, like the federal income tax. Of course, taxing illiquid wealth which a body relies on for shelter is itself problematic, but the author doesn't seem to consider that.

bradleyjg 6y ago
How illiquid is it given the widespread availability of HELOCs?
- OldTimeCoffee 6y ago
  A house can't be sold readily. Even if you get in contract ASAP, it's usually 30 days until closing. It's illiquid because 30 days isn't 'readily'. To contrast this with something 'liquid', with a stock you can sell and wire the funds same day if you needed to, 2-3 days if you use ACH instead. HELOC is a loan and doesn't have anything to do with how liquid the asset is.
  - deleted 6y ago
    [deleted]
- readflaggedcomm 6y ago
  Credit has little to do with convertability.
  - bradleyjg 6y ago
    Why not? The argument is that someone sitting on a $2 million house isn’t “really” rich and shouldn’t have to pay taxes on their house. But they are “really” rich and can easily access that wealth. They’d just prefer not to.
    - 6y ago

Drunk_Engineer 6y ago

Wait until you hear about California's Prop 13...

HarryHirsch 6y ago
That was the point, wasn't it, real estate investment companies dodging taxes with a bone thrown to Grandma.
- pydry 6y ago
  The Howard Jarvis Taxpayers Foundation - the primary lobby group behind prop 13 - sold it to voters almost entirely on the basis of not kicking grandma out of her home. Since then they've lobbied to slash California state pensions on the basis of balancing the budget. If Grandma was a teacher she can go f*k herself, apparently.
rcpt 6y ago
For the uninitiated https://www.taxfairnessproject.org/ https://www.taxfairnessproject.org/ But honestly if you're happy living in California ignorance is bliss on this one
- HarryHirsch 6y ago
  Why are they talking about homeowners but not about shopping malls and office buildings? The whole point of Proposition 13 was to lock in taxation on commercial real estate which is rarely sold.
  - mindslight 6y ago
    It's the standard pattern of corporate activism, dividing people into groups and encouraging them battle one another. The outraged people demand more oppression on the other group to level the playing field, and invent justifications like how it would be economically sensible to make longtime residents move out of their family homes by raising the taxes to reflect an imagined paper asset valuation - in other words even if you own your home outright, you still shouldn't be able to escape the economic treadmill (the crab bucket mentality in action). The people in the crosshairs then have to fight back to keep what they have, while the corporations escape most scrutiny. When the conflict boils over to the point where a law might be passed, the corporations pay off the politicians to grant them an exception, and continue unhindered. Heck, our whole system is set up this way. For example why is it even taken as some given that property taxes need to continually go up in the first place?! The setup has been made big enough such that most people won't work to understand the whole thing to critique it, instead giving up to focus on the individual actors they most strongly perceive. The overall situation becomes "nobody's fault" and just the way things are - oppression by construction while us plebs fight over scraps.

jl2718 6y ago

The primary useful function of government is to protect personal safety and property rights[1]. Some property is more expensive to protect than other property. Consider the cost of protecting urban homes vs rural land. Some property, like contracts, debt, copyright etc, is extremely expensive to protect, and some property, like a crypto key, is not protected at all by the government. From this perspective, there are massive inequities in tax cost:benefit across asset classes. Some of the most expensive assets pay nothing, and the cheapest pay the most. But I don’t think it goes in the direction the author wants it to. [1] https://www.nobelprize.org/prizes/economic-sciences/1991/press-release/ https://www.nobelprize.org/prizes/economic-sciences/1991/pre...

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bradleyjg 6y ago
The justification for taxing real property taxes but not chattels is that real property is scarce and capable of producing positive externalities. Taxing it is one way to insure that it is put to efficient use.
qzw 6y ago
This seems tangential to the NYT article, which is specifically calling out differences in the assessed values of the same type of assets as a function of their actual market value. Particularly they’re comparing houses that are often assessed by the same government entity under what are supposed to be uniformly applied standards. The consistent under assessment of high value homes versus the simultaneous over assessment of low value homes, across a number of different geographical locales would seem to point to some kind of systemic issue. I don’t think we should so quickly dismiss it. And anecdotally, in my area, I see a lot more police patrols in the pricier neighborhoods than the cheaper ones. In most middle class neighborhoods you have speed bumps in the road, the higher end ones get regular police presence to deter speeding so they don’t need to put up with such aesthetic blemishes.

datavirtue 6y ago

There is a neighborhood in my area that uses insanely high taxes to redline itself. $325k house in my metro area generally carries a tax of $4500 per year. The "redline district," we'll call it, charges $11k per year for the same valuation. That is $930 a month in real estate tax. A desirable neighborhood firmly surrounded by minority communities. The message is clear.

kjjjjjjjjjjjjjj 6y ago
Does that neighborhood also have better schools, police, and fire department? Are you absolutely sure its redlining or are you just assuming that?
- kjjjjjjjjjjjjjj 6y ago
  Adding to this: similar thing seemingly happens in my town. Our taxes are higher than surrounding towns and of course the people are richer and "nicer". Except take 5 minutes to dig into the metrics and you see how much our police are paid (and it shows in their behavior and how much they care), the schools are better, the services and commercial spaces are better, etc.
qzw 6y ago
That seems like a terribly inefficient way of achieving exclusivity, if that’s the goal. If the neighborhood is indeed more desirable, wouldn’t the higher value of the houses themselves (which would also result in higher prop taxes anyway) serve the same function? In fact, the artificially high property tax must have a depressive effect on the house values in that neighborhood. I can’t think of why relatively well off people would voluntarily move into such a neighborhood. If anything, the high tax rate sounds punitive toward those who live there.
- deleted 6y ago
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- Dracophoenix 6y ago
  >>That seems like a terribly inefficient way of achieving exclusivity, if that’s the goal. It's not a goal, it's a secondary consequence that happens often enough to be commented upon. >>If the neighborhood is indeed more desirable, wouldn’t the higher value of the houses themselves (which would also result in higher prop taxes anyway) serve the same function? Yes and no. Some people can save enough money to purchase a house from a middle class job or making it big in short-term/seasonal high-risk, high-reward activities (e.g. professional gambling, oil drilling, undersea welding, etc.) if there is only a large (but not untenable) one-time cost. However a property tax is a subscription fee on the basis of an invented metric that is as elastic as what the tax assessor can get away with. Paying thousands of dollars every year for the "privilege" of living in your own property would make doing the kinds of jobs that were adequate for purchaser, insufficient or unsustainable for a resident. The result, at best, is being house rich and cash poor. >>In fact, the artificially high property tax must have a depressive effect on the house values in that neighborhood. Sometimes they do, sometimes they don't. High property taxes can be seen as a form of economic signaling in areas like Manhattan or Beverly Hills. They can also be a result of local politics run amok. The former creates self-sustaining bubbles that will take a long time to (but will eventually) burst. The second will cause residential flight to lower cost areas as is currently happening with San Franciscans moving to Austin at first sight of a downturn. >>I can’t think of why relatively well off people would voluntarily move into such a neighborhood. If anything, the high tax rate sounds punitive toward those who live there. It's not that people want to move to higher property tax areas because they want higher taxes. These areas tend to be much safer and family-friendly, have better schools and amenities, are (in some cases) closer to one's workplace, and look aesthetically pleasing. A property tax, just like purchase price, is one factor in the equation of "is it worth it?". It's just not the factor, punitiveness notwithstanding.

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wyldfire 6y ago

> Their average assessed value before the sale was $151,585. I don't know quite how to analyze this data. But an average is an oversimplification of a series of years during which the properties' values were changing. What if they started at 200k at the beginning and then eventually sold for 100k at the end? Not necessarily unreasonable or unfair that they were assessed higher than 100k in that case. And because of differences among the properties it might at least be sane to do a median of each property's average-over-years. NYT is probably right that there's an issue but '07 to '16 is probably not the best time period to sample.

maxharris 6y ago

Rich people get cheated on income taxes by progressive taxes rates.

oceanghost 6y ago
It's a great problem to have...

tptacek 6y ago

It gets worse than this. At least in Illinois, the way property taxes work is, you add up the cost of all the functions of local government. You offset those costs with non-tax revenue, like permit fees. Whatever's left is the levy, and it's divided through the assessed value of all the property in the area to work out the tax rate. Which means that as areas become economically troubled, their tax rates can go up; the same basic services need to be payed more and more from property taxes on residents because there's less and less permit revenue from investment. As property taxes increase, the value of homes drops; people have a fixed amount they can spend on housing. Fewer residents, less investment, vicious cycle.

lotsofpulp 6y ago
Is it any different anywhere else? Non federal government’s outgoing cash flow has to from somewhere, and it’s going to come from various sources such as property taxes, fees, tolls, income tax, business and occupation taxes, debt, etc. Exactly how the burden is allocated depends on the political power of the various groups of payers. In Illinois’ case, the taxes especially go up in an economically distressed area because they local and state governments are heavily indebted so there’s less room for local governments to cut expenses. As I understand they try to remedy this by increasing various sales taxes and tried for marginal income tax rates last year, but didn’t succeed.
- tptacek 6y ago
  I doubt that it is different elsewhere; it's a phenomenon of how property taxes generally work, not something uniquely bad about Illinois. I just don't want to write that it works this way everywhere and have someone tag me with a comment about some weird levy formula Kansas uses.