5 ms·

Rent is not tax, what an absurd comment.

by countvonbalzac 4y ago

NovemberWhiskey 4y ago
If you're renting, your landlord is paying property tax and passing it on to you.
- kevin_thibedeau 4y ago
  Some states let you deduct a portion of rent in place of property tax.
- jonathankoren 4y ago
  By that logic, no one pays taxes except consumers.
  - deleted 4y ago
    [deleted]
  - prepend 4y ago
    I mean you’re sort of right. There’s no such thing as a free lunch. So stuff is all ultimately paid by the consumer since that’s the end of the line. There’s really no way to increase taxes without impacting consumers. Unless you try to limit rents, but then you have other problems with people not wanting to invest in apartment buildings.
    - paulmd 4y ago
      That assertion depends on an efficient market though, and that is provably not true - the existence of corporate profits demonstrates this, because in an efficient market everyone makes 0 profit, and any rent-seeking will cause every single one of your customers to flee to a competitor who doesn't rent-seek. Everyone has to price as aggressively as possible given the costs, or lose customers to someone who does, and that means zero profit above the actual cost of production/service. In a world where corporations make profits, some competitors choose to eat the taxes and retain customers, while others may increase prices and lose some customers, and some customers may eat the increased price and remain even though they're getting a worse deal than before. This is the concept of "consumer surplus" vs "producer surplus", and taxes are cutting into those surpluses differently depending on the specifics of each market participant. All of this has been debated endlessly by economists, in terms of just how much of corporate taxes get passed along to consumers and so on. And the answer seems to be "not zero, and not 100% either", and everything beyond that is up for debate. So no, not "everything is ultimately paid by the consumer", that is the 100% answer and that's pretty clearly wrong in a market where producer-surplus exists. In reality, real-estate and rents are probably one of the least-efficient markets imaginable. The frictional costs to buying and selling property, and finding a new tenant who might be a problem/deadbeat/etc, or spending a bunch of time apartment-shopping, picking up your life and packing your stuff, and moving, are immense, and all parties involved are highly emotionally invested as well. Landlords are trying to make a long-term calculation about whether the property is going to appreciate - even if they are losing money today, if they expect to make capital gains in the long term it could be worth it. And all parties are operating with minimal information. Out of all the markets in the world, real-estate and rental living spaces are probably one of the least efficient possible.
  - kingrazor 4y ago
    Isn't this basically the case at the end of the day? Just about everything seems to eventually get passed on to the consumer.
    - jonathankoren 4y ago
      Would you say my employer pays my income tax, since they're the ones giving me money?
      - kingrazor 4y ago
        Don't they, technically? Since the income tax is withheld from your paycheck before you get it?
  - mypalmike 4y ago
    One of many counter examples: Corporations holding investments with capital gains aren't sourcing tax payments from consumers. Pass-through taxes exist though, yes.
  - barry-cotter 4y ago
    Yes. Companies are legal fictions and all people buy goods and services. Some people buy those services through those legal fictions so they consume the fraction of them corresponding to their to ownership fraction. Ultimately a person pays all taxes and all people are consumers.
Manuel_D 4y ago
The point is, the apartment owner pays property tax and collect rent from tenants to pay for that. If property taxes go up, property owners raise rents to compensate. So the tenants are paying the property tax, albeit indirectly.
- strombofulous 4y ago
  If the tenants will pay and it doesn't break any rules, why not raise rent before taxes go up and pocket the extra? (serious question)
  - neon_electro 4y ago
    This happens all the time. Deciding whether a raised rent price is justification for moving out is a complicated and personal process and yet it fuels all of the response to landlords that do this. Also, 1-year leases are typical in the U.S. (at least Philly/NYC northeast U.S.), so from that contractual perspective, your rent can go up every year and that's totally legal.
  - winstonewert 4y ago
    If one landlord raises the rent, this will tend to make renters go to other landlords who are not raising the rent. But if the taxes are increased on all the landlords, they will likely all raise their rents together and renters can't simply go to another landlord who isn't raising the rent to avoid the increase. Its actually much more complicated then that, depending on factors such as the propensity of landlords to cease renting out units if their profit decreases, the propensity of renters to shift to smaller dwellings in the face of rent increases, etc.
- dwallin 4y ago
  Landlords are also competing with each other and tenants have limits based on what they can actually afford to pay. At some point they can be forced to move out of the city to a lower cost of living location, dropping demand. In fact it's entirely possible for a significant increase in tax rates to make rental units a poor investment, causing housing prices to plummet and rents to drop. Your mistake is assuming that people who bought up housing stock are guaranteed future profit on their speculative investment.
listless 4y ago
I’m a landlord and yes it is. My taxes doubled last year because of the stupid housing bubble and so we had to raise rent as well. Gotta make a profit here for this investment to be worthwhile.
- AnIdiotOnTheNet 4y ago
  Maybe if people didn't buy property they don't live in as an investment then things like the stupid housing bubble might not happen in the first place. Personally I think owning a residence you don't actually live in should just straight up be illegal, but I'm admittedly pretty radical about parts of the system that seem to exist solely to make the rich richer.
  - rabuse 4y ago
    If government reduced their hold on zoning restrictions and allowed for more properties to be built, we wouldn't be in this mess. Supply and demand.
    - IX-103 4y ago
      I'm not sure of your logic. There's no guarantee that builders will use the loosened restrictions to build the most efficient housing. In fact they will most likely build the most profitable housing instead. The most profitable is on the high end - so marble countertops, stainless steel appliances, etc. All the builders will race to build as much of that as they can, as fast as they can. Then, when the market is glutted, they'll be unable to sell off their investments. Builders will end up with their capital all sunk in cheap land and expensive housing. no one can afford to buy. The builders can't sell the cheap land since they leveraged it to pay for developing the expensive housing. They can't sell the expensive housing because the market has temporarily dried up. The builders will just wait until the glut resolves and continue business as usual. Meanwhile, there is not really that much more actual housing for the low end market. Some builders made a bunch of money and some craftsmen got extra work building houses they can never afford. Capitalism at it's most typical.
daenz 4y ago
"rent" != "a substantial part of rent"

Rent is not tax, what an absurd comment.

NovemberWhiskey 4y ago

If you're renting, your landlord is paying property tax and passing it on to you.

kevin_thibedeau 4y ago
Some states let you deduct a portion of rent in place of property tax.
jonathankoren 4y ago
By that logic, no one pays taxes except consumers.
- deleted 4y ago
  [deleted]
- prepend 4y ago
  I mean you’re sort of right. There’s no such thing as a free lunch. So stuff is all ultimately paid by the consumer since that’s the end of the line. There’s really no way to increase taxes without impacting consumers. Unless you try to limit rents, but then you have other problems with people not wanting to invest in apartment buildings.
  - paulmd 4y ago
    That assertion depends on an efficient market though, and that is provably not true - the existence of corporate profits demonstrates this, because in an efficient market everyone makes 0 profit, and any rent-seeking will cause every single one of your customers to flee to a competitor who doesn't rent-seek. Everyone has to price as aggressively as possible given the costs, or lose customers to someone who does, and that means zero profit above the actual cost of production/service. In a world where corporations make profits, some competitors choose to eat the taxes and retain customers, while others may increase prices and lose some customers, and some customers may eat the increased price and remain even though they're getting a worse deal than before. This is the concept of "consumer surplus" vs "producer surplus", and taxes are cutting into those surpluses differently depending on the specifics of each market participant. All of this has been debated endlessly by economists, in terms of just how much of corporate taxes get passed along to consumers and so on. And the answer seems to be "not zero, and not 100% either", and everything beyond that is up for debate. So no, not "everything is ultimately paid by the consumer", that is the 100% answer and that's pretty clearly wrong in a market where producer-surplus exists. In reality, real-estate and rents are probably one of the least-efficient markets imaginable. The frictional costs to buying and selling property, and finding a new tenant who might be a problem/deadbeat/etc, or spending a bunch of time apartment-shopping, picking up your life and packing your stuff, and moving, are immense, and all parties involved are highly emotionally invested as well. Landlords are trying to make a long-term calculation about whether the property is going to appreciate - even if they are losing money today, if they expect to make capital gains in the long term it could be worth it. And all parties are operating with minimal information. Out of all the markets in the world, real-estate and rental living spaces are probably one of the least efficient possible.
- kingrazor 4y ago
  Isn't this basically the case at the end of the day? Just about everything seems to eventually get passed on to the consumer.
  - jonathankoren 4y ago
    Would you say my employer pays my income tax, since they're the ones giving me money?
    - kingrazor 4y ago
      Don't they, technically? Since the income tax is withheld from your paycheck before you get it?
- mypalmike 4y ago
  One of many counter examples: Corporations holding investments with capital gains aren't sourcing tax payments from consumers. Pass-through taxes exist though, yes.
- barry-cotter 4y ago
  Yes. Companies are legal fictions and all people buy goods and services. Some people buy those services through those legal fictions so they consume the fraction of them corresponding to their to ownership fraction. Ultimately a person pays all taxes and all people are consumers.

Manuel_D 4y ago

The point is, the apartment owner pays property tax and collect rent from tenants to pay for that. If property taxes go up, property owners raise rents to compensate. So the tenants are paying the property tax, albeit indirectly.

strombofulous 4y ago
If the tenants will pay and it doesn't break any rules, why not raise rent before taxes go up and pocket the extra? (serious question)
- neon_electro 4y ago
  This happens all the time. Deciding whether a raised rent price is justification for moving out is a complicated and personal process and yet it fuels all of the response to landlords that do this. Also, 1-year leases are typical in the U.S. (at least Philly/NYC northeast U.S.), so from that contractual perspective, your rent can go up every year and that's totally legal.
- winstonewert 4y ago
  If one landlord raises the rent, this will tend to make renters go to other landlords who are not raising the rent. But if the taxes are increased on all the landlords, they will likely all raise their rents together and renters can't simply go to another landlord who isn't raising the rent to avoid the increase. Its actually much more complicated then that, depending on factors such as the propensity of landlords to cease renting out units if their profit decreases, the propensity of renters to shift to smaller dwellings in the face of rent increases, etc.
dwallin 4y ago
Landlords are also competing with each other and tenants have limits based on what they can actually afford to pay. At some point they can be forced to move out of the city to a lower cost of living location, dropping demand. In fact it's entirely possible for a significant increase in tax rates to make rental units a poor investment, causing housing prices to plummet and rents to drop. Your mistake is assuming that people who bought up housing stock are guaranteed future profit on their speculative investment.

listless 4y ago

I’m a landlord and yes it is. My taxes doubled last year because of the stupid housing bubble and so we had to raise rent as well. Gotta make a profit here for this investment to be worthwhile.

AnIdiotOnTheNet 4y ago
Maybe if people didn't buy property they don't live in as an investment then things like the stupid housing bubble might not happen in the first place. Personally I think owning a residence you don't actually live in should just straight up be illegal, but I'm admittedly pretty radical about parts of the system that seem to exist solely to make the rich richer.
- rabuse 4y ago
  If government reduced their hold on zoning restrictions and allowed for more properties to be built, we wouldn't be in this mess. Supply and demand.
  - IX-103 4y ago
    I'm not sure of your logic. There's no guarantee that builders will use the loosened restrictions to build the most efficient housing. In fact they will most likely build the most profitable housing instead. The most profitable is on the high end - so marble countertops, stainless steel appliances, etc. All the builders will race to build as much of that as they can, as fast as they can. Then, when the market is glutted, they'll be unable to sell off their investments. Builders will end up with their capital all sunk in cheap land and expensive housing. no one can afford to buy. The builders can't sell the cheap land since they leveraged it to pay for developing the expensive housing. They can't sell the expensive housing because the market has temporarily dried up. The builders will just wait until the glut resolves and continue business as usual. Meanwhile, there is not really that much more actual housing for the low end market. Some builders made a bunch of money and some craftsmen got extra work building houses they can never afford. Capitalism at it's most typical.

daenz 4y ago

"rent" != "a substantial part of rent"