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I don't understand why this is so often presented as such a difficult to understand concept. People pay property taxes every year on assets that change in valu

I don't understand why this is so often presented as such a difficult to understand concept. People pay property taxes every year on assets that change in value without selling (ie unrealized gains). Nobody seems perplexed by that. But can't seem to figure out how it works for stocks. Regardless of if you agree or disagree with doing it (which I'm not pushing for or against here), it's not a complex concept.

deleted 4y ago
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seibelj 4y ago
My house needs protection from the police and all manner of city services. Land is one of the more tricky elements of property to handle fairly and one mechanism is property taxes given there is only so much land in prime locations. Hard for me to make sense of taxing unrealized gains. Not even France could make a wealth tax work, and they tax everything.
daenz 4y ago
FWIW, the idea of paying taxes on a fluctuating property valuation has never sat right with me either. So you could say that I am perplexed by that. If I'm on some kind of fixed income, suddenly I might not be able to afford the taxes on the house that I bought 20 years ago and need to sell it? It's bizarre.
- drewrv 4y ago
  I don't know what state you're in, but many states have senior citizen exemptions, or low income exemptions.
astrange 4y ago
Property taxes certainly have issues; they tax building improvements, but we want those, so we shouldn’t be incentivizing people to not improve their buildings. Land value tax is the proper way to go, questions of how to value land aside. The issue with a wealth tax is it’s inflationary - most taxes are deflationary but a wealth tax forces you to sell assets to get their cash from them. It does encourage rich people to mark up their assets less, which might reduce apparent income inequality aka make poor people less jealous of them…
- xyzzy123 4y ago
  Couldn't you take loans against the value? I'm sort of assuming the wealth tax is a fraction of a percent, and that the burden would mostly be borne by high net worth individuals who could easily financialise their way out of small inconveniences.
  - bombcar 4y ago
    Any tax on value is an eventual confiscation of the entire value given enough time, unless you have enough appreciation to outpace it (which likely is inflation). There’s no way to borrow against a property to pay a 2% tax for mor than fifty years, for example. You need an outside source of funds, or appreciation.
    - onedognight 4y ago
      > There’s no way to borrow against a property to pay a 2% tax for mor than fifty years Right. That’s the idea. Create value or sell the property to someone who will.
- KaiserPro 4y ago
  > The issue with a wealth tax is it’s inflationary If it encourages people to undervalue, or lower the value of something, I don't see how that's inflationary. Could you explain how it would be inflationary?
  - astrange 4y ago
    Because you can’t undervalue things with clear values like stocks. You have to actually sell them. The IRS doesn’t accept shares for taxes, it accepts USD. Selling -> increased money velocity -> inflation. Lower asset values aren’t deflation because “asset inflation” isn’t inflation. You can’t eat assets and it doesn’t matter if their prices go up because you can buy fractions of them. Asset inflation (the theory that 2010 QE was causing inflation “in the stock market” even though we didn’t see it in goods) is a crank theory from online people who think central banks print money.
jen20 4y ago
> Nobody seems perplexed by that. Believe me, as a European living in an American city currently “booming”, not only am I perplexed by it but also wonder how in the hell Americans have put up with it for so long. The negative effects are quite plain to see as people get pushed out of their homes by the wealthy moving in from other states, and yet people seem to want to apply the same fundamentally flawed logic to other asset classes too.

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seibelj 4y ago

My house needs protection from the police and all manner of city services. Land is one of the more tricky elements of property to handle fairly and one mechanism is property taxes given there is only so much land in prime locations. Hard for me to make sense of taxing unrealized gains. Not even France could make a wealth tax work, and they tax everything.

daenz 4y ago

FWIW, the idea of paying taxes on a fluctuating property valuation has never sat right with me either. So you could say that I am perplexed by that. If I'm on some kind of fixed income, suddenly I might not be able to afford the taxes on the house that I bought 20 years ago and need to sell it? It's bizarre.

drewrv 4y ago
I don't know what state you're in, but many states have senior citizen exemptions, or low income exemptions.

astrange 4y ago

Property taxes certainly have issues; they tax building improvements, but we want those, so we shouldn’t be incentivizing people to not improve their buildings. Land value tax is the proper way to go, questions of how to value land aside. The issue with a wealth tax is it’s inflationary - most taxes are deflationary but a wealth tax forces you to sell assets to get their cash from them. It does encourage rich people to mark up their assets less, which might reduce apparent income inequality aka make poor people less jealous of them…

xyzzy123 4y ago
Couldn't you take loans against the value? I'm sort of assuming the wealth tax is a fraction of a percent, and that the burden would mostly be borne by high net worth individuals who could easily financialise their way out of small inconveniences.
- bombcar 4y ago
  Any tax on value is an eventual confiscation of the entire value given enough time, unless you have enough appreciation to outpace it (which likely is inflation). There’s no way to borrow against a property to pay a 2% tax for mor than fifty years, for example. You need an outside source of funds, or appreciation.
  - onedognight 4y ago
    > There’s no way to borrow against a property to pay a 2% tax for mor than fifty years Right. That’s the idea. Create value or sell the property to someone who will.
KaiserPro 4y ago
> The issue with a wealth tax is it’s inflationary If it encourages people to undervalue, or lower the value of something, I don't see how that's inflationary. Could you explain how it would be inflationary?
- astrange 4y ago
  Because you can’t undervalue things with clear values like stocks. You have to actually sell them. The IRS doesn’t accept shares for taxes, it accepts USD. Selling -> increased money velocity -> inflation. Lower asset values aren’t deflation because “asset inflation” isn’t inflation. You can’t eat assets and it doesn’t matter if their prices go up because you can buy fractions of them. Asset inflation (the theory that 2010 QE was causing inflation “in the stock market” even though we didn’t see it in goods) is a crank theory from online people who think central banks print money.

jen20 4y ago

> Nobody seems perplexed by that. Believe me, as a European living in an American city currently “booming”, not only am I perplexed by it but also wonder how in the hell Americans have put up with it for so long. The negative effects are quite plain to see as people get pushed out of their homes by the wealthy moving in from other states, and yet people seem to want to apply the same fundamentally flawed logic to other asset classes too.