44 ms·

High property taxes are good

• vanilla_nut 4y ago
  In my region of northern New Hampshire, there are a lot of retired folks with houses rising from $200k-ish values to closer to $500k-ish values in the last 5-10 years. As such, there's a lot of discussion around lowering property taxes to help these retirees. In my opinion? Fuck 'em. Property taxes are a brilliant method of perfectly progressive taxation: you can always choose to live in a cheaper home. If your home is so expensive that you can't afford the property tax, downgrade. Those of us who can't afford property will shed no tears.
  • gedy 4y ago
    > Those of us who can't afford property will shed no tears. You seem to believe the fallacy that not being able to afford a home is other homeowners fault, and not due to poor government planning (likely by the same politicians you willingly vote for.)
    • rjbwork 4y ago
      And the same politicians that those homeowners vote for. And lobby. Especially retirees who have time to do things like endlessly harangue their local councils to implement NIMBYist policies to prevent increasing housing supply in order to drive their housing prices higher. Of course, couched in language like "preserving the historical character of the neighborhood" and "keeping the riff raff out".
    • dangerlibrary 4y ago
      One can very convincingly make the argument that state and national governments are undemocratic and difficult for individuals or local groups to influence. But on the scale of a county, small town, or city government, that's less the case. Individual voters who have repeatedly NIMBY voted against densification have absolutely caused their own home values to inflate.
    • lijogdfljk 4y ago
      I took their statement differently; rather, that they aren't concerned for the fallout of the Haves at the sacrifice for the HaveNots. I am uninformed in this game, so this is not a statement by me: However i've been told that one issue is squatters, land being used purely as investment and with low costs you can easily afford to buy land and squat it till a time when you later sell it in the market. As someone looking to buy land to build a home on, i've noticed quite a lot of property seemingly being used purely for investment. Flipped through the years for profit with no real added value, in an area of the country (PNW) that is very, very expensive due to limited supply. It is very cheap to keep land, tens of dollars a year for 10 acres (the lot size i'm familiar with) iirc. Inhibiting this behavior seems beneficial. Though i imagine more interesting (than simply "high") taxes could help more. Ie something like a higher tax on unimproved and uninhabited land. Encourage usage, not squatting. But.. i don't know anything here. I just have experience looking to buy land, and watching what goes up for sale.
      • gedy 4y ago
        > Encourage usage, not squatting. Yes agreed, though I do think people conflate things and vilify wrong targets, which sounds a lot like the OP. E.g. in California it's en vogue to rail against "Prop 13" without considering why it was passed, or how it helps people on fixed incomes remain in their homes. , or more importantly how the financialization of homes has made things bad globally.
        • zip1234 4y ago
          Just because it was passed for a good reason does not make it a good policy. Prop 13, whatever the good intentions, is a disaster and has created a modern landed gentry in California.
    • crisdux 4y ago
      I think you are missing something. It's not about blame, that doesn't matter. People are lashing out. It's about anger at the system. It's becoming increasingly obvious that recently a large part of our personal prosperity is based on incumbency. Our government is routinely breaking social contracts which maintain order. That makes people angry at the system, government and their fellow citizens.
      • gedy 4y ago
        > That makes people angry at the system, government and their fellow citizens. The "system" and governments frequently prefer angry people direct their rage at other citizens instead of them! QED
        • deleted 4y ago
          [deleted]
  • derekp7 4y ago
    But the absolute home value shouldn't affect property taxes. It should only be the relative home value. The county takes the entire budget, and divides it by the total of all the home values in the county to determine the basis for assessing taxes. The problem comes when a given home goes up in value more then their neighbors, or when one neighborhood increases more than other ones.
  • jherskovic 4y ago
    If there was a supply of cheaper housing, I'd agree with this wholeheartedly. Part of the problem is that, in a lot of places (SF, NYC, Seattle, etc) you can price folks into homelessness. Sure, no one is entitled to live in a specific area, but for those who built their lives there, have a community, family, it's cruel to tell them "move to Nowheresville, OH so you can afford a roof"
    • Workaccount2 4y ago
      And who are the ones that voted against building that cheaper housing?
    • igorkraw 4y ago
      I mean, either you are cruel to home owners who have capital or you are cruel to poor people. I know where my priorities would be. Or we could of course try to remove the cruelty completely by not using a market system to manage a natural monopoly (space in a community). But if you choose cruelty, at least be cruel to those that can choose to suffer as opposed that cannot really escape
      • cableshaft 4y ago
        > I mean, either you are cruel to home owners who have capital or you are cruel to poor people. False equivalence. There's no reason you have to be cruel to either. You can always build more housing or provide financial services to help poorer people buy homes. Or just, you know, lower the cost of homes so property taxes don't have to be astronomical and force older people out of their homes to begin with. If housing costs and property taxes are so high it forces older people out, I don't see how that somehow benefits poor people anyway. They still can't afford those stupid expensive houses.
        • igorkraw 4y ago
          If you disincentivise individual ownership of expensive land and buildings, building dense housing becomes more profitable. Also, you can pay for social programs with the tax revenue.
  • francisofascii 4y ago
    Or, they can simply get a reverse mortgage using the $300K free appreciation they realized.
  • et-al 4y ago
    Who would want to settle down in an area that is trying to churn you out though? Sure, the "fuck 'em" attitude has been used by NIMBYs forever. But now we're using it to deprioritise the existing residents that might've sculpted the community. E.g. "Artists who can't the 200% rent increase? Fuck 'em." Most folks like some sense of stability with their housing. Not everyone's a 20 y/o digital nomad.
  • flyingfences 4y ago
    > you can always choose to live in a cheaper home I'm not sure if you've looked around northern New England recently, but there are practically no cheaper homes left.
  • throwaway9980 4y ago
    > Fuck 'em. Progressive taxation. At least you’re honest about how you want to wield the cudgel.
  • stephencanon 4y ago
    Over here in Hanover they've gone from $500k up to $1M, and honestly the 2% tax rate is the only thing that kept prices somewhat in check in the presence of near-zero interest rates.
  • woofyman 4y ago
    //Those of us who can't afford property will shed no tears. Move somewhere cheaper.
    • deleted 4y ago
      [deleted]
  • happytoexplain 4y ago
    There's a reasonable and holistic argument to be made for the generalized version of your position, but specifically wanting people to be removed from their homes by forces they can't control under the rationale, "fuck 'em", is counterproductive and - I don't think it's uncalled for to say - immoral. It's important to have a base level of humanity for people, regardless of what side of which broken social dynamic they are lucky or unlucky enough to be on. Choosing not to do so will in fact hurt our chances of fixing systems in most cases, regardless of how righteous it feels. >you can always choose to live in a cheaper home Here also - you're oversimplifying. Yes, you can always choose to engage in all manner of frustrating, saddening, and burdensome life changes. But it's unfair to imply it is easy. You may cite the burdens of others as justification for forcing such a change, but it's a complicated, emotional, difficult, subjective argument that you do no justice by abbreviating into hostile quips. You sound like you're sure this group of people you're imagining is the enemy, and not simply equal human beings, some of whom may have voted in a selfish way on some policy that arguably increased the strain of the situation. It's simply not enough to justify your tone. It's unrealistic to attack every individual who does not always act in perfect unselfish harmony with the greater society, especially when such balance is impossible to objectively define. I.e. it is reasonable to expect individuals to make various concessions for society, but it is not reasonable to expect people not to fight as hard as they can to keep their home (even though it may ultimately be that they must lose it).
    • Victerius 4y ago
      > removed from their homes by forces they can't control A caveat here is that many of these people vote against denser zoning in their neighborhood. So, in a way, the appreciation of their primary home is due to factors that they do control.
      • cjmb 4y ago
        "in a way" -- the region in question is northern New Hampshire. on balance, the housing price appreciation, and therefore tax burden, on "these people" is functionally entirely due to external macroeconomic factors, which you can clearly see on the Zillow Housing price index by typing in "New Hampshire" or any relevant zip code: https://www.zillow.com/home-values/ https://www.zillow.com/home-values/ The average NH home increased $7k-$10k in value per year linearly for the last 10 years! Then it increased $25k Jan '20 -> Jan '21. Then it increased *$53k* Jan '21 -> Jan '22. 10 years worth of price appreciation, and therefore tax appreciation, occurred in a 2 year window. I understand many people have a pet housing policy issue they care about, but trying to attribute this step-function change in tax burden to "New Hampshire zoning laws" and "these people" as opposed to the massive increase in demand caused by Covid urban flight/WFH & relaxed monetary policy is completely unreasonable.
  • exclusiv 4y ago
    I disagree. The local budget shouldn't change much from year to year, but when values go up, they are quick to reassess high on, many times, artificially inflated values. When values go down, then they aren't too quick to reassess accurately downward. In this situation, you just end up displacing retirees which is not good. I'm not talking about having special rules for retirees, just saying the politicians feast when home values skyrocket and cities need to have a reasonable balanced approach to be able to have great services and departments for the community, but not try to optimize for their budget. So many great cities have been destroyed from high property taxes. They jack up prop taxes, then lose families and are left with mostly older citizens, and there's a breaking point and they leave. Home values plummet along with property taxes. So what they thought might be good for the community ended up being a poor decision. Also property taxes are not perfectly progressive. Only areas with nice homes have good schools.
  • toomuchtodo 4y ago
    Alternatively, have them pay for an appraisal and finance the progressive property taxes out of home equity. Upon death, the property is sold and the equity used to pay progressive taxes is repaid. This prevents the generational wealth transfer of subsidized senior housing tax rates with the benefits going to next of kin, who sells the asset and receives the proceeds.
  • deleted 4y ago
    [deleted]
  • bombcar 4y ago
    Strange, around here property taxes are allocated based on proportional value, true, but the total amount collected is set by the township budget. So if they collected $10m last year, and will collect $10.1m this year, it doesn't matter if the houses have tripled in value, you'll pay roughly the same dollar amount.
    • ceejayoz 4y ago
      This is how they work pretty much anywhere; the locality aims to collect a certain amount in total taxes, and sets a per-$1000 tax rate based on the total value of all taxable property in their jurisdiction. People think doubling house value doubles property tax, but the bill could go down if double is less than the average increase for the area.
  • fundad 4y ago
    I'd say Fuck the idea of making it cheaper to live forever in the exact house when you could downsize and make the home available for a family. If the area was underutilized when they bought in cheap, they earned their windfall. I hope they didn't prevent apartment buildings from being built in their area.
    • vanilla_nut 4y ago
      Thank you -- this is a more concise version of my thoughts. If your house goes up in value, you just earned likely hundreds of thousands of dollars in the resulting windfall when you sell. Why on earth should I feel bad for you? I understand that communities change when this sort of thing happens, but pushing out the retired couple living in a multi-bedroom apartment for a small family is a healthier thing for the community. You don't want to freeze communities in time, they need to grow and evolve.
  • chadash 4y ago
    > You can always choose to live in a cheaper home. So your 90 year old grandpa has been living in a two bedroom apartment on the lower east side for 65 years. When he moved in at age 25, it was considered a crummy but affordable neighborhood, but now it's expensive and desirable. You want a 90 year old to have to move? I agree that maybe a 65 year old couple no longer needs to be in a 3,000 square foot home, but there are a lot of cases that make this complicated.
    • BlargMcLarg 4y ago
      Grandfathering until the chickens come to roost hasn't helped the vulnerable either, yet that same party largely consists of individuals proposing that solution to the vulnerable. It's cruel, but that same cruelty is deemed acceptable towards 'have nots'.
    • yellowapple 4y ago
      If Grandpa rents that apartment instead of owning it, he'd if anything stand to benefit (especially if we tax land value specifically and not the building).
      • chadash 4y ago
        My point is that a lot of (and maybe most) 90 year olds are not really capable of moving. Moves are a pretty big pain in the ass in your 20s and 30s, but doing the process of finding a new apartment and physically moving are much harder at that age. And then you move to somewhere cheaper because the whole point is you can't afford the city anymore, but now you need to find all new doctors (many 90 year olds have multiple doctors they see regularly), figure out how to see family (perhaps you remained in your old place because your family lived nearby), get to the grocery store (you're 90... you likely can't drive). It's not practical.
        • yellowapple 4y ago
          > My point is that a lot of (and maybe most) 90 year olds are not really capable of moving. And mine is that a lot of (and maybe most) 90 year olds wouldn't need to move. The ones who would be motivated to move are also largely the ones who are wealthy enough to do so.
  • lettergram 4y ago
    Almost anyone can afford property… provided you’re willing to move. I’m where I live it costs $40-$50k / acre up to $150k / acre. 30 min away it’s $3-4k / acre. I personally am opposed to property taxes. I think it basically implies rent of the land. Then again, I’m basically opposed to all taxes except tariffs and perhaps licensing fees. For instance, you could implement a licensing fee to use the public roads. Or add a tax on import / export of goods across the protected border(s). But beyond that I view all taxes as far too intrusive. Why should my land be assessed? Why should I provide any details to the government so they can tax me? The “government” is infact my “neighbors” and I simply don’t think it’s their business what my assets are.
    • yellowapple 4y ago
      > I think it basically implies rent of the land. That's already implied from the existence of land deeds and the enforcement thereof: you're renting a subset of a nation-state's sovereign territory.
    • int_19h 4y ago
      Do you expect the government to protect your assets if someone threatens them?
  • scifibestfi 4y ago
    Yeesh, lack of empathy much? Imagine you bought a house and worked diligently for 30 years to pay it off. Now in retirement your cost of living skyrockets, through no fault of your own, such that you can no longer afford to live there in your 70s and 80s. How is that in any way fair or just?
    • medvezhenok 4y ago
      Now imagine the same exact thing but instead of buying a house, the person rented for 30 years (probably would have been forced out of the neighborhood much sooner). Are you still empathizing? What about the people who couldn't get a loan in the 1940s-70s because of redlining and ended up having to rent for the same amount of time? All of this "empathy" talk hides real wealth redistribution towards property owners. Just holding on to a piece of property should not increase your share of real productive capital disproportionately.
  • HWR_14 4y ago
    I thought: a) NH (like CA) didn't revalue land for property tax purposes as long as you continue to own it. b) NH had a generous homestead exemption based on the median of the area in which you live.
  • mutatio 4y ago
    Isn't your envy/entitlement misplaced, by your own argument "you can always choose to live in a cheaper home".
    • fundad 4y ago
      Low taxes incentivizes a retiree to stay in possible a more spacious home than they need instead of selling to a young family. If you are a retired couple or a single without any large adult children living with you, you're better off with less to maintain.
  • googlryas 4y ago
    If the only thing that changes are home prices going up, why wouldn't property taxes(as a percent of home prices) go down? It's not like the city is offering new services because housing prices are rising?
  • ahallock 4y ago
    That's a very callous attitude, especially for people who have put a lot into their property. Being forced out due to taxation is no choice at all.
  • tclancy 4y ago
    Southern NH here and I would be interested to see if NH's eye-watering property taxes (when you only have one lever, it gets used a lot) have a similar effect as Chicago. Personally, being somewhat involved in city politics, while I appreciate your take, it does mean pricing people out of their forever homes when they've done nothing more than retire to a fixed income in the middle of a bubble. I don't have the answer, but I can definitely imagine the fear of the unknown seeing you will not only be forced out of your home but your town and region to find something affordable.
    • corpMaverick 4y ago
      I lived in Nashua. There is zero new construction going on, lotes are very big so there is a lot of wasted space. The result is that housing is too expensive.
  • commandlinefan 4y ago
    > you can always choose to live in a cheaper home ... Those of us who can't afford property If there are cheaper homes for these privileged retirees to move into, why don't you buy those homes yourself?
  • unethical_ban 4y ago
    So, politicians get voted in, raise property taxes to extort established neighborhoods into selling because they can no longer afford the government's shakedown of their residence, so the corrupt politicians' business associates can purchase the properties and rent them.
• recursivedoubts 4y ago
  High property taxes are good on non-owner occupied homes.
  • Ekaros 4y ago
    Also it should be used as tool to increase densification. Just increase if property is not sufficiently dense, maybe to some 20%. At that point people are free to choose either to allow redevelopment to happen or support local community.
    • Elof 4y ago
      Residential real estate represents 5% of the GDP (in the US), 25% of an individuals wealth, and 65% of the homes are owner occupied. A 20% tax even if only for property deemed underdeveloped would bankrupt a ton of people (myself included) and throw the entire market into chaos. Most people who were hit with this wouldn't be able to redevelop because of the expense, so they would be forced to sell. The market would get flooded and drive down the value. Investors would snatch everything up, redevelop, and start driving up rental prices. We need change but this would be horrible in so many ways.
  • belligeront 4y ago
    This is a regressive tax. It forces higher taxes on renters (as a class, less wealthy than homeowners) than homeowners.
    • mikeyouse 4y ago
      Nah, rents aren't determined by owners' costs (except at the margin where property owners are debating whether to 'stay in the game') - they're determined by bog standard supply/demand and usually set to the maximum rate the market will bear.
      • nrmitchi 4y ago
        This assumption (which is largely correct) gets thrown out the window when the entire tranche of supply is hit with a cost increase all at the same time (and every participant knows it). The point of this "margin" you mention gets rather deterministically and uniformily raised across the board.
• hahaxdxd123 4y ago
  High property tax gets us to closer to a land value tax, so yes.
  • stewarts 4y ago
• cbm-vic-20 4y ago
  Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.
  • conductr 4y ago
    > A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents Zoning usually dictates what's allowed and is indifferent to tax rates
    • theluketaylor 4y ago
      One of the many reasons exclusionary zoning needs to die in a fire. The urban housing crisis has been allowed to grow for decades, so we're long past any single solution, but I'm increasingly convinced no combination of fixes can succeed while exclusionary zoning still exists. Japanese-style inclusionary zoning splits the difference nicely between making sure people don't live next to loud, potentially dangerous industry and allowing lots of mixed-use, human scale developments of varying density. http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
      • staringback 4y ago
        US home ownership: 65% Japan home ownership: 61% Yet there is such a housing crisis in the states due to the "zoning" bogeyman
        • dpe82 4y ago
          I'm not sure what your point is? Does development policy not affect the supply and location of housing?
    • yellowapple 4y ago
      Exclusionary zoning exists because of NIMBYism. NIMBYism exists because of the financial incentive to raise land values. That financial incentive exists because of a lack of taxation on land value.
• deleted 4y ago
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• js2 4y ago
  From https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax > Property taxes discourage construction, maintenance, and repair because taxes increase with improvements. LVT is not based on how land is used. From https://www.strongtowns.org/journal/2019/3/8/if-the-land-tax-is-such-a-good-idea-why-isnt-it-being-implemented https://www.strongtowns.org/journal/2019/3/8/if-the-land-tax... > The problem is that the land tax component of a traditional property tax is too small to deter land speculation. Although property taxes vary from place to place, they are typically between 1% and 2% of the property's total value paid annually. If inflation is low, then for longtime property owners, this amounts to roughly the same cost as if they paid a one-time sales tax on the property of between 10% and 20%. Thus, the property tax applied to building values inflates their price by between 10% and 20%. And the property tax applied to land value allows 80% to 90% of publicly-created land value to accrue as a windfall to landowners. Thus, typical land taxes are too weak to discourage land speculation. Etc. https://duckduckgo.com/?q=economist+land+use+vs+property+taxes https://duckduckgo.com/?q=economist+land+use+vs+property+tax...
  • mjmahone17 4y ago
    Property taxes discourage existing inventory from being taken off the market in order to speculate via property holding, at the expense of also discouraging new building. Land value tax discourages holding vacant or under-built property, at the expense of lowering the cost of the land. This means existing homeowners won’t be able to sell their old homes for as much as they could if fewer surrounding properties are developed (more modern, better built, larger, with more units), because their old home is closer to being worth the raw value of the land. If you want to sell a $50,000 home for $500,000 because it sits on land that grew from being worth $10,000 to $450,000, then a LVT is terrible for you: you need to put in actual work improving your property rather than just sitting on a decrepit old building and selling it for a profit. The problem in the US is that the voters who mostly own their home can’t stomach their home value decreasing: that reduces their paper wealth as well as their ability to take out loans and second mortgages for things like college or car payments. So politically it’s a hard solution to push for (even if, on net, it would help the community be stronger).
  • jpollock 4y ago
• timcavel 4y ago
• tosser0001 4y ago
  "interest rates are a powerful tool to help control home prices" Unless you're paying cash, most people think in terms of what their monthly payment will be. So driving down the price may not make any particular house any more affordable.
  • mrcarruthers 4y ago
    There's also the downpayment to think of. While the monthly payments may not have changed all that much, the downpayment certainly has.
• hedora 4y ago
  The article overlooks one important factor: Raising property taxes would lower house values, reducing loan sizes, and therefore bank profits. We can't have that money being squandered on social services or infrastructure.
  • commandlinefan 4y ago
    How would raising property taxes lower house values?
    • frankbreetz 4y ago
      When people take out a mortgage, they normally only care about total monthly cost. If the property tax increases they can afford to spend less on a house for the same monthly payment.
• btilly 4y ago
  And, thanks to Proposition 13, California has entirely removed this policy tool from consumer housing. A tremendous amount of our problems, from high rent to gridlock, can be traced back to this decision.
  • Victerius 4y ago
    Early born privilege.
    • spicymaki 4y ago
      This is local democracy in action. Vested landowners can put up barriers to entry to prop up their investments. They can also hand it down to their family, entrenching wealth for generations. Sucks to be an outsider.
      • rahimnathwani 4y ago
        "They can also hand it down to their family, entrenching wealth for generations." Not any more.
        • HWR_14 4y ago
          Why not? What changed?
          • rahimnathwani 4y ago
            Prop 19
        • gnicholas 4y ago
          I think this new rule only applies to property that is inherited and not lived in by the inheritor (e.g., rental property or vacation home). If you inherit a home and live in it, I think you can still keep the old property tax basis. There may be some dollar value limitations or other rules I’m not remembering though. EDIT: just checked, the property value can go up by $1M from when it was purchased without the inheritor owing additional tax. [1] Beyond that, tax is due on the incremental additional appreciation. In reality, this will only affect properties in a few metro areas (Bay Area, LA, OC, SD) and certain beachside properties. This isn't to say that the law is good or bad, just to describe the scope of its likely impact. 1: https://www.cunninghamlegal.com/california-legal-services/california-prop-13-protection-prop-19-strategy/ https://www.cunninghamlegal.com/california-legal-services/ca...
• datavirtue 4y ago
  Neighborhood a few minutes from me has an insane tax rate. It comes to $1000 a month for a $325k house. Keeps the riffraff away...and me...but they can afford their roads so...
  • exclusiv 4y ago
    That's crazy and that city is doomed. My in-laws spend more than that but their home is worth more. They've owned it free and clear for like 20 years but they are getting out this year. Their city used to be full of families, much higher values, lots of great local businesses and some big business headquarters. That's all gone and it's not desirable at all.
• justinzollars 4y ago
  This community is deranged. All forms of taxation are messed up, the funds end up in grifters pockets, funding wars, or in black holes. The last place I want my money is in a politicians pocket. But this community overwhelmingly supports this concept. If a slave is taxed at 100% and an indentured servant is taxed at 20% - what does that make you?
  • avgDev 4y ago
    So, what is your solution for building infrastructure? Funding the military? Social programs? Snow removal? Libraries? Education?
    • honkycat 4y ago
      Or producing meat, or maintaining prisons, or building security critical CPUs, or funding medical research... These people think the market exists, but really we just have a fucked-up version of socialism that privatizes the profits while subsidizing the risk. It supports toxic industries while fucking everyone else over. In this case, particularly talking about agriculture and the prison industrial complex... or the huge scam with the covid loans where they just used the money for stock buybacks.
    • justinzollars 4y ago
      Governments in the West have grown tremendously. In the United States the footprint of Government is 44% of GDP. 44%! This community is "Hacker News" not "Socialist News" or "Red State". Government should be able to function much better with much less. And it is no Hackers interest for its footprint to continue its endless expansion.
      • EddieDante 4y ago
        You realize that there is a website called Red State and that it's a right-wing propaganda outfit, right? I personally think it's hilarious that the "godless Reds" used to be commies, and now they're Republicans.
  • 4y ago
• boredumb 4y ago
  High taxes are bad
• mech987 4y ago
  Weird to see Chicago used as an example of good governance.
• kmeisthax 4y ago
  If the homevoter hypothesis is true then the counterargument to this is just the argument itself. Property taxes cool speculation, but I'm me, and I bought into the neighborhood and thus want to see line go up. Yes, local politics is inherently more tailored, but it's also more vulnerable to conflicts of interest. Most local town councils are controlled by an oligopoly of the loudest homeowners who will vote down anything that is perceived to impact their home prices. The people who want affordable housing are not part of the voting quorum because they do not live or own the neighborhood. In other words, don't say the quiet part out loud!
• beefman 4y ago
  This article argues that relatively high property taxes are good. It's a geographically zero-sum situation. Real estate is a rivalrous good and people will pay as much as they can afford to buy it. High property taxes put political pressure on interest rates, which in turn have broad effects on the economy. Economic mechanisms like this, which don't change anything in the physical world, almost never have any long-term impact, positive or negative, since the economy is a densely-connected network. Findings of large effects depend on stopping accounting somewhere, and you can get positive or negative findings depending on where you stop. Money juggling is a great distraction from what really matters: physical quantities and actions.
• nrmitchi 4y ago
  I'm not disgreeing that there can be valid benefits of higher property taxes. The problem with it though is that it is a very regressive tax, especially in states that get the majority of their income from property tax as compared to income taxes (I'm looking at you Texas). > They can be adjusted annually based off the needs of a local market Or, in the case of Texas, a very large portion of property taxes in urban centers ends up as recapture and goes into a state-controlled slush fund. These portions (school taxes) are not actually adjusted at all. > the money collected from property taxes doesn't evaporate from a local area See above statement again. This may be true for city-level property taxes though. > Retirees and low income individuals are often able to make cases to reduce their tax burden I would disagree with this. There are exceptions written into the law that provide exemptions for some of these groups (which are often abused and disincentivise "good" use), but overall lower-end properties have many more comparables to set value based off of, and tends to be much closer to "market". These residents also don't tend to have the funds to many these arguments, and commission-based tax-appealers don't stand to make much money taking on these cases (the absolute dollar value is relatively low). Further, high-value properties without many comparables are the easiest ones to argue for lower tax burden on. Finally, when property values actually do decrease (due to central bank action on interest rates, etc) it can be difficult to get the assessed value lowered without an actual sale. Tldr, the current implementation of property taxes in many locations is extremely regressive.
• kumarski 4y ago
  If you analyze how tax dollars are spent, you'd disagree. 50% of US GDP is about to become US gov't expenditure.
• njarboe 4y ago
  Maybe subsidizing 30 year mortgages with low down payments is not such a great idea for the general populous. Imagine if house payments were similar but you paid off your mortgage in 10-15 years instead of 30. That would be a much better state of affairs.
• jeffbee 4y ago
  I have nothing against property taxes and I think they are good and should be higher - as the article says, the price of the houses stays the same and the government gets a bigger cut at the expense of land speculators. That's a good thing. However the arguments feels defective because it uses Chicago as an example. Surely the reason housing is plentiful and affordable in that city is because it has been slowly depopulating for decades and it currently only 75% as populous as it was at its peak.
• dmfdmf 4y ago
  Property taxes are unconstitutional and immoral. They are an implicit nationalization of all property because there is no way to own property unencumbered. Implicitly the govt owns all the land and charges you rent. The level, high or low, is irrelevant to the principle.
  • EddieDante 4y ago
    I'm gonna blow your mind right now: the foundation of all law is the government's monopoly on violence. Might makes right. The only "social contract" in force is, "Obey and be protected. Defy us and die."
    • danans 4y ago
      > The only "social contract" in force is, "Obey and be protected. Defy us and die." That same contract is also in force in the absence of a government monopoly on violence, with the difference that the "and die" part gets implemented far more frequently. That's why anarchists (of any stripe - left or right) shouldn't be trusted, since what they are really aiming for is to destroy democratic institutions and replace them with an authoritarianism that enforces only their preferences.
      • EddieDante 4y ago
        Corollary: the difference between a government and a warlord/organized crime syndicate is the time/money/effort spent on propaganda.
        • danans 4y ago
          > Corollary: the difference between a government and a warlord/organized crime syndicate is the time/money/effort spent on propaganda. Only when the government is authoritarian. You can't vote out a dictator, king, warlord, or mob boss.
          • EddieDante 4y ago
• binarymax 4y ago
  An effective 2.5% property tax, such as the example given for Chicago, is not high. Try living in NY, where effective tax is between 3.5% and 5% (mine is 3.8 in the city of Rochester). It’s really hard for people to become homeowners at that rate, especially when the market goes up and an appraiser can show up at any time and re-assess your value and raise your taxes.
  • kristjansson 4y ago
    Wow, that's nearly another mortgage payment. Forever! For the privilege of living in Rochester, NY?
    • throwaway0a5e 4y ago
      That's probably part of how they keep the kind of people they don't want living long term in Rochester out of Rochester.
      • binarymax 4y ago
        Not sure what you mean by this. The city itself is quite diverse. Who are “they”? Also this is all of NY, not just Rochester, that has rates such as these.
• BLO716 4y ago
  The real estate industry is a closed looped system, and because its monopolistic, anti-free market, and dealing with a finite product that simply trades hands its golden age was done after the great expansion of the United States after the Louisiana Purchase and the Mexican Treaties of 1848. This a foundational industry that pitted the upstate New Yorkers and the agrarian Virginians against Alexander Hamilton at almost every corner of his life in the establishment of free markets disruptions with the Bank of New York and later the Department of Treasury. Disruption can be seen in vertical markets of big cities and land creation like that of China in the South China Sea with man-made islands and expansion of territorial rights, but outside of that it's golden age is gone and the taxation will only become more intrusive for programs as our populous grows and the need to extract support for the expansion from the adult working class is through taxation. Hopefully this isn't rambling, but rather insight into how perverse the market has become because of no more land, and way more people.
  • ryan93 4y ago
    There is an incredible amount of land not to mention upzoning and vertical development. Not to mention there is no monopoly on housing unit production. In fact many companies want to build but can’t due to approval processes and zoning.
    • imtringued 4y ago
      Incredible amount of land = running away from the rent seekers = urban sprawl
  • salawat 4y ago
    The market didn't become more perverse because no more land. It was perverse from it's inception, you just wouldn't come across the scaling issue until such time as population seeking space outstripped finite supply of land. Any market will run into this fundamental problem. The issue is apriori to market facillitated resource allocation systems. Whatever unit you use to represent value or as the unit of transaction; it will inevitably centralize once demand starts outstripping supply, and rent extraction becomes an effective capital amplifier. It's the magic of power laws. Everybody without capital assets pays everyone who has it. Those with it lift the prices by virtue of the fact they too are factored into average buying power amongst the potential set of transactors. That justifies higher asks, which decreases your non-capital owning members supply of transaction medium to devote to acquiring more capital which increases your rent extractors capability to diversify, rinse, repeat. There. Is. No. Escape. Except estate taxes, assuming no immortal legal fictions. In the presence of such, you're hosed for recreating a level playing field for latecomers.
• chiefalchemist 4y ago
  > "This has led to is a glut of high quality housing at very low prices." Yes, but this (obviously) doesn't mean this housing is more affordable. It's not. Sure the razor is less but the blades (i.e., taxes) count as well. Both come out of the same pocket, so to speak. Housing prices are a function of affordability, and that is the collective sum of all associated payments, not just mortgage. So while we're on the topic, this is why the "college loan debt means more people can't afford to buy" logic (?) doesn't work. Eliminate that debt and prices will go up. Why? Simple! Because the market can bear higher prices. Roughly the same can be said for raising the minimum wage. Eventually, housing will eat that up as well. It just takes longer because leases are one-year cycles (and perhaps other local rent-increase limits). What we need is more supply. The only way to truly lower prices is to increase supply. Anything else is smoke & mirrors.
• sudden_dystopia 4y ago
  High property taxes are only “good” in this stupid system that we have to reduce speculation. But what would really be good is if we could stop using housing as investments that drive the prices of homes higher via inflationary mechanisms so that the prices of homes remain more stable over longer periods of time. Which is exactly how a lot of other countries housing markets work. In a better system, property taxes should be relegated to the dustbin because it turns property ownership into property leasing which is antithetical to the idea of private property.
  • naasking 4y ago
    > But what would really be good is if we could stop using housing as investments that drive the prices of homes higher via inflationary mechanisms so that the prices of homes remain more stable over longer periods of time. Housing only becomes a good investment if supply is sufficiently limited such that demand can't be met. NIMBYism and decades of artificially low interest rates are mostly to blame here, although I agree that in the short-term, penalties on speculation can help keep costs in line. > In a better system, property taxes should be relegated to the dustbin because it turns property ownership into property leasing which is antithetical to the idea of private property. I disagree 100%. Protecting property costs money, and the government is in charge of protecting your property rights. It seems perfectly reasonable that you should have to pay a fee proportional to the value of the property as an "insurance" against its loss.
    • imtringued 4y ago
      >and decades of artificially low interest rates are mostly to blame here You mean artificially high interest rates propped up by QE.
• eternityforest 4y ago
  Why are these taxes not progressive? Homeowners shouldn't pay a ton of tax just to stop speculation and airbnb.
• tptacek 4y ago
  High property taxes are clearly not intrinsically good; they're passed on to renters, and so they decrease affordability. Land value taxes sidestep this (increasing density decreases marginal tax burden on tenants), but they're not going to happen. You have to design policy for the world we actually have, not the one you'd prefer to live in. (Property taxes are a real problem where I live; we're an upper-middle-class enclave directly adjacent to the roughest part of Chicago, and affordability issues prevent people in Chicago from moving across the border to get our services. In the world we actually live in, annexing the Village I live in would make more public policy sense than raising property taxes, which gives you a sense of how clumsy those taxes are as an intervention.)
  • dleslie 4y ago
    LVTs are a panacea for the concerns paper wealthy. They fear taxes on stock trades, capital gains taxes, and other forms of paper wealth tax; a LVT lets them point at the homes of the masses and say "Look, there is an easy to track and tax asset class, sink your teeth into that and not my stock portfolio or trades."
    • imtringued 4y ago
      A lot of companies like McDonalds are just real estate companies in disguise, an LVT would wipe out the stock market.
    • tptacek 4y ago
      It just doesn't matter. Land value taxes aren't going to happen. We need to make smarter decisions with the policy levers we actually have, and not pretend we'll have levers we don't.
      • imtringued 4y ago
        You can't make smarter decisions downstream, you can only distribute the burden of the monopoly away from your interest group.
    • dan-robertson 4y ago
• m0llusk 4y ago
  These remarks about interest rates having an impact on real estate prices are not universally accepted.
• edmcnulty101 4y ago
  I think someones FIRST house should be property tax free up to a certain amount that is reasonably indexed to some home value inflation metric. Any houses or value after that should be taxed. I think that the government constantly threatening to take your basic shelter that that you PAYED FOR already and put you out on the street... even though.. I repeat.. you PAYED FOR THE PROPERTY ALREADY..is outright fascism.
• beefman 4y ago
  Threads about real estate are invariably overrun by clueless 20-somethings who think 'muh zoning' will let them afford property in the [elite metropolitan neighborhood]. Statistically none of you will be able to afford a home here; my advice is to leave while the leaving's good. Especially if you were lured here by some VC who sold you a metric ton of variance and went to the bank with the drift. But hey, they're on your side with the whole zoning thing. When you strip away the politics and bogus economics, house pricing is just the adult version of lunch table drama. That drama is actually a microcosm -- everyone in the cafeteria was selected at the real estate level. You may have been raised to think you could be elite, but only a small minority can be. And if you're downvoting comments because they imply you're not... It is cruel, but changing it would require far more drastic measures than proposed here.
  • Fauntleroy 4y ago
    I'd settle for home prices in [way out there suburb of a delapidated major urban area] to be relatively affordable. You might be surprised to know that many of the "twenty somethings" that make it out to the big city actually have brains inside their heads.
  • newaccount2021 4y ago
• anm89 4y ago
  No need for discussion I guess. Someone from the internet has the correct conclusion... Hard to take stuff like this seriously.
• EddieDante 4y ago
  What's the deal with Brock Whittaker's website at brooock.com, anyway? It only seems to have one page: <http://brooock.com/a/property-taxes-are-good http://brooock.com/a/property-taxes-are-good>. There's no home page, no list of other posts. Kinda disappointing, really, since I was curious to see what else this guy had to say.
  • brockwhittaker 4y ago
    sorry I just made this site this morning to post this article. it's just a simple node-http server! I don't write much :)
    • EddieDante 4y ago
      New, huh? Was't this yours, too? https://web.archive.org/web/20200822170417/https://brooock.com/predicting-market-returns/ https://web.archive.org/web/20200822170417/https://brooock.c...
      • brockwhittaker 4y ago
        yep! i just spun down that service and didn’t bother to use it again, i wanted something simpler.
        • EddieDante 4y ago
          @tdarb's pblog (https://pblog.xyz https://pblog.xyz) is pretty simple. It's just a shell script that builds a site and RSS feed with pandoc. The build system's a makefile.
• googlryas 4y ago
  But what do Chicagoans get from their high property taxes that New Yorkers don't get with their low property taxes? Services seem about similar in both places to me(though, there is a huge swath I don't have experience with, like services for the poor or school services).
  • SoftTalker 4y ago
    Rich Aldermen.
  • conjecTech 4y ago
    The tax burden is similar (maybe slightly lower in NY), but collected through different means. NYC has a city income tax, Chicago doesn't. If we're going to pick a means of collecting the same amount, encouraging good use of land and discouraging excess consumption seem like nice side effects.
    • googlryas 4y ago
      I actually like the concept of a city income tax - you don't get to use all the resources for free just because you take a bus in from across a river.
      • brockwhittaker 4y ago
        I'm not sure that's how it works—at least in the case of NYC. The ~4% tax only applies to those with residence within the city's limits. If you live in Westchester however and work in Manhattan, you escape the 4% income tax (but instead pay higher property taxes). https://tax.custhelp.com/app/answers/detail/a_id/571/~/i-don%E2%80%99t-live-in-new-york-city%2C-but-i-earn-income-there.-am-i-subject-to-a-new https://tax.custhelp.com/app/answers/detail/a_id/571/~/i-don...
• firloop 4y ago
  This article doesn't provide any reasons why a property owner should want lower property taxes; why would you want to constrain prices and prevent speculation? I don't own any property myself and am sympathetic to the idea of raising property tax, but many arguments for LVT/raising property taxes don't paint a convincing argument for why property owners should vote against their self interests.
  • newaccount2021 4y ago
  • brockwhittaker 4y ago
    This is totally my personal bias, but I'm unsure that speculation has a positive value in the housing market, and I think governments should largely try to ensure that as many people as possible can afford homes, rather than ensuring that people can profit off the sales of their homes. In the United States, people have long seen real estate as a path to wealth (unlike Japan, for example), so it's difficult to reason that people's primary homes shouldn't be their escape hatch into retirement (e.g. the dream of someone buying a house in 1980s Palo Alto and selling it in 2022).
  • int_19h 4y ago
    There isn't one. Land, and thus real estate, is an inherently limited pie, so any market disbalance like what we have right now can only be corrected by taking some of the pie away from those who have too much of it. The only argument you can make to the former is that it's fairer that way. If they don't find it persuasive at face value, you can remind that, once enough people are sufficiently desperate to reach for torches and pitchforks, property owners would lose a lot more that any such tax.
• intrasight 4y ago
  Where I live, the government only re-appraises every ten years. So it's a pretty crappy market signal.
• mr_beans 4y ago
• ahallock 4y ago
  Not if you're retired on fixed income. My parents' property taxes kept going up year after year in upstate NY -- one of the deciding factors when they moved. It's a shame because my dad put so much into that property.
• TimPC 4y ago
  The analysis doesn’t go far enough. If you want to stop speculation you should tax land not property.
• sinecure 4y ago
  There is so much incompetence and political game playing regarding property taxes. I work in commercial real estate development. We negotiated a TIF district in a small midwestern town to help redevelop their vacant mall. In theory, if we could redevelop the mall and fill it with new stores, the sales taxes and property taxes from this growth would greatly benefit the city over the long term and help finance this risky project. First we came into battle with the school district. They would not allow us to build apartments on the mall site because "renters don't contribute to property taxes for the school", even though the citizens of this town need rentals because not everyone can afford a home. It then came to light that the city had been paying the school district out of their operating budget... which is illegal, schools can only be funded by property taxes. But would any politician want to go to war with the school district because they had accidentally been paying them illegally with taxpayer dollars? No way, they'd be voted out for attacking schools. So the school district continues draining the operating budget from the city to this day, while also getting their share of property taxes. Enter the county assessor. We went back through all the assessment records and discovered that the county assessor had not re-assessed the commercial properties in the area for 8 years... meanwhile jacking taxes up on single family homes annually. Essentially they were giving businesses a freeze on property taxes while shifting the burden onto homeowners. If the county wasn't reassessing commercial real estate, than our TIF development couldn't demonstrate growth as the taxes would not change! So we tried to shake the hornets nest and let the county and city know that their taxpayers were being taken advantage of... What was the end result? Why had they not been reassessing commercial properties? Incompetence, the assessor was some idiot who was voted in because he had the "D" next to his name and did not know anything about assessing property taxes and argued that he was simply "too understaffed" to assess commercial properties for the last 10 years. Now imagine a whole country where massive, expensive errors like this can play out without anyone noticing for nearly a decade... it's frightening how broken, corrupt, or incompetent our government is in the United States.
  • jrm4 4y ago
    Sorry this was annoying and messy for you, but I look at many other countries and on balance this doesn't sound too bad, and certainly not "broken or incompetent" as if the US was on the verge of collapse because of things like this. If anything, this sounds like a system working, and you doing a bit of whining. Yeah, there's political game playing, that's called the price of localism and democracy.
• monksy 4y ago
  There is a lot of frustration over the blanket example they used for Chicago. Is Chicago cheaper than NYC/SFO? Yes.. does that mean it's affordable for the area? No. We have encountered quite a lot of inflation in the housing market due to people from the HLOCs moving in. It's screwing us over pretty badly. The prices are like that due to the labor market and that we've been a blue collar city for the longest time.
• mdcds 4y ago
  If speculation is the problem, then making expected return from real estate investments less than expected return from risk-free or low risk investments should fix it. Something like, if 10 or 20-year US Treasury bond pays more than you'd make being a landlord and you expect little to zero asset appreciation, then there is no incentive getting into real estate. And it's possible to discourage house flipping by introducing some sort of friction. Like a high tax of some sort that is applied only if you sell sooner than X number of years (let's say 5)
• always2slow 4y ago
  This article doesn't take into account the negative migration that's been happening from Cook county for the past two decades. Less demand means lower prices. Also the claim that Chicago even has high property taxes for housing isn't really true. See here: https://www.rosenfeldinjurylawyers.com/news/chicago-property-taxes/ https://www.rosenfeldinjurylawyers.com/news/chicago-property... and here: https://www.lincolninst.edu/sites/default/files/pubfiles/50-state-property-tax-comparison-for-2017-exec-summary.pdf https://www.lincolninst.edu/sites/default/files/pubfiles/50-... Currently trapped renting in a high property tax area because the monthly tax bill would be as high as the mortgage payment. This rent trap is starting to feel real permanent because any raise in the property tax just gets passed through to the renter when they raise the rent each year.
  • brockwhittaker 4y ago
    They label property taxes as an absolute value paid, rather than as a percentage. Illinois per the Tax Foundation had the second highest rate*. In fact, it speaks to Illinois' and Chicago's affordability** that with such a high marginal rate, their property taxes as a dollar amount are on-par with many other states. * https://taxfoundation.org/how-high-are-property-taxes-in-your-state-2020/ https://taxfoundation.org/how-high-are-property-taxes-in-you... ** https://resources.oxfordeconomics.com/hubfs/Housing_affordability_fell_in_Q2_and_is_likely_to_worsen.pdf https://resources.oxfordeconomics.com/hubfs/Housing_affordab...
    • always2slow 4y ago
      I'm not sure what you're saying, yes Illinois property taxes are high but that's mainly because of the collar counties around cook (https://www.civicfed.org/civic-federation/blog/2017-effective-property-tax-rates-collar-counties https://www.civicfed.org/civic-federation/blog/2017-effectiv...). It's hilarious that you think that high taxes has done anything good for Illinois. the state is bankrupt and in absolute shambles financially. The taxes are high on everything to try to dig out of the hole (which will never happen), effective sales tax in the Chicago area is now over 10%!! All of this nets reduced buying power so yeah, housing will probably be slightly cheaper on average but at the cost of standard of living all around. Your argument is absolutely clueless to the reality on the ground. High property taxes just look good on a spreadsheet.
• nayuki 4y ago
  > High property taxes are good Not necessarily. I've learned that at least in Toronto, the property tax rate is derived from the budget instead of the other way around. Let this article explain: https://torontoist.com/2016/12/how-property-taxes-work-toronto/ https://torontoist.com/2016/12/how-property-taxes-work-toron... > With sales and income taxes (which can only be levied provincially and federally) governments establish a tax rate, and then see how much money that brings in. > Each year municipalities decide how much money they need to bring in, and then set their property tax rates accordingly, to ensure they collect the requisite sum. They start from the total they need to raise, in other words, and work backwards to figure out what tax rate will yield that amount. Because of this "backward" system of tax calculation, if every single building doubled in value, the tax rate will be halved, and the city will receive the exact same revenue. So if you raise the property tax rate more than what it should "naturally" be, what will you do with the budget surplus? What will you spend it on?
• kkfx 4y ago
  I totally disagree because high property taxes means people would be pushed toward small and small, bad and worst houses. As a result instead of encouraging remote work and energy saving high taxes encourage crappy popular housing that waste much more energy AND can't be improved. At maximum I agree about taxing homes depending on their energy consumption (all sources) to encourage modern house development. But definitively not high taxes on properties. I'm Italian and I've seen the effect of them destroying the market AND pushing people toward crappier and crappier homes. It's not just a personal idea.
• karaterobot 4y ago
  > And perhaps, the best attribute: the money collected from property taxes doesn't evaporate from a local area like it does when borrowers pay higher interest rates. It goes back into the local neighborhood, leading to better local infrastructure and higher quality schools. This much is demonstrably false, at least where I live. I don't even pay property taxes to the city, I pay them to the county. There's no tie between those funds and my neighborhood. Then, a lot of the taxes are passed from the county up to the state as well, where it's further spread out.
  • notacoward 4y ago
    > I don't even pay property taxes to the city, I pay them to the county. The county is still a lot more local than a bank that might have an HQ across the country and is barely accountable even there. Also, most people's property taxes do go to their town or city, so your sample-of-one is not really a basis for a policy statement.
    • karaterobot 4y ago
      I was responding to the article's incorrect statement that the money stayed in your neighborhood, which is not correct in my case. I say "my case", but it's the case for everyone who lives in my county, the 12th most populous in the nation. Probably true for others as well. https://kingcounty.gov/council/budget/budget_basics.aspx https://kingcounty.gov/council/budget/budget_basics.aspx
• goatcode 4y ago
  Here's a crazy idea: 0% for primary residence, 50% for income properties (rentals, etc.). Will it kill renting? Heck no, not for property owners who live in one of their own units, at least. It might affect individuals and entities who hoard and exploit people, though.
  • deleted 4y ago
    [deleted]
• pessimizer 4y ago
  Funding local public schools through property taxes is terrible, and makes sure that kids from wealthier neighborhoods get better public schools. Kids are a special case; we even expect people without kids to pay for kids. Public education should be uniform and high-quality, not dependent on local political dynamics and neighborhood wealth (and wealth disparities.)
  • rcpt 4y ago
    Where does it happen like that? I. California we stopped local school funding with Serrano v Priest 50 years ago
    • jdhawk 4y ago
      Texas, but its more complex because we distribute tax revenue from wealthy districts to less wealthy districts. Its imperfect, to say the least.
• freedude 4y ago
  Coming from a state with a higher property tax rate I can qualify this by saying higher is not better. Taxes are always a disincentive. While the author claims it is a disincentive to sitting on a property and is comparing it to the effect on price like the FED's interests rates, these comparisons are myopic. He misses the bigger picture of longevity of private property ownership, the Constitutional protections of a property owner, and the inevitable results of the state seizing the property for back taxes. The long term benefits of the first two are long proven and the cold destruction of a member of a community the result of the last. Oh yeah, and the higher tax gets passed to the renter/leasee in higher rents and is a further disincentive to usage and investment.
  • curious_cat_163 4y ago
    Agreed on the taxes being (at least partially) passed on to renters in a typical case. However, don’t understand how you are linking constitutional protection of property ownership with tax rates… it is obviously not an absolute because we do pay property taxes… so this is a matter of degrees. Free society chooses to find the right level. It does not imply negation of bill of rights…
• djfobbz 4y ago
  Said no one EVER!
• ketchupdebugger 4y ago
  property taxes are used to pay for services that the local government provides. when property taxes are high, it means that either the local government is proving more services, the local government is in debt and needs to raise taxes to finance its debt, or the cost of those basic services has risen. At the end of the day your local government needs to spend almost every penny it gets. If they have extra money, they are going to spend it on stupid things like tanks for the police. High property taxes will make housing cheaper, but it wouldn't make housing affordable. Sure that house might only costs 100k but with a 2k per month property tax, no one can afford it.
  • parineum 4y ago
    Property taxes paying for local services keeps poor people poor. I don't understand why people think this is ethical. Property tax is possibly the worst way to fund the government. The only thing it's really good at is imposing a market force. It's largely regressive. In fact it's almost identical to gas tax. All flat taxes are regressive.
    • ketchupdebugger 4y ago
      on the contrary, property tax is actually a good way for people to pay for what they voted for. If your town voted to increase the education budget, your property tax directly goes into that. You are not paying for something that your town did not vote for. Property tax can be regressive within a community, but can often be progressive within a county/state. Different towns can have different property tax rates. Rich people would actually prefer a higher property tax to a certain degree to keep the poor out. If the avg property tax is 2k a month, then everyone living there needs to make at least 6 figures.
      • parineum 4y ago
        > on the contrary, property tax is actually a good way for people to pay for what they voted for. It's also a great way for poor neighborhoods to not be able to afford what they need.
• pmontra 4y ago
  The house where one lives: no taxes. Other houses, tax them a lot especially if they are not rented.
• killjoywashere 4y ago
  Brock, would you please date your articles?
• crikeyjoe 4y ago
• curious_cat_163 4y ago
  I would want to see statistical backing for this. Kindly share if you know of any reasonable models that have studied this. — FWIW: Chicago has high property tax rate and it does seem to correlate to relatively steady median price movements. But that is just one example… There are likely other factors at play in Chicago as well: number of units of supply per capita and quality of public transportation come to mind as two that might have some bearing on housing prices.
• clintonwoo 4y ago
  I agree with this article, housing shouldn't be an "investment" but rather a place to live and have a good life. By taxing it, it provides disincentive for people to use it as an income generating or speculative asset. We shouldn't view housing as a way to "get rich" but housing actually provides much better utility if it's price is stable and not prone to boom bust cycles. Since more people would be able to buy at any given time for their budget if prices stay low.
• veritas20 4y ago
  it saddens me that we have not put more thought into this topic and we constantly put our education, safety, and services on the economic roller coaster. no matter how much your home is worth today or in ten years you and other in the community want a standard level of education, safety, and services from your local governments. this should be priced as a service based on the cost to provide it to the members of the community and not based on dynamically changing home values property taxes should have a baseline cost to cover the essential services (schools, critical infrastructure, safety, etc.) that is the same for everyone (no exemptions) and a variable cost for the non-essential services (parks, beautification projects, etc.) (very limited exemptions) that can be based on the value of your home or land this way the essential services are always funded and not impacted by economic downturns or property appraisal disputes/challenges and local governments don't have to play the game of increase the millage rate to make up costs for essential services
• abeppu 4y ago
  If you want to tamp down on speculation, can't we be a little more creative and targeted than just high vs low property tax rates? - Some cities are already getting into vacancy taxes; here the problem seems to be enforcement. No one's going door to door in luxury condo buildings looking for empty ones. - Can a tax due when a property is sold be based on how long the seller owned the property? If you lived there for 20 years and now you're moving to downsize, you pay a low rate. If you held it for 9 months to renovate and flip it, pay a high rate. - Can a tax rate due when a property is sold be based on the number of homes the seller has been purchased in the past 5 years? If you've been a resident homeowner, low rate. If you're a development company bought subdivision land and is now able to sell dozens of houses, low rate. If you're a speculator who has bought several homes, and are flipping them, high rate.
  • throwaway742 4y ago
    The problem is once you start making complex rules people will start finding loopholes and ways to work around it. Like you pointed out vacancy taxes are very difficult to actually enforce. If taxes are based on how long you have owned the property maybe instead of selling the property I give you a transferable 20 year rent to own lease or create a corporation that owns the property and sell you that corporation so that the ownership never changes. If taxes are based on how many properties you purchase in a year then maybe you create a separate corporation that purchases each property. No single entity has purchased more than one home. I am not a lawyer and these examples probably aren't that good, but I think you get the point. The simpler the rules are the harder they are to work around.
    • abeppu 4y ago
      I don't think vacancy taxes are _actually_ hard to enforce, but I think there are a lot of noisy objections from people who don't want them enforced, and that can be enough to sway municipal government. I agree that simpler rules are generally harder to work around. _However_, I notice that argument is almost always made to claim that governments shouldn't try to change behavior in line with the preferences of their electorate. Tax laws have loopholes, regulations have loopholes and push jobs and industries overseas, etc. The logical end point seems to be that democratic processes are doomed to be ineffective and we should just trust everything to the invisible hand of the market. What if the real problem is that the mindset that improving policy is so hard that governments shouldn't even try, itself dooms us to bad policies? What if 20 years ago we had all said, "making complex rules to identify and block spam emails is too hard; there will always be some way for the spammers to get through. So let's not waste resources on it."
• fleddr 4y ago
  I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Next: "This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York." How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? If so, why not just get rid of speculative buying (simply make it illegal)? What does it have to do with property tax for ordinary citizens? And what on earth does Chicago have to do with San Francisco or New York?
  • negamax 4y ago
    What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check
    • cryptonector 4y ago
      That can be right in the short term, but in the long term you'd expect developers to stay out of the market, so how is it that Chicago has a "glut of high quality housing at very low prices"?
      • paconbork 4y ago
        My guess is that this probably indicates that the primary obstacle to construction currently isn't developer capital. It could be that housing construction is still profitable, as there's comparatively less political resistance and less of the budget has to go to legal fees and bribes. In the interest of being intellectually honest though, that's probably not the full story. It's worth pointing out that Chicago's population peaked in the 50's and that property taxes were probably lower back then. Also worth pointing out that there's a lot of directions for sprawl to help meet housing demand. I actually grew up in Indiana and my dad worked in Chicago. We lived in Indiana because the property tax was significantly lower even though housing prices were comparable.
• cryptonector 4y ago
  In Texas property tax functions as an income tax by proxy, as the state lacks an income tax but redistributes property tax monies from rich school districts to poor ones. Therefore property taxes are high. Well, high compared to many other states, though not compared to, say, New Jersey. This is not really healthy.
• jmyeet 4y ago
  This is one area where (I hate to say it) the red states have tended to do a better job than the blue states. Take Texas as an example. Up until this last year at least, Texas had relatively low property values but high property taxes. But high property taxes on a $200,000 house aren't the end of the world. But here's a big one: in Texas, seniors (65+) can defer their property taxes to be settled upon their death. This allows seniors to stay in their house if they really want but incentivizes seniors to downsize to avoid passing on that liability onto their children. This is exactly what you want. Compare that to California, for example. "But what about the Seniors?" led to Prop 13, which was a massive tax giveaway to Disney and affluent property holders. Capping property taxes deprives the state of taxes to fund services for no good reason. Even worse, when your children inherit that house, they inherit the house on a stepped up basis (meaning they pay no capital gains tax and the capital tax base gets reset to the market value so if you sell immediately you won't pay any CG tax) and children and grandchildren can inherit the artifically low property tax rates. New York has a different set of problems. A big one is that single family homes are subsidized. A $1m SFH will pay less than half the property tax of an equal value condo. And there's all sorts of caps on property taxes on SFHs too. Additionally a $100m condo only pays about 10-15x the property tax of a $1m condo in NYC. I'm a big fan of making property speculation less lucrative. High property taxes are a good thing. We need to stop giving away money under the auspices of "but what about the Seniors?"
  • twobitshifter 4y ago
    Instead of taxes, I prefer depreciation terms (see japan), which incentivizes new construction and does no harm to those that continue to occupy the land in old age. you’ll also find that older houses go down in value as expected.
  • throwaway_4ever 4y ago
    > children and grandchildren can inherit the artifically low property tax rates Grandchild -> child is readjusted to market rate property taxes. Only parent -> child IFF both are and continue to be primary homes, does it receive the previous tax treatment.
• jacksnipe 4y ago
  I always thought the low property taxes in NYC were twofold: 1. The absolutely staggering incomes at the top top end in NYC make income taxes a more effective revenue source. 2. In addition to property taxes, if you own an apartment in a building, there are a lot of other monthly costs. As I’m writing to this, it occurs to me that they may be completely equivalent to the maintenance costs on a house, but I suspect that condo and co-op boards are not nearly that efficient.
• social_quotient 4y ago
  Maybe instead of messing with the money via the fed and then finding volatility in housing we should just end the fed. Housing becomes a safe haven asset to avoid the other ramifications of fed policy namely inflation and the machinations of policy qe/qt, contractions and tightening. Yes it’s not in a vacuum but… we didn’t get here by accident. Taxing and taxing higher on property is an assault on our ability or “own” property which is a freedom. Free societies have property ownership. Higher taxes whilst monetary devaluation seems like the system now wants to take away our ability to own things. https://en.m.wikipedia.org/wiki/End_the_Fed https://en.m.wikipedia.org/wiki/End_the_Fed https://thehill.com/opinion/finance/570895-the-debate-we-should-be-having-about-the-federal-reserve/amp/ https://thehill.com/opinion/finance/570895-the-debate-we-sho...
  • BirdieNZ 4y ago
    Right now we have lots of income tax, but most countries have very low land value tax/property tax. This means you don't "own" all the fruits of your labour, but you "own" land, which derives its value from the labour of society as a whole around the land. The Georgist proposal is that you should own all the fruit of your personal labour (no income tax) but that the proceeds of the labour of society should be returned to society at large, through a land value tax that captures the rental value of the land. The current status quo in most countries is that you can own a piece of land in the middle of a metropolis and do no labour, and yet reap significant reward. This is in essence a theft from society, as the citizens of the metropolis are labouring and building capital that creates value for the piece of land, yet the land-owner proportionally does very little to create value for their land. If you want to discourage theft and encourage keeping the fruits of your labour, the Georgist proposal is fantastic.
• jelliclesfarm 4y ago
  I have generally found it to be true that only those who don’t pay property taxes..that is, those who don’t own property by virtue of paying for it and/or have inherited property..are usually the ones who clamour to increase property taxes as a punitive measure. In other words, the assetless classes support taxing those with earned fixed assets. When reframed this way, the article reads to me as a high falutin petty and bitter whine. All taxes are theft. The only justifiable tax is a tax on consumption and perhaps a tax on children because population increases exponentially. That would take care of all the bundle of taxes and simplify the tax code.
  • imtringued 4y ago
    No it wouldn't. You would still end up with inequality and sprawl.
• exabrial 4y ago
  Ok what if you're a poor person and you want to buy a home in a rich neighborhood? Ope, guess you can't! Government is going to fine you for wanting something better for yourself.
• dubswithus 4y ago
  All homeowners are real estate speculators. Wouldn't you also consider anyone buying a "starter home" a speculator? Their goal is to continuously flip their house.
  • babypuncher 4y ago
    I bought my starter home to live in for 5 years while I continued building my career, not to flip.
    • dubswithus 4y ago
      You bought it to live in for 5 years and then you flipped it for more money than you bought it? That's the definition of successful speculation.
      • babypuncher 4y ago
        The difference is turning a profit was not my primary motivation, owning my primary residence was. If making money was my top priority then there are several other houses I looked at that I would have bought instead.
        • dubswithus 4y ago
          Imagine someone offered you a house but the agreement was that you could only sell it for what you bought it for. I doubt you would buy it considering there are other options on the market where you could profit in the future. It's 100% speculation. It's part of the package.
          • babypuncher 4y ago
            I'm not sure what this absurd hypothetical has to do with anything. I do not believe anyone is proposing such a requirement. Personally I am in favor of systems that discourage speculative investment but encourage homeownership. This can be done without indiscriminately punishing people for realizing gains in the market value of their domicile. One such mechanism could be offering incentives or tax breaks that require the buyer to use the home as their primary residence for a certain amount of time. I think having the opportunity to own the land you personally live on is a right. Owning land on which others reside but not yourself should be considered a privilege, and privileges always come with strings attached.
• DevKoala 4y ago
  > This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York. That is because it is Chicago and not SF. Not because of taxes.
  • bergenty 4y ago
    Well Chicago is one of the best cities in the world to live in based on rankings so I don’t know what you’re implying here.
    • DevKoala 4y ago
      My point is that there are a dozen factors that account for the difference in housing costs. The median income, the population density relative to the housing inventory, the weather, the demand, etc.
• RichardHeart 4y ago
  LOL @ credit is too cheap, so increase taxes instead of stop overprinting.
  • imtringued 4y ago
    "stopping overprinting" requires negative interest rates.
• 999900000999 4y ago
  Like most things, this is a complicated problem. The only way to actually make a good cheaper is to produce more of it. But home owners don't want their homes to stop increasing in value. If their was a bill in Congress to magically double the housing supply, I guarantee you it wouldn't pass. Plus passing a property tax hike won't get you re elected.
• epa 4y ago
  Chicago also has a colder winter than SF and NYC, i didnt see the author price that in their conclusion
• raymondh 4y ago
  My experience of high property taxes is that it no longer feels like you own a home. You pay rent on it forever. At any time the rent can rise to more than you can afford. I own my home outright but likely won't be able to stay when I retire.
  • Clubber 4y ago
    Agree. This seems like a trick to keep people working forever. I think homesteads should be tax free and just second or speculative homes.
• krnlpnc 4y ago
  It seems like the higher taxes should be applied to non primary residences, along with perhaps some kind of penalty built in for holding the property for only a short period of time.
• Proven 4y ago
• FpUser 4y ago
  What a piece of BS. High ever rising property taxes are good at pushing older people out of their houses. It is fucking immoral. If the author is so concerned about speculative investors (yes they are huge problem) then this problem must be addressed separately. Not difficult to do at all.
• silver-arrow 4y ago
  No, property taxes are completely immoral.
• ByersReason 4y ago
  Property values for tax calculation purposes are not reassessed round here so you pay on whatever the assessed value was when your bought the property. Sounds nice, but what actually happens is that baby boomers, who bought their houses ages ago, pay essentially no tax on houses. Meanwhile, more recent residents get to foot the bill with sky high property taxes. I know people with previously purchased houses of the order or 5 (yes 5) houses that they are renting out for outrageous rents - all with very low property taxes on them. Please make the normal tax rate lower and actually tax everyone.
• smallmouth 4y ago
  No. High property taxes are NOT good.
• Blackstrat 4y ago
  Generally, high taxes on anything are bad. Taxation facilitates a transfer of assets from the productive sector to the non-productive sector, e.g., from the homeowner to the government. The recipient then uses the money to further their plans without regard to the taxpayer. It has always been that way. Using econo-speak doesn't make it any less true. Looking at cities like NYC, eliminating rent control would do more for the housing market than raising property taxes.
• eddof13 4y ago
  Sales/income tax I can agree with. Property/estate inheritance taxes I do not.
• cafard 4y ago
  They are a fine way to build up a solid conservative voting bloc among the elderly. They have property that has appreciated, but their income is well down (usually) from their peak earning years.