4 ms·

Renters do not pay property tax in the US. That liability is entirely on the owner.

rahimnathwani 2y ago
Your statement is technically correct. It's also technically correct to say that diners, not restaurant owners, pay sales taxes. The reality is more nuanced. Introducing a sales tax on restaurant meals affects both diners and restaurant owners: restaurant owners can't pass on the whole increase to diners, and diners cannot afford to go out as much. Similarly, property tax levels influence landlords' decisions to enter or exit the rental market, impacting housing supply and, consequently, tenant rents. 'Paying' a tax has two distinct meanings: - Who bears the economic burden after the tax is introduced - Who is legally responsible for paying the tax These two concepts are not always aligned.
- fallingknife 2y ago
  This is a silly distinction because by that standard you could equally say that my employer pays my rent because they are the source of income which I use to pay it. Property tax in the US is a liability of the owner. This is in contrast to other systems like the UK where it is a liability of the occupant.
  - rahimnathwani 2y ago
    The incidence of taxation is a well-studied concept in economics, with a solid theoretical foundation and empirical evidence backing it. You dismiss its application as a 'silly distinction' and repeat the fallacy that the incidence of taxation falls on the party who is legally liable. If you don't believe me, and don't want to read up on 'tax incidence', consider what would happen if sales tax were paid by retailers instead of customers. Would the flow of money change at all? Would any party be worse off or better off?
    - lazide 2y ago
      This is an entirely ridiculous argument. Who actually ‘writes the check’ is actually important in a discussion about who writes the check, despite the fungibility of money. Renters don’t pay the owners property taxes in the US, even if they pay rent. Full stop. Why this matters is because in some cases, owners can end up ‘under water’ with even rent not covering property taxes in the US. In other places, that may not be possible.
      - eastbound 2y ago
        No, really, it has been studied, taxes affects both supply and demand. It’s one of the first chapters of any microeconomics book.
        lazide 2y ago
        you might want to actually read my comment. the details matter.
        arcticbull 2y ago
        Well, I get charged sales tax when I buy something at a store, itemized on my receipt. But the store writes the check to the state, and I write the check to the store. Did I pay or did the store? And why does it differ from a renter? Are we splitting hairs over itemized vs unitemized receipts? And what about a retail store in England where the VAT isn’t itemized? Did I pay or did the store?
        lazide 2y ago
        No landlord in the US itemizes, or even lets you see the property tax they are paying anywhere they can control. You can dig it up if you know where to look though, usually, from public sources. Same with the landlords financing costs. And it varies between much lower than you would expect, to much higher - and doesn’t generally change the amount they can charge in rent between the two scenarios. Though of course, landlords will go broke eventually if on average rent doesn’t exceed property taxes, finance costs, and other costs they pay on average. Competitiveness/survival between landlords over time will often hinge on their ability to pick the best options and structure/time this well to minimize their costs while maximizing their returns. A much harder problem than I think anyone who isn’t in that game realizes. Which is why successful property management and investment strategies vary quite a bit depending on these specific details, like who pays what, when, and under what circumstances. So all I’m getting from what you’re saying is you don’t actually understand what you’re talking about concretely, and you’re going off a first year economics textbook instead of actual experience. Am I correct, or not?
- zajio1am 2y ago
  I appreciate your nuance, as mixing up economic burden and legal responsibility for taxes is a common fallacy in discussions. But specifically for rents in supply-constrained cities, i would guess that supply is highly inelastic, therefore market rate of rents is already as high as acceptable by renters (i.e. determined by demand curve) and therefore property tax would not affect it much.
deleted 2y ago
[deleted]
jjav 2y ago
> Renters do not pay property tax in the US. There's a simple way to visualize why is not true: You're renting a property for $1000/mo. Whatever the owner is paying for property taxes, you don't know. Then, property taxes go up by $200/mo. Do you think your rent won't go up by at least $200/mo as a direct consequence of the tax increase? Because it will. Because the renter is of course paying for all costs, including those taxes.
- fallingknife 2y ago
  No it won't. The rent will not go up until the lease is up. And at that point it still won't necessarily go up by 200 bucks because that's just not how markets work.
- kaibee 2y ago
  > Then, property taxes go up by $200/mo. Do you think your rent won't go up by at least $200/mo as a direct consequence of the tax increase? Because it will. Because the renter is of course paying for all costs, including those taxes. So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..?
  - freejazz 2y ago
    Could he have?
  - jjav 2y ago
    > So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..? Because you don't pre-date inflation. It is the same as asking why the supermarket doesn't raise the price of milk to what inflation estimates say it'll probably be next year.
  - munksbeer 2y ago
    >So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..? Look at it a different way. If the $200/month was a new tax that all renters had to pay, what would happen?
NoMoreNicksLeft 2y ago
Some say that the owners should be permitted to pass that tax bill along to the renter in the form of increased rent. Can't someone think of the poor starving landlords? Seriously though. Renters pay the property tax, even if they don't get to see the bill.

Your statement is technically correct. It's also technically correct to say that diners, not restaurant owners, pay sales taxes. The reality is more nuanced. Introducing a sales tax on restaurant meals affects both diners and restaurant owners: restaurant owners can't pass on the whole increase to diners, and diners cannot afford to go out as much. Similarly, property tax levels influence landlords' decisions to enter or exit the rental market, impacting housing supply and, consequently, tenant rents. 'Paying' a tax has two distinct meanings: - Who bears the economic burden after the tax is introduced - Who is legally responsible for paying the tax These two concepts are not always aligned.

fallingknife 2y ago
This is a silly distinction because by that standard you could equally say that my employer pays my rent because they are the source of income which I use to pay it. Property tax in the US is a liability of the owner. This is in contrast to other systems like the UK where it is a liability of the occupant.
- rahimnathwani 2y ago
  The incidence of taxation is a well-studied concept in economics, with a solid theoretical foundation and empirical evidence backing it. You dismiss its application as a 'silly distinction' and repeat the fallacy that the incidence of taxation falls on the party who is legally liable. If you don't believe me, and don't want to read up on 'tax incidence', consider what would happen if sales tax were paid by retailers instead of customers. Would the flow of money change at all? Would any party be worse off or better off?
  - lazide 2y ago
    This is an entirely ridiculous argument. Who actually ‘writes the check’ is actually important in a discussion about who writes the check, despite the fungibility of money. Renters don’t pay the owners property taxes in the US, even if they pay rent. Full stop. Why this matters is because in some cases, owners can end up ‘under water’ with even rent not covering property taxes in the US. In other places, that may not be possible.
    - eastbound 2y ago
      No, really, it has been studied, taxes affects both supply and demand. It’s one of the first chapters of any microeconomics book.
      - lazide 2y ago
        you might want to actually read my comment. the details matter.
        arcticbull 2y ago
        Well, I get charged sales tax when I buy something at a store, itemized on my receipt. But the store writes the check to the state, and I write the check to the store. Did I pay or did the store? And why does it differ from a renter? Are we splitting hairs over itemized vs unitemized receipts? And what about a retail store in England where the VAT isn’t itemized? Did I pay or did the store?
        lazide 2y ago
        No landlord in the US itemizes, or even lets you see the property tax they are paying anywhere they can control. You can dig it up if you know where to look though, usually, from public sources. Same with the landlords financing costs. And it varies between much lower than you would expect, to much higher - and doesn’t generally change the amount they can charge in rent between the two scenarios. Though of course, landlords will go broke eventually if on average rent doesn’t exceed property taxes, finance costs, and other costs they pay on average. Competitiveness/survival between landlords over time will often hinge on their ability to pick the best options and structure/time this well to minimize their costs while maximizing their returns. A much harder problem than I think anyone who isn’t in that game realizes. Which is why successful property management and investment strategies vary quite a bit depending on these specific details, like who pays what, when, and under what circumstances. So all I’m getting from what you’re saying is you don’t actually understand what you’re talking about concretely, and you’re going off a first year economics textbook instead of actual experience. Am I correct, or not?
zajio1am 2y ago
I appreciate your nuance, as mixing up economic burden and legal responsibility for taxes is a common fallacy in discussions. But specifically for rents in supply-constrained cities, i would guess that supply is highly inelastic, therefore market rate of rents is already as high as acceptable by renters (i.e. determined by demand curve) and therefore property tax would not affect it much.

deleted 2y ago

[deleted]

jjav 2y ago

> Renters do not pay property tax in the US. There's a simple way to visualize why is not true: You're renting a property for $1000/mo. Whatever the owner is paying for property taxes, you don't know. Then, property taxes go up by $200/mo. Do you think your rent won't go up by at least $200/mo as a direct consequence of the tax increase? Because it will. Because the renter is of course paying for all costs, including those taxes.

fallingknife 2y ago
No it won't. The rent will not go up until the lease is up. And at that point it still won't necessarily go up by 200 bucks because that's just not how markets work.
kaibee 2y ago
> Then, property taxes go up by $200/mo. Do you think your rent won't go up by at least $200/mo as a direct consequence of the tax increase? Because it will. Because the renter is of course paying for all costs, including those taxes. So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..?
- freejazz 2y ago
  Could he have?
- jjav 2y ago
  > So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..? Because you don't pre-date inflation. It is the same as asking why the supermarket doesn't raise the price of milk to what inflation estimates say it'll probably be next year.
- munksbeer 2y ago
  >So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn't because..? Look at it a different way. If the $200/month was a new tax that all renters had to pay, what would happen?

NoMoreNicksLeft 2y ago

Some say that the owners should be permitted to pass that tax bill along to the renter in the form of increased rent. Can't someone think of the poor starving landlords? Seriously though. Renters pay the property tax, even if they don't get to see the bill.