7 ms·

Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, b

Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.

rch 13y ago
It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
- rwmj 13y ago
  Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html
  - bolder88 13y ago
    Why not just go the whole hog and tax all property. eg you buy a laptop, you have to pay the government a tax each year to keep it. Why just apply it to houses? May as well just prohibit people from owning property. Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it. Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
    - rwmj 13y ago
      In effect we do have a property tax on laptops, but for convenience you pay it up front (VAT @ 20% of the value). It pays for all the same things such as helping the police to defend your laptop from being stolen, and paying for the ports and roads along which your laptop was imported (as well as the national debt which was increased when you imported it). Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
      - robk 13y ago
        Good luck getting any value from the UK police of your laptop is stolen.
    - asmithmd1 13y ago
      In Massachusetts they do: "All personal property situated in the commonwealth is subject to tax, unless specifically exempt by law" http://www.mass.gov/dor/local-officials/municipal-finance-law/frequently-asked-questions-personal-property.html http://www.mass.gov/dor/local-officials/municipal-finance-la...
      - brightsize 13y ago
        True. When I lived there in the 80s, I remember getting fairly hefty annual bills for excise tax on my car. I don't know if they still do that or what classes of property were routinely taxed at the time.
    - WildUtah 13y ago
      This is the law in Utah and was applied to all businesses up until a few years ago. I don't think they ever tried to property tax the personal possessions of individuals, though that was the law. You were required to declare your chairs and desks and tables, calculators, paper and pens, books, bicycles, cameras and computers, and everything and look up its market value and then pay the usual tax just as if it were real estate. You were required to do it every single year. And it's still the law for property above an exempt amount, but no longer applies to every paperclip like it used to. That law is crazy, of course. Real estate is a big expensive immovable item that creates limits on the level of corruption and record keeping headaches so it's the best target for property taxation. Maybe really big vehicles like cars and airplanes and boats could be targets, too, if they have a home base, but even then you can see problems. And finally, Henry George [0] points out that the ideal property tax to promote investment, limit corruption and cheating, allow fair administration, limit any kind of dead-weight loss [1], and generate reasonable revenue would be a tax on land value only. Buildings, improvements, vehicles, and personal property should be exempt and only the land's location, area, and fixed geology/hydrology/soil conditions should matter. [0] http://en.wikipedia.org/wiki/Georgism http://en.wikipedia.org/wiki/Georgism [1] http://en.wikipedia.org/wiki/Excess_burden_of_taxation http://en.wikipedia.org/wiki/Excess_burden_of_taxation
  - to3m 13y ago
    Comprehensive (UK-focussed) site dealing with arguments against a property tax in the form of a tax on the imputed rental value of land: http://kaalvtn.blogspot.co.uk/ http://kaalvtn.blogspot.co.uk/ (Note that property owners would NOT take a larger share of the burden; as with council tax, responsibility for payment would fall to tenants, to the greatest extent that market forces will permit. For council tax, that is currently "tenant pays all of it". No reason to assume a land value tax would be different.)
  - fnordfnordfnord 13y ago
    I don't think I like that idea. Sounds like a good way to throw Native Americans, Amish, and others who can't or don't wish to participate in the traditional labor force off of their land. disclosure: I am an ordinary, average, white, property owner, not Amish (Atheist, actually).
    - Daishiman 13y ago
      At some point, you cannot realistically expect your interests as a class if you refuse to participate in the political system, for better or worse. The notion that we can be isolated within a nation and refuse to take collective responsibility is a dream that has never had much foundation in reality.
  - hansjorg 13y ago
    A property tax will also make sure that the landowning class either makes productive use of their land or loses it, rather than hoarding it as an anti-competitive measure.
  - rch 13y ago
    Excellent reply, and your position is completely reasonable. I would submit, however, that there is more variability in how and where people choose to live than your views can completely accommodate.
  - ksrm 13y ago
    Absolutely! A land value tax (on the base value of the unimproved land) is an idea that goes back hundreds of years. It has many attractive properties when compared to other taxes like sales and income tax. It's a shame it hasn't really ever taken off. http://en.wikipedia.org/wiki/Land_value_tax http://en.wikipedia.org/wiki/Land_value_tax
    - dnautics 13y ago
      There's no way the government will use the appraisal system to screw over the poor!
  - dnautics 13y ago
    >Property taxes are very progressive and we should absolutely have more of them. The naivete, here, is of course, that the wealthy don't have more resources to protect themselves against property taxes or reduce their burden, or deal with enforcement, or mitigate corruption by the state. In reality though, there is no "rules scheme" you can construct that will be as progressive as you want. You'll tack on more rules to tweak it to satisfy your conscience that you're not hurting the poor. The wealthy will hack this and find a loophole, and even if they don't, the burden isn't so terrible for them. Slight infraction by the poor will be come down upon disproportionately by the government (because the cost of enforcement against the poor is lower because of lowered risk of having it fought in the courts) and 'an example must be set'. Although your property tax was designed to be 'progessive', it instead, wound up being a barrier that is difficult to surmount. It is naive to think that the state will be this hyper-logical ultra-fair machination. It's not, and it never will be. Instead of socially engineering through the state, everyone would have been far better off if you helped the poor by reaching into your own pocket. But, of course if one is selfish, that's not going to happen - and it's far easier instead to project one's own selfishness onto other people, extrapolate onto all of society and use the state to run your charity for you.
    - rwmj 13y ago
      Property is harder to hide than other forms of wealth. You can hide your money in an offshore bank account. It's pretty hard to hide land. If there's a piece of land, someone should be paying the land tax on it (if whoever owns it is hiding, the people can grab it back). So land tax is fair and progressive (the more land you own, the more tax you pay).
      - dnautics 13y ago
        Gaming the property tax system is not a binary proposition. How do you assess its value? How does the state choose whom to go after? Did you even read the WaPo article? Do you not see how the existence of a property tax has come around to hurt exactly the most vulnerable population (and in this case, through no directed malice) I promise you, people living in Palisades (the richest part of DC) are not worried about property tax liens because they can pay people to deal with paying the taxes (either legally, say hiring an admin, or extralegally). It's not progressive because the bureaucracy and the hammer of the state causes a greater fundamental inconvenience to those of less means than to those of greater means. As to the hammer, do you think the DC government would have sent "armed US marshals" to recover the house if it were in the Palisades? Why or why not?
xsmasher 13y ago
The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt. What else could the government do, put the homeowner in debtor's prison?
- muzz 13y ago
  It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.
  - xsmasher 13y ago
    You are correct, they buy the lien and have to foreclose later. I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general https://www.tax-sale.info/html/index/page/general SPOILER: > The properties are then sold by deed at auction. Not much of an improvement over the lien process; just a faster foreclosure.
- caf 13y ago
  In some places they would garnish the debtors income.

rch 13y ago

It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?

rwmj 13y ago
Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html
- bolder88 13y ago
  Why not just go the whole hog and tax all property. eg you buy a laptop, you have to pay the government a tax each year to keep it. Why just apply it to houses? May as well just prohibit people from owning property. Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it. Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
  - rwmj 13y ago
    In effect we do have a property tax on laptops, but for convenience you pay it up front (VAT @ 20% of the value). It pays for all the same things such as helping the police to defend your laptop from being stolen, and paying for the ports and roads along which your laptop was imported (as well as the national debt which was increased when you imported it). Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
    - robk 13y ago
      Good luck getting any value from the UK police of your laptop is stolen.
  - asmithmd1 13y ago
    In Massachusetts they do: "All personal property situated in the commonwealth is subject to tax, unless specifically exempt by law" http://www.mass.gov/dor/local-officials/municipal-finance-law/frequently-asked-questions-personal-property.html http://www.mass.gov/dor/local-officials/municipal-finance-la...
    - brightsize 13y ago
      True. When I lived there in the 80s, I remember getting fairly hefty annual bills for excise tax on my car. I don't know if they still do that or what classes of property were routinely taxed at the time.
  - WildUtah 13y ago
    This is the law in Utah and was applied to all businesses up until a few years ago. I don't think they ever tried to property tax the personal possessions of individuals, though that was the law. You were required to declare your chairs and desks and tables, calculators, paper and pens, books, bicycles, cameras and computers, and everything and look up its market value and then pay the usual tax just as if it were real estate. You were required to do it every single year. And it's still the law for property above an exempt amount, but no longer applies to every paperclip like it used to. That law is crazy, of course. Real estate is a big expensive immovable item that creates limits on the level of corruption and record keeping headaches so it's the best target for property taxation. Maybe really big vehicles like cars and airplanes and boats could be targets, too, if they have a home base, but even then you can see problems. And finally, Henry George [0] points out that the ideal property tax to promote investment, limit corruption and cheating, allow fair administration, limit any kind of dead-weight loss [1], and generate reasonable revenue would be a tax on land value only. Buildings, improvements, vehicles, and personal property should be exempt and only the land's location, area, and fixed geology/hydrology/soil conditions should matter. [0] http://en.wikipedia.org/wiki/Georgism http://en.wikipedia.org/wiki/Georgism [1] http://en.wikipedia.org/wiki/Excess_burden_of_taxation http://en.wikipedia.org/wiki/Excess_burden_of_taxation
- to3m 13y ago
  Comprehensive (UK-focussed) site dealing with arguments against a property tax in the form of a tax on the imputed rental value of land: http://kaalvtn.blogspot.co.uk/ http://kaalvtn.blogspot.co.uk/ (Note that property owners would NOT take a larger share of the burden; as with council tax, responsibility for payment would fall to tenants, to the greatest extent that market forces will permit. For council tax, that is currently "tenant pays all of it". No reason to assume a land value tax would be different.)
- fnordfnordfnord 13y ago
  I don't think I like that idea. Sounds like a good way to throw Native Americans, Amish, and others who can't or don't wish to participate in the traditional labor force off of their land. disclosure: I am an ordinary, average, white, property owner, not Amish (Atheist, actually).
  - Daishiman 13y ago
    At some point, you cannot realistically expect your interests as a class if you refuse to participate in the political system, for better or worse. The notion that we can be isolated within a nation and refuse to take collective responsibility is a dream that has never had much foundation in reality.
- hansjorg 13y ago
  A property tax will also make sure that the landowning class either makes productive use of their land or loses it, rather than hoarding it as an anti-competitive measure.
- rch 13y ago
  Excellent reply, and your position is completely reasonable. I would submit, however, that there is more variability in how and where people choose to live than your views can completely accommodate.
- ksrm 13y ago
  Absolutely! A land value tax (on the base value of the unimproved land) is an idea that goes back hundreds of years. It has many attractive properties when compared to other taxes like sales and income tax. It's a shame it hasn't really ever taken off. http://en.wikipedia.org/wiki/Land_value_tax http://en.wikipedia.org/wiki/Land_value_tax
  - dnautics 13y ago
    There's no way the government will use the appraisal system to screw over the poor!
- dnautics 13y ago
  >Property taxes are very progressive and we should absolutely have more of them. The naivete, here, is of course, that the wealthy don't have more resources to protect themselves against property taxes or reduce their burden, or deal with enforcement, or mitigate corruption by the state. In reality though, there is no "rules scheme" you can construct that will be as progressive as you want. You'll tack on more rules to tweak it to satisfy your conscience that you're not hurting the poor. The wealthy will hack this and find a loophole, and even if they don't, the burden isn't so terrible for them. Slight infraction by the poor will be come down upon disproportionately by the government (because the cost of enforcement against the poor is lower because of lowered risk of having it fought in the courts) and 'an example must be set'. Although your property tax was designed to be 'progessive', it instead, wound up being a barrier that is difficult to surmount. It is naive to think that the state will be this hyper-logical ultra-fair machination. It's not, and it never will be. Instead of socially engineering through the state, everyone would have been far better off if you helped the poor by reaching into your own pocket. But, of course if one is selfish, that's not going to happen - and it's far easier instead to project one's own selfishness onto other people, extrapolate onto all of society and use the state to run your charity for you.
  - rwmj 13y ago
    Property is harder to hide than other forms of wealth. You can hide your money in an offshore bank account. It's pretty hard to hide land. If there's a piece of land, someone should be paying the land tax on it (if whoever owns it is hiding, the people can grab it back). So land tax is fair and progressive (the more land you own, the more tax you pay).
    - dnautics 13y ago
      Gaming the property tax system is not a binary proposition. How do you assess its value? How does the state choose whom to go after? Did you even read the WaPo article? Do you not see how the existence of a property tax has come around to hurt exactly the most vulnerable population (and in this case, through no directed malice) I promise you, people living in Palisades (the richest part of DC) are not worried about property tax liens because they can pay people to deal with paying the taxes (either legally, say hiring an admin, or extralegally). It's not progressive because the bureaucracy and the hammer of the state causes a greater fundamental inconvenience to those of less means than to those of greater means. As to the hammer, do you think the DC government would have sent "armed US marshals" to recover the house if it were in the Palisades? Why or why not?

xsmasher 13y ago

The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt. What else could the government do, put the homeowner in debtor's prison?

muzz 13y ago
It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.
- xsmasher 13y ago
  You are correct, they buy the lien and have to foreclose later. I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general https://www.tax-sale.info/html/index/page/general SPOILER: > The properties are then sold by deed at auction. Not much of an improvement over the lien process; just a faster foreclosure.
caf 13y ago
In some places they would garnish the debtors income.