4 ms·

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 house

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
Do you think income tax has proven a big disincentive for people to go out and work? (To ancitipate an obvious rebuttal: yes, I will admit that inheritance tax has probably put people off the idea of dying.)
- bolder88 13y ago
  Higher rate income tax certainly does. Tax bands certainly provide a big disincentive for bothering to get a better job/raise. Inheritance tax is very unfair. If you are rich enough, you'll plan around it and avoid it. But if you're not rich enough, your kids will not only lose their parents, they'll be sent a bill from the government. Which at best is a tad insensitive. Add to that the fact that the thresholds for inheritance tax haven't been raised properly, so that someone with a 1 bedroom apartment in London will be subject to inheritance tax, it all seems pretty unfair, and perverse for the government to effectively profit from peoples death.
  - eurleif 13y ago
    >Tax bands certainly provide a big disincentive for bothering to get a better job/raise. You know that your entire income isn't taxed at the highest bracket's rate, right? So, for example, the highest bracket is 39.6% for income above $400k. If you make $410k, $10k is taxed at 39.6%, and the rest of your income is taxed at a lower rate.
    - bolder88 13y ago
      Yes I do know that. It's still a big disincentive to bother earning more money. Why bother trying harder if the government will take half of anything extra you make?
      - nknighthb 13y ago
        I understand greed, and as much as I loathe it, I also understand the mindset that looks at money as a score, but I've never understood this mindset that is unable to recognize the "score" is not absolute, and taxation does not have a 1:1 impact. Progressive taxation renders the scale non-linear. Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?
prostoalex 13y ago
Property taxes add liquidity to the market, and lower prices on everyone, as the cost to own real estate is not zero. Negative side effects that areas with no property taxes include * blind investments into endless real estate development projects that have no tenants or structural quality (China, Dubai) * extremely high prices for anyone entering the real estate market (old European monarchies, where a family might have owned the same real estate for centuries) * lack of funds for upkeeping and maintaining what's considered a shared property (facades, sidewalks) while maintaining fancy interiors (Eastern Europe)
sliverstorm 13y ago
Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it (metaphorically). That's a good thing- it means the incentives will push land into the hands of people who are actually going to do something with it (making it worth paying the property tax)
- cmccabe 13y ago
  Absolutely. If we had reasonable property taxes in CA, we wouldn't have a housing shortage, and middle-class people would be able to live in SF again. But try explaining this to the average voter...
  - muzz 13y ago
    By reasonable you mean the same taxes for the same value, ie the opposite of Prop 13, right?
    - cmccabe 13y ago
      yep
- unclebucknasty 13y ago
  >Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it... No. Property tax is primarily a means for localities to raise revenue. If what you were saying were true, then developed land, including primary residences, would have no associated property taxes. It'd be exempt.
  - ycombobreaker 13y ago
    Regardless of the intent, property taxes do serve both purposes. Developed land must provide a return above and beyond the property tax rate in order to be profitable. That includes primary residences, where the return is... not easy to measure in dollars.
turar 13y ago
They already do tax it for businesses in various jurisdictions, e.g. in Florida (see "tangible personal property").
drone 13y ago
Many counties in Texas do tax business property. I know I have to pay business property taxes every year to my county. Here, generally, personal income taxes are replaced with property, sales, and business (franchise) taxes. You pay taxes, as a person, on your vehicle, real property, and per taxable transaction. But, you do not pay it on your income.
seanalltogether 13y ago
In the UK you don't have property tax, and this gives rise to the concept of leasehold land. Instead of paying rent to the government you end up with people paying rent to a private company. Instead of getting better local infrastructure as a result of your rent, you enrich the family that purchased your land over 200 years ago.

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

Do you think income tax has proven a big disincentive for people to go out and work? (To ancitipate an obvious rebuttal: yes, I will admit that inheritance tax has probably put people off the idea of dying.)

bolder88 13y ago
Higher rate income tax certainly does. Tax bands certainly provide a big disincentive for bothering to get a better job/raise. Inheritance tax is very unfair. If you are rich enough, you'll plan around it and avoid it. But if you're not rich enough, your kids will not only lose their parents, they'll be sent a bill from the government. Which at best is a tad insensitive. Add to that the fact that the thresholds for inheritance tax haven't been raised properly, so that someone with a 1 bedroom apartment in London will be subject to inheritance tax, it all seems pretty unfair, and perverse for the government to effectively profit from peoples death.
- eurleif 13y ago
  >Tax bands certainly provide a big disincentive for bothering to get a better job/raise. You know that your entire income isn't taxed at the highest bracket's rate, right? So, for example, the highest bracket is 39.6% for income above $400k. If you make $410k, $10k is taxed at 39.6%, and the rest of your income is taxed at a lower rate.
  - bolder88 13y ago
    Yes I do know that. It's still a big disincentive to bother earning more money. Why bother trying harder if the government will take half of anything extra you make?
    - nknighthb 13y ago
      I understand greed, and as much as I loathe it, I also understand the mindset that looks at money as a score, but I've never understood this mindset that is unable to recognize the "score" is not absolute, and taxation does not have a 1:1 impact. Progressive taxation renders the scale non-linear. Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?

prostoalex 13y ago

Property taxes add liquidity to the market, and lower prices on everyone, as the cost to own real estate is not zero. Negative side effects that areas with no property taxes include * blind investments into endless real estate development projects that have no tenants or structural quality (China, Dubai) * extremely high prices for anyone entering the real estate market (old European monarchies, where a family might have owned the same real estate for centuries) * lack of funds for upkeeping and maintaining what's considered a shared property (facades, sidewalks) while maintaining fancy interiors (Eastern Europe)

sliverstorm 13y ago

Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it (metaphorically). That's a good thing- it means the incentives will push land into the hands of people who are actually going to do something with it (making it worth paying the property tax)

cmccabe 13y ago
Absolutely. If we had reasonable property taxes in CA, we wouldn't have a housing shortage, and middle-class people would be able to live in SF again. But try explaining this to the average voter...
- muzz 13y ago
  By reasonable you mean the same taxes for the same value, ie the opposite of Prop 13, right?
  - cmccabe 13y ago
    yep
unclebucknasty 13y ago
>Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it... No. Property tax is primarily a means for localities to raise revenue. If what you were saying were true, then developed land, including primary residences, would have no associated property taxes. It'd be exempt.
- ycombobreaker 13y ago
  Regardless of the intent, property taxes do serve both purposes. Developed land must provide a return above and beyond the property tax rate in order to be profitable. That includes primary residences, where the return is... not easy to measure in dollars.

turar 13y ago

They already do tax it for businesses in various jurisdictions, e.g. in Florida (see "tangible personal property").

drone 13y ago

Many counties in Texas do tax business property. I know I have to pay business property taxes every year to my county. Here, generally, personal income taxes are replaced with property, sales, and business (franchise) taxes. You pay taxes, as a person, on your vehicle, real property, and per taxable transaction. But, you do not pay it on your income.

seanalltogether 13y ago

In the UK you don't have property tax, and this gives rise to the concept of leasehold land. Instead of paying rent to the government you end up with people paying rent to a private company. Instead of getting better local infrastructure as a result of your rent, you enrich the family that purchased your land over 200 years ago.