5 ms·

According to that article a lot of these people already have paid off the mortgage and have the deeds to the house. It's that they can't keep up with the taxes.

According to that article a lot of these people already have paid off the mortgage and have the deeds to the house. It's that they can't keep up with the taxes. If you raised money to pay their back taxes, what would they do the following year? This kind of stuff really is sad, there has to be some solution to not kicking people that have lived in these houses for 30+ years because they can't afford the taxes.

jMyles 12y ago
One of the first times I've seen that property tax really does read like serfdom.
- Scramblejams 12y ago
  Property tax is really onerous for those who own their houses but fall on hard times. Its implementation can be terribly unfair, because it essentially says that you don't really own all of your property. You own most of it, but if you don't kick that little bit up every year, then you're out on your duff and what you get back is subject to the whims of the auction bidders. That's a troubling implication for me. I'm a big fan of first sale doctrine. If you bought it, it should be yours. I'm deeply uncomfortable with the notion that you must always pay rent to the government on something you ostensibly own, or you get the boot. There are so many ways this could be addressed. Property taxes could be eliminated and other taxes raised for a revenue neutral solution. Or below a certain property value, the tax levied could be zero. Lots of ways to fix this.
  - angersock 12y ago
    I think it's even more screwed up than that, right? One pays property taxes in order to get the benefits of the people they pay taxes to. It looks like the local and state government have utterly failed to provide the policing, schooling, or other tangible benefits associated with taxes. There is literally no incentive to abide by that part of the social contract other than the vague fear that they'll be called in one day or forcibly evicted. The state is acting in bad faith.
  - pkaye 12y ago
    That is what we did in California. We started capping the rate of growth of property taxes. Now old people and companies pay little property taxes since they bought the property long ago. Meanwhile the young people usually end up paying the bulk of the property taxes (along with sky high mortgages.)
  - AnthonyMouse 12y ago
    > Property taxes could be eliminated and other taxes raised for a revenue neutral solution. The perfect solution for this is to eliminate both property tax and the mortgage interest tax deduction and let them cancel each other. For most people it makes no difference, but we stop kicking little old ladies out of the homes they own just because they can no longer afford the property taxes.
    - icebraining 12y ago
      Would they cancel each other? In value, I mean? Seems like the property tax would cover much more than mortgaged houses.
      - AnthonyMouse 12y ago
        The numbers depend on several variables, but they seem to be in the same ballpark. The amount people owe on their mortgages is generally in the neighborhood of the assessed value of their homes. People may make some headway into actually paying off the mortgage, but the tax deduction makes that financially unattractive (better to pay off all other debt before the mortgage because the interest rate is lower and the interest is tax deductible) and housing crisis notwithstanding the assessed value is generally lower than what people pay for houses to begin with. So you're really comparing tax rates against approximately the same base. Then you only need to know the mil rate, the marginal income tax rate and the loan interest rate. Plug in typical numbers and they end up within an order of magnitude of each other one way or the other (e.g. somewhere around 2%). Unless your point is that property tax applies to more than single family homes, but there is no reason we have to eliminate property tax for e.g. commercial property.
  - mullingitover 12y ago
    > If you bought it, it should be yours. I'm deeply uncomfortable with the notion that you must always pay rent to the government on something you ostensibly own, or you get the boot. > There are so many ways this could be addressed. Property taxes could be eliminated and other taxes raised for a revenue neutral solution. I made this same argument in my high school civics class. As I recall, the deal is you're not paying 'rent' on the property but for the services that property receives courtesy of the state/nation (e.g. fire, police, protection from invading armies, etc). Real estate taxes are a pretty progressive tax, I'd hate to see landowners (generally in the upper echelons of income distribution) get a tax break and have that passed down to the lower tiers with something horribly regressive like sales tax (which is the general go-to funding scheme). It'd be a lot better to eliminate all other taxes and make all government revenues come from a flat land value tax.
    - Scramblejams 12y ago
      There are plenty of ways to pay for the services the property owner receives courtesy of the state/nation. It doesn't have to be by a tax that in the case of arrears results in eviction of the property owner, and many taxes can be made as progressive as you like.
      - mullingitover 12y ago
        > It doesn't have to be by a tax that in the case of arrears results in eviction of the property owner, and many taxes can be made as progressive as you like. As a renter, I have a hard time feeling sympathy for the downtrodden landowning class. While there may be cases where an unfortunate landowner is forced to liquidate and find a place to live that's in line with their income, there are more cases where a drop in real estate tax simply means the landlord gets a better profit margin.
        Scramblejams 12y ago
        If there's a big enough reduction in property taxes, the market will adjust, absent other dominating effects, and your landlord's margin will be reduced. Also consider that the vast majority of the landowning class consists of a person or family that owns one SFR, and most-to-all of their wealth is tied up in it. Those are the people that will get hurt if they can't keep up with property taxes, and it includes most of the middle class that isn't renting. I rent too. My landlord is not wealthy. If he can't cover his property taxes, then I'm the one who gets the boot. And lest you think this is mostly a theoretical consideration, there were enough cases where an unfortunate retiree was forced to liquidate that it prompted the California electorate to pass Prop 13, which froze property taxes. If real estate values increase rapidly, for whatever reason, a property tax that rides that slope creates terrible injustices.
icebraining 12y ago
This kind of stuff really is sad, there has to be some solution to not kicking people that have lived in these houses for 30+ years because they can't afford the taxes. There is, the article points it out: Owners can buy their homes back with debts cleared at auction for $500 as a solution of last resort. The problem doesn't seem to be the lack of a solution, but knowledge that it exists and what they have to do to benefit from it.
- corysama 12y ago
  So, the solution is: Don't pay your taxes. Wait for your house to go to auction. Hope no one buys it. Pay $500 to effectively erase your three year tax debt. Repeat. That apparently currently works. It's a clear market signal to the government that it has no alternative but to put up with you not paying your taxes. But, I expect if it became widespread, the tax man would see it as a loophole to be closed.
  - AnthonyMouse 12y ago
    There is also clearly something fishy going on there. The only way you get to pay $500 is if no one else offers to pay more than that, i.e. the market value of the house is only ~$500. For a dilapidated house in a bad neighborhood that is entirely possible, but then why are the taxes on such a low value piece of real estate so high that the occupant can't afford them?
    - Scramblejams 12y ago
      Agreed. Other government housing auctions have been recently documented in the press as bearing signs of bidder collusion. A closer look here would be welcome.
- jpetersonmn 12y ago
  Yes, but it's an auction, no guarantee that the place is going to go for less than the taxes owed, let alone $500.
- Scramblejams 12y ago
nthj 12y ago
> If you raised money to pay their back taxes, what would they do the following year? Detroit property tax rates are something like 3% per year. If I own the house outright, shouldn't I get a mortgage on the house to pay the property taxes, rather than lose the entire house? If I was a banker in the Detroit area I'd be all over this—with a little bit of marketing I could offer to “save your house from the tax man”, take care of all the paperwork, and charge the highest interest rate that still let me sleep at night. (People could shop around, but if you're going to shop around for a better interest rate, you're probably of the type that isn't about to lose your paid-off home over a bill for 10% of the total value.)

jMyles 12y ago

One of the first times I've seen that property tax really does read like serfdom.

Scramblejams 12y ago
Property tax is really onerous for those who own their houses but fall on hard times. Its implementation can be terribly unfair, because it essentially says that you don't really own all of your property. You own most of it, but if you don't kick that little bit up every year, then you're out on your duff and what you get back is subject to the whims of the auction bidders. That's a troubling implication for me. I'm a big fan of first sale doctrine. If you bought it, it should be yours. I'm deeply uncomfortable with the notion that you must always pay rent to the government on something you ostensibly own, or you get the boot. There are so many ways this could be addressed. Property taxes could be eliminated and other taxes raised for a revenue neutral solution. Or below a certain property value, the tax levied could be zero. Lots of ways to fix this.
- angersock 12y ago
  I think it's even more screwed up than that, right? One pays property taxes in order to get the benefits of the people they pay taxes to. It looks like the local and state government have utterly failed to provide the policing, schooling, or other tangible benefits associated with taxes. There is literally no incentive to abide by that part of the social contract other than the vague fear that they'll be called in one day or forcibly evicted. The state is acting in bad faith.
- pkaye 12y ago
  That is what we did in California. We started capping the rate of growth of property taxes. Now old people and companies pay little property taxes since they bought the property long ago. Meanwhile the young people usually end up paying the bulk of the property taxes (along with sky high mortgages.)
- AnthonyMouse 12y ago
  > Property taxes could be eliminated and other taxes raised for a revenue neutral solution. The perfect solution for this is to eliminate both property tax and the mortgage interest tax deduction and let them cancel each other. For most people it makes no difference, but we stop kicking little old ladies out of the homes they own just because they can no longer afford the property taxes.
  - icebraining 12y ago
    Would they cancel each other? In value, I mean? Seems like the property tax would cover much more than mortgaged houses.
    - AnthonyMouse 12y ago
      The numbers depend on several variables, but they seem to be in the same ballpark. The amount people owe on their mortgages is generally in the neighborhood of the assessed value of their homes. People may make some headway into actually paying off the mortgage, but the tax deduction makes that financially unattractive (better to pay off all other debt before the mortgage because the interest rate is lower and the interest is tax deductible) and housing crisis notwithstanding the assessed value is generally lower than what people pay for houses to begin with. So you're really comparing tax rates against approximately the same base. Then you only need to know the mil rate, the marginal income tax rate and the loan interest rate. Plug in typical numbers and they end up within an order of magnitude of each other one way or the other (e.g. somewhere around 2%). Unless your point is that property tax applies to more than single family homes, but there is no reason we have to eliminate property tax for e.g. commercial property.
- mullingitover 12y ago
  > If you bought it, it should be yours. I'm deeply uncomfortable with the notion that you must always pay rent to the government on something you ostensibly own, or you get the boot. > There are so many ways this could be addressed. Property taxes could be eliminated and other taxes raised for a revenue neutral solution. I made this same argument in my high school civics class. As I recall, the deal is you're not paying 'rent' on the property but for the services that property receives courtesy of the state/nation (e.g. fire, police, protection from invading armies, etc). Real estate taxes are a pretty progressive tax, I'd hate to see landowners (generally in the upper echelons of income distribution) get a tax break and have that passed down to the lower tiers with something horribly regressive like sales tax (which is the general go-to funding scheme). It'd be a lot better to eliminate all other taxes and make all government revenues come from a flat land value tax.
  - Scramblejams 12y ago
    There are plenty of ways to pay for the services the property owner receives courtesy of the state/nation. It doesn't have to be by a tax that in the case of arrears results in eviction of the property owner, and many taxes can be made as progressive as you like.
    - mullingitover 12y ago
      > It doesn't have to be by a tax that in the case of arrears results in eviction of the property owner, and many taxes can be made as progressive as you like. As a renter, I have a hard time feeling sympathy for the downtrodden landowning class. While there may be cases where an unfortunate landowner is forced to liquidate and find a place to live that's in line with their income, there are more cases where a drop in real estate tax simply means the landlord gets a better profit margin.
      - Scramblejams 12y ago
        If there's a big enough reduction in property taxes, the market will adjust, absent other dominating effects, and your landlord's margin will be reduced. Also consider that the vast majority of the landowning class consists of a person or family that owns one SFR, and most-to-all of their wealth is tied up in it. Those are the people that will get hurt if they can't keep up with property taxes, and it includes most of the middle class that isn't renting. I rent too. My landlord is not wealthy. If he can't cover his property taxes, then I'm the one who gets the boot. And lest you think this is mostly a theoretical consideration, there were enough cases where an unfortunate retiree was forced to liquidate that it prompted the California electorate to pass Prop 13, which froze property taxes. If real estate values increase rapidly, for whatever reason, a property tax that rides that slope creates terrible injustices.

icebraining 12y ago

This kind of stuff really is sad, there has to be some solution to not kicking people that have lived in these houses for 30+ years because they can't afford the taxes. There is, the article points it out: Owners can buy their homes back with debts cleared at auction for $500 as a solution of last resort. The problem doesn't seem to be the lack of a solution, but knowledge that it exists and what they have to do to benefit from it.

corysama 12y ago
So, the solution is: Don't pay your taxes. Wait for your house to go to auction. Hope no one buys it. Pay $500 to effectively erase your three year tax debt. Repeat. That apparently currently works. It's a clear market signal to the government that it has no alternative but to put up with you not paying your taxes. But, I expect if it became widespread, the tax man would see it as a loophole to be closed.
- AnthonyMouse 12y ago
  There is also clearly something fishy going on there. The only way you get to pay $500 is if no one else offers to pay more than that, i.e. the market value of the house is only ~$500. For a dilapidated house in a bad neighborhood that is entirely possible, but then why are the taxes on such a low value piece of real estate so high that the occupant can't afford them?
  - Scramblejams 12y ago
    Agreed. Other government housing auctions have been recently documented in the press as bearing signs of bidder collusion. A closer look here would be welcome.
jpetersonmn 12y ago
Yes, but it's an auction, no guarantee that the place is going to go for less than the taxes owed, let alone $500.
Scramblejams 12y ago

nthj 12y ago

> If you raised money to pay their back taxes, what would they do the following year? Detroit property tax rates are something like 3% per year. If I own the house outright, shouldn't I get a mortgage on the house to pay the property taxes, rather than lose the entire house? If I was a banker in the Detroit area I'd be all over this—with a little bit of marketing I could offer to “save your house from the tax man”, take care of all the paperwork, and charge the highest interest rate that still let me sleep at night. (People could shop around, but if you're going to shop around for a better interest rate, you're probably of the type that isn't about to lose your paid-off home over a bill for 10% of the total value.)