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Why Billionaires Don't Pay Property Taxes in New York
- jbhatab 11y agoWouldn't another city just adopt similar systems and over time start to attract billionaires? I'm sure that this effects their decision of where they purchase real estate. I am assuming having rich people in your city is a good thing, but I genuinely think it is overall.
- ceejayoz 11y ago> Wouldn't another city just adopt similar systems and over time start to attract billionaires? They're willing to pay $100 million for apartments that'd probably go for a tenth or less of that in any other city. Let's not pretend having to pay a bit more tax is going to drive them to live in Tulsa. The prestige of living in NYC is the main draw, I'd imagine.
- ubernostrum 11y agoRemember that real estate is about three things: location, location, and location. You bribe your way into tax abatements for luxury condos basically anywhere, but there's currently no way to bribe someone to move Central Park, the museums and arts centers and all the restaurants and other New-York-specific stuff that actually attracts people to within a few blocks of your cheap-tax-rate tower in Wyoming.
- nostromo 11y agoYou're not being fair to his or her question. Yes, most cities cannot attract billionaires like New York. But London or Hong Kong can. And London has been much more successful at it than New York lately. Fun fact: the states with the most billionaires per capita are... Oklahoma, Oregon, and Ohio. New York comes in at #4.
- warfangle 11y ago> the states with the most billionaires per capita are... Oklahoma, Oregon, and Ohio. New York comes in at #4. In residence, perhaps. Yet how many own a pied-à-terre in New York, while residing primarily elsewhere?
- mturmon 11y agoHmm, your fun fact (http://en.wikipedia.org/wiki/List_of_U.S._states_by_the_number_of_billionaires http://en.wikipedia.org/wiki/List_of_U.S._states_by_the_numb...) is fun, I agree, but also misleading. According to the above link, Oklahoma has 5 billionaires, Oregon has 2, Ohio has 4. New York, at #4 per capita, has 88; California has 111. The "surprise" is mostly due to low counts. For any process (like wealth) with large extremes, if you subdivide it into bins, you are going to get local extrema just due to low counts. The only mildly informative thing is Oklahoma (oil and gas). Ohio is a few elderly (ages 77, 74, 70) manufacturing folks -- their count seems to have dipped to 3, according to http://www.forbes.com/billionaires/list/#version:static_search:ohio http://www.forbes.com/billionaires/list/#version:static_sear..., which would remove Ohio from the top 3 per capita.
- apalmer 11y agoThese are the richest of the richest people anywhere. They live where they want to live. A billionaire doesn't move his whole existence across the country to save 10 million dollars in taxes.
- logfromblammo 11y agoBut they don't even need to do that, in this instance. The article stated $17k tax on a $100M (market value) condo. Assuming the buyer pays in cash, the property retains its value, and ignoring the condo fees, that person is paying $1417 a month for the option of living in one of the most prestigious places in the world. I'm not an expert on housing costs in NYC, but that seems like a pretty good deal.
- darkstar999 11y agoThat's flawed logic, as it's $100M + $1417/mo. If you asked me if I wanted to rent that place for $1417 I would absolutely say yes. But I don't happen to have $100M lying around.
- logfromblammo 11y agoThe wealth moves from $100M in cash to $100M in ultralux NYC condo. Absent some event that diminishes the value of ultralux NYC condos, the only real sacrifice is in liquidity. It's harder to spend a condo if you need to. When you can pay cash for everything, the budgetary math is more oriented around periodic cash flows. Taxes and insurance and depreciation become monthly accounting expenses that have to be paid from monthly incomes. The actual sale price of the place is almost irrelevant. What if you had so much money that you have already bought everything you ever wanted? Keeping it all is now just a matter of keeping the monthly expenses below the monthly incomes.
- s73v3r 11y agoYou still have to have at least a decent amount of that $100MM in cash to start with.
- infinotize 11y agoMany (most?) of these people don't even live in these apartments. In fact, developers actually use this as an argument in favor of new construction - it won't put any more pressure on local infrastructure, because no one will live here.
- s73v3r 11y agoIn order for it to work, it has to be a place that billionaires would want to be at in the first place. Something like this isn't going to work in the middle of nowhere, for example.
- m-i-l 11y agoThe article quotes Michael Bloomberg as saying "If we can find a bunch of billionaires around the world to move here, that would be a godsend". But is attracting billionaires to your city a good thing? I can imagine it would be if they paid their taxes and contributed to the local economy, not just themselves but via their companies and personnel. But the article suggests in many cases they don't, i.e. they pay lower taxes and barely visit let alone invest outside the property market.
- lotsofmangos 11y agoLondon has similar issues - http://www.independent.co.uk/news/uk/home-news/sultans-tax-discount-on-london-house-shows-law-favours-rich-8229543.html http://www.independent.co.uk/news/uk/home-news/sultans-tax-d... http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1189018.ece http://www.thesundaytimes.co.uk/sto/news/uk_news/National/ar... http://www.theguardian.com/society/2014/jan/31/inside-london-billionaires-row-derelict-mansions-hampstead http://www.theguardian.com/society/2014/jan/31/inside-london...
- ende 11y agoI've got three words: land value tax
- e3b0c 11y agoTo mitigate the political frictions, LVT should probably be bundled with principal residence deduction(or exemption).
- ende 11y agoYeah, there's a lot of devil in the details as far as determining the actual formula as a function land value. I typically imagine there are ways to align an LVT along a progressive scale, such that the little old lady who owns nothing but her own small lot isn't burdened by the tax while generously backed speculators buying up all waterfront property in sight are.
- Spooky23 11y agoNobody lives in these condos for the most part. They are money laundering/tax shelter vehicles for the uber-rich, especially foreigners. The same phenomenon is common in south florida. A lot of the content of the article is FUD. There is no relationship between income and property tax levy -- it's based on the adjusted value of the property. In the case of an apartment building, the value is easily computed as a factor of the revenue generated. Obviously, the process in NY is prone to corruption, as the leaders of both houses of the state legislature under Federal investigation for related issues. There are lots of stakeholders here with different interests -- unions want construction jobs, lawyers get to bill for title and other work, etc. What has changed during the last 15 years is the importance of property tax in NYC. Unlike the rest of the state, other revenue sources were more prominent. Now, in addition to high sales tax, city income tax, special transit payroll tax, and other costs associated with NYC, you get high property taxes too.
- ceejayoz 11y ago> They are money laundering/tax shelter vehicles for the uber-rich, especially foreigners. All the more reason to tax them. When I bought my house, its assessed value was the price I paid for it. Why not here?
- spikels 11y agoIn many if not most areas in the US assessed value and market value are two different things. The system in NYC (for homes not condos) is that the assessed value is 6% of market value. While in other place like the entire state of California (at least at time of purchase) assessed value is 100% of the market value - a more straightforward method used in some states. The percentage is know as the "assessment ratio" and varies by state and even within states such as by city or county. However the tax rates are much higher areas using the 6% method versus the 100% method. For example in NYC the tax rate is 19.157% while in San Francisco is 1.1743%. If you do the math the tax rate on market value is about the same. 6% * 19.157% = 1.149% in NYC versus 1.1743% in SF. In most places it is around 1% but can be over 2% in place like New Jersey, Illinois or upstate New York which unlike NYC relies more on property taxes. None of this says anything about the NYC system for condos (class 2) that the article talks about but is often a source of confusion when comparing areas that use different systems. http://www1.nyc.gov/assets/finance/downloads/pdf/brochures/class_1_guide.pdf http://www1.nyc.gov/assets/finance/downloads/pdf/brochures/c... http://www.socketsite.com/archives/2014/09/san-francisco-property-tax-rate-slated-drop-next-year.html http://www.socketsite.com/archives/2014/09/san-francisco-pro... EDIT: Here's a good recent review of residential real estate taxes across the US (290kb pdf): http://www.brookings.edu/~/media/research/files/papers/2013/11/18-residential-property-taxes/18-residential-property-taxes-harris.pdf http://www.brookings.edu/~/media/research/files/papers/2013/...
- rhino369 11y agoJesus, that article took forever to describe the problem. Inverted pyramid guys, come on.
- ed_blackburn 11y agoI wonder how many of these flats are occupied. In London such flats are investments for a balance sheet and remain unoccupied.
- ChuckMcM 11y agoThere has got to be a really awesome AirBnB type service in here for the rich but not that rich types. All that unused property, all those traveling rich people for whom a hotel is too 'exposed'. Connect those dots people! :-)
- pdeuchler 11y agoThis already exists in most elite social circles, albeit informally. A shared realtor, you happen to own a yacht slip next to someone at St. Barts, serendipitous private jet flights, etc. etc. When everyone you know owns 3+ homes and would be able to easily cover any sort of damages that they cause people are much more willing to loan out keys and open their homes, especially when they aren't there. I'm nowhere near that level of wealth, but I've been more than fortunate to be invited on some trips that follow this pattern. I've even heard from the horses mouth how someone literally spent two years after college traveling across the world, staying in nothing but her parent's friends' apartments/condos/houses with other socialites. You can get real deep into social psychology with this, but the social rules are different for people with such socio-economic standing. Money/assets are no longer dominant social currencies (and thus more willing to be risked)... it's more personality, looks/style, and tangential social connection. i.e. I care a lot less that you drive a Ferrari and a lot more that you can get me into X social event through Y connection, or that you can give me good advice on popular art. Gotta keep up with the Jones' somehow, and when everyone has too much money you have to find other social signals.
- ubernostrum 11y agoI'm nowhere near that level of wealth, but I've been more than fortunate to be invited on some trips that follow this pattern. I was fortunate to end up with a bunch of scholarships and funding to let me go to a much more expensive college than I would ever have otherwise been able to afford. Guy who lived across the hall from me was the son of a pharma exec, and I ended up learning a lot about how that stratum of society works. And that's pretty close to it. I've known people who literally can say "oh, yeah, I don't need a hotel on that Europe trip, a friend of the family has a castle I can stay in".
- allworknoplay 11y agoI love this article (disclosure: written by friend of friend) and 421a is ludicrous. However, primary occupancy in the major properties under discussion here (the three along 57th plus the Time Warner center and a few others) is incredibly low, and basically speaks to high-end real estate bubble. These are high-visibility properties that people think of as good investments, whether because they can be re-sold later for similar valuations or because they're hedges against russians or chinese having to leave their own countries for a variety of reasons. In that regard, it's totally worth noting that NYC does a much better job than most cities at permitting the construction of new luxury units that keep billionaires from pricing everyone else out of the market while extracting concessions like low- and moderate-income housing or the building of new parks. Imagine if each of the 104 billionaires who bought at 432 park ave had bought their own greenwich village townhouse instead. Supply would be as short as it is in san francisco. That said, we can extract a lot more from builders and billionaires along the way, and we should. NYC still needs more housing -- the small proportion of rent regulated housing that accompanies these buildings remains insufficient to build the quantity of housing needed to avoid pricing actual new yorkers out, and to keep offering the services the city deserves.
- bradleyjg 11y agoA few points. First, I agree 421a is ludicrous, which is why I don't see why you credit NYC for "extracting concessions like low and moderate-income housing". 421a and similar programs trade billions of dollars in tax revenue that could be spent on everyone for hundreds of thousands of dollars in rental subsidies handed out to a few lucky lottery winners. That is terrible public policy. A park or subway station improvement is a little closer call, but cash ought to be the gold standard. Second, I'm not sure I care whether billionaires buy castle in the sky in midtown or townhouses in Greenwich Village. I wasn't going to be able to afford the townhouses anyway. It seems like the people most concerned about billionaires bidding up property are the centimillionaires being priced out. 100 units, even extremely large units, are a drop in the bucket for NYC. The knock-on effects are just not that large out in the places where the middle and lower classes live. Finally, in terms of extracting more, I think the in-kind programs are both inefficient and a massive opportunity for corruption. I'd much rather see all the special deals -- parks, affordable housing, etc. eliminated and property taxes that reflect reality imposed, with perhaps a small pied-à-terre differential. The billions of dollars of missing tax revenue would be a lot more valuable to NYC than a few more housing lotteries or a small park, if for no other reason than you can subsidize rentals with cash but you can't fix potholes with subsidized rentals.
- tn13 11y agoIn general when you have super complex laws, the law will always help rich and powerful simply because they will be the only once who will have the resources to pass through the myriad laws.
- rich_tariffs 11y agoI live in a state which does something similar to this -- the sales tax is extremely high, and property taxes are laughably low. I have never cared to investigate it, but my hunch is it protects those who are already land owners, and therefor the economic elite, and burdens renters and other lower income citizens with a disproportionate tax burden.
- MagicWishMonkey 11y agoIt's just another way to shift the tax burden from the rich to the poor.
- mikeyouse 11y agoFind your state in Appendix B (Page 27) here: http://www.itep.org/pdf/whopaysreport.pdf http://www.itep.org/pdf/whopaysreport.pdf To see just how much more difficult they make it for the poor.
- DamnYuppie 11y agoMy quibble with your assertion is that if property taxes were higher it would also hit the lower income citizens as well. Those property taxes would just be passed along as an increase in their rent. Also it isn't the low income who are being taxed to death it is those who "middle class" who are subsidizing everything. Effectively only 50% of those who file taxes actually owe any taxes.
- crdoconnor 11y ago>My quibble with your assertion is that if property taxes were higher it would also hit the lower income citizens as well. Those property taxes would just be passed along as an increase in their rent. Rent is determined by supply of housing and demand for housing, not taxation. Property owners would eat the cost and the price of properties would probably drop accordingly (higher taxes = a less attractive purchase).
- smm2000 11y agoIt's true in SF, NY and few other places in US where cost of housing is determined by ability to pay. In the rest of the country cost of housing is a cost of building a house/rental property with a reasonable margin on top - with almost no correlation with local ability to pay (as long as it's higher than cost of building or maintaining a housing unit). If you increase property taxes, it will increase rental prices.
- ryandrake 11y agoSimultaneously disgusting and utterly unsurprising.
- deep_blue_6 11y agoI never understand when folks get upset over this kind of thing -- how would you do it?
- forrestthewoods 11y agoTax breaks made to protect the poor all too often benefit the wealthiest the most. Which causes the most harm to the group it was meant to protect. Oops. I support equality in taxing. Alas such things are labeled regressive but it's always the poor who end up under the bus. Complicated progressive tax schemes always benefit the rich more than the poor. Always.
- danmaz74 11y agoProgressive tax schemes don't need to be complicated.
- Quanticles 11y ago>And buyers are paying only a fraction of that fraction in property taxes. This just in, you don't pay 100% of your home's value in property taxes each year!
- emehrkay 11y agoI should become a billionaire. Any advice?
- bko 11y agoOne of the conditions required for a condo to receive generous tax breaks (which it passes on to the tenants) is that they build affordable housing. >As originally designed, the program requires to allocate at least 20 percent of their units to low-income families, in return for tax breaks of up to 80 percent. It's a badly kept secret in Manhattan that the program is often used by luxury developers. One57 used a popular loophole in the law that allowed the developers to take the tax benefit for the building overlooking the park, but fund the affordable housing units in another location. One57 bought credits or "certificates" that helped fund those affordable housing units in outer bouroughs, according to city records. [0] This is all part of a misguided housing policy in New York that focuses on "affordable" housing. This results in housing that is below market and a few lucky people that get in. For instance, one new building that got a lot of attention for having a separate door for the subsidized tenants (dubbed the "poor door" by the media) has received 88,000 applications for 55 subsidized units. [1] In my opinion, if the government wanted to subsidize the less fortunate, they should provide a cash subsidy for the individual to use as see fit. Forcing someone to take the entire value of that subsidy in the form of a housing credit is silly. For example, if you force developers to charge only $1000 for a $5000 apartment, you're essentially transferring $4,000 from landlord to tenant as a housing credit. I would prefer the individual receive $4,000 cash and be able to choose how to spend that amount, or somewhere in-between. I doubt most would use the entirety of that amount on better housing. [0] http://www.cnbc.com/id/49360274 http://www.cnbc.com/id/49360274 [1] http://www.nytimes.com/2015/04/21/nyregion/poor-door-building-draws-88000-applicants-for-55-rental-units.html?_r=0 http://www.nytimes.com/2015/04/21/nyregion/poor-door-buildin...
- thrownaway2424 11y agoDirect cash payment is always better than subsidies. Subsidized housing simply transfers money to property owners.
- CPLX 11y ago> Direct cash payment is always better than subsidies. Because you say so? Direct cash benefits have one effect, rent regulation has another. It depends on what you are trying to achieve. I am always perplexed when people talk about NYC housing policy and how it's self-apparently and obviously being done wrong, they invariably fail to note that it's the most desirable and culturally important city in the Western Hemisphere.
- Throwaway1224 11y agoYou know, across the country, homes are undervalued for tax purposes. I've seen several of these articles pop up over the last few days, but they are, on the face, oriented towards "ohhh look at the 1%ers and how little they pay!" Just sayin, be careful what you wish for. If the government decided on some new system for assessing property values... well, you better believe it's coming to the masses as well. End result: If you own a home, your tax bill WILL go up and your property value WILL drop. Probably best to just let this one slide, unless you just love paying taxes.
- deleted 11y ago[deleted]
- jgalt212 11y agoI'm no socialist, but this one line makes me sick to my stomach. > In NYC, Billionaires Pay 1/100th the Average Property-Tax Rate
- zaroth 11y agoI assume the ability to sell these floors out as a tax shelter / investment property factors in heavily to the financing and scale of the entire project to begin with. Does NYC get to have a One57 Tower without duplex condos selling for 9 figures? Probably not. Do duplex condos sell for anywhere close to 9 figures if the annual property taxes are 7 figures? Certainly not. When Mayer Bloomberg talked of the ultra-rich moving in, he didn't mean so that the city could literally confiscate their assets, but rather, the city can benefit from the investment that follows. There are great arguments to be had about how much NYC actually benefits from massive infrastructure projects like One57, but the property tax structure is intentional because the city benefits in other ways. A more interesting analysis would consider the myriad costs and benefits of the construction and upkeep of One57. Obviously there is very significant tax revenue and expenses to the city generated through various channels for a building at that scale. They are not and should not be taxed like single family homes or condos.
- DMac87 11y agoThe problem with this reasoning is that while new buildings / tenants may be marginally beneficial to the city, if the rate new condos pay is significantly lower than existing buildings, then fairness issues arise. To me, this is analogous to incentives for building factories, etc - why does the big / new factory get a tax incentive while the small / old one doesn't, if it generates the same spinoff investment / employment / revenue? Put another way, the marginal revenue gain may be positive, but lower than the community average revenue gain (or gain in comparable properties) - how is that fair?
- armsmasher 11y ago(author here) To your point: "They are not and should not be taxed like single family homes or condos." They are taxed like condos—they are condos. I think the larger issue in this story is that the tools for assessing tax value are crude and don't allow the city to assert a progressive taxation. The range between 0.017 and 1.7 is large, and the city needs to be able to find a target taxation that draws in revenue without warding off services. There's no reason to believe the limit there is 0.017 percent.
- hahamrfunnyguy 11y agoProperty taxes in ALL of NY are excessively high.
- joshuaheard 11y ago"The values of these new condos are being assessed at just a fraction of what they're worth. And buyers are paying only a fraction of that fraction in property taxes." This is true in every state that I have lived in. The tax-assessed value is lower than the market value, and the tax rate is a small portion of the tax-assessed value. The tax-assessed value is lower because the assessors use a historical comparative market analysis, which looks to the past to determine a current price. Free market buyers who assess the property for the purchase of making a purchase offer look at comparative historical values, but they also look to what the future market will be. A rising market will command a higher price than a sinking market. The same is true of the stock markets. This effect is especially true for unique locations or other outlier properties that can have grossly higher market values than tax-assessed values. I am not surprised then that this is a problem in a place like Manhattan, New York. Also, some states limit the annual increase of the tax-assessed value. In California it is 1%. If the market increase is 8%, the difference is going to be large quickly.
- cmurf 11y agoUnrented residential property probably shouldn't have property tax. This is an ancient feudal carry over. Piles of retirees across the U.S., including NYC, bought property two epochs ago and in many cases can't afford the property taxes. Property taxes are regressive and unfair. Instead, counties should get their money from a combination of income tax and sales tax; OR at w.orst index the property tax to income. Commercial property (that includes residential rental property in my book) maybe property tax still makes sense because landlords are pretty much always indexing rent to property value anyway.
- andrewvc 11y agoProperty tax isn't just about the income to the state. Property tax is about making sure that people are putting the property to work. If you're second mansion is costing you an extra chunk of change every year and you never visit it you'll be more likely to sell. Additionally, property taxes are (usually) progressive. In places like NYC where they aren't that should be fixed.
- cmurf 11y agoProperty tax typically doesn't go to the state at all. It's a county assessment. An argument for keeping property taxes is they tend to be more stable than income or sales taxes, and since counties tend to have less float in their budget (a large pile of county spending is on the public school system) it probably works better for them. The idea of an aggressive mill levy on someone's additional homes seems sane: use it or sell it. I just think universality of property tax isn't actually fair, just like a $200 speeding ticket isn't fair. Indexing it somehow to your worth or income is more fair.
- e3b0c 11y agoLand value tax + principal residence deduction can solve both the economic and political problems. By the way, property tax and land value tax are different. Land value tax is superior than the other.
- sokoloff 11y ago
- paulsutter 11y agoThey need to unify taxes on residential units in a revenue neutral way. A unified rate should be selected that reduces taxes on ordinary units by the same amount as the extra billion from the superrich. This should make a change more politically palatable. The biggest beneficiaries of the current system are the property developers. Fairer property taxes on these high end units may mean lower sales prices, and that seems just fine. One error in the article is the idea that landlords pass through taxes as higher rents. That completely misunderstands landlord psychology. Landlords will charge as high a tent as they can. Tax rates affect the value of the property when sold by reducing the cap rate, they don't affect rents. Fairness shouldn't impact the requirements for low income units. Those should be traded for the right to build, not for a tax break. The article suggests the complexity in the laws are based on the difficulties in 1980 of calculating year to year increases in property values. Much more data is available now and lots of work has gone into such algorithms, that should be less of a barrier now. It's probably less important that the algorithm be perfect than that the methodology should be apply equally to everyone.
- sokoloff 11y agoAnything that affects the cap rate also affects the marginal conversion of that building from rentals into owner-occupant usage (especially in jurisdictions where there's a homestead or owner-occupant partial abatement of taxes). It may not seem like there's a direct effect because Unit 2 on 123 Main Street is still a rental for the same price after a $50/mo tax increase. But, some other unit ends up being sold to an end-user (or a condo-conversion developer) instead of staying as a rental. Across the body of rentals, I believe that tax increases show up in rent over the long-run. Landlords aren't in the business to give renters breaks. (Nor are they evil Scrooge McDucks; the good ones are just smart businesspeople who can do math and put up with people... :) )
- DanBlake 11y agoThe system in California is pretty ideal. I say this as a property owner there. Homes are assessed by the most recent sale price. Both the city and the home owner can appeal that assessment- So in cases where you overpay for whatever reason you can get it reduced, as well as if your home falls in value after you buy it - In cases where you sell a friend your house for a dollar, the city can appeal the 'last sale price' to get a market assessment. If you do a major addition, the home gets reassessed. Assessments are capped at something like 1-2% increase a year max, so you can budget increases accordingly, thanks to prop 13. This compared to florida, where my home purchase/sale price has nothing to do with the appraisal. Instead they look at all 'comparable' homes and average out the assessment that way. That has the disadvantage of having half the people underpaying for their property tax and half overpaying.
- ild 11y agoIndiana has a hard cap of 1% on property tax AFAIK.
- brohee 11y ago"In cases where you sell a friend your house for a dollar, the city can appeal the 'last sale price' to get a market assessment" In France, municipalities can preempt real estate transactions as long as they offer more than the buyer, so the city would get your house for two dollars. This is mostly to discourage under-reporting of transaction prices, as property ownership change taxes are a major revenue source for cities...
- lsiebert 11y agoActually it's interesting to note the parallels of the relevant laws in New York with prop 13 in California, the idea was to encourage and enable people to stay in their homes when inflation was high in the 1970's, but weren't rolled back, creating issues.
- ksec 11y agoTo me, Property should not be a investment option, or Heavy tax ( 50%+ ) on Property investment profits. Everyone deserve to have a place to live, large or small. The property market ( especially after recent years of QE ) has skyrocket to a point where many can not afford to live. And if you think New York is bad, take a look in Hong Kong.
- friendzis 11y agoI am not even from USA, but this whole thing seems a bit off to me. As far as I understood, one of the core goals of all these subsidies (I'm using this phrase to group all the mechanisms that change total cost of ownership, be it tax rate or whatever) were designed to keep people from being thrown out of their homes by rising taxes due to rising value and creating affordable housing. I base my comment on this. First of all property prices can rise due to [fake] economic growth/housing bubbles. In that case most property values rise proportionally, therefore no change here - housing gets more expensive in general. Second, property prices can rise due to area getting more attractive or just having more luxurious properties. And if you can no longer afford living there due to rising taxes - this means that you just happen to live in an area that is out of your class. Income change (e.g. loss of a job) might throw a family into a lower class. Is it unreasonable to expect to relocate? Personally I don't think so. The same should apply to rising property costs in a neighbourhood. Last, any regulation differences in the same area (housing in this case) creates non-free, regulated market and as a consequence actual prices might differ from expected "natural" free-market values by quite a margin or just cancel the intended effect out. For example artificially lowering construction prices in a new neighbourhood (tax exemptions; city funded utilities installation: electricity, plumbing, etc.) might create demand higher than supply effectively cancelling out the intended price reduction. Of course city planners might want to prohibit industrial buildings in some areas, but these are in no direct competition with living places. I believe that the best solution is to simply have a fixed tax rate based on property value. The biggest challenge here is to calculate real market value without actually transferring ownership. The obvious choice of sell price is only valid for several years, while property can be held for decades. Valuation based on rental price is off if one can rent from wife. Yes, there are loopholes to plug and mechanisms to adjust billable property value without sudden spikes to place. The only way to make housing more available to the poor I see is to lower billable property value if it contains at least x units and maximum household income averaged over y years is less than z, legally placing tax burden on renters.
- ctdonath 11y agoNobody is discussing the fact that the people voted into power on grounds that they would "do something about this" have been in power and re elected on those grounds for * decades*, have done nothing about it but make more exploitable loopholes, and whine about how something must be done and they're the people to do it so must be re elected. Stop voting for the same group of Democrats who keep not solving the problem.