Why not just give the option to defer increases in property taxes?
It makes zero sense to give tax breaks to people who won the housing lottery.
And as others have mentioned, there are other mechanisms to defer the tax payment based on the house equity.
The real cruel thing is to lower the bar for the "have" (as in have a house in SV) and higher it for the "have not".
It’s funny to see non owners seem up of ways property owners could do with their ‘wealth’.
Guess what, they own property in the hot Bay Area market by virtue of..wait for it..being here and working before most of us were born!
So we can sit here on hacker news and think of all that they need to do to make us feel better, but it means nothing, you know. It’s like the French peasants wondering how Louis XIV should redistribute his kingdom to them. There are no victims. They aren’t the villains...they are just old folks who want to continue to live and die in the towns they funded and built and not be bothered by kids who were likely educated in free public schools they helped build.
What a ridiculous take. Besides, the problem of people wanting to remain in their existing homes is trivially solvable by deferring property taxes as liens against the property to be paid on the death of the owner. Average property tax in California is ~1%, so a person could live an entire lifetime without having to pay anything. But of course that was never the real reason anyone supported these absurd initiatives. It was always about rent-seeking.
When you want someone to part with their money or wealth, you have to give them a reason to do so. ‘We want what you have’ is not a good reason. It becomes a punitive tax and is based on coercion.
I see no valid arguments or offers that would make people agree to higher taxation.
The have-nots want to take more from the haves. This has happened many many times in the past. It comes from lack. Not logic.
We have to do this if we want to allocate land properly. Land is an exclusionary good, so one person owning a piece of land means that someone else can't own it.
Imagine a society with no property tax. What prevents one (or a few people) from buying up all the land, holding it indefinitely, and then charging arbitrarily high rent to everyone else? Property tax forces people to sell if they using it inefficiently, and makes sure that few aren't able to take land and exclude everyone else.
They used to send people to re-education camps to ensure it happened smoothly. We may not have re education camps here in CA but asking senior citizens to accept punitive taxes so they would feel incentivized to move to the country so land can be reallocated is the same thing.
And yes, ‘one or few’ people will buy up everything and hold it. It is the nature of property rights. To have rights over ones own property. If you want to rewrite that, we have to change what America is about..
Being able to live in your property is not ‘using it inefficiently’. Wanting someone’s property ..otoh..is theft.
No one's property is taken, they'll just sell it on the market to whoever can pay the most. That's not redistribution, it's called markets (what America is build on).
I think we fundamentally disagree on economics, so I doubt we'll come any useful agreement here unfortunately.
However, one thing I wanted to note is that Milton Friedman, one of the most libertarian modern economists thinks property tax is the best tax [1][2]. If a libertarian economist thinks a policy is good, yet you're comparing the policy to authoritarian socialist countries and re-education camps, you may want to consider that your mental model of economics/definitions of common words is extremely off base from how everyone else uses it. The Conservative Party in UK did the same thing, where they called land value tax (essentially what I'm arguing for here) a "Marxist tax grab", even when Marx opposed it!
In general, using words to mean the exact opposite of what everyone else considers them is not a great strategy.
Even ignoring that, I think claiming that property taxes are the "same thing" as re-education camps is a fairly tone-deaf statement to make (and one most readers would consider wrong), and it only serves to weaken the rest of your argument.
[1]: in his words, the "least bad tax", but that's equivalent, since he considers taxes to be required
Secondly it is not market forces when the govt has to interfere and impose more taxes to make sure homes become affordable to the working class by snatching away the economic net of the non working retired class. In fact, it is the exact opposite of ‘Markets’. It’s a freebie by the govt to the govt educated public school kids who became adults. The kids who grew up in public schools are doing what they were taught to do. Redistribution of common resources and wealth. Socialism sits uneasily with free market forces. An imposition of an INCREASE in taxes is not the same as imposing a tax.
Friedman speaks about land value tax on unimproved land. And that the property tax thus collected should be used for public services like law and order, infrastructure and essential services.
Almost 85% of the property taxes collected is used for public system. 45% of California state budget goes to provide free public school education for everyone regardless of whether they pay taxes or not to the tune of 10-12k/child per annum. It is also used to cover unfunded pension liabilities of these public school system teachers.
I am pretty sure you haven’t understood what Friedman suggested and this was read from some Bay Area real estate sponsored article from a click bait’y rag that has nothing to do with economics or Friedman or libertarian economics.
There is zero economic logic is in trying to alleviate housing shortage by taxing retired property owners on fixed incomes except to displace them..aka drive them away to make space for public school educated young people who despite having earning power are not mobile enough to educate their kids in quality schools because California’s educational system is a Ponzi scheme. And no one is paying attention to it because the schools did not do the job of actually educating these kids in..I don’t know..subjects like economics.
Current workinh populace can not afford to buy properties from older folks. Because they lack the purchasing power. So the mob wants to increase taxes so old people who don’t gain anything from public school funding will leave.
This is exactly what is known as ‘cutting the nose to spite the face’ because what’s good for the goose is good for the gander. The only winner is the govt that gains more taxes from property, income(because only the wealthy can now afford to buy and most of their income is going to income taxes, property taxes, sales tax, gas tax, road tax on top all the other special taxes, parcel taxes, business tax etc). It’s like in the casino..the house always wins. Why anyone with a modicum of understanding of economics cannot see this beggars belief.
The problem is relating property taxes to public education budgets. The problem is the speculative nature of real estate and allowing foreign investors to speculate on California real estate. The problem is the lack of TRUE purchasing power of the Silicon Valley grunt workers allegedly making hundreds of thousands of dollars in income but have little to show for it. The govt is taking them for a ride and they can’t see it because the critical knowledge of evaluating a bloated govt’s economics is conveniently left out in the public school system. And I suspect..by design.
Density benefits taxes. Taxes are ‘good’. The purpose of a tax increase is to make it unaffordable for retirees to continue living in their homes and to displace them. It doesn’t pay for any services. The govt acts like a henchmen so housing stock is cleared and made available for the highest tax paying demographic. So they can collect more taxes. Let this sink in. I repeat. Let.This.Sink.In. Milton Friedman ..trust me on this...wouldn’t approve.
The government also has to fund services to everyone who works there whether or not they own land. Do devices cost more to home owners based on the value of their land?
I thought the purpose of tax was to fund the government. Not to take stuff that other people wanted.....
Property taxes are among the most economically efficient taxes that exist. They are an excellent way to fund the government.
What happens when they can’t pay their taxes? The government takes it.
Those same tech bro’s would hate it if they were taxed on unrealized, illiquid wealth.
But, yes there are plenty of jurisdictions that give property tax breaks to senior citizens.
Problem solved.
You
Sure you can: https://point.com/how_it_works
The pros and cons of a mark to market capital gains tax are pretty far outside of the scope of this thread, so I will save my thoughts on them for another day.
This is obvious when you consider the fact that a person who owns a piece of property outright pays the same property tax as someone who owns a similar piece of property but carries a mortgage.
Edit: I think a tax on imputed rent could maybe be considered a consumption tax, and it would indeed make sense for it to be higher or lower depending on the location of the property. But a tax on the value of the whole property is not, because it also captures the value of the property as an asset. So that's why I think your argument is too broad.
That makes a 10% tax on imputed rent the exact same thing as a 1% tax on the value of the property.
So your point is really just an argument about the rate, not an argument about the fundamentals of what is being taxed.
Note that property taxes tend to be a fraction of sales taxes for exactly this reason.
Does it vary all that much within a specific property tax jurisdiction?
- There is no usable building on your property.
- There are plans to build a highway through your neighborhood in five years.
- Amazon has announced plans to build an office in your neighborhood two years from now.
- There are harvestable (with further development) natural resources on your property.
Many of these have impacts on hypothetical future consumption, but hopefully you agree that a tax on anticipated future consumption indefinitely into the future is not a consumption tax.
I don't have data as to precisely how strong the correlation is, but I think it's pretty clear that it is not 1, and furthermore if we really wanted to tax imputed rent directly we could presumably do so (we'd have to guess what it is but the same challenge applies to valuations of properties that haven't sold recently). So I just don't think "consumption tax" is a good way to look at a tax that clearly captures, and is designed to capture, other things.
I'm actually pretty curious now, and might be go looking for data. It's surely not precisely 1, but I bet it's not all that far off. Especially if you limit the sample to residences.
Your list of outliers is a good one (I particularly like the natural resources one), but I think they're probably mostly exceptions to the rule.
In the end though sure, property taxes aren't precisely consumption taxes. But they clearly aren't wealth taxes either. They're something in between and, I think, much closer to consumption that wealth.
I've really enjoyed thinking about the points you brought up. Thank you for doing that.
It’s only more valuable because tech bro’s want it.
SF has had an explosion in property values and thus struggles to find teachers, firefighters and police officers at the salaries it's willing to pay.
Trash pickup is actually a great example. Where I live it’s not part of your property taxes. It’s a separate bill and everyone pays the same amount.
The city council can set budgets for the different departments and set taxes based on the budget. Neighborhoods already do something similar via homeowner’s association fees and condo fees.
But, yes, there is plenty he can do. Stay in the house and keep paying low property taxes.
Once he dies or sells, then all those accrued property tax increases get paid, with interest.
You know, the same way a lot of governments in Canada and the US do it.