Hacker News Reader

Comment by bequanna | Hacker News Reader

This isn’t how taxation works or even can work. It would be trivial to avoid the tax you propose if it is based on income from the properties. If the tax is more like a property tax then it would be impossible for it to not be passed on to renters. Indeed, ALL taxes are passed onto consumers!

View on HN

Where do you live? Here in Canada properties are taxed according to their value on an assessment scale. The city does not care if you make money or not, you pay your taxes. If you also operate a business you are also assessed business taxes which you must pay regerdless of your profits. There are also income taxes on people and corporations and all costs of the business (wages, business taxes, realty taxes raw materials etc) are taken away (called deductions) on the balance the income tax or corporation tax is levied. Usually on a sliding scale, with individuals having a protected basic exemption and then a sliding scale up to around 50% for individuals of great income. A similar scale is applies to corporations but usually peaks at a lower rate.

My suggestion to apply a business tax to the rental of each suite IN ADDITION to the real estate taxes is to make corporations have a greater burden than a person living and owning it to create a disadvantage to the corporation to offset the rent seeking aspect whereby corprations can borrow large sums, pay the spread and have the tenants pay for their equity gains. This has driven property values for a 2 bedroom home to $1 -2 million and in essence makes ownership impossible.

Mmmm, not sure if that would be the case / possible with something like "First home for your use, you get tax exemptions, etc. Second house, for you, X amount of taxes. If rented, Y% of the income. Third house rented, insane % of the income (like 50%)". That would discourage people from buying-to-rent massive amounts of properties, as they would simply not be cost-effective, regardless of how much you want to pass on to the renters.

If you think that would raise rents by a huge %, I don't think so, as it would be completely impossible for people to pay.

> it would be impossible for it to not be passed on to renters. Indeed, ALL taxes are passed onto consumers!

Agreed. While not immediately intuitive, this is unfortunately very true for all taxes that are imposed upon institutions, corporations, investors, etc.

I wish this is something that could be fixed in a fair manner…

All taxes are passed on is a very simplistic view. Do I pass the taxes on to my employer when I negotiate salary? Probably to some extent, but this is like saying all cubes are squares and calling it good enough.

EDIT: typo

Maybe you misunderstood my post, but I was not arguing that this is a good thing.

But indeed, when you negotiate a higher salary, your employer pays more taxes. And this cost is passed on to the end-users of your employer’s business.

I was pointing out this view of "everything is passed on" is simplistic. There are multiple pots that can all be used. Profit, R&D, Cost to consumer, etc...

I don’t understand how profit and r&d are pots for tax losses? Could you clarify what exactly you mean?

A great example is Apple/other electronic products in the EU. They’re just straight up 30% more expensive, which is approximately the extra taxes they incur in EU vs USA.

This includes higher VAT, taxes, and even labor/payroll.

Reply on news.ycombinator.com