High property taxes are good | Hacker News Reader

High property taxes are good

brooock.com

234 pointsbrockwhittaker597 comments

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments that use LVT in practice [1]? What do they do?

[1] In practice and as a primary means of property taxation. For example, proponents of wealth taxes talk about Switzerland, but the percentage of wealth that gets taxed there is quite small and nowhere near what proposals for wealth taxes in the US are aiming for. In other words, what's a good country to look at to see LVT used effectively?

Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".

> I understand the benefits of LVT, but how do you solve this?

Georgism[1], which I'm fascinated by. One way to organise it is to ask people how much tax they're willing to pay, from which the land value can be derived (as that's the real point of assessing land value for someone who isn't willing to sell that's the real order of things). However, if someone bids on the land for that price you must sell.

> Are there any good examples of governments that use LVT in practice?

I thought there were only one or two places using LVT but it appears there are quite a few[2], but it's rarely pure LVT.

[1] https://en.wikipedia.org/wiki/Georgism

[2] https://en.wikipedia.org/wiki/Land_value_tax#Implementation

https://astralcodexten.substack.com/p/does-georgism-work-par...

Had a good summary of land valuation problems

Proposed mechanism: You declare the value of your land, but the government can buy it at the declared price if they want to. This also makes land acquisition for infrastructure straightforward and transparant.

There is a risk that the government will increase taxes such that people can't declare high land prices, which allows the government to buy up land for cheap. I haven't found a mechanism for that yet.

It will be interesting to see if Texas ends up with some sort of Proposition 13 equivalent given property values and property taxes have been increasing a pretty significant rate.

Fight over increased property taxes in Texas becoming political https://www.youtube.com/watch?v=gzUwoFVUc_I

Texas voters to decide on 2 propositions that could impact property taxes https://www.youtube.com/watch?v=Nz67VXkjRfg

It seems like the Texas Homestead Exemption Act is starting to morph into something analogous to Prop 13. Perhaps if there's enough growth in tech jobs (and more billionaires start hiding out there) they'll end up with an income tax like California and New York.

Wikipedia has some examples of places where it is used: https://en.m.wikipedia.org/wiki/Land_value_tax

Just let property owners declare a value for their land, and give anyone the right to buy it for 120% of that value at any time, with the existing owner given a grace period where they can restate their estimate.

I don’t think that’s a meaningful difference. It would take an extreme property tax to actually incentivize an empty field over productive use of that space.

It might in theory make a difference when considering replacing a 40 story building with a 42 story one, but in practice you really don’t see that kind of construction project. In that context pushing for larger jumps before replacement might actually be economically and environmentally beneficial.

Have you ever seen a flat parking lot in the downtown of a US city?

Low property tax (because it's unimproved) plus real estate speculation.

It’s not just empty fields. It’s also empty buildings. A grocery store sized unit sat vacant in my San Francisco neighborhood for over a decade. Cheap property tax due to Prop 13. Owners wanted to wait for the “right offer” to develop it.

In Australia at least local government rates are based on "improved property value", i.e. you get taxed more from building a house on your land. It absolutely does lead to land-sitting even in higher density inner-city suburbs.

Land value taxes are not functionally different than just regular property taxes in the places where it matters. In all of the areas that are in the worst of the housing crisis, property value is already dominated by land value; LVT doesn't really change much.

The problem, just like the source says, is that the tax is too low, not mention the absolute disaster that is Prop 13 in California.

The advantages of a land-value tax is the central idea of Georgism/Distributism. There have been some interesting discussions about this on HN. Recently: https://news.ycombinator.com/item?id=29493005

> Land value taxes are even better. Property taxes provide a disincentive to making the land more productive.

I could get on board with this if cost to build and demolish were considered. We have a lot of SFHs that don't make sense to turn into town homes yet because the value of the home on property + demolition costs + cost to build new townhomes on property is greater than what those townhomes could sell for.

More to the point, a blind land value tax could create a lot of waste through otherwise unproductive land repurposing (only productive because the tax makes it so).

That seems like the point, though - the land tax makes it so that it is productive to add more density. We want people to demolish that SFH and turn it into a townhome because we need more housing, so that's a feature of the tax, not a bug.

I'm not clear on how land value taxes would incentivize the right kinds of units. For instance, would a land value tax incentivize the creation of tiny bachelor apartments, or larger apartments that families can use? We need incentives for both, and larger units are not very common these days.

Why does tax policy need to directly influence the mix of 1bdr and 3bdr apartments? Renters who need 3bdr apartments have enormous influence over the market already.

The only thing land value tax incentives is raising the building value to land value ratio. It says nothing about what kind of building is optimal.

The LVT is meant to stay neutral and let the market figure it out. That would probably mean more density compared to today (where lots of traditional houses take up massive amounts of space while paying artificially low tax), but if people are willing to pay a fair price for a big place then that's what will get built.

This could have extremely negative side effects. A really expensive house on cheap land in some exurb would be comparatively cheap, thus encouraging sprawl. Old, cheap high density housing in desirable cities would all of a sudden become really expensive, hence massively acceleration gentrification.

It doesn't, the only thing it does is remove the tax per apartment which means building more apartments on the same lot becomes cheaper per apartment.

> A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents

Zoning usually dictates what's allowed and is indifferent to tax rates

Exclusionary zoning exists because of NIMBYism. NIMBYism exists because of the financial incentive to raise land values. That financial incentive exists because of a lack of taxation on land value.

One of the many reasons exclusionary zoning needs to die in a fire. The urban housing crisis has been allowed to grow for decades, so we're long past any single solution, but I'm increasingly convinced no combination of fixes can succeed while exclusionary zoning still exists.

Japanese-style inclusionary zoning splits the difference nicely between making sure people don't live next to loud, potentially dangerous industry and allowing lots of mixed-use, human scale developments of varying density.

http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html

There is zoning, and then also the cost of development. Here, the reason why no starter homes are being built is because the cost to develop a subdivision is so high that no one can make a profit selling inexpensive homes.

The original purpose of the tax is to reclaim the land if the possessor can not make enough money off the land, or prosper some other way, to pay the tax.

A mortgage acts like this too and if the tax was insignificant by comparison it would seem so fair but at least a mortgage can eventually be paid off in full. Then the bank no longer has an interest but the taxman never stops.

Taxes always go up but economic fortunes do not, when these become out-of-phase the original purpose is fulfilled.

This is what makes people demolish perfectly good buildings to reduce the taxable value of their property while they try to hold on to the land during a downturn.

Mortgages don't make people act like this.

For the greatest prosperity of the average citizens in a sustainable system, you tax nothing but commerce.

The purpose of taxing the income or property of average citizens is to repress opportunity for the majority.

This is by design.

Not in all cases. I live in a Resource Conservation area where no lot less than 10 acres in size can be subdivided per zoning laws. The zoning is set as it is to preserve watersheds, wildlife, etc. There are limits (by ratio to land area) that dictate structure density, amount of impervious substrate that can exist within the perimeter of my property, etc. Just because I own over 10 acres doesn't mean I can sell my property to a developer so that they can build four high rise apartment buildings and turn a rural area into a burgeoning metropolitan hub (while destroying a large swath of forest in the process).

We pay high property taxes (which are split value taxes, by the way) relative to other rural areas in the region. That is, we are taxed for the virtue of owning relatively large plots of land (for our area) that come with the protections afforded by the zoning laws--even though our sparsely-developed properties and the characteristics thereof provide benefit to all in our area, including city dwellers (e.g. readily available and clean drinking water, maintaining a healthy ecosystem), for which a value could be assessed that would result in lowering our taxes.

That said, I purchased the property specifically for the Resource Conservation zoning protections, as did my neighbors--and we'd have the zoning laws set no other way regardless of the cost of doing so.

Trying to jam more people into the same finite amount of space is not a sustainable solution (here's looking at you, Bay Area). A byproduct of the recent pandemic was that a significant number of people beta tested relying on technology to get their job done independent of where they were physically located. I would argue it generally worked quite well (though not in all cases).

Though a more ambitious plan than merely increasing taxes and hoping that more housing is developed, why not incentivize people to move to less populated area with the intent of promoting a more-even distribution of population density over time; incentivize medium and large businesses to either permit remote work or establish and maintain local/regional offices if remote work is not conducive to their lines of business or their corporate culture; and fund timely development of new and improvement of existing infrastructure that would make previous two goals achievable?

property taxes are terrible for old people. you should be able to buy a reasonable amount of land tax free.

USA has about 2.5 billion acres. 1/4 acre per person in an average area tax free is reasonable.

The way people in the US plan for old age and retirement, and the way they are treated by society, is terrible and property taxes are aspect of that. But the only way you should be able to own land tax free is if there are no government services provided on that land. No utilities, no public road, no emergency services, no municipal services. I don't know of anywhere in the US where that is an option. Unless you're saying you want that funding to come from a different source, which would mean a total restructuring of the tax system in the majority of localities.

USA has about 2.5 billion acres

I don't see how that's relevant, not all land is equally well suited for housing, especially among the elderly who are likely to need some sort of living assistance and regular access to healthcare.

property taxes are terrible for old people. you should be able to buy a reasonable amount of land tax free.

I think something like California's Prop 13 that puts a cap on property tax increases is a better idea -- but it should only apply to owner occupied primary residences, not second homes or investment properties.

Fairly sure this is to increase population density in the area, so selling old homes for tear downs would be a net gain.

The more reasonable approach to this would be discounts for the primary residence, and possibly discounts for populated units, depending on if you are targeting home owners / overall population and housing cost.

Quarter acre per family might make sense across the US as a whole with large swathes of empty land across the middle, but it makes no sense if you look at the average individual given the percentage of the country living in urban areas.

Just allow the elderly to accrue property/land tax debts against the value of the property, redeemed when sold/transferred or on death.

Property Taxes aren't terrible for old people. How the mille-rate is set is terrible for old people.

A fixed mille-rate results in taxes going up as value goes up. This might be difficult to plan for and manage. However, many cities will simply put a lien on the property and collect when the property is sold/transferred/person dies.

However, this isn't necessarily how things need to be done. In New Zealand, the mille-rate is set to clear the budget. That way, the mille-rate changes with the city's budget, not valuations.

If the city wants to do more, they put it into the budget and say "do you want to pay for it?". Then the mille-rate is changed and everyone's taxes change.

If your house changes value, your taxes don't change! Unless your neighborhood changes its relative valuation, then it might go up or down.

Most states and counties I’ve lived in in the southeast US either exempt or minimize property taxes on residents that are over 65.

In fact, my current area (Cobb county, GA) nimbys keep trying to block assisted living residences. The argument is that old people move in, don’t pay into local funds, but the burden is hoisted on other younger families instead.

1/4 acre is the roughly the footprint of 432 Park Ave which is worth billions of dollars. There's no way a single old guy should be able to squat on that tax free.

The lack of property/land value taxes hurts anyone who isn't retired. I care much more about poor young people who get priced out of moving to a better job in the city than an old person who is "forced" to sell their multi-million dollar single family home. If an old person insists on living in a place where they can't afford property taxes, there are plenty of people willing to pay their property taxes until they pass in exchange for a stake in equity of their home.

> property taxes are terrible for old people. you should be able to buy a reasonable amount of land tax free.

When LVT is used to fund UBI, that ability is automatic: the "break even" point (where your taxes minus dividends are zero) would represent you owning a "reasonable amount of land" (as measured by value). If you own more than that, you pay for it; if you own less than that, you're paid for it.

Sure, I'll happily give you a quarter acre in rural Nevada tax free.

A quarter acre in Palo Alto, though?

In many states low income seniors can opt out of property taxes and take a lien on the house instead. This way they feel zero tax pressure no matter what happens to the local economy.

Examples are California Tax Postponement Program and New Jersey senior freeze.

It is called a citizen's dividend and it even rewards people who use less land than the average.

This would certainly impact people with older houses disproportionately relative to the wealthier folks doing the teardowns, though. Probably a political downside.

Where they implement such taxes, people with homes often get lower taxes because the tax on vacant or underutilized properties makes up for it.

What's the difference between the two in reality? Theoretically, with a land value tax, "improvements" (however that's defined) aren't added to the final tax calculation. However better-looking homes are then a signal that drive up demand for (and therefore price of) land so ultimately it seems LVT does punish improvements if only indirectly.

> What's the difference between the two in reality?

Land value tax incentivises turning a single-family home into a multi-unit building. Property tax explicitly discourages that.

> What's the difference between the two in reality?

One taxes the land and the building(s) on it. The other only taxes the former.

In practice, this means that while property taxes and land value taxes both penalize speculation, LVTs more precisely do so, without the side effect property taxes have of penalizing construction.

> However better-looking homes are then a signal that drive up demand for (and therefore price of) land so ultimately it seems LVT does punish improvements if only indirectly.

Even assuming that effect does happen, it'd be considerably worse under a property tax.

Almost all property people buy and sell is productively used, and separating the value of land and improvements is practically impossible.

Edit: As a weird example, subtracting what it would cost to build my California house from its current market value gives a value for the lot far lower than the actual market price of an empty lot in this location. This isn't just due to the depreciation of the construction (2012) but to market inefficiencies. It's actually the norm in our town. Only developers with economies of scale can really afford to build here, modulo a few wealthy families who are building their dream home without concern for ROI.

>separating the value of land and improvements is practically impossible.

is routinely done in countries in which variants of land value tax are implemented.

> gives a value for the lot far lower than the actual market price of an empty lot in this location

Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.

> disincentive to making the land more productive.

Isn't that like saying income tax disincentives people from making more money.

A land value tax discourages people from owning land and an income tax discourages people from working.

It disincentivises labour, yes.

No, I hate it. It’s a tax on just living and we don’t need to do this in the US where we have more land than we know what to do with.

I'm struggling to make sense of the cause and effect in the article:

"The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term."

Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes. Next:

"This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York."

How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators? If so, why not just get rid of speculative buying (simply make it illegal)? What does it have to do with property tax for ordinary citizens?

And what on earth does Chicago have to do with San Francisco or New York?

> How does specifically a high property tax for genuine buyers lead to lower prices? Because of less demand from speculators?

Speculators are forced to sell, because the cost of keeping too many houses locked down is high and starts to show on their books, so they have to explain it to the investors, that go away unsatisfied, and so on.

Of course, that only makes a difference if there are many unused houses.

Also the idea is that as prices fall, the absolute value of the tax falls, but speculators still do not have a motivation to buy them, because the price isn't expected to rise.

> If so, why not just get rid of speculative buying (simply make it illegal)?

Because you will need an entire book of rules, that lawyers will use to get a lot of money, and rich people will use to make the tax not apply to them. (But there are some simple rules that can only be gamed a bit. Maybe those are enough.)

How is “a hefty tax on a good reduces it’s value” a controversial claim requiring substantial evidence?

Nobody is willing to pay as much up front for housing that has higher ongoing costs.

Because a suppression of price would also suppress new development? Why would a builder build anything in an area of low profitability, in a backdrop of rising costs and worker shortages?

So how come there's ample low cost high quality housing in Chicago?

The same remark applies to home owners. Your property won't rise in value, so why buy it? You must really want to live in the area, I guess.

And yes, I know the point of a house is to live in it, but almost everywhere it has a double function in also being an appreciating retirement fund.

For now my theory is that a lot of speculative supply got dumped, leading to a one time effect.

> almost everywhere it has a double function in also being an appreciating retirement fund.

That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth.

Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look like at 10% per annum? 20%? 100%?

At 100% per annum, the average land value of a house needs to be below $50k or so in current dollars (most would need to be much less). Any higher, and ~nobody is willing to pay the taxes.

A large home costs $200k or so to build vs a small/cheap home at 80k, so property prices now range from 50k (old cheap home) to 250k (new, high-end home).

That's a huge result for housing affordability! People are currently saving deposits of 80k to get a mortgage.

Instead of paying mortgage costs to capital holders, you're paying tax to a government that ostensibly exists to serve you. Instead of buying "the most I can afford so I get a retirement fund", now people are buying housing based on their willingness to pay an ongoing cost for access to amenities.

I think there are higher order effects at play.

For example low property taxes encourages NIMBYism which results in lower density zoning which reduces new supply.

If high property taxes reduce NIMBYism by making homeowners feel the housing crisis themselves, that alone could ultimately increase affordability.

What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check

The elephant in the room is the amount of housing supply being held by banks and private equity in an effort to shore up housing prices. They can afford high property taxes. Your elderly parents might not be able to.

Obama should have let the bankers twist in the wind when the citizenry was out for blood in 2008. They repaid him by channeling money to Republicans. Put them all in jail.

> They can afford high property taxes. Your elderly parents might not be able to.

Texas has an interesting solution to this. Homeowners over 65 can elect to defer the payment of their property taxes indefinitely, although the taxes eventually get paid when the house changes owners.

"They repaid him by channeling money to Republicans."

I'm uncomfortable with this phrasing. Are you implying that the bailouts were some kind of quid pro quo?

Banks/investors don't let property to just sit there if the cost of renting out is small. (Ie. if the risk of getting into an long eviction fight is low, then they will not let it sit empty.)

On the other hand, it also increases the demand to rent property on AirBnB, if that's allowed and it's a desirable area. Tourists can pay more than locals.

In general, as costs go up, the more there is incentive to try to cater to wealthier customers.

That can be right in the short term, but in the long term you'd expect developers to stay out of the market, so how is it that Chicago has a "glut of high quality housing at very low prices"?

My guess is that this probably indicates that the primary obstacle to construction currently isn't developer capital. It could be that housing construction is still profitable, as there's comparatively less political resistance and less of the budget has to go to legal fees and bribes.

In the interest of being intellectually honest though, that's probably not the full story. It's worth pointing out that Chicago's population peaked in the 50's and that property taxes were probably lower back then.

Also worth pointing out that there's a lot of directions for sprawl to help meet housing demand. I actually grew up in Indiana and my dad worked in Chicago. We lived in Indiana because the property tax was significantly lower even though housing prices were comparable.

I don't think this statement is true because in high cost areas developers still don't develop because higher price also mean higher land costs. On top of that places like NY have lower taxes but not enough development over a long term scale. This taxes codes don't change on a whim. There is also a factor of zoning when it comes to build there very well might not be any land to develop near a city because it's all saturated from long term speculation

>> now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high property taxes.

Homeowners are concerned with the size of the deposit required, the size of the loan needed, and ongoing costs (inc taxes). This tax will likely mean a smaller deposit and loan than would otherwise be the case. This could be offset by higher ongoing costs by the property tax.

For a speculator, they have the same concerns as a homeowner, but most significantly the potential for capital gains. Yield also comes into it, but let's face it - without strong capital gains no one would be paying these prices (homeowners included).

Lower potential for capital gains effects speculator demand more than homeowner demand.

> These genuine owners are paying high property taxes.

Not if the tax base goes down. Which is the point.

> If so, why not just get rid of speculative buying (simply make it illegal)?

This makes the lawyer rich too. It’s not a smash-and-grab at a Walgreens. You can’t put real estate cops on every deal. If price is expected to go up, people will speculate.

I doubt speculator demand has anything to do with anything in the long term.

I also doubt that developers would bother with a market like the one described. Why not go to some other state/city where construction costs are low and property taxes are also low?

Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market. As the "cheapest of the Big 6", once Atlanta falls, other cities will, as well.

General contractors don't just do general contracting, and it's not like tech where you can pick up and move anywhere there's internet.

>Blackrock is currently propping up residential property prices in Atlanta to keep the bottom from falling out of the housing market

source? On one hand they could be as you said, but the alternative could be that investors think that "cheapest of the big 6" makes real estate there undervalued and therefore a good investment.

I think it is utopia to compete with investors on price. Sure, you can make it too expensive for them. It will be too expensive for everyone else too.

Why not make property tax cumulative with the amount of property owned and impose a progressive tax here? It would have an equalizing effect on ownership and speculation would be less attractive for those that already own o lot of properties.

Sure, you have to fix a lot of holes to circumvent taxes so that not every company creates a large amount of holdings, but such strategies are a problem with every tax.

To now say a high property tax would scare away investors doesn't sound workable at all.

> And what on earth does Chicago have to do with San Francisco or New York?

This was such a laughable comparison because BOTH of these cities have high property taxes compared with more affordable cities in other states.

I don’t know about NY, but in SF property taxes are effectively frozen based on the value of your home when purchased.

I rented a house once in West Portal where the landlord was paying property taxes on the 1970 value of the home, which was something like $70k. The owner was gifted this house and taxes basis from their parents, who originally bought it. The tax bill came out to just a few thousand dollars as of 2020.

Meanwhile my neighbor at the time bought their house for $3m and was paying something like $35k.

I thought about writing the property taxes in front of each house on the sidewalk with sidewalk chalk to make a point how messed up this tax policy is, but I opted instead to keep the peace and do nothing.

This loophole is used by families in CA as a way to pass assets to their heirs. The worst part is the tax rate also gets passed down, but one generation tops.

This website makes it easy. I looked up West Portal and there are several homes paying 1-3K, many in the 15-20K, and some 30K+

https://www.officialdata.org/ca-property-tax/#37.74219147779...

Not only keep the peace, but you probably already understand that West Portal residents likely do not care about wealth inequality, or care about it in the opposite way that you seen to. I mean you don't wind up there by accident.

San Francisco (all of CA) has very low property taxes compared to non-CA cities. Because of Prop 13, property taxes are limited to 1% of the purchase price of the home (appraised values can change a max of 2%/yr).

As a result, my neighbor has a house with an effective tax rate of <0.1% ($3,000/yr on a single family house worth >$3M).

I think New York means NYC in this context and NYC has incredibly low property taxes. I believe it's due to a cap on maximum annual increases. New York State tends to have high property taxes on the other hand.

I'm less familiar with San Francisco, but I wouldn't be surprised if they had low property taxes due to Prop 13.

Even if this is provable, why not have a progressive property tax rate? Owner occupied properties can be charged half the rate of rented properties. Rather than increase it for everyone and making it harder on the very people who are likely to sell it to a speculative investor.

It's also desirable to nudge owner occupied properties towards efficient uses.

For instance, there's loads of large family houses being occupied by empty-nesters, while those trying to raise a young family are squashed into undersized townhouses.

Shifting the cost-base from "pay a huge mortgage and a tiny property tax" to "pay a moderate mortgage and an moderate property tax" means it's more likely to be worth the hassle of moving to a smaller house when you no longer need the space.

Landlords will just pass the extra tax to tenets. And mostly low income tenets will bear the cost as they are least likely to have enough money for down payment.

Now you need to police whether people are living in specific houses. This is simple and much harder to get wrong.

Just go straight to land-value tax https://en.wikipedia.org/wiki/Land_value_tax

I agree that the cause and effect is backwards, but for a different reason. High property values lead to lower property tax rates (but not necessarily dollar amounts). The total property tax is largely set by how much money is needed to provide services to a place, which is mostly independent of property values (though I guess stuff like building schools is more expensive if it costs more to buy the land). NYC also has a city income tax further lowering the amount of money that needs to be raised.

If I have $10M to spend on property to take out of the market and hold for a period, do I buy where it will cost me 250k per year in taxes or 50k per year in taxes?

If you're a speculator, you'll buy it wherever the expected profit, after taking out all expenses, is the highest.

If the tax is high in a location where they think they can flip the house for a 50% gain in a few years that's still better profit than a lower tax in a place where they'll gain 5% in a few years. So the property tax doesn't, all by itself, matter to the speculator. It's just a cost of doing business.

A high property tax does, however, hurt the person who just wants a house to live in it and doesn't care about being a speculator.

> If so, why not just get rid of speculative buying (simply make it illegal)?

How do you propose to do that in the US?

Laws requiring occupancy before selling them? Just guessing.

And, thanks to Proposition 13, California has entirely removed this policy tool from consumer housing.

A tremendous amount of our problems, from high rent to gridlock, can be traced back to this decision.

Early born privilege.

This is local democracy in action. Vested landowners can put up barriers to entry to prop up their investments. They can also hand it down to their family, entrenching wealth for generations. Sucks to be an outsider.

The push back on Prop 13 blows my mind. "What will actually make housing cheaper, is to make costs higher, actually."

Ok you've forced a bunch of house painters and restaurant owners to sell and move out. More tech workers buy the houses, more large chains buy the retail space, now what?

Prop 13 solved two problems at once. It forced a reduction in the out-of-control government spending, and it saved seniors from losing their houses. IMHO the only problem with Prop 13 was the "grandfathering" clause. The cuts should have been perpetual and across the board.

> It forced a reduction in the out-of-control government spending

No, it didn't. California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there.

> It saved seniors from losing their houses

Why are seniors magically allowed to be immune to basic market forces when no one else is?

Doesn't Prop 13 also apply to commercial property? And second/third/30th houses? I think they smuggled a bear in as a rabbit with this one.

Grandma is a millionaire. She can take out a reverse mortgage to pay her taxes and she'll still be a millionaire. Or she can agree to a lien that pays her taxes upon her death or move. We don't need to worry about grandma losing her house.

It created a landed gentry in California and has caused out of control housing prices. The world changes, trying to insulate one particular group from change is deeply unfair.

Inexpensive senior housing comes from the same place inexpesive housing for everyone else does: building more housing.

Unlike first-time buyers, though, for whom asset inflation is itself strictly a tax (paid by them, to seniors, but far more so, banks and investors), price inflation of an asset you already hold is free money.

It's highly distortionary.

From https://en.wikipedia.org/wiki/Land_value_tax

> Property taxes discourage construction, maintenance, and repair because taxes increase with improvements. LVT is not based on how land is used.

From https://www.strongtowns.org/journal/2019/3/8/if-the-land-tax...

> The problem is that the land tax component of a traditional property tax is too small to deter land speculation. Although property taxes vary from place to place, they are typically between 1% and 2% of the property's total value paid annually. If inflation is low, then for longtime property owners, this amounts to roughly the same cost as if they paid a one-time sales tax on the property of between 10% and 20%. Thus, the property tax applied to building values inflates their price by between 10% and 20%. And the property tax applied to land value allows 80% to 90% of publicly-created land value to accrue as a windfall to landowners. Thus, typical land taxes are too weak to discourage land speculation.

Etc. https://duckduckgo.com/?q=economist+land+use+vs+property+tax...

Property taxes discourage existing inventory from being taken off the market in order to speculate via property holding, at the expense of also discouraging new building.

Land value tax discourages holding vacant or under-built property, at the expense of lowering the cost of the land. This means existing homeowners won’t be able to sell their old homes for as much as they could if fewer surrounding properties are developed (more modern, better built, larger, with more units), because their old home is closer to being worth the raw value of the land.

If you want to sell a $50,000 home for $500,000 because it sits on land that grew from being worth $10,000 to $450,000, then a LVT is terrible for you: you need to put in actual work improving your property rather than just sitting on a decrepit old building and selling it for a profit. The problem in the US is that the voters who mostly own their home can’t stomach their home value decreasing: that reduces their paper wealth as well as their ability to take out loans and second mortgages for things like college or car payments. So politically it’s a hard solution to push for (even if, on net, it would help the community be stronger).

Doesn't this presume that all property is taxed at a flat rate? Wouldn't the answer be to split the property based on what the city wants to accomplish? Then empty land can be taxed at a different rate to property with a residence on it (or whatever priority the city would apply).

Check out all the different tax rates that Wellington, New Zealand applies to a property [1]. I count 50!

[1] https://wellington.govt.nz/property-rates-and-building/rates...

There is so much incompetence and political game playing regarding property taxes. I work in commercial real estate development. We negotiated a TIF district in a small midwestern town to help redevelop their vacant mall. In theory, if we could redevelop the mall and fill it with new stores, the sales taxes and property taxes from this growth would greatly benefit the city over the long term and help finance this risky project.

First we came into battle with the school district. They would not allow us to build apartments on the mall site because "renters don't contribute to property taxes for the school", even though the citizens of this town need rentals because not everyone can afford a home. It then came to light that the city had been paying the school district out of their operating budget... which is illegal, schools can only be funded by property taxes. But would any politician want to go to war with the school district because they had accidentally been paying them illegally with taxpayer dollars? No way, they'd be voted out for attacking schools. So the school district continues draining the operating budget from the city to this day, while also getting their share of property taxes.

Enter the county assessor. We went back through all the assessment records and discovered that the county assessor had not re-assessed the commercial properties in the area for 8 years... meanwhile jacking taxes up on single family homes annually. Essentially they were giving businesses a freeze on property taxes while shifting the burden onto homeowners. If the county wasn't reassessing commercial real estate, than our TIF development couldn't demonstrate growth as the taxes would not change! So we tried to shake the hornets nest and let the county and city know that their taxpayers were being taken advantage of...

What was the end result? Why had they not been reassessing commercial properties? Incompetence, the assessor was some idiot who was voted in because he had the "D" next to his name and did not know anything about assessing property taxes and argued that he was simply "too understaffed" to assess commercial properties for the last 10 years.

Now imagine a whole country where massive, expensive errors like this can play out without anyone noticing for nearly a decade... it's frightening how broken, corrupt, or incompetent our government is in the United States.

In theory, decentralized government delegating various decisions closer to the people allows for more oversight and flexibility. In practice, in most places the oversight doesn't happen and just results in local politicians doing what they want, and simply enforcing a one-size-fits-all rule of law would be an improvement.

Sorry this was annoying and messy for you, but I look at many other countries and on balance this doesn't sound too bad, and certainly not "broken or incompetent" as if the US was on the verge of collapse because of things like this.

If anything, this sounds like a system working, and you doing a bit of whining. Yeah, there's political game playing, that's called the price of localism and democracy.

A city breaking the law for decades by paying the school district illegally and no one doing anything about it out of fear of getting bad PR for their election campaign... or mishandling property assessments for 8 years are all pretty huge examples of incompetence and are not something I expect in a first world country.

It's the exact opposite of the system working. It's people being given power because of their party rather than their qualification and it indicates a greater sickness in politics in which we have become binary sports fans rooting for our team no matter the cost or quality of the candidate.

To be fair I have no clue how broken property taxes are in Europe or Japan or other first world places, but this ordeal was eye opening to me having grown up assuming our local governments were held to a higher standard.

High property taxes are clearly not intrinsically good; they're passed on to renters, and so they decrease affordability. Land value taxes sidestep this (increasing density decreases marginal tax burden on tenants), but they're not going to happen. You have to design policy for the world we actually have, not the one you'd prefer to live in.

(Property taxes are a real problem where I live; we're an upper-middle-class enclave directly adjacent to the roughest part of Chicago, and affordability issues prevent people in Chicago from moving across the border to get our services. In the world we actually live in, annexing the Village I live in would make more public policy sense than raising property taxes, which gives you a sense of how clumsy those taxes are as an intervention.)

LVTs are a panacea for the concerns paper wealthy. They fear taxes on stock trades, capital gains taxes, and other forms of paper wealth tax; a LVT lets them point at the homes of the masses and say "Look, there is an easy to track and tax asset class, sink your teeth into that and not my stock portfolio or trades."

Financial transaction taxes aren’t really a concern for people who own stocks. Trades used to cost money before the zero-fee brokerages. An FTT will just be like everyone having to pay a slightly higher fee: a little less liquidity, slightly wider spreads, not much cost if your investment strategy is shaped roughly like ‘buy SPY and then do nothing for a long time, then sell some and maybe buy some bonds’.

It just doesn't matter. Land value taxes aren't going to happen. We need to make smarter decisions with the policy levers we actually have, and not pretend we'll have levers we don't.

A lot of companies like McDonalds are just real estate companies in disguise, an LVT would wipe out the stock market.

While true, renting is a roach motel no matter what property taxes are.

Obviously this isn't true at all.

This is one area where (I hate to say it) the red states have tended to do a better job than the blue states.

Take Texas as an example. Up until this last year at least, Texas had relatively low property values but high property taxes. But high property taxes on a $200,000 house aren't the end of the world.

But here's a big one: in Texas, seniors (65+) can defer their property taxes to be settled upon their death. This allows seniors to stay in their house if they really want but incentivizes seniors to downsize to avoid passing on that liability onto their children.

This is exactly what you want.

Compare that to California, for example. "But what about the Seniors?" led to Prop 13, which was a massive tax giveaway to Disney and affluent property holders. Capping property taxes deprives the state of taxes to fund services for no good reason.

Even worse, when your children inherit that house, they inherit the house on a stepped up basis (meaning they pay no capital gains tax and the capital tax base gets reset to the market value so if you sell immediately you won't pay any CG tax) and children and grandchildren can inherit the artifically low property tax rates.

New York has a different set of problems. A big one is that single family homes are subsidized. A $1m SFH will pay less than half the property tax of an equal value condo. And there's all sorts of caps on property taxes on SFHs too.

Additionally a $100m condo only pays about 10-15x the property tax of a $1m condo in NYC.

I'm a big fan of making property speculation less lucrative. High property taxes are a good thing. We need to stop giving away money under the auspices of "but what about the Seniors?"

> children and grandchildren can inherit the artifically low property tax rates

Grandchild -> child is readjusted to market rate property taxes. Only parent -> child IFF both are and continue to be primary homes, does it receive the previous tax treatment.

Instead of taxes, I prefer depreciation terms (see japan), which incentivizes new construction and does no harm to those that continue to occupy the land in old age. you’ll also find that older houses go down in value as expected.

Coming from a state with a higher property tax rate I can qualify this by saying higher is not better. Taxes are always a disincentive. While the author claims it is a disincentive to sitting on a property and is comparing it to the effect on price like the FED's interests rates, these comparisons are myopic. He misses the bigger picture of longevity of private property ownership, the Constitutional protections of a property owner, and the inevitable results of the state seizing the property for back taxes. The long term benefits of the first two are long proven and the cold destruction of a member of a community the result of the last.

Oh yeah, and the higher tax gets passed to the renter/leasee in higher rents and is a further disincentive to usage and investment.

Agreed on the taxes being (at least partially) passed on to renters in a typical case.

However, don’t understand how you are linking constitutional protection of property ownership with tax rates… it is obviously not an absolute because we do pay property taxes… so this is a matter of degrees.

Free society chooses to find the right level. It does not imply negation of bill of rights…

Here's a crazy idea: 0% for primary residence, 50% for income properties (rentals, etc.). Will it kill renting? Heck no, not for property owners who live in one of their own units, at least. It might affect individuals and entities who hoard and exploit people, though.

The article overlooks one important factor: Raising property taxes would lower house values, reducing loan sizes, and therefore bank profits. We can't have that money being squandered on social services or infrastructure.

How would raising property taxes lower house values?

When people take out a mortgage, they normally only care about total monthly cost. If the property tax increases they can afford to spend less on a house for the same monthly payment.

Maybe instead of messing with the money via the fed and then finding volatility in housing we should just end the fed. Housing becomes a safe haven asset to avoid the other ramifications of fed policy namely inflation and the machinations of policy qe/qt, contractions and tightening. Yes it’s not in a vacuum but… we didn’t get here by accident.

Taxing and taxing higher on property is an assault on our ability or “own” property which is a freedom. Free societies have property ownership. Higher taxes whilst monetary devaluation seems like the system now wants to take away our ability to own things.

https://en.m.wikipedia.org/wiki/End_the_Fed

https://thehill.com/opinion/finance/570895-the-debate-we-sho...

Right now we have lots of income tax, but most countries have very low land value tax/property tax. This means you don't "own" all the fruits of your labour, but you "own" land, which derives its value from the labour of society as a whole around the land.

The Georgist proposal is that you should own all the fruit of your personal labour (no income tax) but that the proceeds of the labour of society should be returned to society at large, through a land value tax that captures the rental value of the land.

The current status quo in most countries is that you can own a piece of land in the middle of a metropolis and do no labour, and yet reap significant reward. This is in essence a theft from society, as the citizens of the metropolis are labouring and building capital that creates value for the piece of land, yet the land-owner proportionally does very little to create value for their land. If you want to discourage theft and encourage keeping the fruits of your labour, the Georgist proposal is fantastic.

I agree with this article, housing shouldn't be an "investment" but rather a place to live and have a good life.

By taxing it, it provides disincentive for people to use it as an income generating or speculative asset.

We shouldn't view housing as a way to "get rich" but housing actually provides much better utility if it's price is stable and not prone to boom bust cycles. Since more people would be able to buy at any given time for their budget if prices stay low.

If the homevoter hypothesis is true then the counterargument to this is just the argument itself. Property taxes cool speculation, but I'm me, and I bought into the neighborhood and thus want to see line go up.

Yes, local politics is inherently more tailored, but it's also more vulnerable to conflicts of interest. Most local town councils are controlled by an oligopoly of the loudest homeowners who will vote down anything that is perceived to impact their home prices. The people who want affordable housing are not part of the voting quorum because they do not live or own the neighborhood.

In other words, don't say the quiet part out loud!

Generally, high taxes on anything are bad. Taxation facilitates a transfer of assets from the productive sector to the non-productive sector, e.g., from the homeowner to the government. The recipient then uses the money to further their plans without regard to the taxpayer. It has always been that way. Using econo-speak doesn't make it any less true. Looking at cities like NYC, eliminating rent control would do more for the housing market than raising property taxes.

High property taxes are good on non-owner occupied homes.

Also it should be used as tool to increase densification. Just increase if property is not sufficiently dense, maybe to some 20%. At that point people are free to choose either to allow redevelopment to happen or support local community.

Residential real estate represents 5% of the GDP (in the US), 25% of an individuals wealth, and 65% of the homes are owner occupied. A 20% tax even if only for property deemed underdeveloped would bankrupt a ton of people (myself included) and throw the entire market into chaos. Most people who were hit with this wouldn't be able to redevelop because of the expense, so they would be forced to sell. The market would get flooded and drive down the value. Investors would snatch everything up, redevelop, and start driving up rental prices. We need change but this would be horrible in so many ways.

This is a regressive tax. It forces higher taxes on renters (as a class, less wealthy than homeowners) than homeowners.

Nah, rents aren't determined by owners' costs (except at the margin where property owners are debating whether to 'stay in the game') - they're determined by bog standard supply/demand and usually set to the maximum rate the market will bear.

This assumption (which is largely correct) gets thrown out the window when the entire tranche of supply is hit with a cost increase all at the same time (and every participant knows it).

The point of this "margin" you mention gets rather deterministically and uniformily raised across the board.

> Nah, rents aren't determined by owners' costs

I don't understand this. The owners have pay mortgage, taxes, insurance, and repairs. How can it be decoupled? The landlords I know would have to sell if they lost their renters, or if the rental income fell below a certain amount.

Some sort of tax structure like;

"x% LVT, y% Improvements tax on all properties with 50% reduction for your primary residence"

Would be great.

Threads about real estate are invariably overrun by clueless 20-somethings who think 'muh zoning' will let them afford property in the [elite metropolitan neighborhood]. Statistically none of you will be able to afford a home here; my advice is to leave while the leaving's good.

Especially if you were lured here by some VC who sold you a metric ton of variance and went to the bank with the drift. But hey, they're on your side with the whole zoning thing.

When you strip away the politics and bogus economics, house pricing is just the adult version of lunch table drama. That drama is actually a microcosm -- everyone in the cafeteria was selected at the real estate level.

You may have been raised to think you could be elite, but only a small minority can be. And if you're downvoting comments because they imply you're not...

It is cruel, but changing it would require far more drastic measures than proposed here.

I'd settle for home prices in [way out there suburb of a delapidated major urban area] to be relatively affordable. You might be surprised to know that many of the "twenty somethings" that make it out to the big city actually have brains inside their heads.

High property tax gets us to closer to a land value tax, so yes.

If speculation is the problem, then making expected return from real estate investments less than expected return from risk-free or low risk investments should fix it.

Something like, if 10 or 20-year US Treasury bond pays more than you'd make being a landlord and you expect little to zero asset appreciation, then there is no incentive getting into real estate.

And it's possible to discourage house flipping by introducing some sort of friction. Like a high tax of some sort that is applied only if you sell sooner than X number of years (let's say 5)

> High property taxes are good

Not necessarily. I've learned that at least in Toronto, the property tax rate is derived from the budget instead of the other way around. Let this article explain: https://torontoist.com/2016/12/how-property-taxes-work-toron...

> With sales and income taxes (which can only be levied provincially and federally) governments establish a tax rate, and then see how much money that brings in.

> Each year municipalities decide how much money they need to bring in, and then set their property tax rates accordingly, to ensure they collect the requisite sum. They start from the total they need to raise, in other words, and work backwards to figure out what tax rate will yield that amount.

Because of this "backward" system of tax calculation, if every single building doubled in value, the tax rate will be halved, and the city will receive the exact same revenue.

So if you raise the property tax rate more than what it should "naturally" be, what will you do with the budget surplus? What will you spend it on?

The real estate industry is a closed looped system, and because its monopolistic, anti-free market, and dealing with a finite product that simply trades hands its golden age was done after the great expansion of the United States after the Louisiana Purchase and the Mexican Treaties of 1848.

This a foundational industry that pitted the upstate New Yorkers and the agrarian Virginians against Alexander Hamilton at almost every corner of his life in the establishment of free markets disruptions with the Bank of New York and later the Department of Treasury.

Disruption can be seen in vertical markets of big cities and land creation like that of China in the South China Sea with man-made islands and expansion of territorial rights, but outside of that it's golden age is gone and the taxation will only become more intrusive for programs as our populous grows and the need to extract support for the expansion from the adult working class is through taxation.

Hopefully this isn't rambling, but rather insight into how perverse the market has become because of no more land, and way more people.

The market didn't become more perverse because no more land. It was perverse from it's inception, you just wouldn't come across the scaling issue until such time as population seeking space outstripped finite supply of land.

Any market will run into this fundamental problem. The issue is apriori to market facillitated resource allocation systems. Whatever unit you use to represent value or as the unit of transaction; it will inevitably centralize once demand starts outstripping supply, and rent extraction becomes an effective capital amplifier.

It's the magic of power laws. Everybody without capital assets pays everyone who has it. Those with it lift the prices by virtue of the fact they too are factored into average buying power amongst the potential set of transactors. That justifies higher asks, which decreases your non-capital owning members supply of transaction medium to devote to acquiring more capital which increases your rent extractors capability to diversify, rinse, repeat.

There. Is. No. Escape. Except estate taxes, assuming no immortal legal fictions. In the presence of such, you're hosed for recreating a level playing field for latecomers.

There is an incredible amount of land not to mention upzoning and vertical development. Not to mention there is no monopoly on housing unit production. In fact many companies want to build but can’t due to approval processes and zoning.

Incredible amount of land = running away from the rent seekers = urban sprawl

it saddens me that we have not put more thought into this topic and we constantly put our education, safety, and services on the economic roller coaster.

no matter how much your home is worth today or in ten years you and other in the community want a standard level of education, safety, and services from your local governments. this should be priced as a service based on the cost to provide it to the members of the community and not based on dynamically changing home values

property taxes should have a baseline cost to cover the essential services (schools, critical infrastructure, safety, etc.) that is the same for everyone (no exemptions) and a variable cost for the non-essential services (parks, beautification projects, etc.) (very limited exemptions) that can be based on the value of your home or land

this way the essential services are always funded and not impacted by economic downturns or property appraisal disputes/challenges and local governments don't have to play the game of increase the millage rate to make up costs for essential services

This article doesn't take into account the negative migration that's been happening from Cook county for the past two decades. Less demand means lower prices.

Also the claim that Chicago even has high property taxes for housing isn't really true. See here: https://www.rosenfeldinjurylawyers.com/news/chicago-property... and here: https://www.lincolninst.edu/sites/default/files/pubfiles/50-...

Currently trapped renting in a high property tax area because the monthly tax bill would be as high as the mortgage payment. This rent trap is starting to feel real permanent because any raise in the property tax just gets passed through to the renter when they raise the rent each year.

They label property taxes as an absolute value paid, rather than as a percentage. Illinois per the Tax Foundation had the second highest rate*. In fact, it speaks to Illinois' and Chicago's affordability** that with such a high marginal rate, their property taxes as a dollar amount are on-par with many other states.

* https://taxfoundation.org/how-high-are-property-taxes-in-you... ** https://resources.oxfordeconomics.com/hubfs/Housing_affordab...

I'm not sure what you're saying, yes Illinois property taxes are high but that's mainly because of the collar counties around cook (https://www.civicfed.org/civic-federation/blog/2017-effectiv...). It's hilarious that you think that high taxes has done anything good for Illinois. the state is bankrupt and in absolute shambles financially. The taxes are high on everything to try to dig out of the hole (which will never happen), effective sales tax in the Chicago area is now over 10%!! All of this nets reduced buying power so yeah, housing will probably be slightly cheaper on average but at the cost of standard of living all around. Your argument is absolutely clueless to the reality on the ground. High property taxes just look good on a spreadsheet.

> "This has led to is a glut of high quality housing at very low prices."

Yes, but this (obviously) doesn't mean this housing is more affordable. It's not. Sure the razor is less but the blades (i.e., taxes) count as well. Both come out of the same pocket, so to speak.

Housing prices are a function of affordability, and that is the collective sum of all associated payments, not just mortgage.

So while we're on the topic, this is why the "college loan debt means more people can't afford to buy" logic (?) doesn't work. Eliminate that debt and prices will go up. Why? Simple! Because the market can bear higher prices.

Roughly the same can be said for raising the minimum wage. Eventually, housing will eat that up as well. It just takes longer because leases are one-year cycles (and perhaps other local rent-increase limits).

What we need is more supply. The only way to truly lower prices is to increase supply. Anything else is smoke & mirrors.

If you want to tamp down on speculation, can't we be a little more creative and targeted than just high vs low property tax rates?

- Some cities are already getting into vacancy taxes; here the problem seems to be enforcement. No one's going door to door in luxury condo buildings looking for empty ones.

- Can a tax due when a property is sold be based on how long the seller owned the property? If you lived there for 20 years and now you're moving to downsize, you pay a low rate. If you held it for 9 months to renovate and flip it, pay a high rate.

- Can a tax rate due when a property is sold be based on the number of homes the seller has been purchased in the past 5 years? If you've been a resident homeowner, low rate. If you're a development company bought subdivision land and is now able to sell dozens of houses, low rate. If you're a speculator who has bought several homes, and are flipping them, high rate.

The problem is once you start making complex rules people will start finding loopholes and ways to work around it.

Like you pointed out vacancy taxes are very difficult to actually enforce.

If taxes are based on how long you have owned the property maybe instead of selling the property I give you a transferable 20 year rent to own lease or create a corporation that owns the property and sell you that corporation so that the ownership never changes.

If taxes are based on how many properties you purchase in a year then maybe you create a separate corporation that purchases each property. No single entity has purchased more than one home.

I am not a lawyer and these examples probably aren't that good, but I think you get the point. The simpler the rules are the harder they are to work around.

I don't think vacancy taxes are _actually_ hard to enforce, but I think there are a lot of noisy objections from people who don't want them enforced, and that can be enough to sway municipal government.

I agree that simpler rules are generally harder to work around.

_However_, I notice that argument is almost always made to claim that governments shouldn't try to change behavior in line with the preferences of their electorate. Tax laws have loopholes, regulations have loopholes and push jobs and industries overseas, etc. The logical end point seems to be that democratic processes are doomed to be ineffective and we should just trust everything to the invisible hand of the market.

What if the real problem is that the mindset that improving policy is so hard that governments shouldn't even try, itself dooms us to bad policies?

What if 20 years ago we had all said, "making complex rules to identify and block spam emails is too hard; there will always be some way for the spammers to get through. So let's not waste resources on it."

I agree legislatures are often complicit and that is part of the reason why our laws are so ineffective. Spam filtering rules are much easier to update than legislation. I'm not saying we shouldn't try, but you also can't dodge a simple tax of x percent on each property. Perhaps a better way to offset it is something like a universal basic income.

But what do Chicagoans get from their high property taxes that New Yorkers don't get with their low property taxes? Services seem about similar in both places to me(though, there is a huge swath I don't have experience with, like services for the poor or school services).

The tax burden is similar (maybe slightly lower in NY), but collected through different means. NYC has a city income tax, Chicago doesn't.

If we're going to pick a means of collecting the same amount, encouraging good use of land and discouraging excess consumption seem like nice side effects.

I actually like the concept of a city income tax - you don't get to use all the resources for free just because you take a bus in from across a river.

Rich Aldermen.

This article argues that relatively high property taxes are good. It's a geographically zero-sum situation. Real estate is a rivalrous good and people will pay as much as they can afford to buy it. High property taxes put political pressure on interest rates, which in turn have broad effects on the economy.

Economic mechanisms like this, which don't change anything in the physical world, almost never have any long-term impact, positive or negative, since the economy is a densely-connected network. Findings of large effects depend on stopping accounting somewhere, and you can get positive or negative findings depending on where you stop.

Money juggling is a great distraction from what really matters: physical quantities and actions.

My experience of high property taxes is that it no longer feels like you own a home. You pay rent on it forever. At any time the rent can rise to more than you can afford. I own my home outright but likely won't be able to stay when I retire.

Agree. This seems like a trick to keep people working forever. I think homesteads should be tax free and just second or speculative homes.

Maybe subsidizing 30 year mortgages with low down payments is not such a great idea for the general populous. Imagine if house payments were similar but you paid off your mortgage in 10-15 years instead of 30. That would be a much better state of affairs.

"interest rates are a powerful tool to help control home prices"

Unless you're paying cash, most people think in terms of what their monthly payment will be. So driving down the price may not make any particular house any more affordable.

There's also the downpayment to think of. While the monthly payments may not have changed all that much, the downpayment certainly has.

I totally disagree because high property taxes means people would be pushed toward small and small, bad and worst houses. As a result instead of encouraging remote work and energy saving high taxes encourage crappy popular housing that waste much more energy AND can't be improved.

At maximum I agree about taxing homes depending on their energy consumption (all sources) to encourage modern house development. But definitively not high taxes on properties. I'm Italian and I've seen the effect of them destroying the market AND pushing people toward crappier and crappier homes. It's not just a personal idea.

I have generally found it to be true that only those who don’t pay property taxes..that is, those who don’t own property by virtue of paying for it and/or have inherited property..are usually the ones who clamour to increase property taxes as a punitive measure.

In other words, the assetless classes support taxing those with earned fixed assets.

When reframed this way, the article reads to me as a high falutin petty and bitter whine.

All taxes are theft. The only justifiable tax is a tax on consumption and perhaps a tax on children because population increases exponentially. That would take care of all the bundle of taxes and simplify the tax code.

No it wouldn't. You would still end up with inequality and sprawl.

I have nothing against property taxes and I think they are good and should be higher - as the article says, the price of the houses stays the same and the government gets a bigger cut at the expense of land speculators. That's a good thing.

However the arguments feels defective because it uses Chicago as an example. Surely the reason housing is plentiful and affordable in that city is because it has been slowly depopulating for decades and it currently only 75% as populous as it was at its peak.

I always thought the low property taxes in NYC were twofold:

1. The absolutely staggering incomes at the top top end in NYC make income taxes a more effective revenue source.

2. In addition to property taxes, if you own an apartment in a building, there are a lot of other monthly costs. As I’m writing to this, it occurs to me that they may be completely equivalent to the maintenance costs on a house, but I suspect that condo and co-op boards are not nearly that efficient.

Neighborhood a few minutes from me has an insane tax rate. It comes to $1000 a month for a $325k house.

Keeps the riffraff away...and me...but they can afford their roads so...

That's crazy and that city is doomed.

My in-laws spend more than that but their home is worth more. They've owned it free and clear for like 20 years but they are getting out this year.

Their city used to be full of families, much higher values, lots of great local businesses and some big business headquarters. That's all gone and it's not desirable at all.

There is a lot of frustration over the blanket example they used for Chicago. Is Chicago cheaper than NYC/SFO? Yes.. does that mean it's affordable for the area? No. We have encountered quite a lot of inflation in the housing market due to people from the HLOCs moving in. It's screwing us over pretty badly.

The prices are like that due to the labor market and that we've been a blue collar city for the longest time.

What's the deal with Brock Whittaker's website at brooock.com, anyway? It only seems to have one page: <http://brooock.com/a/property-taxes-are-good>. There's no home page, no list of other posts. Kinda disappointing, really, since I was curious to see what else this guy had to say.

sorry I just made this site this morning to post this article. it's just a simple node-http server! I don't write much :)

New, huh? Was't this yours, too?

https://web.archive.org/web/20200822170417/https://brooock.c...

I would want to see statistical backing for this. Kindly share if you know of any reasonable models that have studied this.

—

FWIW: Chicago has high property tax rate and it does seem to correlate to relatively steady median price movements.

But that is just one example…

There are likely other factors at play in Chicago as well: number of units of supply per capita and quality of public transportation come to mind as two that might have some bearing on housing prices.

This article doesn't provide any reasons why a property owner should want lower property taxes; why would you want to constrain prices and prevent speculation?

I don't own any property myself and am sympathetic to the idea of raising property tax, but many arguments for LVT/raising property taxes don't paint a convincing argument for why property owners should vote against their self interests.

This is totally my personal bias, but I'm unsure that speculation has a positive value in the housing market, and I think governments should largely try to ensure that as many people as possible can afford homes, rather than ensuring that people can profit off the sales of their homes.

In the United States, people have long seen real estate as a path to wealth (unlike Japan, for example), so it's difficult to reason that people's primary homes shouldn't be their escape hatch into retirement (e.g. the dream of someone buying a house in 1980s Palo Alto and selling it in 2022).

There isn't one. Land, and thus real estate, is an inherently limited pie, so any market disbalance like what we have right now can only be corrected by taking some of the pie away from those who have too much of it. The only argument you can make to the former is that it's fairer that way. If they don't find it persuasive at face value, you can remind that, once enough people are sufficiently desperate to reach for torches and pitchforks, property owners would lose a lot more that any such tax.

An effective 2.5% property tax, such as the example given for Chicago, is not high.

Try living in NY, where effective tax is between 3.5% and 5% (mine is 3.8 in the city of Rochester). It’s really hard for people to become homeowners at that rate, especially when the market goes up and an appraiser can show up at any time and re-assess your value and raise your taxes.

Wow, that's nearly another mortgage payment. Forever! For the privilege of living in Rochester, NY?

That's probably part of how they keep the kind of people they don't want living long term in Rochester out of Rochester.

Not sure what you mean by this. The city itself is quite diverse. Who are “they”?

Also this is all of NY, not just Rochester, that has rates such as these.

In Texas property tax functions as an income tax by proxy, as the state lacks an income tax but redistributes property tax monies from rich school districts to poor ones. Therefore property taxes are high. Well, high compared to many other states, though not compared to, say, New Jersey. This is not really healthy.

Like most things, this is a complicated problem.

The only way to actually make a good cheaper is to produce more of it.

But home owners don't want their homes to stop increasing in value.

If their was a bill in Congress to magically double the housing supply, I guarantee you it wouldn't pass.

Plus passing a property tax hike won't get you re elected.

What a piece of BS. High ever rising property taxes are good at pushing older people out of their houses. It is fucking immoral. If the author is so concerned about speculative investors (yes they are huge problem) then this problem must be addressed separately. Not difficult to do at all.

Property taxes are unconstitutional and immoral. They are an implicit nationalization of all property because there is no way to own property unencumbered. Implicitly the govt owns all the land and charges you rent. The level, high or low, is irrelevant to the principle.

That argument is easily debunked by introducing a citizen's dividend.

With a citizen's dividend the opposite is true, private land ownership is forcing people into homelessness and taking away their contributions to their local community.

I'm gonna blow your mind right now: the foundation of all law is the government's monopoly on violence. Might makes right. The only "social contract" in force is, "Obey and be protected. Defy us and die."

> The only "social contract" in force is, "Obey and be protected. Defy us and die."

That same contract is also in force in the absence of a government monopoly on violence, with the difference that the "and die" part gets implemented far more frequently.

That's why anarchists (of any stripe - left or right) shouldn't be trusted, since what they are really aiming for is to destroy democratic institutions and replace them with an authoritarianism that enforces only their preferences.

Mind not blown. I agree with that and argue the point with people all the time. At the bottom of all the govt regs and laws is a gun. It seems like an obvious point to me but some people struggle with it.

In my view the govt necessarily has a monopoly on the use of force which is unavoidable. The important part of the "social contract" is when is it valid for the govt to use that force. The US Constitution originally laid out when the use of that force was moral. Using force to extract tax payment from property owners is not on that list and turns the govt into criminals operating under the color of the law which is terrible situation.

The house where one lives: no taxes. Other houses, tax them a lot especially if they are not rented.

> This has led to is a glut of high quality housing at very low prices. The amount of money one needs to save up for a downpayment in Chicago on a 2BR in the city center is 5x lower than in San Francisco or New York.

That is because it is Chicago and not SF. Not because of taxes.

Well Chicago is one of the best cities in the world to live in based on rankings so I don’t know what you’re implying here.

My point is that there are a dozen factors that account for the difference in housing costs.

The median income, the population density relative to the housing inventory, the weather, the demand, etc.

property taxes are used to pay for services that the local government provides. when property taxes are high, it means that either the local government is proving more services, the local government is in debt and needs to raise taxes to finance its debt, or the cost of those basic services has risen. At the end of the day your local government needs to spend almost every penny it gets. If they have extra money, they are going to spend it on stupid things like tanks for the police.

High property taxes will make housing cheaper, but it wouldn't make housing affordable. Sure that house might only costs 100k but with a 2k per month property tax, no one can afford it.

Property taxes paying for local services keeps poor people poor. I don't understand why people think this is ethical.

Property tax is possibly the worst way to fund the government. The only thing it's really good at is imposing a market force. It's largely regressive. In fact it's almost identical to gas tax.

All flat taxes are regressive.

on the contrary, property tax is actually a good way for people to pay for what they voted for. If your town voted to increase the education budget, your property tax directly goes into that. You are not paying for something that your town did not vote for.

Property tax can be regressive within a community, but can often be progressive within a county/state. Different towns can have different property tax rates. Rich people would actually prefer a higher property tax to a certain degree to keep the poor out. If the avg property tax is 2k a month, then everyone living there needs to make at least 6 figures.

> on the contrary, property tax is actually a good way for people to pay for what they voted for.

It's also a great way for poor neighborhoods to not be able to afford what they need.

They are a fine way to build up a solid conservative voting bloc among the elderly. They have property that has appreciated, but their income is well down (usually) from their peak earning years.

Not if you're retired on fixed income. My parents' property taxes kept going up year after year in upstate NY -- one of the deciding factors when they moved. It's a shame because my dad put so much into that property.

I'm not disgreeing that there can be valid benefits of higher property taxes.

The problem with it though is that it is a very regressive tax, especially in states that get the majority of their income from property tax as compared to income taxes (I'm looking at you Texas).

> They can be adjusted annually based off the needs of a local market

Or, in the case of Texas, a very large portion of property taxes in urban centers ends up as recapture and goes into a state-controlled slush fund. These portions (school taxes) are not actually adjusted at all.

> the money collected from property taxes doesn't evaporate from a local area

See above statement again. This may be true for city-level property taxes though.

> Retirees and low income individuals are often able to make cases to reduce their tax burden

I would disagree with this. There are exceptions written into the law that provide exemptions for some of these groups (which are often abused and disincentivise "good" use), but overall lower-end properties have many more comparables to set value based off of, and tends to be much closer to "market". These residents also don't tend to have the funds to many these arguments, and commission-based tax-appealers don't stand to make much money taking on these cases (the absolute dollar value is relatively low). Further, high-value properties without many comparables are the easiest ones to argue for lower tax burden on.

Finally, when property values actually do decrease (due to central bank action on interest rates, etc) it can be difficult to get the assessed value lowered without an actual sale.

Tldr, the current implementation of property taxes in many locations is extremely regressive.

Ok what if you're a poor person and you want to buy a home in a rich neighborhood? Ope, guess you can't! Government is going to fine you for wanting something better for yourself.

It seems like the higher taxes should be applied to non primary residences, along with perhaps some kind of penalty built in for holding the property for only a short period of time.

> And perhaps, the best attribute: the money collected from property taxes doesn't evaporate from a local area like it does when borrowers pay higher interest rates. It goes back into the local neighborhood, leading to better local infrastructure and higher quality schools.

This much is demonstrably false, at least where I live. I don't even pay property taxes to the city, I pay them to the county. There's no tie between those funds and my neighborhood. Then, a lot of the taxes are passed from the county up to the state as well, where it's further spread out.

> I don't even pay property taxes to the city, I pay them to the county.

The county is still a lot more local than a bank that might have an HQ across the country and is barely accountable even there. Also, most people's property taxes do go to their town or city, so your sample-of-one is not really a basis for a policy statement.

I was responding to the article's incorrect statement that the money stayed in your neighborhood, which is not correct in my case. I say "my case", but it's the case for everyone who lives in my county, the 12th most populous in the nation. Probably true for others as well.

https://kingcounty.gov/council/budget/budget_basics.aspx

In my region of northern New Hampshire, there are a lot of retired folks with houses rising from $200k-ish values to closer to $500k-ish values in the last 5-10 years.

As such, there's a lot of discussion around lowering property taxes to help these retirees.

In my opinion? Fuck 'em. Property taxes are a brilliant method of perfectly progressive taxation: you can always choose to live in a cheaper home. If your home is so expensive that you can't afford the property tax, downgrade. Those of us who can't afford property will shed no tears.

Who would want to settle down in an area that is trying to churn you out though?

Sure, the "fuck 'em" attitude has been used by NIMBYs forever. But now we're using it to deprioritise the existing residents that might've sculpted the community. E.g. "Artists who can't the 200% rent increase? Fuck 'em."

Most folks like some sense of stability with their housing. Not everyone's a 20 y/o digital nomad.

If there was a supply of cheaper housing, I'd agree with this wholeheartedly. Part of the problem is that, in a lot of places (SF, NYC, Seattle, etc) you can price folks into homelessness. Sure, no one is entitled to live in a specific area, but for those who built their lives there, have a community, family, it's cruel to tell them "move to Nowheresville, OH so you can afford a roof"

I mean, either you are cruel to home owners who have capital or you are cruel to poor people. I know where my priorities would be. Or we could of course try to remove the cruelty completely by not using a market system to manage a natural monopoly (space in a community). But if you choose cruelty, at least be cruel to those that can choose to suffer as opposed that cannot really escape

And who are the ones that voted against building that cheaper housing?

On the other hand: if you own property, you could take a loan out in order to turn your single family home into a rent-collecting multi-unit house. That’s what people did all the time before zoning laws, and it’s a reasonable way for a retiree to earn an income.

The problem is the zoning laws: we don’t allow people to let out part of their property, so they’re forced either to attempt to downsize into a non-existent market, or get evicted for not being able to afford their taxes.

Would reverse mortgages be an option?

There's a reasonable and holistic argument to be made for the generalized version of your position, but specifically wanting people to be removed from their homes by forces they can't control under the rationale, "fuck 'em", is counterproductive and - I don't think it's uncalled for to say - immoral. It's important to have a base level of humanity for people, regardless of what side of which broken social dynamic they are lucky or unlucky enough to be on. Choosing not to do so will in fact hurt our chances of fixing systems in most cases, regardless of how righteous it feels.

>you can always choose to live in a cheaper home

Here also - you're oversimplifying. Yes, you can always choose to engage in all manner of frustrating, saddening, and burdensome life changes. But it's unfair to imply it is easy. You may cite the burdens of others as justification for forcing such a change, but it's a complicated, emotional, difficult, subjective argument that you do no justice by abbreviating into hostile quips. You sound like you're sure this group of people you're imagining is the enemy, and not simply equal human beings, some of whom may have voted in a selfish way on some policy that arguably increased the strain of the situation. It's simply not enough to justify your tone. It's unrealistic to attack every individual who does not always act in perfect unselfish harmony with the greater society, especially when such balance is impossible to objectively define. I.e. it is reasonable to expect individuals to make various concessions for society, but it is not reasonable to expect people not to fight as hard as they can to keep their home (even though it may ultimately be that they must lose it).

The main problem is that in America, the tax structure is very much tilted in favor of home-owning at the expense of renters, that collectively, the homeowner class is receiving subsidies from the renter class (and the homeowner class already has greater net worth and everything else).

There are multiple ways to reduce the impact of the problem. All of them would reduce property values and some might displace existing homeowners. All redistribution is painful and surely people will lose out, the same way that savers lose purchasing power to inflation. Nevertheless, I think it is a necessary rebalance of a system that has been favoring owning over renting for too long.

(1) Tax on imputed rent when owning (imputed rent should not be pre-tax)

(2) Land Value Tax

(3) Remove the mortgage interest deduction

Why should one group be immune from change just because they happened to own property in an area first?

> removed from their homes by forces they can't control

A caveat here is that many of these people vote against denser zoning in their neighborhood. So, in a way, the appreciation of their primary home is due to factors that they do control.

> You can always choose to live in a cheaper home.

So your 90 year old grandpa has been living in a two bedroom apartment on the lower east side for 65 years. When he moved in at age 25, it was considered a crummy but affordable neighborhood, but now it's expensive and desirable. You want a 90 year old to have to move? I agree that maybe a 65 year old couple no longer needs to be in a 3,000 square foot home, but there are a lot of cases that make this complicated.

If Grandpa rents that apartment instead of owning it, he'd if anything stand to benefit (especially if we tax land value specifically and not the building).

Grandfathering until the chickens come to roost hasn't helped the vulnerable either, yet that same party largely consists of individuals proposing that solution to the vulnerable.

It's cruel, but that same cruelty is deemed acceptable towards 'have nots'.

Why does grandpa get to live in a two bedroom apartment in the LES during retirement when so many other people can't afford it despite working for a living?

If he owns, you'd think that he could sell the two bedroom and downgrade to a one bedroom to keep the monthly cost down. Or even a studio. But at some point it's an incredibly desirable, expensive neighborhood and I'm not sure anyone deserves the privilege to live where they want as long as they want.

//Those of us who can't afford property will shed no tears.

Move somewhere cheaper.

Southern NH here and I would be interested to see if NH's eye-watering property taxes (when you only have one lever, it gets used a lot) have a similar effect as Chicago. Personally, being somewhat involved in city politics, while I appreciate your take, it does mean pricing people out of their forever homes when they've done nothing more than retire to a fixed income in the middle of a bubble. I don't have the answer, but I can definitely imagine the fear of the unknown seeing you will not only be forced out of your home but your town and region to find something affordable.

I lived in Nashua. There is zero new construction going on, lotes are very big so there is a lot of wasted space. The result is that housing is too expensive.

> you can always choose to live in a cheaper home

I'm not sure if you've looked around northern New England recently, but there are practically no cheaper homes left.

That's a very callous attitude, especially for people who have put a lot into their property. Being forced out due to taxation is no choice at all.

But the absolute home value shouldn't affect property taxes. It should only be the relative home value. The county takes the entire budget, and divides it by the total of all the home values in the county to determine the basis for assessing taxes.

The problem comes when a given home goes up in value more then their neighbors, or when one neighborhood increases more than other ones.

Alternatively, have them pay for an appraisal and finance the progressive property taxes out of home equity. Upon death, the property is sold and the equity used to pay progressive taxes is repaid.

This prevents the generational wealth transfer of subsidized senior housing tax rates with the benefits going to next of kin, who sells the asset and receives the proceeds.

I disagree.

The local budget shouldn't change much from year to year, but when values go up, they are quick to reassess high on, many times, artificially inflated values. When values go down, then they aren't too quick to reassess accurately downward.

In this situation, you just end up displacing retirees which is not good.

I'm not talking about having special rules for retirees, just saying the politicians feast when home values skyrocket and cities need to have a reasonable balanced approach to be able to have great services and departments for the community, but not try to optimize for their budget.

So many great cities have been destroyed from high property taxes. They jack up prop taxes, then lose families and are left with mostly older citizens, and there's a breaking point and they leave.

Home values plummet along with property taxes. So what they thought might be good for the community ended up being a poor decision.

Also property taxes are not perfectly progressive. Only areas with nice homes have good schools.

So, politicians get voted in, raise property taxes to extort established neighborhoods into selling because they can no longer afford the government's shakedown of their residence, so the corrupt politicians' business associates can purchase the properties and rent them.

> Those of us who can't afford property will shed no tears.

You seem to believe the fallacy that not being able to afford a home is other homeowners fault, and not due to poor government planning (likely by the same politicians you willingly vote for.)

I took their statement differently; rather, that they aren't concerned for the fallout of the Haves at the sacrifice for the HaveNots.

I am uninformed in this game, so this is not a statement by me: However i've been told that one issue is squatters, land being used purely as investment and with low costs you can easily afford to buy land and squat it till a time when you later sell it in the market.

As someone looking to buy land to build a home on, i've noticed quite a lot of property seemingly being used purely for investment. Flipped through the years for profit with no real added value, in an area of the country (PNW) that is very, very expensive due to limited supply. It is very cheap to keep land, tens of dollars a year for 10 acres (the lot size i'm familiar with) iirc.

Inhibiting this behavior seems beneficial.

Though i imagine more interesting (than simply "high") taxes could help more. Ie something like a higher tax on unimproved and uninhabited land. Encourage usage, not squatting.

But.. i don't know anything here. I just have experience looking to buy land, and watching what goes up for sale.

And the same politicians that those homeowners vote for. And lobby. Especially retirees who have time to do things like endlessly harangue their local councils to implement NIMBYist policies to prevent increasing housing supply in order to drive their housing prices higher. Of course, couched in language like "preserving the historical character of the neighborhood" and "keeping the riff raff out".

I think you are missing something. It's not about blame, that doesn't matter. People are lashing out. It's about anger at the system. It's becoming increasingly obvious that recently a large part of our personal prosperity is based on incumbency. Our government is routinely breaking social contracts which maintain order. That makes people angry at the system, government and their fellow citizens.

One can very convincingly make the argument that state and national governments are undemocratic and difficult for individuals or local groups to influence. But on the scale of a county, small town, or city government, that's less the case. Individual voters who have repeatedly NIMBY voted against densification have absolutely caused their own home values to inflate.

Over here in Hanover they've gone from $500k up to $1M, and honestly the 2% tax rate is the only thing that kept prices somewhat in check in the presence of near-zero interest rates.

Strange, around here property taxes are allocated based on proportional value, true, but the total amount collected is set by the township budget.

So if they collected $10m last year, and will collect $10.1m this year, it doesn't matter if the houses have tripled in value, you'll pay roughly the same dollar amount.

This is how they work pretty much anywhere; the locality aims to collect a certain amount in total taxes, and sets a per-$1000 tax rate based on the total value of all taxable property in their jurisdiction.

People think doubling house value doubles property tax, but the bill could go down if double is less than the average increase for the area.

Or, they can simply get a reverse mortgage using the $300K free appreciation they realized.

> Fuck 'em. Progressive taxation.

At least you’re honest about how you want to wield the cudgel.

If the only thing that changes are home prices going up, why wouldn't property taxes(as a percent of home prices) go down? It's not like the city is offering new services because housing prices are rising?

> you can always choose to live in a cheaper home ... Those of us who can't afford property

If there are cheaper homes for these privileged retirees to move into, why don't you buy those homes yourself?

Almost anyone can afford property… provided you’re willing to move.

I’m where I live it costs $40-$50k / acre up to $150k / acre. 30 min away it’s $3-4k / acre.

I personally am opposed to property taxes. I think it basically implies rent of the land. Then again, I’m basically opposed to all taxes except tariffs and perhaps licensing fees.

For instance, you could implement a licensing fee to use the public roads. Or add a tax on import / export of goods across the protected border(s). But beyond that I view all taxes as far too intrusive. Why should my land be assessed? Why should I provide any details to the government so they can tax me? The “government” is infact my “neighbors” and I simply don’t think it’s their business what my assets are.

> I think it basically implies rent of the land.

That's already implied from the existence of land deeds and the enforcement thereof: you're renting a subset of a nation-state's sovereign territory.

Do you expect the government to protect your assets if someone threatens them?

I thought:

a) NH (like CA) didn't revalue land for property tax purposes as long as you continue to own it.

b) NH had a generous homestead exemption based on the median of the area in which you live.

I'd say Fuck the idea of making it cheaper to live forever in the exact house when you could downsize and make the home available for a family.

If the area was underutilized when they bought in cheap, they earned their windfall. I hope they didn't prevent apartment buildings from being built in their area.

Thank you -- this is a more concise version of my thoughts. If your house goes up in value, you just earned likely hundreds of thousands of dollars in the resulting windfall when you sell. Why on earth should I feel bad for you? I understand that communities change when this sort of thing happens, but pushing out the retired couple living in a multi-bedroom apartment for a small family is a healthier thing for the community. You don't want to freeze communities in time, they need to grow and evolve.

Yeesh, lack of empathy much?

Imagine you bought a house and worked diligently for 30 years to pay it off. Now in retirement your cost of living skyrockets, through no fault of your own, such that you can no longer afford to live there in your 70s and 80s. How is that in any way fair or just?

Now imagine the same exact thing but instead of buying a house, the person rented for 30 years (probably would have been forced out of the neighborhood much sooner). Are you still empathizing?

What about the people who couldn't get a loan in the 1940s-70s because of redlining and ended up having to rent for the same amount of time?

All of this "empathy" talk hides real wealth redistribution towards property owners. Just holding on to a piece of property should not increase your share of real productive capital disproportionately.

Isn't your envy/entitlement misplaced, by your own argument "you can always choose to live in a cheaper home".

Low taxes incentivizes a retiree to stay in possible a more spacious home than they need instead of selling to a young family. If you are a retired couple or a single without any large adult children living with you, you're better off with less to maintain.

Why are these taxes not progressive? Homeowners shouldn't pay a ton of tax just to stop speculation and airbnb.

Where I live, the government only re-appraises every ten years. So it's a pretty crappy market signal.

Chicago also has a colder winter than SF and NYC, i didnt see the author price that in their conclusion

Sales/income tax I can agree with. Property/estate inheritance taxes I do not.

These remarks about interest rates having an impact on real estate prices are not universally accepted.

The analysis doesn’t go far enough. If you want to stop speculation you should tax land not property.

Funding local public schools through property taxes is terrible, and makes sure that kids from wealthier neighborhoods get better public schools. Kids are a special case; we even expect people without kids to pay for kids. Public education should be uniform and high-quality, not dependent on local political dynamics and neighborhood wealth (and wealth disparities.)

Where does it happen like that? I. California we stopped local school funding with Serrano v Priest 50 years ago

Texas, but its more complex because we distribute tax revenue from wealthy districts to less wealthy districts. Its imperfect, to say the least.

LOL @ credit is too cheap, so increase taxes instead of stop overprinting.

"stopping overprinting" requires negative interest rates.

Weird to see Chicago used as an example of good governance.

Property values for tax calculation purposes are not reassessed round here so you pay on whatever the assessed value was when your bought the property. Sounds nice, but what actually happens is that baby boomers, who bought their houses ages ago, pay essentially no tax on houses. Meanwhile, more recent residents get to foot the bill with sky high property taxes. I know people with previously purchased houses of the order or 5 (yes 5) houses that they are renting out for outrageous rents - all with very low property taxes on them. Please make the normal tax rate lower and actually tax everyone.

Brock, would you please date your articles?

No, property taxes are completely immoral.

No. High property taxes are NOT good.

No need for discussion I guess. Someone from the internet has the correct conclusion...

Hard to take stuff like this seriously.

Said no one EVER!

All homeowners are real estate speculators.

Wouldn't you also consider anyone buying a "starter home" a speculator? Their goal is to continuously flip their house.

I bought my starter home to live in for 5 years while I continued building my career, not to flip.

You bought it to live in for 5 years and then you flipped it for more money than you bought it? That's the definition of successful speculation.

High taxes are bad

If you analyze how tax dollars are spent, you'd disagree.

50% of US GDP is about to become US gov't expenditure.

I think someones FIRST house should be property tax free up to a certain amount that is reasonably indexed to some home value inflation metric.

Any houses or value after that should be taxed.

I think that the government constantly threatening to take your basic shelter that that you PAYED FOR already and put you out on the street... even though.. I repeat.. you PAYED FOR THE PROPERTY ALREADY..is outright fascism.

High property taxes are only “good” in this stupid system that we have to reduce speculation. But what would really be good is if we could stop using housing as investments that drive the prices of homes higher via inflationary mechanisms so that the prices of homes remain more stable over longer periods of time. Which is exactly how a lot of other countries housing markets work. In a better system, property taxes should be relegated to the dustbin because it turns property ownership into property leasing which is antithetical to the idea of private property.

> But what would really be good is if we could stop using housing as investments that drive the prices of homes higher via inflationary mechanisms so that the prices of homes remain more stable over longer periods of time.

Housing only becomes a good investment if supply is sufficiently limited such that demand can't be met. NIMBYism and decades of artificially low interest rates are mostly to blame here, although I agree that in the short-term, penalties on speculation can help keep costs in line.

> In a better system, property taxes should be relegated to the dustbin because it turns property ownership into property leasing which is antithetical to the idea of private property.

I disagree 100%. Protecting property costs money, and the government is in charge of protecting your property rights. It seems perfectly reasonable that you should have to pay a fee proportional to the value of the property as an "insurance" against its loss.

>and decades of artificially low interest rates are mostly to blame here

You mean artificially high interest rates propped up by QE.

This community is deranged. All forms of taxation are messed up, the funds end up in grifters pockets, funding wars, or in black holes.

The last place I want my money is in a politicians pocket. But this community overwhelmingly supports this concept.

If a slave is taxed at 100% and an indentured servant is taxed at 20% - what does that make you?

So, what is your solution for building infrastructure? Funding the military? Social programs? Snow removal? Libraries? Education?

Or producing meat, or maintaining prisons, or building security critical CPUs, or funding medical research...

These people think the market exists, but really we just have a fucked-up version of socialism that privatizes the profits while subsidizing the risk. It supports toxic industries while fucking everyone else over.

In this case, particularly talking about agriculture and the prison industrial complex... or the huge scam with the covid loans where they just used the money for stock buybacks.

Governments in the West have grown tremendously. In the United States the footprint of Government is 44% of GDP. 44%!

This community is "Hacker News" not "Socialist News" or "Red State".

Government should be able to function much better with much less. And it is no Hackers interest for its footprint to continue its endless expansion.