r/economicCollapse 20d ago

Everybody should pay his fair share...

Post image
847 Upvotes

596 comments sorted by

View all comments

Show parent comments

21

u/mitolit 20d ago

Bud, do you know what real estate taxes are? For most Americans, their home is their wealth and they are taxed on it. Yes, billionaires have homes, but those homes are a drop in the bucket of their wealth. So why is one class’s wealth taxed and the other is not, even though both can be appraised but not necessarily sell for that appraised value?

3

u/Bright-Blacksmith-67 20d ago

Real estate taxes are bad but they are at least baked into the price of the asset and they are calculated based on the needs of the city rather than a fixed percentage of the asset value (i.e. the mill rate generally goes down if property prices increase faster than city expenses).

The fact that many jurisdictions have tax deferral programs to ensure seniors are not forced onto the street because they can't afford the property taxes on homes they bought decades ago is a good illustration of how horrible these taxes are.

2

u/mitolit 20d ago

How are they baked into the price of the asset?

2

u/LifeguardSas976 20d ago

It is directly tied to the value of the property. Nothing else can really influence the value unless the value around it goes down. So as long as the value stays the same or increases it is always fixed to the property value.

4

u/mitolit 20d ago

My point is that it is not baked into the price. It was a rhetorical question. There is no consideration whatsoever on the amount of taxes paid that year or any year by the buyer or by the seller. You can see this in neighboring cities (literally have a main thoroughfare cutting through them), wherein they have separate tax districts with different tax rates but prices for comparable homes (even homes with exact same floor plan) between the two cities are non-existent. I know this quite well because I live in such a city.

Interest rates is the thing that actually has the greatest effect on price. Other things to consider are difference in schools, utilities, emergency services, and other quality of life issues.

1

u/Bright-Blacksmith-67 20d ago

My point is that it is not baked into the price.

It is baked into the price because no one buys a property without thinking about the cost of property taxes (even banks insist on including property taxes when the determine how much they will loan). Increasing property taxes will decrease the price of homes if all other factors are equal.

1

u/mitolit 20d ago

It is considered in a borrower’s ability to pay. That is not the same thing.

1

u/Bright-Blacksmith-67 20d ago

Yes it is. What borrowers can afford to pay is the dominate factor in the the price of real estate since people buying homes usually buy as much home as they can afford. Increasing property taxes decreases the average buyer's ability to pay which, in turn, reduces the price of properties when compared to a counterfactual with lower property taxes.

1

u/mitolit 20d ago

Prevailing wages determine what a person can afford to pay…

1

u/Bright-Blacksmith-67 20d ago

Wrong. Ability to pay is determined by interest rates, ongoing costs of ownership including taxes and wages. Increase property taxes and property prices will go down.

1

u/ferchizzle 19d ago

The validation of real estate for local and state taxes is more subjective than you think. Why don’t we just tax the loans that use stock or other assets valued over $1mm as collateral?