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Thievery and Discrimination


Gregmal
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So I was talking with someone earlier and then just started rolling with the logic behind it, in regards to property taxes. How conceptually fucked up is it that you essentially get taxed on your possessions? Let me explain.

 

Your salary, sure. You make $30K or $100K or $1M, you pay taxes on every dollar and the higher up you go the more variation. But it's consistent. But on your home, why TF are you taxed for the cost/value of the materials on your property? If I have an acre of land, I should pay no more or less(barring a special assessment like Farm or something) as the other people in my town with an acre. What right or stake of claim does the government have to saying "you built a bigger enclosure so we'll take twice as much"? I 100% get the concept of paying for what you use, like water and sewer, or that the police and schools need funding, but if we both own an acre, why does it matter whether the house on the property is 5000 sq ft or 750 sq ft? Who in the town does this inconvenience? What exactly, in terms of public consumption, does it possess to warrant significantly more than if there was nothing but a tent?

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So I was talking with someone earlier and then just started rolling with the logic behind it, in regards to property taxes. How conceptually fucked up is it that you essentially get taxed on your possessions? Let me explain.

 

Your salary, sure. You make $30K or $100K or $1M, you pay taxes on every dollar and the higher up you go the more variation. But it's consistent. But on your home, why TF are you taxed for the cost/value of the materials on your property? If I have an acre of land, I should pay no more or less(barring a special assessment like Farm or something) as the other people in my town with an acre. What right or stake of claim does the government have to saying "you built a bigger enclosure so we'll take twice as much"? I 100% get the concept of paying for what you use, like water and sewer, or that the police and schools need funding, but if we both own an acre, why does it matter whether the house on the property is 5000 sq ft or 750 sq ft? Who in the town does this inconvenience? What exactly, in terms of public consumption, does it possess to warrant significantly more than if there was nothing but a tent?

 

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I've been thinking about this lately as well. I think what truly is criminal is making retired people 65+ continue to pay property taxes if their house is paid off. I think it would be good if tax didn't have to be paid on that property until it changed hands again so as to prevent them from being a homeless elderly person. Again, I don't really know the economics of this. I'm assuming it would mean increased taxes for the previous years. We could always cut the public school system  :P

 

Could be like Virginia and have to pay property tax on your vehicle (luxury only)?

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I thought that property taxes were relatively appealing for local governments (local autonomy and accountability) but there is an element of progressivity if you're rich and an element of regressivity if you're poor. I guess it depends if you see property tax as a tax on housing services or as tax on capital. Reform is possible. In my area, school-related taxes are related to property taxes and had gone up significantly due to increasing housing values and other reasons and, after various representations, this tax component has been reduced significantly in order to obtain a more homogeneous (and fair?) result in my jurisdiction. But there are people who don't understand why school-related taxes should be tied to property in the first place.

 

If the property tax becomes uniform per land area, there would either be a budget shortfall if set to low or an issue of home affordability for many if set too high. It may be a matter for a negotiated compromise.

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One of the few pro arguments I can think of is that having a tax on land or any property is that it provides some sort of minimum return to society. Meaning the carrying charge provides an incentive to make the land productive beyond a certain minimum threshold. That return could be in the form of the enjoyment you receive from walking your plot or from the property you plan to develop on it and rent out.

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One of the few pro arguments I can think of is that having a tax on land or any property is that it provides some sort of minimum return to society. Meaning the carrying charge provides an incentive to make the land productive beyond a certain minimum threshold. That return could be in the form of the enjoyment you receive from walking your plot or from the property you plan to develop on it and rent out.

 

Well there are a number of other great reasons:

 

- Non-payment of taxes is secured against an asset that can be sold rather than garnishing wages...if someone isn't working, you can't get blood out of them...you can always seize and sell the property to recover taxes owed.

- Easiest and simplest way to share the burden of community infrastructure costs...you need to build a dam or need to fix a major road, you can nominally raise property taxes without appearing to levy an increased regressive goods and services tax.

- More parity than income taxes...if I'm single, why am I subsidizing those with children that burden schools, hospitals, municipal welfare programs, etc...well it's based on the underlying asset I own or equivalent to a wealth tax, rather than a higher marginal income tax rate.

- Forces turnover of the asset increasing utilization rate of the property...a mansion passed onto the 3rd generation, but zoned for condos and townhouses, usually gets sold to a developer and the underlying utilization of the property increases...due to the 3rd generation no longer being able to live in the area because of increased cost of living and property taxes relative to income. 

 

I'm sure there are plenty I'm missing.  Cheers!

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People often say it's necessary for the government to provide these services (Fire dept, Public Schools, Police) and I would ask why? At least in respect to some of these. I can see both sides of the argument but why can't communities try something else? Generally you're paying someone for a service somewhere. I would rather pay for a service competing for my hard earned dollars than a government monopoly. The difference is the government doesn't have to compete in a free market (they would lose). They simply legislate away the competition and you're stuck with whatever service they can provide. Or they hamstring you and force you to continue to pay into their service whether you use it or not (public school vs charter school)Is it unrealistic to think we could simply pay an HOA fee to competing companies in our areas to provide all of the mentioned services? Police is questionable, but there certainly are cases of  private fire brigades, and charter schools that do a better job.

 

I'll take one itemized document of my property tax dollars distribution please.

 

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Here's a decent article that you may find informative on the evolution of the public fire department:

 

https://www.firerescue1.com/fire-products/Administration-Billing/articles/393135018-how-todays-public-fire-departments-were-born-from-private-fire-brigades/

 

Insurance-based fire protection appears to make good sense, only paid subscribers receive protection. What soon becomes evident under that system is the fact that letting uninsured buildings burn threatens insured buildings. In a densely built city, you simply cannot stand by and allow the fire in one building to spread to adjacent structures. Fire does not respect boundaries or insured vs. the uninsured.

 

The fire service was now clearly competing for tax dollars against the needs of police, schools and public works departments. The problem of justification for fire chiefs was the decline in serious fires after the introduction of affordable smoke detector technology in the 1970s.

 

In this environment, attempts were made to make the fire service seem more relevant. This was achieved by adding services such as hazmat, EMS and technical rescue to show that firefighters could adapt to change.

 

And many cities and states do release overall budget numbers.

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I totally agree with the idea of everyone chipping in for public resources and paying their dues. HOA fees are a good example of this. What I dont get is why two people, with the same exact(as exact as you can get) piece of land, have wildly different tax obligations if one has a 1500 sq ft house on it and the other has a 4000 sq ft house? It's bullshit.

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It is embarrassing how bad all your comments are.  Have you all lost common sense?

 

For simplicity, if a theoretical city has two landowners.  Each has the same amount of land.  One with a 5,000 square foot mansion, while the other just has a 100 sq ft barn for a horse that roams the pasture.  Do you think fire or police protection costs should be split 50/50 or based on the value at risk?  Before any smart ass says well I wouldn't have fire or police protection.  Don't, that is not the issue.  If necessary make it 200 with 100 large houses and 100 little barns.   

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Im not even sure the fire department is a totally necessary itemized tax issue. Many towns I know with some pretty damn egregious tax rates have volunteer fire departments and generally speaking, in relation to schools, public utilities, and police force, fire departments are a rounding error. So yea, maybe putting out a fire at a 9,000 sq ft mansion is a greater "cost" than the same property with nothing on it, but that's more an exception to the rule example and still hardly something that warrants getting raped on a yearly basis. A 5,000 sq ft home could cost 1.5m in some areas, and in those same areas your taxes are $60,000 a year. You can demo and remove debris for less than that and if the fire is legit, insurance will cover you for both that plus building a new one. So even the most extreme scenario and only real area where "bigger home = higher taxes" is moot.

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Castanza - one more thing on public vs private fire departments (or police, etc.)

 

With public services, you are: 1) guaranteed a standard of service; and 2) have a public government financially backing these services.

 

With the first item, you don't get firefighters driving up to your burning home and potentially extorting you before they will perform their services. And you don't get firefighters saying, "well that's a crappy part of town, let's all go to the fire in nice part of town first". (I'm thinking of how many problems people have with denied claims at insurance companies; or the stalling techniques that insurance companies use to delay services rendered)

 

On the second item, if one of these scenarios does in fact occur, well now you can sue the shit out of a state or city government. And actually collect on your payment. Again, I'm thinking of sketchy private companies that will either go bankrupt or simply refuse to pay if they lose in court.

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^Up from a certain level, an unadjusted property tax based on total value is clearly progressive (progressive in the sense that one pays more than one receives) and, to determine if that is fair or not, one has to go through the same equity reflection versus a flat or progressive tax on income. I've come to believe that a certain level of progressivity is acceptable.

 

FWIW, in my jurisdiction, property taxes are deductible only to a certain income level so that the regressivity aspect is dealt with, at least to some degree. I understand that, in the US, the mortgage interest deductibility rule and local property tax deductibility rule tend to alleviate the inherent progressivity aspect of property taxes at the local community level. At least that's what the 'progressive' relationship between income and % share of total amount deducted shows. And I wonder if this has anything to do with the growing divergence between the size of houses and the size of households (versus the size of civic engagement).

 

Concerning the public service aspect of fire departments, I can't help but think about Benjamin Franklin who founded, in 1736, the Union Fire Company in order to mutualize the benefits and the costs. He even pushed for protection of the entire community and introduced prevention policies. Benjamin Franklin perhaps belongs to another epoch where a different kind of Common Sense (Paine pamphlet type) applied but part of the motivation for this guiding light was the "publick spirit". Interesting because then, volunteer firefighters', who were heavily represented by the wealthy owners, paid for their own equipment and, eventually, became leaders in a movement that sensed that cooperation should not be coerced. Building a pool of social capital has a price and the price may involve some kind of progressivity.

 

I've always wondered if gated communities compromised safety, on a net basis?

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It is embarrassing how bad all your comments are.  Have you all lost common sense?

 

For simplicity, if a theoretical city has two landowners.  Each has the same amount of land.  One with a 5,000 square foot mansion, while the other just has a 100 sq ft barn for a horse that roams the pasture.  Do you think fire or police protection costs should be split 50/50 or based on the value at risk?  Before any smart ass says well I wouldn't have fire or police protection.  Don't, that is not the issue.  If necessary make it 200 with 100 large houses and 100 little barns. 

 

This isn't a logical way of thinking about it either. If you really want to break down the cost and efforts of firefighters per property then you don't do it on size. You would do it on infrastructure quality. Surely a newly built mansion with modern electrical work, appliances, building materials and alarm systems is far less likely to burn down than a house build in the early 1900's. I'd be willing to bet there are far more houses in the hood that burn down (percentage wise) than much larger modern houses.

 

 

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