As someone who’s consecutively “owned” one Northern Virginia townhouse and two houses in Austin, trust me when I say that home ownership is a tad bit of a sham. When we’re done with our lease, we’ll be home owners, but for now we lease-to-own from our credit union (which is still transcendently better than any bank). A mortgage is but a way to lose less money than a pure rental. True ownership it ain’t.
5 Likes
Like. Likeity like like like. Plus yes. Tax the rich. And return residential property to housing people as opposed to making rich people richer by keeping it empty
1 Like
But for everyone who doesn’t rent, taxing wealth means taxing property.
3 Likes
Heh, I haven’t stepped foot in the state the current house is in for two years. I paid a reassessment of around $15k additional this year, will make a nice paycheck… And if I could save literally every dime for half a decade–zero food, zero rent, zero anything–i’d have a down payment here 
And I’m doing okay by bay standards.
Home ownership just isn’t in my future anymore.
In a heartbeat I’d take a low wage and a place to live if that meant a solid social safety net. (A garden with bees would be nice as well :D) I will gladly hand over property and wealth, as I do, for quality of life.
9 Likes
In high cost areas almost all of the value is in the land, because of its location. That is priced by bidding and people bid what they can afford. Therefore mortgage + taxes (+insurance + maintenence, but those aren’t very location based) = x% of family income in the area.
Lower the taxes, people can afford more mortgage, prices rise to fit. Raise taxes, people can afford less mortgage, prices drop.
There is, of course, a windfall to existing owners when a property tax cut is made, and a greater one when a crazy property tax system like prop 13 is created, but for future owners it’s going to end up zero sum or less (due to bad schools, etc).
You shift from a higher tax, lower price equilibrium to a lower tax higher price equilibrium.
Prop 13 is also a snowballing policy. If your life goes smoothly and swimmingly you can win a lot of money. Get a good job early, buy in a spot that gets nicer, don’t need to move for a job, don’t get divorced, don’t have some horrible health problem or other calamity or reason to move, win win win. Hit a sizable bump in the road of life and you might lose the prop 13 lottery. The property prices made higher by the prospect of paying essentially no tax in the long run got you a bigger mortgage, higher interest rates, less equity, when forced to sell you lose all that future tax avoidance benefit. Prop 13 gives you a hand when you are on top, and kicks you when you are down.
Prop 13 also encourages housing bubbles. In bubbles people fear being priced out, prop 13 adds all their future property taxes into that calculation. The fact that major remodels can reset the tax also drive people to get a bigger mortgage and do their remodel upfront rather than waiting to see if life goes swimmingly. Again if life goes swimmingly that works well. The advantage is tied to how long you own a particular house, it punishes moving. This means if you are ever to own your ‘dream house’ prop 13 suggests you buy it first, even if the price is a bit too high.
But, yea, its also a highly addictive policy. Home owners vote. Hard to see them deciding to voluntarily lose the prop 13 lottery as a group. So just eliminating the property tax in california might be the only way forward. Maybe it could eventually creep back, after quite a few years.
Prop 13 is ridiculously awful policy.
Its like some kind of pure example of how to build a hughly awful and hugely popular policy in a democracy.
9 Likes
Hello, you were talking about me? 
5 Likes
I don’t want a free lunch. Charge me a tax commensurate with the services I receive while I’m living in the house (and not based on how much my neighbors can pay based on their incomes), and charge a tax based on the house appreciation when it gets sold and the actual value gets determined thereby.
[quote=“Donald_Petersen, post:60, topic:86764”]
If your responsibility to the schools began and ended during the years your own kids attend, then you might as well send 'em to private school.[/quote]
As it happens I did, but I’ve also lobbied for more money for the public schools, and am willing to pay more income tax for this (our public schools are state-supported).
It isn’t obviously fair to me if the people who created a neighborhood paid for the schools they could afford for their children, and now that their neighborhood is full of wealthy professionals they now have to pay for the more expensive schools these newbies want for their kids.
If your assessment really does go back that far, it won’t take too many years for a new homeowner to pass that total up.
Probably not in actual value. I’ve looked at the neighborhood I grew up in, an amazing amount of the basic structure (such as bridges and parks) was there when I was a kid.
5 Likes
A poll tax?
3 Likes
[quote=“daneel, post:68, topic:86764”]
A poll tax?[/quote]
More like the “rates” I paid while in England.
The fact is that the property tax is only statistically progressive; wealthy people pay more by virtue of the fact that wealthier people typically live in wealthier neighborhoods. The converse isn’t the case: one isn’t wealthy simply by virtue of living in a wealthy neighborhood, and it is not fair to charge them more for the same services, certainly not at a rate directly proportional to some artificially-determined value of the house.
Tax income. Tax capital gains. Tax inheritance. Even tax property, for example tax flips, but find a way to not punish long-term owner-occupiers just for living long enough to retire. It is mean and cruel.
7 Likes
All logical and prudent. But do not fix tax assessments at one point and never reassess until the property changes hands, because that leads to… well, Prop 13. Which leads to a chronically underfunded California, and an unfair tax structure.
10 Likes
The greatest trick the Devil ever pulled was convincing the world to get on the property ladder…or something like that 
3 Likes
You weren’t in the UK for the Poll Tax riots, following Maggie’s replacement of “rates”?
The replacement for that, Council Tax, is a bit of a joke. Sort of based on property value, but houses are hardly ever reassessed (actually, never, in England, it appears) and are only graded into buckets anyway - and doesn’t scale enough to properly cover really expensive houses.
The LibDems wanted to replace that with a local income tax. I remember not being very impressed with that, because as someone who could barely afford a Band A house (i.e. the cheap ones) due to rampant properly inflation, the income tax was going to double my local tax bill, and I certainly wasn’t highly paid. Or at least, I didn’t think I was.
4 Likes
Going out way beyond the capitalist mindset. It seems to me that the optimal distribution of resources is not served by policies to keep the elderly in big house at the expense of families with kids.
I read a profile of a NYC rent controlled building. Almost all of the largest units (3br) were occupied by elderly couples or elderly individuals paying 3-500 a month, and almost all the studios by families of 3 or 4 paying 2000. Very screwy. California doors that with houses.
3 Likes
I don’t see an alternative if you don’t want to charge people for value they don’t have. You can moderate the effects on government operation, for example by having a higher property tax rate (1% is absurdly low), by not allowing fixed assessments when the owner is not the occupier, and by moving as many services as possible onto an income tax, which means state level.
I mainly moved back to the US in '88, but didn’t sell my flat until a couple of years later (I was in the UK for several months in '89, and then was mainly renting the flat out). So, I owned under both systems but didn’t experience the controversy except in the wallet and through the newspaper.
1 Like
Repeating nonsense might work for The Donald…
Depends if you are in the real world or the Pikketyverse
1 Like
One of the quirky things about California is that it requires a simple majority ballot measure to amend the state’s Constitution but a 2/3 majority to approve a tax increase.
1 Like
CA has a state income tax and they also screw seniors by taxing capital gains as income.
As I said, Property is a wealth tax, far harder to game than an income tax, witness the current disclosures about Mr Trump. The argument about only wanting to pay tax for what you want or receive is a non-starter in the USA. Rejecting the reverse mortgage simply reveals the “I want it all” attitude. I want my big pile of equity, my nicer gentrified neighborhood (in the case of my area) and my nice low tax. In most cases we’re talking about asking other people to pay your tax so you can pass on your equity to your heirs. How crazy is that?
1 Like
Care to make the argument why a home worth $1m isn’t wealth while a business or a diamond? I don’t buy it that it’s wealth only if you don’t live in it.
2 Likes
