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Thread: The right kind of property tax vs. the wrong kind

  1. Top | #21
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    Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.

  2. Top | #22
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    Quote Originally Posted by Lumpenproletariat View Post



    How is it a "burden" for them to submit their selling price? And this is not just about residential properties, but commercial properties also.

    If there's a worry about the many small homeowners being inconvenienced, maybe the right approach would be to limit this to only the most expensive properties at first, like anything above 1 million or 5 million value. And later it would be extended to those lower.


    A better solution for this particular corruption would be much higher punishment for the corrupt government officials.
    No, the problem is not just "this particular corruption" but the more widespread corruption or distortion happening in the system without crime per se committed by someone. The extreme case of a blatantly corrupt official taking bribes is only a small percentage of the problem.

    By analogy, consider "corruption" in enforcement of the drug laws. Most of the problem is not corrupt cops making a deal with the traffickers so they get a cut in the profits. The problem is bad laws, or a bad system of enforcement which results in many violators totally circumventing the laws while other very small buyers/sellers are disproportionally punished for offences never intended to be punished by those who enacted the laws -- i.e., a small buyer being busted for possession of a small quantity.

    Many laws are easily distorted to do damage which was not intended by those laws. Another analogy is income tax loopholes. These cause significant loss of tax revenue, though it's usually not due to criminal violation which can be prosecuted.

    Assessing value of the property is too subjective, because there is no way to determine the value other than basing it on the actual selling price, which is not known if the property is not for sale. Such property assessment is faulty in the same way that price-setting by the state is faulty. There is no way the government can properly set the prices on everything, as some totalitarian countries have tried to do. Such pricing does great damage to the economy, even if there is no bribery of officials and payoffs which could be prosecuted.

    Basing the assessed value on what the actual selling price would be would probably result in net higher assessed values for taxing, as some properties are under-assessed, due to pressures to protect those wealthier property owners, though it does not take the form of blatant bribery or other crime which could be prosecuted.

    No doubt it would result in increased billions in property tax revenue annually in some states.

    While just prosecuting an extreme corrupt official who gets caught would not fix much. It would bring no additional revenue, but would drive up costs for enforcement. More cost-efficient is to remove the opportunity for the corruption, by taking the power away from the arbitrary subjectivity of the assessor or other official. There are many pressures on assessors causing the values to be reduced or increased contrary to anything about the real market value.


    Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe.
    No, just cracking down on a violator who carelessly gets caught once every 5 or 10 years would ignore 99% of the real problem. Just like catching a corrupt cop in an extreme case doesn't fix the systemic problem or address all the many distortions which happen without blatant criminal corruption which can be prosecuted.

    Bad laws lead to bad results even when everyone honestly tries to enforce them.

    E.g., if a law is enacted mandating Everyone is hereby ordered to pay their fair share, do you think all we need is honest officials who will get a "fair share" out of everyone or be prosecuted for bribery in each case of someone who underpays?

    Or, more realistically, how about labor law which requires an employer to "bargain in good faith" with the union. How is a law like that to really be enforced? "in good faith" is mostly subjective, and it's obvious that the same employer would be found guilty in one court but exonerated in another, depending on the sentiments of the judge(s). But that doesn't mean the judge(s) could be prosecuted on corruption charges. The basic problem is bad law, not corruption.
    There are likely dozens of reasons your solution would be utterly impossible to do. Anything from titling, mortgage filing, moving infrastructure, the cost of businesses moving, the simple mindless inconvenience of it, buying pool, inflation! One time a year would be a quarter of the year.

  3. Top | #23
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    Quote Originally Posted by laughing dog View Post
    Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.
    But the cost to government has a substantial relationship with the value of the property. I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)

  4. Top | #24
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    Quote Originally Posted by Loren Pechtel View Post
    Quote Originally Posted by laughing dog View Post
    Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.
    But the cost to government has a substantial relationship with the value of the property.
    Not really.
    Quote Originally Posted by Loren Pechtel View Post
    I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)
    What a generous plan - using taxes to reduce the wealth of low income households even more.

  5. Top | #25
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    Quote Originally Posted by laughing dog View Post
    Not really.
    Quote Originally Posted by Loren Pechtel View Post
    I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)
    What a generous plan - using taxes to reduce the wealth of low income households even more.
    The point is that nobody is ever taxed out of their house. Better than the current system where your house can be taken for non-payment of property tax.

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