Property taxes and high rents

escap

Please read:

http://www.nytimes.com/2006/12/05/nyregion/05taxes.html?ref=nyregion

This article shows how something as dry and boring as tax policy can have broad implications on the lives of all New Yorkers, and the unintended consequences it can lead to. It shows how rental properties tend to pay a higher effective tax, which of course is shouldered by tenants in the form of higher rents, and which also discourages the development of rental properties, constraining supply (and hurting the poorest New Yorkers to boot). Can Spitzer cut through the special interest maze and reform the system?

More importantly, this is a great time to reconsider the fairness of property tax as a whole. What other asset is taxed, anyway? Do you pay a tax on the value of your car, your cash, or your clothes? If you have no job and no income, why should you pay tax on your house just because it appreciates, even though you haven't sold it and realized the gain? Even firms whose core income is derived from trading assets only have to pay a tax on the gain itself, not a % of the value, and they get a credit on an unrealized loss. Asset taxes should be abolished entirely for the rest of us.

lostingreenwoodhts

Subject: Re: Property taxes and high rents

escap wrote:
More importantly, this is a great time to reconsider the fairness of property tax as a whole. What other asset is taxed, anyway? Do you pay a tax on the value of your car, your cash, or your clothes? If you have no job and no income, why should you pay tax on your house just because it appreciates, even though you haven't sold it and realized the gain?

For once I must agree with you here escap. As a home owner (and yes, I feel lucky...lucky to make the mortgage payment each month), it is real nice my property value goes up every year. BUT that only helps me if I am selling my property. If I my wife and I stay in our lil' abode till we get dusty later in life, our property will continue to appreciate, even when we reach the age were our income will be fixed...but taxes not.

Not sure what the solution is. I certainly realize the City needs the income, but where should the burden fall? Across all shoulders evenly, perhaps.

And while taxes for 1,2,3 family homes are a record low for the country, every nickel counts in my home

And PS. we just had a assessed property tax increase :evil:

escap

Hey, glad to hear we actually agreed on something. One could argue that the interest deduction for homeowners is also unfair in that it creates a de facto tax benefit for the wealthy, so in part these two unjust tax codes cancel each other out, but I doubt the tax benefit compensates any homeowners entirely, or even mostly. Both should probably be done away with in favor of a drastically simplified income tax (it doesn't have to be flat, but it should be very, very simple), and a consumption tax. Naturally I advocate large spending cuts (and of course the end of rent control, which would greatly help city coffers), but I don't want to jeopardize the rare agreement we reached so I won't push my luck.

lostingreenwoodhts

Touché

And we're probably not far off one another's marks on rent control, either...

escap

Really? Sweet Haysoos!

What was it we disagreed on again? :-s