patrick.net

ja says

So, let's start with rent imputed income, like the Swiss.

That would be pure corruption. You would force homeowners to pay rent and they would still have a mortrgage payment. No rationale, no reason and no justice.

dublin hillz says

No rationale, no reason and no justice.

justice = no subsidize (= different taxation) either using your property or your's landlords
Rationale = reason = with no subsidies, open market allocates resources better than planed government

tatupu70 says

Reality says

When it comes to forcibly taking money from people, a narrow view on what's do-able is probably safer than the expansive view that if you put a gun to someone's head, he/she will cough up the money.

Nice pile of gibberish there.

So you think forcing people to cough up tax money as they see fit under the threat of jail if you don't pay is not akin to sticking a gun to your head?

mell says

So you think forcing people to cough up tax money as they see fit under the threat of jail if you don't pay is not akin to sticking a gun to your head?

You are correct. I think it's a ridiculous analogy that has no useful purpose in intelligent conversation.

ja says

dublin hillz says

No rationale, no reason and no justice.

justice = no subsidize (= different taxation) either using your property or your's landlords
Rationale = reason = with no subsidies, open market allocates resources better than planed government

I don't see how it's fair to have people pay tax on "imputed rent" while they are paying off a mortgage. Please elucidate.

ja says

Anything the open market would pay. Of course, you would have to take into discounts things like moving expenses for the medical stuff and the cost of the yuk factor (that most likely you don't have for holding your own thing, what makes it a non open market since there is a unique seller-buyer match - yourself with yourself -)

The same "unique match" would also apply to cooking for myself and "renting" to myself. If I had the requisite skills and good practice for running a restaurant, I wouldn't be wasting time cooking for myself only. Both running a restaurant and renting residential properties involve a lot of overhead, much more than "moving expenses for the medical staff" (did you mean commute expense?)

But for big items whose cost is easily verifiable in an open market, I still for it. So, let's start with rent imputed income, like the Swiss.

Verifiable in what sense? The rent paid by strangers covers myriads of services and overhead precisely because the two parties are strangers to each other. Do you think renting to oneself would entail lease contract? deposit segregation? insurance against law suits by oneself? income and job verification? interviewing oneself? etc. etc..

As for the Swiss citation, I'm afraid you are missing a lot of the details. Instead of being "fair" as you claim, it seems to me such a tax system is designed to limit home ownership and benefit a few big landlords with sophisticated accountants and tax lawyers. The average homeowner would not go through the trouble of accounting for all the expenses and amortization (most American homeowners don't even itemize to take advantage of mortgage interest deduction) to offset such an "imputed income," whereas a big landlord with a team of accountants and tax lawyers would make sure the actual taxable income from rent is minimized.

ja says

justice = no subsidize (= different taxation) either using your property or your's landlords

What subsidy? Home ownership comes with all sorts of expenses. If the homeowner is forced to "rent" to oneself for tax accounting, then he would be able to deduct interest payment, amortization and repairs/improvements, as well as all the other operating expenses, such as insurance and utilities. Do you really believe there's much tax revenue to be generated on this scheme? What is granny's 1960's decoratiion apartment worth in "open market" anyway? Do we really want bureaucrats to tell granny she can't live there anymore because the bureaucrats think the house' rental value is higher?

Rationale = reason = with no subsidies, open market allocates resources better than planed government

Your proposal would entail vastly increased central planning/valuation by the government.

Reality says

What subsidy? Home ownership comes with all sorts of expenses. If the homeowner is forced to "rent" to oneself for tax accounting, then he would be able to deduct interest payment, amortization and repairs/improvements, as well as all the other operating expenses, such as insurance and utilities. Do you really believe there's much tax revenue to be generated on this scheme? What is granny's 1960's decoratiion apartment worth in "open market" anyway? Do we really want bureaucrats to tell granny she can't live there anymore because the bureaucrats think the house' rental value is higher?

So we should subsidize all industries that have expensive costs? Great, let's encourage those least productive

Last time I checked, around 30% of income is spent on living and rental is a good chunk. But if you have accurate data, please send us those papers.

I can use the average rental-to-value in the area, and use as value a the house appraisal.

Rationale = reason = with no subsidies, open market allocates resources better than planed government

Your proposal would entail vastly increased central planning/valuation by the government.

Just like it happens in other big Comunist countries of the world, like Switzerland.

Wait, we already appraise all our homes. We must be communist then.

ja says

Wait, we already appraise all our homes. We must be communist then.

How goes ascertaining market value of a home for purchase or refi loan resemble communism?

dublin hillz says

How goes ascertaining market value of a home for purchase or refi loan resemble communism?

I don't know, but the same way that appraising rental value.

ja says

appraising rental value

Appraising rental value is not communism. Taxing imputed rent is communism!

ja says

So we should subsidize all industries that have expensive costs? Great, let's encourage those least productive

What industries? You are talking about kicking granny out of her own home! Just like I have suspected for a long time, Georgists are really shills for big corporations trying to wield a tool that's even more disruptive than Eminent Domain, all in the name of "efficiency."

Last time I checked, around 30% of income is spent on living and rental is a good chunk. But if you have accurate data, please send us those papers.

What does that have to do with anything? Encouraging home ownership in the long run helps keep housing cost down, as owner take care of the houses on their own dimes.

I can use the average rental-to-value in the area, and use as value a the house appraisal.

In case it's not obvious, rental homes drive down home price. The rental-to-value is much lower in sections of town where rentals are rare. In fact, in most parts of nice towns where almost all homes are owner occupied, the interest and tax expense if buying now tends to be higher than rental income. In other words, there wouldn't be any income/profit to tax.

ja says

ust like it happens in other big Comunist countries of the world, like Switzerland.

Wait, we already appraise all our homes. We must be communist then.

Appraisal is based on real arm-length transactions (even then, disputes are often). Imputing owner equivalent of rent OTOH is fraught with biases listed previously.

The Swiss case is much more than what you think it is. It's a scheme for keeping ownership rate low, benefiting the big landlords, as they can afford the team of accountants and tax lawyers to run up expenses against the rental revenue, whereas the typical home owner do not have the time to expense everything at tax filing time.

ja says

I don't know, but the same way that appraising rental value.

Appraising rental value doesn't work for renting to oneself. A big part of the rental price is counter party default risk (vacancy, squatting). Renting to oneself obviously does not run such risk. In fact, many homeowners offer massive discount when renting to friends (or simply let friends home sitting) because there is significantly reduced counter party risk.

Reality says

What industries? You are talking about kicking granny out of her own home! Just like I have suspected for a long time, Georgists are really shills for big corporations trying to wield a tool that's even more disruptive than Eminent Domain, all in the name of "efficiency."

You seem to have a granny. I don't. And I don't want to subsidize grannies. But if you are so fond about it, promote another tax exemption for them, an elderly earned income credit, or some like that.
Reality says

What does that have to do with anything? Encouraging home ownership in the long run helps keep housing cost down, as owner take care of the houses on their own dimes.

Again, same argument missing all the arguments. What about the opportunity cost of the time/money expent on your own house. The best way of assuring that you spent time/money on the house is efficient is not subsizing owning it. Unless, of course, that you think individuals do not realize how good is home ownership (vs rental) and government has to give us a "push". But all of the recent studies indicate that there are no externalities owning a home.

href="http://patrick.net/?p=1227085&c=983586#comment-983586">Reality says

the interest and tax expense if buying now tends to be higher than rental income. In other words, there wouldn't be any income/profit to tax.

Who is talking about mortgage interest? In a ideal-perfect market, rents should be the same than interest for infinite years amortization.
I'm talking about return on capital. Rental-to-value does not vary that much and even Zillow's approximations are better than nothing.

Reality says

The Swiss case is much more than what you think it is. It's a scheme for keeping ownership rate low, benefiting the big landlords, as they can afford the team of accountants and tax lawyers to run up expenses against the rental revenue, whereas the typical home owner do not have the time to expense everything at tax filing time.

Finally an argument that vaguely makes sense. We should subsidize home ownership because rentals have externalities when the scale is small.

Reality says

ja says

I don't know, but the same way that appraising rental value.

Appraising rental value doesn't work for renting to oneself. A big part of the rental price is counter party default risk (vacancy, squatting). Renting to oneself obviously does not run such risk. In fact, many homeowners offer massive discount when renting to friends (or simply let friends home sitting) because there is significantly reduced counter party risk.

Sure, whatever, deduct the price of the insurance as well.

BTW: I'm not alone, is one of those things that make perfect economic sense but it's difficult to implement politically. Sort of like getting rid of subsidies on farming.

http://www.ft.com/intl/cms/s/0/af6eacf8-23ff-11e0-b68c-00144feab49a.html#axzz2ZTqicuD6
http://www.ft.com/intl/cms/s/0/af6eacf8-23ff-11e0-b68c-00144feab49a.html#axzz2ZTqicuD6

tatupu70 says

NO you can't deduct property taxes, as for state income I don't know, I live in Florida we don't have intax

YES, you 100% can deduct property taxes.

Not for those subject to AMT. Or those who take the standard deduction.

Reality says

First of all, one has to understand what tax is: systematic armed robbery in order to maintain a geographical monopolizer on the use of violence.

I hear conservatives say this sometimes. What exactly is meant by this? There's no good level of robbery or theft other than zero, so if tax=theft or robberty, this statement means that there should be no tax whatsoever. Welcome to Somalia.

ja says

You seem to have a granny. I don't. And I don't want to subsidize grannies. But if you are so fond about it, promote another tax exemption for them, an elderly earned income credit, or some like that.

So more legislations, more taxation, more lobbying for special interest groups. You are precisely the type of wannabe busy body idiots that have provided the political capital for making our laws and tax code as convoluted as they are.

ja says

Again, same argument missing all the arguments. What about the opportunity cost of the time/money expent on your own house.

Would be less opportunity cost lost than having to write down all the expenses for deduction at tax filing time in addition to doing all the work. If renting to oneself results in taxable imputed income, obviously the expense for being one's own landlord would be used to subtract from that imputed income.

The best way of assuring that you spent time/money on the house is efficient is not subsizing owning it. Unless, of course, that you think individuals do not realize how good is home ownership (vs rental) and government has to give us a "push".

What a moronic and yet hubristic way of thinking how the world works. There's hardly ever a "push" by the government necessary, unless one is thinking of creating over paid job opportunities for the bureaucrats doing the "pushing." There is no subsidy per se. It's renting house vs. renting money, take your pick. Mortgage interest is deducted either by the owner-occupant or the landlord as expense and passed onto the tenant via competition.

But all of the recent studies indicate that there are no externalities owning a home.

There is no real ownership in the US. The "ownership" is fee simple long term renting from the town, which collects property tax as rent. Long term occupancy makes it feasible to invest for the longer term.

ja says

the interest and tax expense if buying now tends to be higher than rental income. In other words, there wouldn't be any income/profit to tax.

Who is talking about mortgage interest? In a ideal-perfect market, rents should be the same than interest for infinite years amortization.

Do you then not realize your tax scheme would collect exactly zero $ in that "ideal-perfect market"? The entire rent would be expensed via amortization. In most desirable parts of the country, the rent-to-sale price ratio is so low that new landlords buying to rent would indeed produce negative cash flow. Apparently the buyers are bidding prices so high that they are effectively counting on rising price in the future.

I'm talking about return on capital. Rental-to-value does not vary that much and even Zillow's approximations are better than nothing.

What return on capital if rent income is no more than amortization and interest payment? The return on capital would be zero in that case, as capital is being consumed while interest expense is being paid out.

Reality says

BTW: I'm not alone, is one of those things that make perfect economic sense but it's difficult to implement politically. Sort of like getting rid of subsidies on farming.

Yes, there are many shills out there looking for new ways to generate tax revenue.

SiO2 says

I hear conservatives say this sometimes. What exactly is meant by this? There's no good level of robbery or theft other than zero, so if tax=theft or robberty, this statement means that there should be no tax whatsoever. Welcome to Somalia.

Somalia under anarchy was a far more prosperous time than Somalia under any of its governments in the previous two centuries.

Reality says

So more legislations, more taxation, more lobbying for special interest groups. You are precisely the type of wannabe busy body idiots that have provided the political capital for making our laws and tax code as convoluted as they are.

one person, one vote. One type of income, one tax.
The overhead for an election system and for a fair income evaluation is small and worth it for the benefits.

Reality says

If renting to oneself results in taxable imputed income, obviously the expense for being one's own landlord would be used to subtract from that imputed income.

Sure, whatever, you can add the landlord income and substract it when deducing the rental income. Just don't do my taxes.

Reality says

There is no subsidy per se. It's renting house vs. renting money, take your pick. Mortgage interest is deducted either by the owner-occupant or the landlord as expense and passed onto the tenant via competition.

Sure, whatever. Competition passes all the savings from manufacturers to consumers. And you can forget about elasticity of offer and demand. Same idea that if goverment pays $1 for potato to farmers, savings are passed to the consumers. Just don't do my 101 economics homework.

Reality says

There is no real ownership in the US. The "ownership" is fee simple long term renting from the town, which collects property tax as rent. Long term occupancy makes it feasible to invest for the longer term.

Sure... Property tax denies property, no matter how small it is or what services you receive on its behalfReality says

What return on capital if rent income is no more than amortization and interest payment? The return on capital would be zero in that case, as capital is being consumed while interest expense is being paid out.

Sure, whatever. If you pay cash then it makes sense and you should pay imputed income? Just don't give ideas to the Wall Street guys or they would start buying securities on (income tax free) leveraged money.

Reality says

Yes, there are many shills out there looking for new ways to generate tax revenue.

Yes, and if you follow their profile, they'll try to generate just the minimum government revenue. But all of it without market distortions.

Reality says

Somalia under anarchy was a far more prosperous time than Somalia under any of its governments in the previous two centuries.

You seem more informed that the World Bank, that doesn't have official GDP statistics about Somalia since the 90s.

But even with CiA's estimations, you are right. Congrats!
Oh wait, if you compare GDP growth of Somalia with the neighbors, it's really shitty.

ja says

one person, one vote. One type of income, one tax.

The overhead for an election system and for a fair income evaluation is small and worth it for the benefits.

What are you talking about? Aren't forgetting the lobbyists? Once you start exempting this group that group from "income" calculation that may amount to as much as 1/3 of what they are currently making, trust me, the lobbyists will be fully engaged.

ja says

If renting to oneself results in taxable imputed income, obviously the expense for being one's own landlord would be used to subtract from that imputed income.

Sure, whatever, you can add the landlord income and substract it when deducing the rental income. Just don't do my taxes.

What the heck are you talking about? Are you old enough to have filed income tax? or are you just some pimply faced high school kid? or college kid not making enough to need to file anything more than an EZ form?

ja says

There is no subsidy per se. It's renting house vs. renting money, take your pick. Mortgage interest is deducted either by the owner-occupant or the landlord as expense and passed onto the tenant via competition.

Sure, whatever. Competition passes all the savings from manufacturers to consumers. And you can forget about elasticity of offer and demand. Same idea that if goverment pays $1 for potato to farmers, savings are passed to the consumers. Just don't do my 101 economics homework.

Are you bragging about taking Econ 101 now? Is that for high school?

ja says

What return on capital if rent income is no more than amortization and interest payment? The return on capital would be zero in that case, as capital is being consumed while interest expense is being paid out.

Sure, whatever. If you pay cash then it makes sense and you should pay imputed income? Just don't give ideas to the Wall Street guys or they would start buying securities on (income tax free) leveraged money.

Once again, what the heck are you talking about? Do you know anything about accounting or paying taxes on profit?

ja says

Yes, there are many shills out there looking for new ways to generate tax revenue.

Yes, and if you follow their profile, they'll try to generate just the minimum government revenue. But all of it without market distortions.

Dream on. All taxation schemes create distortions. It is human nature to minimize one's own tax bill. You will know that after you have filed tax returns.

ja says

You seem more informed that the World Bank, that doesn't have official GDP statistics about Somalia since the 90s.

But even with CiA's estimations, you are right. Congrats!

Oh wait, if you compare GDP growth of Somalia with the neighbors, it's really shitty.

Rapid economic growth in Somalia during the period of "anarchy" could be verified by the vibrant market place that showed up there, compared to many decades of socialist and fascist rules before then. Even Paul Krugman admits in his latest column that all government economic statistics are essentially boring science fictions. All those dams and other big infrastructure projects that Somalia's neighbors built added greatly to their GDP but benefited the people very little, aside from the crony contractors.

I still don't understand what exactly is rationale for this so called "imputed rent" bullshit. Seems to me that some people are simply pissed that homeowners can deduct interest and property taxes via schedule A over the standard deduction hurdle from their taxable income. To those who are so upset about it, if you actually ran the numbers you would realize that what renters pay in federal + state taxes is very similar to what owners pay in federal + state + property. So the overall tax burden is extremely close. But I guess it's easier to get people emotionally manipulated via the hysteria over "tax breaks."

dublin hillz says

I still don't understand what exactly is rationale for this so called "imputed rent" bullshit. Seems to me that some people are simply pissed that homeowners can deduct interest and property taxes via schedule A over the standard deduction hurdle from their taxable income. To those who are so upset about it, if you actually ran the numbers you would realize that what renters pay in federal + state taxes is very similar to what owners pay in federal + state + property. So the overall tax burden is extremely close. But I guess it's easier to get people emotionally manipulated via the hysteria over "tax breaks."

Think of a world where you paid your home cash. And where there were no property taxes because your town doesn't give you services and you pay them, if you want, by yourself.
Your house is capital and using its shelter year by year its a benefit you receive from that capital. In the same way that you receive dividends if you own stock

Reality says

Rapid economic growth in Somalia during the period of "anarchy" could be verified by the vibrant market place that showed up there, compared to many decades of socialist and fascist rules before then. Even Paul Krugman admits in his latest column that all government economic statistics are essentially boring science fictions. All those dams and other big infrastructure projects that Somalia's neighbors built added greatly to their GDP but benefited the people very little, aside from the crony contractors.

(no clue what Paul Krugman's point about China has to do. As in China's, Somalia's numbers are no good but even if they are half wrong the same conclusions apply)

Sure Somalia has been growing.. but was it because of anarchy? All the neighbors in the area are growing a lot. Caterus paribus?

Reality says

What are you talking about? Aren't forgetting the lobbyists? Once you start exempting this group that group from "income" calculation that may amount to as much as 1/3 of what they are currently making, trust me, the lobbyists will be fully engaged.

Lobbies are a problem now and would be anytime. Myself, I'm lobying about the best more rational and fair solutionReality says

What the heck are you talking about? Are you old enough to have filed income tax? or are you just some pimply faced high school kid? or college kid not making enough to need to file anything more than an EZ form?

I have the same question about yourself. Think about the added value theory and how the tax system tries to capture the incremental value additions. = If you deduct your honoraries as landord, you also have to declare them as income. So you are even.

Reality says

Are you bragging about taking Econ 101 now? Is that for high school?

No, I'm asking you to review it. If you take a pencil, a paper, and some offer and demand curves you'll see that this 'passing costs' thing doesn't have much sense.Reality says

Once again, what the heck are you talking about? Do you know anything about accounting or paying taxes on profit?

For simplification, think in a world where we pay cash for houses.

Reality says

Dream on. All taxation schemes create distortions. It is human nature to minimize one's own tax bill. You will know that after you have filed tax returns.

Again, basic offer and demand curves show that some taxations can minimize the utility loss in the market place. Particularly, if you distribute them evenly across all products.

dublin hillz says

Seems to me that some people are simply pissed that homeowners can deduct interest and property taxes via schedule A over the standard deduction hurdle from their taxable income

the MID is just a subsidy since nearly all buyers (after a certain income level) benefit from it.

And since housing is an *extremely* scarce good (relative to demand), this price subsidy just gets added to the purchase price.

The MID is silly, counter-productive policy.

Part of the problem with this place is treating housing like an actual wealth-creation industry.

That's not really case. Housing is just a major avenue to beat money out of the lower half of the nation.

McDonald's recent budget for its employees had its largest item in rent, $600.

http://www.practicalmoneyskills.com/mcdonalds/documents/McD_Journal2.pdf

There's no reason that housing even has to be that high per month, other than the rent-seeking allowed and even encouraged to go on.

Most of the housing rent we pay is simply the amount it takes to keep the next bidder from taking over our leasehold tenancy, not the actual capitalized cost of production and ongoing maintenance.

There are very few other sectors of the economy that operate like this, which is why housing has embedded economic rents right up there with health care (which is of course another high-profit sector of the economy with supply-demand imbalance).

The only solution is to increase the supply of quality housing such that there is surplus everywhere people want to live.

If we threw a trillion dollars worth of labor and resources at this we'd have 6 million new units (@ $160,000 per). For a city the size of Portland OR that'd be another 11,000 units on the market.

That'd be a good start in eliminating the rents out in housing, empowering our economy to focus more on actual wealth-creation and not just all the wealth-capture that's going on now to our great long-term detriment.

http://research.stlouisfed.org/fred2/series/GINIALLRH

Another mechanism would be to not deduct property tax from income taxes, but tax property -- the land component -- more. The more land you own, the more taxes you pay. That would encourage higher housing density, which is also necessary for an economy to run more efficiently, with less waste lost to transportation and distribution costs.

ja says

Think of a world where you paid your home cash. And where there were no property taxes because your town doesn't give you services and you pay them, if you want, by yourself.

Your house is capital and using its shelter year by year its a benefit you receive from that capital. In the same way that you receive dividends if you own stock

Why do you have to imagine so many counter-factual assumptions? Home, even if owned outright, already comes with Excise tax: property tax, just like car ownership in many states. What you are proposing is equivalent to levying a tax on the equivalent daily rental fee on car ownership.

ja says

Lobbies are a problem now and would be anytime. Myself, I'm lobying about the best more rational and fair solution

Really? What lobbying firm have you hired? You obviously don't even understand how political lobbying works. What you consider "rational" and "fair" is what most people would consider irrational and unfair. Should you pay a tax on the equivalent monthly computer lease "income" for owning the computer that you have?

ja says

What the heck are you talking about? Are you old enough to have filed income tax? or are you just some pimply faced high school kid? or college kid not making enough to need to file anything more than an EZ form?

I have the same question about yourself. Think about the added value theory and how the tax system tries to capture the incremental value additions. = If you deduct your honoraries as landord, you also have to declare them as income. So you are even.

So you are a pimply faced high school kid who thinks he has the world figured out. FYI, I have been filing income tax returns on personal and business income for over 20 years. What the heck is "honoraries as landlord"? For rental income, I count income from rents and deduct expenses associated with making the housing available to my tenants. For most young families that bought homes recently (as in the past decade), their "imputed income" from owning a home would be very close to zero after deducting interest payment and amortization: a $200k house that would rent for $1500/mo would have close to $800 interest payment + $100 insurance, $200 property tax + $500 amortization = $1600/mo expenses. So the net income after expense would be negative! That's before accounting for any repairs!

The people that your scheme would really catch would be people who already have paid off their houses or have in the house for more than 27.5 amortization years. That means retirees! Who you would then exempt. What exactly is your fuss about? That's why I started suspecting you never had any experience filing tax returns or accounting for business income.

ja says

Are you bragging about taking Econ 101 now? Is that for high school?

No, I'm asking you to review it. If you take a pencil, a paper, and some offer and demand curves you'll see that this 'passing costs' thing doesn't have much sense.Reality says

Do you even know the supply and demand curves for housing in a given area? They are not at all akin to canonical supply and demand curves for hamburgers. Mortgage interest deduction is very much on the mind of people buying properties, as it works into the price and rental price.

ja says

nce again, what the heck are you talking about? Do you know anything about accounting or paying taxes on profit?

For simplification, think in a world where we pay cash for houses

What about cash? You then deposit it into the business account just like receiving a check. Are you suggesting tax evasion now? or money laundrying?

ja says

Again, basic offer and demand curves show that some taxations can minimize the utility loss in the market place. Particularly, if you distribute them evenly across all products.

It's called supply and demand curve, you silly. Qualified Supply and Qualified Demand. You don't know enough economics to talk about Utility or "utility loss." The tax scheme that you propose, with attendant enforcement and compliance cost far outweigh any "fairness" that you are dreaming about. All it would do would be forcing a lot of people going thru the paper pushing and arrive at a near-zero net income from owning their home.

Bellingham Bill says

the MID is just a subsidy since nearly all buyers (after a certain income level) benefit from it.

This statement is very much counter-factual. The overwhelming majority of owner occupants do not take advantage of MID, because they use the standard deduction instead. MID is only available if you itemize. Then for the rich who do itemize, MID gets cut off when Minimum Alternative Tax hits (usually before MID itself runs into caps).

c=983975#comment-983975">Bellingham Bill says

And since housing is an *extremely* scarce good (relative to demand), this price subsidy just gets added to the purchase price.

Are you talking about Demand (as in Qualified Demand) or vernacular "want"?

Bellingham Bill says

There's no reason that housing even has to be that high per month, other than the rent-seeking allowed and even encouraged to go on.

Most of the housing rent we pay is simply the amount it takes to keep the next bidder from taking over our leasehold tenancy, not the actual capitalized cost of production and ongoing maintenance.

You have no clue how much it costs nowadays to build a new house in expensive areas. The overwhelming majority of existing homes for sale nowadays are selling for lower than insurance replacement cost (that's already having land value at zero as insurance co doesn't pay out for land; they only pay structural replacement). If you are envious of return on capital on rental homes, you can take stab at it yourself any time. The barrier to entry is so low, there is no economic rent to speak of.

Bellingham Bill says

The only solution is to increase the supply of quality housing such that there is surplus everywhere people want to live.

If we threw a trillion dollars worth of labor and resources at this we'd have 6 million new units (@ $160,000 per).

LOL. We already know what your proposal would result in: ghost cities like those in China. People don't want to live in the middle nowhere new development. People want to live in places like New York City. Don't tell me you can slap together a plywood box in the middle of time square for $160k and expect being able to keep it there, especially in millions of copies.

Low density is also a quality of life issue. Most Americans don't want to be pigeon holed within 2ft of their neighbors.

ja says

Think of a world where you paid your home cash. And where there were no
property taxes because your town doesn't give you services and you pay them, if
you want, by yourself.
Your house is capital and using its shelter year by
year its a benefit you receive from that capital. In the same way that you
receive dividends if you own stock

OK, so lets see here. Imagine a $500K home and can be "rent imputed" for $2600 a month. Currently property tax in california would be $6250 per year. So, I don't have to pay it and I get no services from my city. However, my glorious imputed rent is $31,200 which feds and state want dibs on. Say feds get me for 25% so that's $7800. State wants a 9% cut so that's $2808. Combines, I get fucked for $10,608....and I still get no services...lol, so I have to pay $4358 more and get no services whatsoever and can't write nothing of...sounds like AC transit bus system - increase rates and cut routes what a proposal!

Reality says

Why do you have to imagine so many counter-factual assumptions? Home, even if owned outright, already comes with Excise tax: property tax, just like car ownership in many states. What you are proposing is equivalent to levying a daily rental fee on car ownership.

I imagine them to simplify confused minds. Yes, it would be equivalent to car rental after you take all the overhead of it. And in case it was not clear it's INDEPEEEEENDENT from any other tax or fee you charge on it.

dublin hillz says

OK, so lets see here. Imagine a $500K home and can be "rent imputed" for $2600 a month. Currently property tax in california would be $6250 per year. So, I don't have to pay it and I get no services from my city. However, my glorious imputed rent is $31,200 which feds and state want dibs on. Say feds get me for 25% so that's $7800. State wants a 9% cut so that's $2808. Combines, I get fucked for $10,608....and I still get no services...lol, so I have to pay $4358 more and get no services whatsoever and can't write nothing of...sounds like AC transit bus system - increase rates and cut routes what a proposal!

YEs, it's a increase over what you are paying right now, but this doesn't make it unfair, just politically difficult ;-). Like any other subsidy. It would b much easier politically to forgive any tax on rental, and this wouldn't make it better for the society.

Mortgage deduction is also very stupid from economic point of view, but it's very difficult to get rid of. Proposals out there try to focus on a gradual reduction of it, and/or targeting the richest owners, who get way with most of the deductions. Similar strategies should be used for rental imputed income

Reality says

Really? What lobbying firm have you hired? You obviously don't even understand how political lobbying works

Nor you irony.

Reality says

What you consider "rational" and "fair" is what most people would consider irrational and unfair. Should you pay a tax on the equivalent monthly computer lease "income" for owning the computer that you have?

Can you give me a serious economist making a case why impute income is not good. I'd love to read the paper.

Different to say that it may be impractical to tax all items you otherwise have an option to rent. But that's not a justification not to do it with the biggest items.

Reality says

What the heck is "honoraries as landlord"?

No idea. But you brought it up. I guess honoraries you can claim for all the administrative work or renting a house, that you *could* also claim if you were renting to yourself.

In any case, if you *could* claim the honoraries for renting the house to yourself, they would both deduct from your imputing income and add as wages.

If you meant something else less stupid in the threads above, I apologize for my missunderstanding

Reality says

The people that your scheme would really catch would be people who already have paid off their houses or have in the house for more than 27.5 amortization years. That means retirees!

Or millionares. But why should we care. If you want to subsidize retirees be a man and say so. But don't subsidize retirees (or other) who own vs retirees (or other) who rent. I happen to know some retirees who pay rent from their retirement checks, usually poor people, and I'd think we should subsidize them if we have to do it to anybody.

Reality says

Do you even know the supply and demand curves for housing in a given area?

I never pretenede to know. But as long as they are not perfectly elastic, deduction from landlors would not reflect in lower price for tenants.

Reality says

What about cash? You then deposit it into the business account just like receiving a check. Are you suggesting tax evasion now? or money laundrying?

You can do whatever you want with your cash. But on the interests, you pay income tax.Reality says

It's called supply and demand curve, you silly.

Good catch.. supply curve. AKA offer curve

Reality says

All it would do would be forcing a lot of people going thru the paper pushing and arrive at a near-zero net income from owning their home.

People tend to buy vs renting because it offers them some benefits if they plan to stay there. Even if it's only after 30 years.

Anyway, it's not the same the first year of mortgate, when you have lots of interest to deduct, than the latest, when you are not deducting any.

And I think you are overstimating the overhead of the paperwork of doign that imputed income paperwork. IT can be easily sent to you by government, just like property tax.

Reality says

This statement is very much counter-factual. The overwhelming majority of owner occupants do not take advantage of MID, because they use the standard deduction instead. MID is only available if you itemize. Then for the rich who do itemize, MID gets cut off when Minimum Alternative Tax hits (usually before MID itself runs into caps).

It's a subsudy and a subsidy for the rich. That's what Bellingham says (and what I say and any economist would tell you). A good reason to get rid of it.

Please, don't reply to whatever you think people is saying, read tehm first.Reality says

LOL. We already know what your proposal would result in: ghost cities like those in China.

Problem in China is completely different. Investment without consumption (read what KRugman was actually saying in that article you mentioned).

Bellingham is theoretically right. Why pay $2M for a New York apparment. LEt's build a second New York so prices would go $1M / appartment (simplifying).
Unless, of course, you think you are paying $2M in New York for living close to the smartest guys in the country (kind of a select club). In which case, those guys are screwed because they cannot figure out a way of not paying to the previous (non smartest guys) owners.

In anycase, not a free market in the classical sense.

ja says

I imagine them to simplify confused minds.

Yes, you do have a very confused mind, if any mind at all. What you wrote here is not even a valid sentence.

Yes, it would be equivalent to car rental after you take all the overhead of it.

Another sentence that defies parsing. What the heck does "take all the overhead of it" mean? Why would anyone own any car at all for personal use under your tax scheme? You are essentially advocating a serf renter society.

And in case it was not clear it's INDEPEEEEENDENT from any other tax or fee you charge on it.

What the heck does "independent" mean in this sentence? Other taxes and fees would be abolished? Who would then pay for the salaries and pensions of the bureaucrats that are currently living off the existing taxes and fees? Do you know anything about the real world economic or political process at all?

ja says

Can you give me a serious economist making a case why impute income is not good. I'd love to read the paper.

There are court precedence on why taxing imputed income doesn't fly in the US. Look up imputed income yourself. Serious economists, or any person with economic knowledge, don't write "offer and demand curve," so you can stop pretending to have have read much of any economics papers.

Different to say that it may be impractical to tax all items you otherwise have an option to rent. But that's not a justification not to do it with the biggest items.

What happened to your earlier concept about "fair" and applying the same rule to all classes of economic activities? Fundamentally you don't understand what private capital ownership means, but prefer a government tax on the use value of all capital ownership. What you don't understand is that capital depreciate and amortize in a progressive society that is not stagnant.

ja says

What the heck is "honoraries as landlord"?

No idea. But you brought it up. I guess honoraries you can claim for all the administrative work or renting a house, that you *could* also claim if you were renting to yourself.

In any case, if you *could* claim the honoraries for renting the house to yourself, they would both deduct from your imputing income and add as wages.

If you meant something else less stupid in the threads above, I apologize for my missunderstanding

No, you brought up the word "honoraries." It was impossible to tell what you meant by that.

Like I illustrated before, the cost of "renting to oneself" for most owners would simply reduce net income from "renting to oneself" to near-zero for people who bought houses on a 30yr mortgage in the past decade.