« prev   random   next »

0
0

Plan to own a house? Prepare to be a Milk Cow

By HeadSet following x   2009 Oct 30, 6:14am 6,979 views   25 comments   watch   nsfw   quote     share    


As many have noticed, unemployment, falling wages, reduced consumer purchases, along with lower house values have caused a big dent in government tax income. However, it appears no government was prepared for the reduced receipts. No vote conscious politico wants to reduce payroll, pensions, parks or perks. Tightening the belt is perceived as bad politics, especially pro-active belt tightening.

What to do now? Battle the collective entitlement mentality of the unions, government employees, campaign contributors, welfare recipients and voters by instituting serious cutbacks? May not have a choice but to do some cutbacks. To be sure, the politicos will prefer to raise taxes to the maximum extent possible, as to mitigate the cutbacks in their vote-buying expenditures.

Raising sales tax won't do the job, since people are continuing a trend of spending less. Increase income tax? That would work for state govs and the few localities that have an income tax. Just really sock it to those who are still employed.

But what about the majority of localities that depend on property tax? Since people are not spending, let's tax assets. Once someone is established in a house, they will hardly move out because of a grand or two of increased house tax. Raise the property tax on cars and boats as well. Just keep the pain right under the threshold that would cause one to leave. Savings accounts are an asset, also. Won't spend, eh? They can just tax you on a percentage of your yearly average savings account balance.

Look to see very high property taxes on home purchased, say, after 2008. This targeted tax can be justified by claiming such buyers need to pay "their fair share" since they vultured a "windfall" after buying homes at such a "discount." In reality, increasing property tax is about the only tapable resource left.

1   EastCoastBubbleBoy   ignore (0)   2009 Oct 30, 10:45pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

If they start taxing my savings account (beyond the tax I already pay on the paltry interest generated from that account) for just sitting there... ugh.

2   Nomograph   ignore (0)   2009 Oct 30, 11:40pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

What is the point of this post? You are just making all this up.

3   fredMG   ignore (0)   2009 Oct 31, 12:17am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Home owners actually vote in elections. The politicians will suffer from taxing them as well

4   elliemae   ignore (0)   2009 Oct 31, 2:26am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Okay - so me & the bank "own" my house. Taxes increase. I'm screwed -right? Better off renting? But if I rent, my monthly payments will increase to cover the increase. So, unless I"m living in a tent on BLM land in the midst of nowhere, I'll have to cover the increases somehow.

They already tax assets; our houses. I don't get the point of your post.

5   HeadSet   ignore (1)   2009 Oct 31, 5:49am   ↑ like (0)   ↓ dislike (0)   quote   flag        

elliemae says

They already tax assets; our houses. I don’t get the point of your post.

True, we already have property taxes. My point is that I predict property taxes are going to greatly increase.

Rents are far more price sensitve than house payments. If a landlord tries to pass on an increased cost to the tenants, he will lose then to another landlord willing to absorb more of the costs. I do not understand why that fact is so hard to see, we have so many examples of renters in houses where the rents are far below the landlord's payments.

Increase taxes on a homeowner, and he will just have to pay them. Therefore, if I am currently renting and am looking to buy, the likelyhood of increased taxes are a factor I should consider. If I am looking to buy rental property, I must consider the effect of soon to be increased property taxes that I cannot pass on to tenants in a competitive market.

6   thomas.wong87   ignore (0)   2009 Oct 31, 7:08am   ↑ like (0)   ↓ dislike (0)   quote   flag        

"My point is that I predict property taxes are going to greatly increase."

Not likely to happen. Government spending is out of control. There needs to be more financially responsible government leaders.

"I do not understand why that fact is so hard to see, we have so many examples of renters in houses where the rents are far below the landlord’s payments."

They paid too much! not hard to see that. Their cash flow management is poor.

7   tatupu70   ignore (0)   2009 Oct 31, 7:08am   ↑ like (0)   ↓ dislike (0)   quote   flag        

HeadSet says

If a landlord tries to pass on an increased cost to the tenants, he will lose then to another landlord willing to absorb more of the costs. I do not understand why that fact is so hard to see, we have so many examples of renters in houses where the rents are far below the landlord’s payments.

This is obviously a temporary occurance though. Landlords can't rent for less than their payments long term. So, any increase in landlords' costs will inevitably be passed on to the tenants. And an increase in property tax is an increase in landlords' costs, so it will have to be passed on to the renters. It is a zero sum game.

8   HeadSet   ignore (1)   2009 Oct 31, 12:17pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

tatupu70 says

Landlords can’t rent for less than their payments long term.

For landlords of single family homes, that is exactly what happens. Even in the 80s and 90s pre-bubble era, it was virtually impossible to purchase a home and rent it out for enough to cover the payments. I bought 5 single family homes during the 90's so let me give an example:

I assumed a two year old VA loan nothing down. After subtracting PITI from rent, along with adding back the depreciation and other tax benefits, I was left with a $50/mo negative cash flow. (Not including any maintenance that may be needed). No problem, I was in effect buying a 1500 sqft 3bed 2.5 bath 2car for $50/mo. Now the city raises the tax by $50/mo. I cannot pass that on by increasing rent, I just have to live with buying the house for essentially $100/mo.

Rents are based on peoples ability to pay using prevailing wages. Raise rents above this level and your houses will sit vacant. Your tenants will find more "reasonable" landlords, or scale back to smaller houses or even apartments/townhomes. The tenants may even choose to buy a home. I have noticed quite a few that won't rent at $1500/mo if they can buy similar with payments of $1800/mo. In fact, this is why I sold 4 of my homes during 2003-2005. I just could not find any tenants with a decent credit rating. Everyone with a decent credit rating wanted to buy, even though the payments would be much higher than my asking rent.

My points:

1. Property taxes are going to skyrocket since so many cities/counties are in serious budget trouble and will need the revenue. How can anyone doubt this, considering that the municipalities have obligations contracted during the good times, coupled with decreased revenue from sources such as sales tax, plus the pension fund investment losses? Especially cities like Houston and cities throughout the whole state of California.
2. Potential buyers (whether residents or landlords) need to consider that any property they buy will likely face seriously increased property taxes in the near future.. Also consider that increased property tax can have the same effect on house prices as an increase in the interest rate. If the monthly PITI payment for a given price goes up by $200/mo, it does not matter if the increase stems from the PI or the TI, the house price will have to fall enough to decrease the payment by $200/mo. This will hurt those who buy before the property taxes skyrocket.

9   4X   ignore (1)   2009 Oct 31, 5:00pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

@Headset

No vote conscious politico wants to reduce payroll, pensions, parks or perks. Tightening the belt is perceived as bad politics, especially pro-active belt tightening.

In recent posts, I have stated under the PROGRESSIVE platform that I would cut 1/2 of all state employees in CA, raise taxes by 3% and cut programs by 25%. Are you saying that I would not get back into office because my opponents in the other 2 parties would trounce on the opportunity to talk down on my decision to act quickly? Explain this statement further so that I can better understand?

10   4X   ignore (1)   2009 Oct 31, 5:03pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

FredMG, Headset

Home owners actually vote in elections. The politicians will suffer from taxing them as well

You guys are putting my run for governor at jeopardy here, stop all these false statements about how dumb our citizens are. I plan to run under the bull-moose PROGRESSIVE platform with "cut, cut, cut" as my slogan. but now, you 2 are telling me that I wont get any votes because of the citizens unwillingness to do their part.

11   Kevin   ignore (2)   2009 Nov 1, 1:44am   ↑ like (0)   ↓ dislike (0)   quote   flag        

tatupu70 says

HeadSet says

If a landlord tries to pass on an increased cost to the tenants, he will lose then to another landlord willing to absorb more of the costs. I do not understand why that fact is so hard to see, we have so many examples of renters in houses where the rents are far below the landlord’s payments.

This is obviously a temporary occurance though. Landlords can’t rent for less than their payments long term. So, any increase in landlords’ costs will inevitably be passed on to the tenants. And an increase in property tax is an increase in landlords’ costs, so it will have to be passed on to the renters. It is a zero sum game.

Most landlords would take a cut in profit over a loss of a tenant though. With vacancy rates what they are, rents aren't going to go up unless the LL is already at or near a loss on the property.

The vast majority of LLs own the properties that they rent outright. LLs that are paying a mortgage are rare.

Taxes are highly unlikely to exceed rent itself. Local governments are strapped, but they're not that strapped.

12   elliemae   ignore (0)   2009 Nov 1, 2:34am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Landlords charge what they can, and if they take too much of a loss they eventually throw in the towel. I dare say that in some areas taxes will rise, services can only be cut so much.

Our country is in crisis; in my area services (and costs) increased during the bubble. Part of this was the air of prosperity - as in, we hire because we can - and part of it was due to increased need. All the building created new infrastructure which now must be maintained. Due to the massive amounts of foreclosures, the money's got to come from somewhere. Instead of my taxes dropping due to appraised value decreasing, they increased the tax rate to match what was charged last year. Yep, they charged me more for less. That's because they can - and because the money's got to come from somewhere.

But I still don't understand your logic:
"Look to see very high property taxes on home purchased, say, after 2008. This targeted tax can be justified by claiming such buyers need to pay “their fair share” since they vultured a “windfall” after buying homes at such a “discount.” In reality, increasing property tax is about the only tapable resource left."

They'll charge whatever they are able, no matter when the house was built. But you seem to forget that politicos would like to be re-elected and will resist raising taxes if at all possible (for that reason - and also because they own homes & pay taxes too).

13   HeadSet   ignore (1)   2009 Nov 1, 3:42am   ↑ like (0)   ↓ dislike (0)   quote   flag        

elliemae,

Yes, you are correct about electorate resistence to tax increases and that politicos own homes as well. But the revenues must be increased. Therefore the targeted tax. We already have a precedence with targeted taxes via Prop 13. Prop 13 allowed virtually identical houses in the same neighborhood to have vastly different property taxes based on when the home was purchased. I am predicting a targeted tax similar to Prop 13 in that it will allow much higher taxes on homes purchased later. Unlike Prop 13, this tax would not be based on assessments but have a higher rate itself for homes purchased after the target date.

For reasons you mentioned, the politicos cannot raise taxes too much on all homeowners. But revenues must go up, so why not just collect more from the ones most able to afford it? You would have the support of the old homeowners, who are seeing the newbies buy across the street for half the payment. From the oldie's point of view, what is wrong with adding a few bucks to newbie's house payment, since newbie got such a good deal anyway?

They must raise revenue. What else are they going to do?

14   HeadSet   ignore (1)   2009 Nov 1, 3:52am   ↑ like (0)   ↓ dislike (0)   quote   flag        

4X says

I plan to run under the bull-moose PROGRESSIVE platform with “cut, cut, cut” as my slogan.

Has any politician ever won with the "cut" platform. All I hear about is what goodies politicos will provide for whoever votes for them. I hope you have an example of an elected official who actually won with a campaign platform of across the board spending cuts, delivered on those cuts, and was then re-elected. It would provide hope.

15   elliemae   ignore (0)   2009 Nov 1, 4:39am   ↑ like (0)   ↓ dislike (0)   quote   flag        

HeadSet says

For reasons you mentioned, the politicos cannot raise taxes too much on all homeowners. But revenues must go up, so why not just collect more from the ones most able to afford it? You would have the support of the old homeowners, who are seeing the newbies buy across the street for half the payment. From the oldie’s point of view, what is wrong with adding a few bucks to newbie’s house payment, since newbie got such a good deal anyway?

I don't live in californialand. We have no prop 13 here - and have less services therefore lower taxes. We have no state disability insurance, we don't subsidize the SSI income, medicaid is different, etc. We have less people (but many, many more children per family average). So I guess I'm out of this discussion. We all pay the same taxes.

16   Vicente   ignore (0)   2009 Nov 1, 5:10am   ↑ like (0)   ↓ dislike (0)   quote   flag        

4X says

I plan to run under the bull-moose PROGRESSIVE platform with “cut, cut, cut” as my slogan. but now, you 2 are telling me that I wont get any votes because of the citizens unwillingness to do their part.

Many voters want a free lunch. They want services without taxes. Thus no politician of the 2 major parties actually has any intention of really cutting overall expenditures drastically. They make symbolic cuts in places that viscerally please their constituents, and then layer on the pork somewhere else.

It's high time for a 3rd party.

17   4X   ignore (1)   2009 Nov 1, 8:19am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Vote for my new yet old school party: BULL-MOOSE Progressives!!!!

18   4X   ignore (1)   2009 Nov 1, 8:21am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Progressive Party (United States, 1912)
From Wikipedia, the free encyclopedia

(Redirected from Progressive Party 1912 (United States))
Jump to: navigation, search
This article is about the 1912 Progressive Party. For other uses, see Progressive Party (United States).
Progressive Party
Founded 1912 (1912)
Dissolved 1916 (1916)
Succeeded by Progressive Party, 1924, Progressive Party, 1948
Ideology Progressivism, New Nationalism
Political position Center-left
International affiliation None
Politics of the United States
Political parties
Elections

National Progressive Convention, 1912In the United States, the Progressive Party of 1912 was a political party created by a split in the Republican Party in the presidential election of 1912. It was formed by Theodore Roosevelt when he lost the Republican nomination to William Howard Taft and pulled his delegates out of the convention. The party is colloquially also known as the Bull Moose Party, after the party's emblem and after Roosevelt's boast that he was "as strong as a bull moose".

19   HeadSet   ignore (1)   2009 Nov 1, 11:52am   ↑ like (0)   ↓ dislike (0)   quote   flag        

4X,

I presume you are following the NY 23rd district race?

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Republican-Scozzafava-endorses-Democrat-against-Conservative-Partys-Hoffman-68315037.html

In this case, the third party may actually win.

Notice now that the Conservative has beat the Republican, that Republican has thrown her endorsement to her former Democrat opponent. Kinda shows what I have been saying all along - that there are no real differences between the Republican and Democratic wings of the Demopublican Party.

Good luck with your Bull Moose Party. I would think that a fiscally conservative but socially liberal party (if I read you right) would have quite an appeal today. Throw in bring the troops home now and you got everything I want.

Maybe your emblem should be Colin Powell instead of Barak Obama.

20   4X   ignore (1)   2009 Nov 1, 2:27pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

@Headset

Actually, Teddy Roosevelt led the Bull-Moose party in 1912. I think I will change my emblem. You are right about bringing the troops home. That is an additional 50B per year savings right off the top.

21   Kevin   ignore (2)   2009 Nov 1, 3:54pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

HeadSet says

Good luck with your Bull Moose Party. I would think that a fiscally conservative but socially liberal party (if I read you right) would have quite an appeal today. Throw in bring the troops home now and you got everything I want.

That's been the Libertarian party's platform for quite a while, but they're just not mainstream enough for most people.

Everyone loves to bitch about taxes and spending and wanting government out of their lives, but as soon as you say that we need to get rid of social security and public education and a standing military, and then end prohibition, they all freak out.

22   4X   ignore (1)   2009 Nov 3, 12:39pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Kevin

I understand the other points, but why in the heck would we want to get rid of our military and public education?

23   The Little Guy Lobby   ignore (0)   2009 Nov 3, 1:00pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I own two houses. One in a highly taxed city in IL, where the taxes are obscene. The second house is in WI out in the country. Taxes on the IL house are 4800 yr. WI house 2900 year. I see more people moving to the outlying areas in the coming years to escape the city taxes that are high primarily to fund city pensions, which are miniscule in the country. I do see a land rush to people moving to WI, MN, MO, IA and living out in the sticks. lower taxes, plenty of crops and water and away from the soon to be marauding bands of pissed off people.

It's the end of the world, and I feel fine. PS. I do keep guns and ammo near me at all times.

24   4X   ignore (1)   2009 Nov 3, 1:45pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

But do you have bait?...you cant have guns, ammo without liquor and bait! It is the redneck way of life...yeehaw!

25   elliemae   ignore (0)   2009 Nov 3, 3:14pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

4X says

But do you have bait?…you cant have guns, ammo without liquor and bait! It is the redneck way of life…yeehaw!

G'head, make fun of us guns & ammo people. We'll leave a light on for ya - ya don't mind if it's at the end of a scope, do ya?


about   best comments   contact   one year ago   suggestions