patrick.net

Astrid: Do you really think that low income people consume more than the rich? Clearly a consumption tax would be paid mostly by the rich, in proportion to how extravagantly they live (consume).

This is particularly true if food clothing and shelter are exempted from the tax. Thus the tax would only apply to discretionary consumption.

However, as a wealthy person I do not want a consumption tax because I feel I would be taxed heavily twice. The money I have saved is the net after tax (taxed once), and I think it terribly unfair for me to pay tax on it again as I spend it in retirement (soon).

Veritas: It is a misconception that a consumption tax would screw the poor. The poor would likely pay no more than now. Other than economists, very few people understand that ultimately all taxes are imbedded in the price of the goods sold. Thus the current tax system is all about who collects the tax, not who ultimately pays it. Corporations do not really pay taxes because they include their income tax in their pricing of the goods and services. In reality corporations are little more than tax collectors, collecting tax from their customers by imbedding the tax in the price.

Worse yet, many companies pay little or no tax because of loopholes and accounting tricks. Those companies with offshore parent companies have many more ways to hide from paying tax. We should tax all corporations on their revenues to eliminate this advantage.

Case in point: MC got his, screw the rest of you.
_nod_ to astrid

On to the other post on taxes....

A system solely based on consumption (which means 30-40% taxes on everything) is 1) difficult to enforce and will encourage all new levels of tax cheating,

No doubt there will be cheaters, but isn't cheating already rampant on income and (especially) corporate taxes? How much of the federal tax bill was paid by corporations or rich people last year? Plus, if most every state already collects sales taxes, why would it be 'difficult to enforce'?

2) fall disproportionately hard on low income people who spend more of their money on immediate consumption,

I wish it were otherwise, but our tax system is becoming less and less progressive with each passing year, not to mention a nightmare of complexity & special interest loopholes. With well funded lobbyists running the show, I don't see that changing anytime soon. It's hard for me to see how a flat consumption tax --while not perfect-- could be any worse than the current system.

and 3) does not tax wealth.

You have a point here. I'm not against all forms of wealth tax --I was never in favor of phasing out the Inheritance tax, which is just a way of passing along un-earned generational wealth to children of privilege. I'm also not against property tax for the way it tends to keep RE prices in check.

Peter-

It is my understanding that sales are down in Marin because inventory is has been lower than usual for quite some time. Has this changed?

Jack, I am now Peter P. That P is not this P.

Harm: People with the top 10% of incomes pay approximately 60% of all income taxes.

Jack, are you the Marin Bubble guy?

many of my neighbors who are retired school teachers, public service employees and such certainly would be. And just because they could sell their homes and move, does that mean they should be forced to?

Again, yes this is unfortunate, but it begs some questions:

How many of these fine "retired school teachers, public service employees and such" voted in favor of Prop. 13 (to redistribute the burden of taxes from themselves to their children & grandchildren)?

How many of them voted in favor of the last Urban Boundary Limit law (to prevent homes from being built nearby so their children & grandchildren could enjoy the same lifestyle)?

Sowing greed/selfishness produces a bitter harvest for all, no?

astrid: Yes, it is a similar argument. If a worker paid no taxes he could work for a lower wage and have the same spending power – except to the extent that the goods he purchases are taxed by the consumption tax. In the end, all taxes end up being included in the prices of goods and services one way or another, with varying degrees of inefficiency in the process. If you want to reduce the burden on the poor one must structure the taxes so that they have less affect on the basic necessities, and more effect on discretionary items.

My only issue with Prop 13 is that it behaves as a price control mechanism, thus potentially making price more volatile.

(I usually refrain from "fairness" arguments because the world is inherently unfair anyway.)

I do want a simple life with flat tax and consumption tax. The government is too big and expensive though, perhaps they should offshore some of the jobs? ;)

I cant even change my name on this blog, let alone do a web site.

Flared Slacks, changing name can sometimes be a good IDEA.

astrid, I doubt that Prop 13 alone is the culprit of unaffordable housing. I am going to lay most blame on laws that limit growth. I think it is a good idea to define a growth boundary for an urban area to prevent sprawling but it is very important to promote growth within a boundary through designated high-density/high-rise housing projects.

HARM: Proposition is too much of a “good” thing. In a time of rapid inflation it was intended to protect people from a rapid increase in property taxes for after they bought it. It works much like rent stabilization laws do. Unfortunately, like rent stabilization, it has unintended consequences. The obvious effect of this is a shift of costs from one group to another.

I have created a "Soft landing" thread in case you guys want a change of subject.

Bitter harvest for who? I am entirely satisfied with the status quo.

@MC,
Exactly. And that's why you defend it. So please don't cry to me about all those "poor people" living in $3 million beachfront homes. You have no moral soapbox to stand on.

"Well if we could please dispense with the class envy..."

_smile_

Rather, comrade. Rather.

Cheerio,
prat

soft landing? now you are speaking my language

It is another "role-playing game". ;)

This state already debated the choices you posed, tossing the elderly out vs. inconveniencing some new comers, and voted for the latter.

We have yeat another alternative: abolish property tax, introduce tax credit for renters, introduce consumption tax.

MC: "This state already debated the choices you posed, tossing the elderly out vs. inconveniencing some new comers, and voted for the latter."

Something of a false choice, wouldn't you say?

Cheerio,
prat

Astrid: In Canada they will tax you more heavily than here. The only way to really reduce taxes is to do what the super rich do and form offshore trusts which pay no taxes and then draw an allowance from them. This is how Ted Kennedy is able to have all those great homes and wealthy lifestyle while appearing to have only modest assets and income. The trusts own the stuff he uses and he draws an allowance as a beneficiary. In addition there is no inheritance tax on money that is never passed.

Unfortunately, like rent stabilization, it has unintended consequences. The obvious effect of this is a shift of costs from one group to another.

Exactly!
Q: Which areas have the LEAST amount of new rental stock being built?
A: Areas with rent control.

Every time the government tries to interfere with markets in such a way as to "protect" a group of people, an industry, etc., its policies tend to create unintended/unwanted side-effect, which are often worse than the very problem they were trying to alleviate in the first place.

Every time the government tries to interfere with markets in such a way as to “protect” a group of people, an industry, etc., its policies tend to create unintended/unwanted side-effect, which are often worse than the very problem they were trying to alleviate in the first place.

If they government says that it wants to "protect" you, be very afraid. Isn't the new bankruptcy law billed as some "consumer protection" act (Bankruptcy Abuse and Consumer Protection Act)?

Sometimes, libertarians do have a point.

"its just homeowners who got theirs and damn everyone else."

At some level, I disagree with this (although I am sympathetic to the sentiment about young families, since I am about to start one). A person's home is their castle, and you shouldn't be kicked out of it because abstract notions of land value increase. Rather, you should be charged a predictable amount for services your house requires.

MC has come across as a bit arrogant, but he has something of a point here.

Cheerio,
prat

MC: "But not a truly false choice, no."

It is absolutely a false choice:

Either old people are kicked out of their house or newcomers are inconvenienced.

Certainly both clauses could hold, and, if property taxes were either non-existent or so low as to not matter, the negation of both clauses could hold. The very definition of a false choice, chap.

In any event, I agree with you that pitching the old folk out on the streets is probably not the civilized thing to do. Although them voting in free Viagra on my dime has perhaps eased my general sympathy...

Cheerio,
prat

However, living there means I can stop worrying about healthcare moving with work, especially in old age.

astrid, I would not be so sure. I love Canada but I think their tax is still a bit too low for the promised level of social services going forward in time.

A person’s home is their castle, and you shouldn’t be kicked out of it because abstract notions of land value increase. Rather, you should be charged a predictable amount for services your house requires.

Yes, Prat, but why should one group be charged *a lot* less for those same services than anyone else by sole virtue of fortunate birth (i.e., those "wonderful" baby-boomers Srufer-X loves to blow kisses to)?

What bugs me most about MC's arguments is he starts out making an emotional appeal about poor grandmothers being kicked out of their homes by big property tax. Then it turns out those "poor" grandmas are more like Grandma Rockefellers. Then away goes the moral fluff, and we get to the heart of the matter. MC supports prop 13 & other NIMBY laws out of pure self interest --nothing more. He doesn't give a $hit about anyone else.

astrid, I do think that Canada has a good future though because it is a country rich in natural resources. In particular, Alberta has tar sands which can someday be economically extracted as oil.

I do have some faith in Canada.

Ever since I went to school in Japan, I have had a much greater love of the U.S. Is it perfect? Hell no. But being American I am much more comfortable with the social environment I was brought up with. I also did not appreciate being treated as a second class citizen because of my gender and race. Would Canada have the same issues as Japan? Probably not, but I think it is so easy to lose one's appreciation for the benefits we have living in the U.S. I love the fact that I can debate about issues and seek to change things I don't like. I'm not trying to be rah rah or overly patriotic. But I do appreciate where I live, warts and all.

astrid, how about portable property tax limit?

We can allow people over certain age to "port" their property tax limit when they move. This allows them to free up houses and encourages them to stay in California to support the local economies.

SactoQt, you went to school in Japan? How was the housing environment there (philosophy, buy vs rent, affordability...)?

MerrillClient, will you just calm down please?

I was there at the earlier stages of the decline (about 3-4 years in). No one thought the market was going to do what it did, and everyone was still pretty optimistic. At the time Japan was much stronger economically, and still looked poised to be a much more influential player in the world economy, which is why I went to school there. I hate to say it, but I didn't fall in love with the culture because it was very repressive to women (at that time) so I didn't stick with any earlier intentions to try to work or live there. Truly, the housing market was not a big issue at the time. If I had gone there maybe 2 or 3 years later, I bet I would have seen a very different environment.

How so?

Just sit down, have a nice glass of iced tea, and relax.

I think the debate is overheated. It can use some cooling. :)

QT, you are so brave. Japan can be quite intimidating for foreigners, especially females.

Please tell me the food was good.

Mostly, the food was great. Spoiled me for Americanized sushi.

Methinks you should direct your cooling enthusiasms elsewhere.

Let's all have iced tea.

astrid, calm down. ;)

On the good side (if there is one), property taxes are 100 per cent tax deductable (at least in California) just like mortgage interest.

One important difference: property tax is not deductible under AMT, which is hitting more and more people every year.

(Not tax advice)

Jack, in "Threaded Discussion" or before, I was just "P". I changed my name to avoid confusion. :)