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Banks pay no property tax on foreclosures?

By someone else follow someone else   2008 Jun 23, 6:56am 23,729 views   320 comments   watch   nsfw   quote   share    


On Jun 23, 2008, at 11:49 AM, A Guy wrote:

Long time reader...and, luckily, a renter here. I would like to bounce an idea off of you. I hear that foreclosed properties don't pay prop taxes. Is that true? If yes, then is there any way you can use your contacts/site to support the idea that municipalities impose regular prop taxes on empty houses. This would:

  • increase holding costs, forcing trustee to sell more quickly, driving home values to normalized pricing levels more quickly
  • help neighborhoods by 're-populating' them more quickly
  • reduce the unfair concept that only owner-occupied houses bear the tax burden
  • ultimately deter speculation
  • reduce likelihood of municipalities facing bankruptcy

Your thoughts would be appreciated.

Phil

Thanks Phil,
I've heard that as well, but it's hard to believe, since it would be so unfair that banks pay no taxes while everyone else has to.

The idea of using property tax to keep things fair (and eliminating income tax and sales tax entirely) is an old one, but not yet tried anywhere. Henry George proposed it more than 100 years ago:

http://en.wikipedia.org/wiki/Georgism

I'll make a post out of this.

Patrick

#housing

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281   Peter P   ignore (0)   2008 Jun 29, 9:34am     ↓ dislike (0)   quote   flag        

you, like most libertarians, completely deflate the issue of a legal system as if all we need are some tablets with a few laws and people will just go ahead and follow them without dispute or malice.

Again, I am a Free Market Conservative. Most true libertarians consider me too authoritarian.

A justice system seeks social justice (whatever it means) whereas a legal system protects the integrity of Free Market.

282   Peter P   ignore (0)   2008 Jun 29, 9:38am     ↓ dislike (0)   quote   flag        

What about rich kids? How do we incentivise them to become responsible? I suppose taking away daddy’s money (aka. “generational welfare”) is out of the question? Right, that would be wrong, it is known as the “death tax” in the moneyed circles.

Trust me. No form of inheritance taxation is more effective than the raw power of Free Market.

Trust me.

These rich kids will see their "undeserved" wealth disappear in no time with or without death tax.

283   justme   ignore (0)   2008 Jun 29, 9:39am     ↓ dislike (0)   quote   flag        

Peter P,

Yes! You have described the core of my meta-ethical belief, that individuals ought to delegate ethical decisions to a self-optimizing, self-organizing system, such as a minimally yet meaningfully regulated market.

The obvious problem here, as TOB and LC have expressed in many different ways, is that the so-called Free Market (TM) is neither self-optimizing nor self-organizing. The Free Market is defined by the legal and judicial constraints created by whoever is in power. The problem is that they tend to DEFINE the "Free Market" as the kind of market that operates to their advantage. There is nothing self-regulating about it all.

284   Lost Cause   ignore (0)   2008 Jun 29, 9:40am     ↓ dislike (0)   quote   flag        

Since when was it ever "..in order to establish a free market?" I think the function of the government is primarily to establish justice. Many people also recognize the importance of social justice, and regard it as a basic human responsibility to ensure that it is provided. True, left to its own devices, the world creates great inequality and suffering, but we have our lives to demonstrate what it is to be human.

285   Peter P   ignore (0)   2008 Jun 29, 9:43am     ↓ dislike (0)   quote   flag        

The Free Market is defined by the legal and judicial constraints created by whoever is in power.

Then it is NOT a free market, isn't it. :roll:

(Yes, Free Market is really a unicorn.)

286   Peter P   ignore (0)   2008 Jun 29, 9:51am     ↓ dislike (0)   quote   flag        

Social justice is just another unicorn.

The world is always unjust for the bottom half. I suggest everyone to understand the true nature of humanity.

but we have our lives to demonstrate what it is to be human.

Ha! I really don't know what you think of humanity. To say the least, we all deserve Hell.

287   Peter P   ignore (0)   2008 Jun 29, 9:56am     ↓ dislike (0)   quote   flag        

Well, at least according to politicalcompass.org, I am not very libertarian.

I certainly will not try to appear intelligent. That word has no meaning to me. I prefer material results. I am still a total failure at this point.

288   Peter P   ignore (0)   2008 Jun 29, 10:10am     ↓ dislike (0)   quote   flag        

WHAT IS THE BASIS FOR YOU MARKET REFORMS?

Greatest aggregate utility. I share some root with utilitarian moral philosophy.

289   Peter P   ignore (0)   2008 Jun 29, 10:16am     ↓ dislike (0)   quote   flag        

For all.

There is a big difference between the greatest number of people and the greatest aggregate utility for all people.

290   DennisN   ignore (1)   2008 Jun 29, 10:33am     ↓ dislike (0)   quote   flag        

Oh dear, it's tense in here. How about some humor to tie together the topics of food and the Heller decision?

I was fiddling around in my kitchen and discovered that rigatoni has a nominal 9mm bore, along with spiral grooves resembling rifling.

I therefore propose that in the future rigatoni be known as "pasta Scalia".

292   Peter P   ignore (0)   2008 Jun 29, 10:37am     ↓ dislike (0)   quote   flag        

Rigatoni is best with mushroom and meat ragu. :)

293   OO   ignore (0)   2008 Jun 29, 11:02am     ↓ dislike (0)   quote   flag        

Peter P,

nothing wrong with wealth disparity as long as you can feed the bottom strata and keep them sheltered. Provide for the basics, and you can be as rich as you want.

This was the case for the last 20 years or so, just that we are slipping away from that. My grandparents were filthy rich in China, and my great grandfather was once the largest land owner in a major coastal city. Guess what, the wealth distribution got so out of whack there that the bottom strata could no longer take it. If you don't give them a bit of socialism, they retaliate with communism, and my grandparents had to flee the country with bars of gold leaving most of their fortune behind. They were the lucky ones, some of their friends and family got executed with all their money confiscated.

People can turn into mob when luck is decisively stacked against them. A little bit of socialism is the best to keep the status quo which benefit most of us here, because we are doing infinitely better than most of the world's population. I don't want to take away that last bit of hope for those who are so unfortunate that they may want to rock the boat so hard to leave me destitute, through a violent revolution.

So I am ultimately selfish to part a little bit of my money with the disadvantaged, so that they will be kept satisfied where they are. They won't come after my asset while I keep on climbing my social ladder. You can't push people to corners leaving them with no options, leaving them some options means leaving myself with far more. Simple as that.

294   Richmond   ignore (0)   2008 Jun 29, 11:03am     ↓ dislike (0)   quote   flag        

Hi all.

Boy, feel the love in here tonight.

I don't mean to sound like some shmuck in a 10x10 cabin, but what do government and laws have to do with "justice"? Justice will always find a way regardless of the laws. It may take a while, but it will.

I'll use ragu as a base, but I always have to doctor it up quite a bit.

295   OO   ignore (0)   2008 Jun 29, 11:04am     ↓ dislike (0)   quote   flag        

oops, why am I still being moderated?

296   Peter P   ignore (0)   2008 Jun 29, 11:13am     ↓ dislike (0)   quote   flag        

Approved!

297   Peter P   ignore (0)   2008 Jun 29, 11:18am     ↓ dislike (0)   quote   flag        

TOB, you remind me of the giant chicken, always fighting with Peter for no reason. :lol:

298   Peter P   ignore (0)   2008 Jun 29, 11:21am     ↓ dislike (0)   quote   flag        

nothing wrong with wealth disparity as long as you can feed the bottom strata and keep them sheltered. Provide for the basics, and you can be as rich as you want.

Or, we can help them feed themselves. I am not fundamentally against welfare so long as people are incentivized to eventually take responsibilities.

On the other hand, I think every person should be given the opportunity to become successful. While it is not possible to ensure that all receive the same equal amount of opportunities, it is just wrong to systematically keep the poor poor by means of welfare.

299   Richmond   ignore (0)   2008 Jun 29, 11:44am     ↓ dislike (0)   quote   flag        

"---- systematically keep the poor poor by by means of welfare"

There is alot to be said for that statement. You all know that I'm a working class stiff. When I was just starting out, I don't know how many years I worked full time for less than a welfare mom. If I needed more money, I studied, worked and made due. It eventually paid off.

When I was at Richmond High, I remember girls talking about their mothers wanting them to have babies to up the check amounts. That's so sad. Never did I hear them say that they wanted to go to college. I don't think that it ever occurred to them that they could. It was a generational lifestyle. That's not to say that we didn't have great success stories, we did, but a large section of the population accepted the life that they had been handed and never knew that things didn't have to be that way.

300   Peter P   ignore (0)   2008 Jun 29, 11:52am     ↓ dislike (0)   quote   flag        

If I needed more money, I studied, worked and made due.

That is true beauty of the American Dream. Thank you.

but a large section of the population accepted the life that they had been handed and never knew that things didn’t have to be that way.

It is sad. As I have repeated many times, welfare is the best tool for sustaining poverty.

This country needs faith. I am not talking about religion. People should have faith in themselves. They must believe in themselves because they are the best providers for themselves.

301   Peter P   ignore (0)   2008 Jun 29, 11:54am     ↓ dislike (0)   quote   flag        

I really admire Oprah Winfrey.

It is not wrong to be rich. It is not wrong to be poor either. It is wrong not to break free of your own limitations.

302   Peter P   ignore (0)   2008 Jun 29, 11:55am     ↓ dislike (0)   quote   flag        

Peter may make logical sense to a point, but hes singing hopelessly out of tune.

You are lucky that I am not singing...

303   Peter P   ignore (0)   2008 Jun 29, 11:57am     ↓ dislike (0)   quote   flag        

Monopolies never last. How many Dow stocks in 1900 are still Dow stocks today?

With today's speed of information flow, monopolies are especially shot-lived.

304   Peter P   ignore (0)   2008 Jun 29, 12:00pm     ↓ dislike (0)   quote   flag        

Also, many monopolies could be maintained mostly because of high entrance barriers in their respective industries.

I wonder how much over-regulation has to do with these entrance-barriers. :roll:

305   Peter P   ignore (0)   2008 Jun 29, 12:01pm     ↓ dislike (0)   quote   flag        

I love Microsoft. I admire Bill Gates a lot.

Disruptive technologies bust monopolies faster than any trust-busting bureaucracy.

306   Peter P   ignore (0)   2008 Jun 29, 12:04pm     ↓ dislike (0)   quote   flag        

This is the truth: you are your own greatest limitation.

Not self-empowerment advice

307   Peter P   ignore (0)   2008 Jun 29, 12:05pm     ↓ dislike (0)   quote   flag        

I have no more time for this.

Then leave. Obviously, I have more time than you.

308   Richmond   ignore (0)   2008 Jun 29, 1:02pm     ↓ dislike (0)   quote   flag        

TOB,

I agree that the whole gimme, gimme attitude in the U.S. is completely out of control. The world will start calling us France pretty soon. At some point the piper will have to be paid and at that point the system will collaps and force change. You guys are smarter than I, but I don't see how the powers that are profiting from a promoted lower class will ever give up that position without some sort of massive civil uprising. There is too much profit in keeping people stupid.

Now, if there was some way to convince people that they are screwing themselves by not getting even a basic education, a large part of the problem would take care of itself. My question is: how do we motivate people, instill enough self respect, to take the time to get enough education to realize that education is the way out; that education is power. Whether it's academics or the trades, people then have options. When you have options, you cannot be controlled. When you cannot be controlled, very positive things begin to happen as long as it doesn't swing into Anarchy.

Just a thought.
Not well thought out, just a thought.

309   Peter P   ignore (0)   2008 Jun 29, 1:28pm     ↓ dislike (0)   quote   flag        

an important aspect to modern america is that any social service is rendered instantly insolvent by the armies of immigrants

The obvious solution is to privatize such social services. Any insolvent services should be shutdown.

RE: FISA bill

I feel safer if the government is allowed greater access to information.
If you do nothing wrong, you have nothing to fear. But I could be wrong, please enlighten me.

RE: illegal immigration

We cannot tolerate massive law-breaking in this scale. We should:

1. deport illegal aliens
2. establish the guest worker program as proposed by President Bush
3. strictly exclude illegal aliens from any welfare program

310   Richmond   ignore (0)   2008 Jun 29, 2:19pm     ↓ dislike (0)   quote   flag        

The American, non Latino, minority population could put a stop to the illegal immigration issue in a New York minute. All they have to do is accuse the Federal government of racism on the grounds that the illegals are taking jobs and resources that should go to the minority populations comprised of U.S. citizens.

There are minority populations in this country that the Latino population wouldn't dare call racist. They have much more "minority power", if you will and that "power" can destroy any candidate with no more than an accusation.

The race game is the illegal immigrants' only defense. That blade has two edges.

311   Peter P   ignore (0)   2008 Jun 29, 3:19pm     ↓ dislike (0)   quote   flag        

if you do #1 and #2 then there is no need #3.

inversly, if we just did #3, the rest would just happen.

Brilliant!

312   Peter P   ignore (0)   2008 Jun 29, 3:22pm     ↓ dislike (0)   quote   flag        

The race game is the illegal immigrants’ only defense.

Illegal aliens also that that they are an important labor force. A guest worker program can neutralize that claim.

313   Lost Cause   ignore (0)   2008 Jun 29, 3:56pm     ↓ dislike (0)   quote   flag        

Here we go again. Picking on the poorest of the poor, and people who are so powerless that they do not even have a right to vote. No wonder it is a favorite of the republicans year after year.

Do you really think you are going to affect change by picking on the poor and the powerless? You really need to rattle the rich and powerful. That is the only way to make a difference.

314   Lost Cause   ignore (0)   2008 Jun 29, 4:27pm     ↓ dislike (0)   quote   flag        

The world is not fair, so agrees Peter P. Is this why we have created laws and institutions for justice? Do we not expect to balance the cruelty of the world with the milk of human kindness? Why do we maintain this civilization? Because we fancy architecture?

Just look at the unfairness of nature. A guy can walk away, yet a pregnant girl is stuck. Do we allow for a remedy? Certainly.

I don’t know if a cybernetic wheel of fortune is a worthy repository of trust. Perhaps that is what created us, after all. But this is not humanity. There is no morality in that. People who are amoral are sociopathic. Peter P – you are a walking contradiction. Almost everything you say contains this or that republican talking point. You have no original thoughts. Do you ever listen to yourself?

315   Philistine   ignore (0)   2008 Jun 30, 12:05am     ↓ dislike (0)   quote   flag        

RE: FISA bill

I feel safer if the government is allowed greater access to information.
If you do nothing wrong, you have nothing to fear. But I could be wrong, please enlighten me.

This chestnut seems to be the fashionable substitute for critical thought. Pure trollery. You can't be serious you "feel safer"? Is the government your mommy and daddy? How repugnant.

Why can't law enforcement do their job without creating a repressive police state? If I'm not doing anything wrong, why do they need to know? Why do we put curtains in our windows, and why do we wear clothes? Who watches these cameras and in what way are they obligated to respond, if any? Or is this just for jollies?

316   Richmond   ignore (0)   2008 Jun 30, 12:20am     ↓ dislike (0)   quote   flag        

Lost Cause,

I don't mean to soud like I'm picking on the poor and powerless. I'm picking on a gross injustice that is being brought againts both citizens and an illegal and exploited population for nothing more than greater profits. If by using the very fears that keeps the government from acting we could force them to act, we might have a better results with regard to forward movement on the issues of illegal and legal immigration. Whether it's enforcing the current laws or making new ones, at least there might be some action. Right now they are choosing to do nothing and doing nothing will lead to more of the same on a greater scale.

Just trying to think outside of the box.

317   PermaRenter   ignore (20)   2008 Jun 30, 1:38am     ↓ dislike (0)   quote   flag        

Dear President Obama:

You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence.

But enough about W’s spilt milk. I’ve already ticked off so many readers that they’re questioning my Republican Party voter registration. What do I think you should do as the new President to rectify this mess? All I know is that any solution will come with a high price tag. Although your campaign slogan says “Yes we can,” I have my doubts. Granted, you’re going to raise tax rates on the rich, give a break to the lower/middle class and rebalance the scales of economic justice somewhat. I myself won’t enjoy paying that near 50 percent marginal tax rate after you remove the current cap on the payroll tax, but my wealthy neighbors and I in Newport Beach should just look at it this way: we’ve had an eight-year lease extension on the “high life.” Now it’s time to give something back and I suspect we won’t be working any less hard. That ol’ Laffer Curve has a certain logic to it, but it only makes sense at the upper margin. People did work less at confiscatory tax rates imposed pre-Thatcher/Reagan but once they got down to 50 percent or lower, it was all gravy – promoting conspicuous consumption as opposed to higher productivity and overtime at the office. Gosh, now we don’t even want those oversized trophy houses! The New York Times reports that the high-profile crowd now favors small ecologically certified “LEED” houses – “Leadership in Energy and Environmental Design.” My, what green eyes we have, Grandma!

Anyway, so you’re gonna do the tax thing, Mr. President, and throw in some form of universal healthcare to boot that your buddy Hillary will help spearhead. You hope you can get a lot of this passed despite a potentially long string of filibusters from a Senate that won’t quite have sixty Democrats. In addition, you’ll need to provide some immediate relief to homeowners in the form of FHA (Federal Housing Administration) subsidies and low mortgage rate loans that somehow have been studied and studied in Congress for the past six months yet still haven’t been passed into law. By January, home prices will be down another 10 percent or so and our Japanese-style property deflation will be in full stride. Congress will have had its summer recess though and spent September and October on the campaign trail. They had to get re-elected you know, so those homeowners just had to wait.

But you’ll have your tax bill and your healthcare bill and your housing fix, and somehow it’ll all be paid for by wealthy hedge fund managers, oil companies or, pray tell, a robust economy that’s creating good jobs at home instead of exporting them abroad. Uh, I don’t think so, Mr. President. That’s where the “yes we can” morphs into “no we can’t.” Not that you won’t accomplish most of that – the robust economy and the good jobs notwithstanding. It’s just that you won’t be able to pay for it and it’s better to admit it now as opposed to later. No David Stockman confessions in your administration. You’re smarter than Ronald Reagan and too nice of a guy to distort reality like King George. So let’s start out by dropping all of that “budget neutral” rhetoric and admit where we’re headed. Your administration will produce this nation’s first trillion dollar deficit!

While the Republicans will blame you for years and label you “Trillion Dollar Obama” in future campaigns, there is in fact not much that you or any other President can do. You’ve inherited an asset-based economy whose well has been pumped nearly dry with lower and lower interest rates and lender of last resort liquidity provisions that have managed to support Ponzi-style prosperity in recent years. Foreign lenders have cooperated by purchasing Treasuries at yields which when combined with dollar depreciation have resulted in negative returns on their money. Even if these charades continue (and they may not), their stimulative effects – their magical powers to transform a 110-pound weakling into a Charles Atlas/Arnold Schwarzenegger mensch of an economy – are gone. What you need now is fiscal spending and lots of it. No ordinary Starbucks will do, Mr. President, you need to step up for a six-pack of Red Bull.

Now I know, Mr. President, that you’re already addicted to those nicotine smokes and I’m not trying to promote a caffeine habit here, but this economy will need an additional jolt of $500 billion or so of government spending real quick. It must replace both reduced residential investment and consumption whose decline has placed the U.S. economy near, if not in a recession. Some quick math for you Sir: gross private domestic investment (machines, houses, inventories) has declined by $200 billion since its peak in late 2006. Due to higher unemployment and energy costs, domestic consumption will soon be $300 billion less than it should be if we are to return to historical economic growth rates. According to that old C + I + G formula (scratch the trade deficit for now) when C + I is reduced by $500 billion, then G should increase by that amount in order to fill the gap. The G, Sir, is you – the government deficit, the fiscal stabilizer popularized by Keynes following the Depression. And since the fiscal deficit for 2008 is likely to press $500 billion even before you take the oath of office, well there you have it: $500 billion + $500 billion = $1 trillion big ones, probably by sometime in 2011 or so. It takes time to spend those types of bucks.

It took the Japanese a lot of time too, Sir. Take a look at the chart below which graphically displays Japan’s increasing deficits as a percentage of GDP following their property bubble of the late 1980s. Over a seven-year span, expansionary fiscal spending widened from a relatively benign 2 percent deficit to a level that exceeded 10 percent at its peak in 1998. Our one trillion dollar level in 2011 would equate to something like six percent of GDP, a mere pittance by Japanese standards.

And what will this mean for investors? Well it’s not totally clear. That same Japanese example was accompanied by declining inflation and near zero percent interest rates in Japan by the time it was all over. They experienced a liquidity trap that stifled investment and failed to revive their economy for nearly a decade. Some fear the same thing here in the U.S. PIMCO has for many years now debated the tightrope walking of the U.S. economy on the knife’s edge between reflation and deflation. A serious case can be argued for either side. Still, as our recent Secular Forum concluded, strong global growth spearheaded by developing countries and accompanied by significant commodity inflation should provide a firm background for stimulative U.S. monetary and fiscal policies during your first administration. Importantly as well, current negative real interest rates along with the innovative liquidity provisions by Bernanke’s Fed should promote “re” as opposed to “de“-flation. A trillion dollars of government deficit spending is potent medicine. Its potency regarding inflation will not be felt fully during the peak deficit period. Rather, inflation will accelerate during the subsequent recovery as the government bonds acquired during the recession are transformed once again into risk bearing assets and high levels of investment. That suggests that intermediate and long-term yields on government bonds have already bottomed and will gradually rise throughout your first, and perhaps second Administration. Your term will not go down in history as investor friendly.

In the final analysis I wonder why you or anyone else would want to be President in 2009. But there’s the ego thing and a hope for a better tomorrow and all that. Come to think of it, “President Obama” does have a certain ring to it. When I listen to your speeches, you even have me half convinced!

All the best, and a fist bump to ya!

William H. Gross

Ordinary Citizen

318   Peter P   ignore (0)   2008 Jun 30, 1:47am     ↓ dislike (1)   quote   flag        

Why can’t law enforcement do their job without creating a repressive police state?

So...

You want the hands of the citizens tied (banning guns).

You want the hands of the law enforcement tied (banning reasonable surveillance).

Who are you with?

319   Peter P   ignore (0)   2008 Jun 30, 1:50am     ↓ dislike (0)   quote   flag        

The world is not fair, so agrees Peter P. Is this why we have created laws and institutions for justice?

Laws and institutions are created to maintain the status quo.

The gross unfairness of the world was caused by a female and her organic heritage apple.

320   Richmond   ignore (0)   2008 Jun 30, 1:58am     ↓ dislike (0)   quote   flag        

Ok, but don't the institutions have to obey the laws? :)

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