patrick.net

SP,

I didn't even know what you were talking about. It seems to me if your literate you should be in a library reading books. Oh, add that to my list of where my tax $$$ go.

Paul

ajh,

You missed the following sentence:

Something tells me that the rich –as always– will find new ways to exploit the system and lobby heavily to create brand-new loopholes to replace the old ones.

Yes. Whenever and wherever there is an opportunity to arbitrage differentials in the system to someone's advantage, it will be done. There is no perfect tax system possible anymore than a perfect government is possible. Just varying degrees of imperfection.

Paul a country can run without taxing ppl or service only when it has other resources of generating money. In Oman Sultan gets certain percentage of oil money and runs the Goverment. However in most of the countries they have taxation to run Goverment.

King_Cobra,

But how does oil (the resource) "generate money"? Ultimately, it generates money mostly by being sold to consumers in other countries. That money then gets spent on rich sultans, lavish construction projects (Google "Dubai" and "The World") and social welfare.

Basically in, SA, Oman, UAE, etc. taxes are "collected" by the government having a monopoly on the greatest resource in those countries, which other countries desperately need and will pay for: oil. Taxes are an unfortunate global reality, but whether they are paid indirectly by state-run monopolies (Arab world) or directly by taxpayers/consumers (Western world), they must still be paid.

Again, there is no such as free government.

King_Cobra,

Posted before I saw your last comment. Looks like we basically agree.

I don’t know where you are from, but I’m guessing you are either not from LI or you are a hermit that doesn’t know anybody.

More than half of my friends have already left to buy in states such as NC, PA, GA, TX, IN even FLA, some are in the process of moving and many of the others who bought are starting to regret it.

No, I'm from LI.

My friends moved to places like DC, Boston, and the City. But then again, most of my friends became doctors/lawyers/consultants/bankers.

Blue Oyster Cult?

More cowbell !!

Property Tax in California, what is the milliage or percent. I just told (my neighbor) that California has the highest property taxes, at 5%, am I right?

FWIW, I recall reading that most politicians don't know/don't care what the local property tax is - because it is basically out of their control.

That said, it's not 5%.

Here's a guess:

http://www.retirementliving.com/RLstate1.html#CALIFORNIA

Personal Income Taxes
Tax Rate Range: Low - 1.0%; High - 9.3%
Income Brackets: * Lowest - $6,319; Highest - $41,477
Number of Brackets: 6
Tax Credits: Single - $85; Married - $170; Dependents - $265; 65 years of age or older - $87
Standard Deduction: Single - $3,254; Married filing jointly - $6,508
Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. There is a 2.5% tax on early distributions and qualified pensions. All private, local, state and federal pensions are fully taxed.
Retired Military Pay: Follows federal tax rules.
Military Disability Retired Pay:
Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.
VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Inheritance and Estate Taxes
There is no inheritance tax. However, there is a limited California estate tax related to federal estate tax collection.

But there’s nothing that can be done.

Sure there is --let's start a ballot initiative to repeal ALL property taxes.
If voters aren't willing to repeal Prop. 13 (or at least remove the absurd 1978 tax basis for lucky Boomers), then no tax at all is better than a crushing tax that only burdens young families.

I know federal estate tax scheme used to give a tax credit for every dollar of state estate/probate tax. But I think that's recently changed to limit the practice of high estate taxes.

Sure there is –let’s start a ballot initiative to repeal ALL property taxes.
If voters aren’t willing to repeal Prop. 13 (or at least remove the absurd 1978 tax basis for lucky Boomers), then no tax at all is better than a crushing tax that only burdens young families.

Hm... if you can spin that to include the car tax, people would go for it!

"SIGN HERE TO END THE UNFAIR CAR TAX and other property related taxes"

I love comments like this:

http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2003/08/04/asparks.DTL

Angry taxpayers didn't just want to control the arbitrary raises in their property taxes; they wanted fiscal control in spending, too. Otherwise, wily politicians would simply just find new taxes to raise.

Who voted for these evil politicians?

Gosh, if only we had taxation with representation.

Glen,

I would say tax everything equally, to avoid confusion.

I think homes should be taxed annually for a portion of their rental value. That's what normal states (not CA) do and it accounts for the dual value of homes as both a consumable good and investment.

SP,

One of the administrators (Randy H, Peter P, SQT, or HARM) can grant you thread privileges.

@SP,

Behold, I have promoted your account to "author" status using my god-like blog powers. Just click on the Meta - Site Admin link from the main page, then on the "Write" tab to create new threads.

You renters should really embrace prop 13, wait a minute, what's that Lovey?, yes 3 olives not 2, ok as I was saying you really should embrace prop 13 because if any of "you renters" become part of the landed gentry you most certainly will benefit.

T. Howell III

SQT - You're the best. Thanks for the cowbell!

I would say tax everything equally, to avoid confusion.

I think homes should be taxed annually for a portion of their rental value. That’s what normal states (not CA) do and it accounts for the dual value of homes as both a consumable good and investment.

Astrid,

I guess that could work... I would have to think about it. So you would have to pay sales tax on investment purchases? This would seem to undermine the purpose of the sales/use tax (eg: encouraging investment, rather than consumption). On the other hand, as I pointed out, a system with differential tax treatment could have some bizarre results. If investments are not subject to sales tax, then I could imagine someone creating an "investment" market for orange juice coupons. Everything would be securitized. We would probably just end up with the same number of byzantine tax regulations as we have today.

Hey what's up with "BUY ME" on HGTV. Just because they are Canadian they can't sell a house or condo? I know they can't deduct mortgage interest but they have have a real economy up there eh? They produce real stuff like oil out of oil shale not paper as in mortgages, etc..

Did I mention my boomer parents have no savings? Oh yeah, and they’re about $800k in debt.

SQT:

But how much "equity" do they have?

I feel your pain. I estimate that my boomer parents have around $350K+ of debt. They have no savings except for about $180K inheritance which they recently received and have not yet blown through and $100K of phony "equity" in their home... I seriously hope they never read this blog...

Glen,

Well, in that regime, there would be no transfer tax for houses, only consumption/usage tax by the way of property tax. As for other financial instruments...I'd say go simple and only have stocks, bonds, derivatives, some combination of these, etc. SEC should have the lead in defining the categories of investments.

Things like fine art and rare gems should be considered a consumable...that'll probably drop their investment value quite a bit.

SQT and Glen,

Wow! I hope your parents make it out okay. Is it because they're running bleeding businesses? It's still a little hard to imagine fairly average people being $800K in debt on consumer credit. I hope they saved some money in retirement accounts just in case.

Southland Home Sales at 9-Year Low

By Annette Haddad, Times Staff Writer
August 15, 2006

Southern California home sales fell to their lowest level in nine years last month as price appreciation continued to take a haircut, data released today showed.

In July, 22,712 homes closed escrow in the six-county region, according to La Jolla-based research firm DataQuick Information Systems. That was a 27% drop from the year before and was the fewest number of homes to close escrow in a July since 1997.
_____

Precious!

Thanks for all the responses on consumption/use tax. I would just like to point out that nearly all of the criticisms raised are also attributes of the current tax system. Sales taxes already exist on practically every consumption item; so I doubt any shock would occur to the consumer economy. In fact, with a simpler system, more revenue could be raised with lower taxation.

The current system is already regressive towards the true poor. They still pay sales taxes on their Big Gulps. That % to them is far more significant to them than to the guy in the BMW. And let us not forget the entire elaborate system of aggressive taxation on poor folks vis-a-vis lotteries and other state run scams.

Investment versus consumption? This is also already a problem, but worse because we interject a third dimension with capital gains taxation.

Special interests et. al. are a problem today, they would be no worse under a use tax.

Very rich people do consume a great deal in the US economy. Not Big Gulps, but a tremendous amount of services and other experiential activities. They consume their fair amount of actual goods too; just expensive ones.

Is a house an investment or consumption? Neither. It is a form of savings. Regardless of the semantics it is relatively simple to classify residential primary owner-occupied real-estate separately. Houses are already a special asset class in our system today.

I always find debate on this subject interesting because most criticisms can be reduced to: "consumption tax isn't perfect, so we're better off with today's by far less perfect system". I have never grasped that logic.

SQT,

http://articles.moneycentral.msn.com/CollegeAndFamily/CaringForParents/ShouldYouBailOutSpendthriftParents.aspx?vv=400

If you haven't already seen it. I thought I was the only one with parents (Silent Gen almost Boomer Cuspers) who inexplicably thought it was everyone elses responsibility to support them financially while they did whatever the hell they wanted to. This hasn't resulted in the best of outcomes for my family. It's really difficult to face the "spend it on mom who really really needs it, even though she blew threw her entire inheritance from her father on 3 husbands, bad habits, and frivolous consumption -- or maybe try to save for my own retirement and my son's college" question. You can't put mom on the street, but her bad choices shouldn't be her grandson's cross to bear.

It’s really difficult to face the “spend it on mom who really really needs it, even though she blew threw her entire inheritance from her father on 3 husbands, bad habits, and frivolous consumption — or maybe try to save for my own retirement and my son’s college” question.

Not difficult to face. I never believe it is right to help people who need help anyway. It is better to help those who will help the world.

You can’t put mom on the street, but her bad choices shouldn’t be her grandson’s cross to bear.

Not to be insensitive. One is no longer productive. One has a bright future ahead. You are to make the right choice.

"I always find debate on this subject interesting because most criticisms can be reduced to: “consumption tax isn’t perfect, so we’re better off with today’s by far less perfect system”. I have never grasped that logic."

That seems like 85% of public discourse anyways. Point out some flaw in the opponent's proposal and ignore the bigger flaws in one's own proposals.

Much of the current trolling is reduced to "rent can increase, buy now" which conveniently ignores that the cost of ownership can also go up in the form of higher taxes, property maintenance, insurance, and ARM resets...not to mention 50-100% more dollars per month compared to renting.

You can’t put mom on the street, but her bad choices shouldn’t be her grandson’s cross to bear.

Unfortunately, this is America - where the best indicator of your future success is who your parents were.

I'd say prodigal parents should get roof over their head and 3 meals a day. In return, they should help with childcare and household chores to the best of their ability. But there's no need to feel guilty withholding vacations or fancy dinners from them. If retirees wanted more than broadcast TV and beans n frank for their retirement, they should have been saving for it.

As for houses, I still maintain that it is simply an expensive durable good. Calling it a form of savings doesn't make much sense when most people do not ever pay off their home mortgage. The rental value tax make sense in a VAT world in accounting for the usage while not putting the barrier to buy/sale that a one time sales tax would create.

Why tax rentals (currently not taxes), homes (currently property taxed), rent equivalent or sales capital gains? Instead tax the sale of homes to business operators (land lords) and all the goods and services that go into building and maintaining houses. That stuff already is taxed, just terribly inefficiently. In such a tax regime the distinction between owning and renting would only be the amount of savings one might accrue in home "equity" weighed against the risk undertaken for holding a risky asset.

Keep in mind that without all this synthetic tax categorization that we've created, people cannot ever "invest" in anything. People save. Businesses invest. Buying a stock or mutual fund or gold or a house without income tax or capital gains is simply saving with varying degrees of reward/risk. You aren't building any capital. You are loaning your money to someone else to build capital. You withdraw that money later and consume it or leave it to your children to consume.

Randy,

If you want to institute a VAT system for all goods and services, it's only fair that housing be one of those taxable goods. I see no reason for the tax code to get overly complicated on this matter when the current property tax system (outside of CA) largely account for the good of having a roof over one's head. Such housing belongs in the same category as hotels and cabin rentals, and the most efficient way to tax the use is to calculate the approximate rental value of a home and charge it to the owner. Whatever savings component would not be taxed, just the usage component, like other VAT items.

I'd argue that homes are a rather inefficient and ineffective mode of savings because of the high maintenance costs and the nature of the mortgage used to buy homes. A home derives its value mostly due to its rental value to a specific family, a roof over their head and some walls and plumbing. In reality, current "homeowners" usually operate like long term lease holder with specific exit stipulations. They usually own less than 50% of the value of their homes.

So we may be getting a few more planets.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/08/16/PLANETS.TMP&type=science

Astrology is about to be even more confusing.

astrid,

I don't disagree philosophically. But taxing home as equivalent rent is not practical. It would be widely gamed and cheated. Rent is not currently taxed either, so why tax rent equivalent? Instead tax the use/consumption of the LL/owner in maintaining the property. This cost will be passed on to renters in their rent and owners will pay it directly. There is no opportunity for evasion or avoidance, unless one evades upkeep. This also solves itself because it drives down rents for LLs and drives down resale value for home owners.

I didn't say savings through a home is efficient. It is not. It has always been true that a shrewd, well diversified "investor" can save much more over time than an equivalent home owner with equity and appreciation. But the key is "shrewd and well diversified". Few people are either. A home is just a giant compulsory piggy bank in this sense. But that is exactly what many people need.

Of course it would be even more efficient to not allow anyone to own any property and instead have an efficient, scientifically based, state planning committee determine the optimal income level, output level, and savings level for everyone. Also, of course, such a system will end in parastroyka and be a big waste of everyone's blood and time.

I’d say prodigal parents should get roof over their head and 3 meals a day. In return, they should help with childcare and household chores to the best of their ability. But there’s no need to feel guilty withholding vacations or fancy dinners from them. If retirees wanted more than broadcast TV and beans n frank for their retirement, they should have been saving for it.

Astrid,

I agree. Something about the baby boom generation seems to have made them feel immune to financial concerns. It is sad. My mom always complained about how "cheap" my grandparents were because they had lots of money, yet they would never buy new stuff. It never occurred to her that maybe that was *why* they had so much money even though they put 4 kids through college, traveled the world, paid for full time care for a disabled family member and lived in retirement comfortably for 20 years before they died.

Many boomers continue to borrow money from their elderly parents well into their (boomers) 50s and 60s. Now that the WWII generation is passing on it is time to pass the hat to the gen x and gen y kids for a handout.

Seems like most boomers never managed to figure out that debt-fueled consumption is not the way to wealth. Their parents suffered the depression and learned the hard way. Many of their kids took out student loans and got in over their heads with credit card debt and also had to learn the hard way. But the boomers have been rewarded all their lives for their imprudence. The more debt they took on, the wealthier they seemed to get. Now that the game is ending, they will find out what depression era farmers learned about debt--that sometimes creditors actually expect to be paid back. Sad.

Now now Little Buddy, your just going to have to save while your renting just like the boomers did when they were young and then someday youll have a down payment.

Work for a down payment Mr. Vincent? I thought they were too busy fucking your mom to work. Come now boomer fuck, work and boomer, two words that just don't go together. Kind of like Mr. Vincent and noncockgobbler.

Ahhh don't worry Mr Boomer there will be plenty to go around for you and your greedy fucking hoard. Any chance of you and a couple of your buddies stopping by $anta Barbara? I would really love to meet you.

since we're all talking about global warming, here is a primitive ancient baleen whale that had large sharp teeth, made extinct in a global warming episode some 23 million years ago...

Discovered: Aussie T-rex of the deep - Science - Specials - smh.com.au

all that were left were modern whales and dolphins from that time...

"Property group Lend Lease Corp said the Australian residential housing market was showing signs of distress, particularly in NSW.

Lend Lease is expecting difficult conditions for the residential housing market amid record high oil prices and an uncertain outlook for interest rates."

whatever does that mean?

Housing market shows signs of distress: Lend Lease

I wonder how many realtwhores took this poll?

I'll add my 2 cents worth. I would assume the real reason why there are such cost diffrences in terms of housing between LA and SF is the kinds of people that lice in these areas. LA has a far youunger population, and one that has historically been transient for the better part of a century due to the non-static entertainment biz. Condos would seem more appealing to young couples without kids.
SF on the other hand has a much older population. The majority of the population is over 40-something and of these, most have kids. That explains why condos are " cheaper" than those in LA while SFH are more. That's a fairly easy explanation right there.
You barely hit on a regional diffrence pertaining to entirely diffrent parts of the country. I can say that the diffrences between TN and CA couldn't be more diffrent in terms of perceptions of home ownership. Here in CA it is definantly seen as a vital, if not guranteed source of future wealth and investment. Homes aren't neccesarily bought on principal that they are neccesarily a great deal to start with, as the equation has long been backwards: It is and has been more expensive to buy than rent for decades. This is entirely the opposite in TN where you still have the option to buy on basic principals pertaining to the fact that buying is still CHEAPER than renting. When I re-discovered this rather common concept that was left at the door when I moved to Cali, it was a wakeup call. So the diffrences between cali and diffrent regions are the value structure tied to housing: One being a way to perhaps glean future, but not immediate wealth, and the other as a means to cut costs and start saving actual wages, and not neccesarily putting all the bets on the house. This is why people in California are so desperate to sell because without their homes, they have zero savings, and zero economic safety nets.

Average SAT scores don't tell you much about a school. I went to private HS on the Peninsula but most of my friends from my local public Jr. HS went to San Mateo High. The "average" SAT score at San Mateo High has never been that great, but most of the white (and now Asian) kids that will go on to Cal, Stanford or UCLA will never have a single class with the Black and Mexican kids that will go on to become gardeners, maids and drug dealers after graduation. I don't know if they are still bussing in the San Fernando Valley, but 25 years ago when I started Cal I met lots of Jewish kids from the Valley and not one of them ever had a class (or even talked with) the black kids they used to bus in from Central LA…