patrick.net

Your proposal would require cooperation among federal, state, and local governments. The Constitution authorizes the federal government to tax income; your proposal is to tax home ownership as "imputed income," even though it isn't really income, but the Constitution doesn't mention "imputed income." You could have a system where state and local governments tax home ownership as "imputed income," either the way municipalities tax property now (usually on market value or purchase price adjusted for inflation), and that would be similar to Henry George's land value tax. Your proposal would also continue to elevate the FIRE industry above all others, subsidizing debt while continuing to tax homeowners who pay off their mortgages. Personally I think ending the mortgage interest deduction would be better.

(Laws out of the scope)

It's different than

- tax. that it's paid for some services, and dependent on the services city offers.

- georgian tax (LVT -land value tax-) it's not on the value/rent generated on the property, but on the quantity of land. Thus, a luxury condo in New York would pay much less than a ranch on Texas.

At the end of the day, income is income, whether it's imputed or you use money to pay for it. IF owner A rents to B, and owner B rents to A, why should they be taxed more than if owner A and owner B live in their own house?

ja says

- georgian tax (LVT -land value tax-) it's not on the value/rent generated on the property, but on the quantity of land. Thus, a luxury condo in New York would pay much less than a ranch on Texas.

Henry George's idea is to tax away the entire use value of land. In any case, it makes no more sense than taxing away the entire use value of sun light that you and your belongings receive: just because an abstract concept can be formed in people's brain, doesn't mean it is quantifiable.

At the end of the day, income is income, whether it's imputed or you use money to pay for it.

Without the reality test supplied by transactions, "imputation" becomes whatever the assessor says it is.

IF owner A rents to B, and owner B rents to A, why should they be taxed more than if owner A and owner B live in their own house?

Because there are now Two sets of rental contracts to enforce, vs. Zero. In practice, people enter into mutual rental agreement in order to reduce tax burden: the expenses and interest payment become tax deductible for high income households that would not otherwise qualify for mortgage interest deduction. Those arrangements often do not have much accounting profit after all the expenses, interest and HOA fees are paid.

or just give a rental deduction valued the same as the mortgage deduction

The current tax code is already in favor of rental (despite what realtwhores tell you):

1. Most home owners do not take mortgage interest deduction, simply because the standard deduction exceeds itemized deduction.

2. In a rental situation, the interest payment is deducted on the landlord side as expense, hence presumably with the benefit passed onto the renter via competition among landlords. Even home improvements, repairs, HOA fees and insurance are tax deductible in a rental situation. That's why some high income and high networth friends rent to each other and generate near-zero profit from each other.

1. Most home owners do not take mortgage interest deduction, simply because the standard deduction exceeds itemized deduction.

Sure... subsidy for home owning is only for rich people. what mades it more outrageous

2. In a rental situation, the interest payment is deducted on the landlord side as expense, hence presumably with the benefit passed onto the renter via competition among landlords. Even home improvements, repairs, HOA fees and insurance are tax deductible in a rental situation. That's why some high income and high networth friends rent to each other and generate near-zero profit from each other.

Sure.. or you can even declare losses. This is not an open-market example, and I'm wondering if it can even be declared fraud. It's not different than paying without money or paying with cash under the table. More to my point, it would be better to pay taxes on the *real* income (either money or rental value), and an approximation (comparing similar rental properties, like the Swiss do), it's better than nothing.

Sure... subsidy for home owning is only for rich people. what mades it more outrageous

So what's your point? Eliminating mortgage interest deduction?
Most home owners do not take mortgage interest deduction because the standard deduction is higher . . . in other words, there is a bigger existing tax shelter for the lower to middle class. . . what's so outrageous about that? They have the option of taking MID but decide not to, largely because their tax bracket is already very low and the standard deduction is already very high compared to their mortgage interest payment.

Sure.. or you can even declare losses. This is not an open-market example, and I'm wondering if it can even be declared fraud.

Why? So long as they are paying each other market rate of rent, there is no fraud. It is not a fraud even if they give each other friends-and-family discount. In many expensive areas of the country, the mortgage payment is higher than rent anyway.

It's not different than paying without money or paying with cash under the table.

Completely different. They don't have to resort to paying under the table or under-paying at all in order to make the exchange tax-advantageous. That illustrates the quirk with our current tax system.

More to my point, it would be better to pay taxes on the *real* income (either money or rental value), and an approximation (comparing similar rental properties, like the Swiss do), it's better than nothing.

How can that be income? Do you buy a new car then have to pay income tax on the daily rental value of the same car just for driving it? Do you buy a pound of beef, cook it, then have to pay income tax according to how much the steak or hamburger would cost in a restaurant?

The mortgage deduction is a bane for the people who could afford not to have it the most. It does nothing for your average middle class. In fact 90% of your average middle class home owners with a house less than 200K don't see one red cent from this deduction. As the standard deduction is always greater.

I find it hard to believe that the standard deduction is greater for most new homeowners. You can deduct property tax, mortgage interest and state income tax.

Assuming a $200K house and $2K property tax? Is that reasonable? State taxes of $2K

At 4.5%, the interest is $9K + $2K property tax + $2K state taxes = $13K deduction. That beats the married standard deduction.

Granted, as you pay down the loan, the interest goes down too and the value of the MID is less and less. I don't think it's worthless to the middle class, but I agree that it's much, much more valuable to the higher income folks.

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

Well yeah you can, but it still didn't beat the standard deduction for me.

My insterest was 8K for the year and my property taxes were 3K.
That's 11K the standard deduction was $12,200, so it did nothing for me.

Just remove the mortgage tax deduction.

Reality says

How can that be income? Do you buy a new car then have to pay income tax on the daily rental value of the same car just for driving it? Do you buy a pound of beef, cook it, then have to pay income tax according to how much the steak or hamburger would cost in a restaurant?

Reality says

More to my point, it would be better to pay taxes on the *real* income (either money or rental value), and an approximation (comparing similar rental properties, like the Swiss do), it's better than nothing.

How can that be income? Do you buy a new car then have to pay income tax on the daily rental value of the same car just for driving it? Do you buy a pound of beef, cook it, then have to pay income tax according to how much the steak or hamburger would cost in a restaurant?

Yes, in the same way that if you cook a beef and labor costs $12, you should pay $3 (let's say 25% tax bracket) to uncle Sam. Income tax is a perversion of economics, since it doesn't incentive prodcution, and one day will get rid of it. In the meantime, we should make it as fair as possible and, if we cannot tax the guy cooking beef for himself, we should tax the guy producing 'rental' for himself.

zzyzzx says

Just remove the mortgage tax deduction.

I'm more for taxing "income - costs". That's the most socially fair.
Today, we tax "-costs" (deduced from your other income)
we never taxed this shadow imputed income

I wish that only US citizens could get the mortgage interest deduction.

ja says

Yes, in the same way that if you cook a beef and labor costs $12, you should pay $3 (let's say 25% tax bracket) to uncle Sam.

So, every time you have sex with your wife, should you or your wife pay uncle Sam? Would that be 25% on $150 or 25% on $5000? Is your wife a cheap whore or a high class call girl?

The whole idea of having to pay income tax on something people do for themselves is more than repugnant.

Income tax is a perversion of economics, since it doesn't incentive prodcution, and one day will get rid of it.

Then work on getting rid of it. Rape is repugnant; that doesn't mean it would be fair to toss either your wife or yourself into a sex-starved jail cell, so you two can get raped too!

In the meantime, we should make it as fair as possible and, if we cannot tax the guy cooking beef for himself, we should tax the guy producing 'rental' for himself.

What the heck is this "we" you are speaking of? Why should some politician get to spend the extra 25% money hiring hookers and whores of all stripes just because some average middle class American make something of their homes?

Reality says

The whole idea of having to pay income tax on something people do for themselves is more than repugnant.

What if I buy stocks for myself with money that has already been income taxed? Why should I pay when I sell them for a gain?

ja says

zzyzzx says

Just remove the mortgage tax deduction.

I'm more for taxing "income - costs". That's the most socially fair.

Today, we tax "-costs" (deduced from your other income)

we never taxed this shadow imputed income

In what sense is it "socially fair"? Private ownership in society ensures properties are taken good care of, and therefore becoming or staying available for use by humanity. Yes, someone else having a roof over their heads is socially advantageous to you: less competition in the market place bidding on limited supply. Your idea of "socially fair" is about as silly as the "socializing the cow" experiment in the former soviet union: very quickly, nobody would be taking care of the cow, and the supply of milk dwindled.

mell says

Reality says

The whole idea of having to pay income tax on something people do for themselves is more than repugnant.

What if I buy stocks for myself with money that has already been income taxed? Why should I pay when I sell them for a gain?

I'm not arguing for income tax. . . however stock trading involves transaction with counterparties. You are not trading with yourself. There is no taxable event if you just move stocks from your brokerage account to your desk drawer by requesting stock certificates.

If you found a stock holding company, and put your after-tax money into it; that vestment action itself is not a taxable event. However, when the company start buying and selling things, taxable events start to take place.

Reality says

mell says

Reality says

The whole idea of having to pay income tax on something people do for themselves is more than repugnant.

What if I buy stocks for myself with money that has already been income taxed? Why should I pay when I sell them for a gain?

I'm not arguing for income tax. . . however stock trading involves transaction with counterparties. You are not trading with yourself. There is no taxable event if you just move stocks from your brokerage account to your desk drawer by requesting stock certificates.

Ok, makes sense. So, assuming the government needs to take some money from the people, what would be fairer ways than today? A transaction/sales/vat tax? A general wealth tax where you just tally up? I don't know, but it's a problem (in many ways) that currently investment debt and wealth is classified in "good" and "bad" via deductions and other loopholes (e.g. you can keep capital gains if you sell your house after 2 years in CA). It should be replaced with a very simple system with no favoritism. Not an easy task ;)

ja says

Yes, in the same way that if you cook a beef and labor costs $12, you should pay
$3 (let's say 25% tax bracket) to uncle Sam. Income tax is a perversion of
economics, since it doesn't incentive prodcution, and one day will get rid of
it. In the meantime, we should make it as fair as possible and, if we cannot tax
the guy cooking beef for himself, we should tax the guy producing 'rental' for
himself

I am sorry but this absolutely ridiculous, but I am sure the restaurant industry would be happy to have this passed. Why the fuck would you tax people on imputed income or cost savings whatever the situation is whether it's cooking at home, owning a car or living in your primary residence?

Reality says

about as silly as the "socializing the cow" experiment in the former soviet
union

But those cows in Kolhoz I am sure were free of antibiotics...

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. It is essentially a mob/gang writ large running a protection racket. In order for such a system to survive in the long run against potential competition from neighboring geographical zones and from internal competition, the extortion racket has to be efficient. That's why taxes have always been levied on transactions where division of labor takes place: division of labor magnifies human productivity, so the the leaches can latch onto those spots and suck blood. You can't get blood out of a stone.

Import tariffs were imposed across the trade interface with maximum division of labor benefits (spices made meats much more valuable, and it was heck lot easier to grow spices in the warm east indies than in the cold Europe). Then industrial manufacturing came along, the economy of scale brought on by machines made the worker much more productive than handicraft, hence the income tax came along to suck blood out of wages.

The problem with taxation on steady ongoing productivity is that once the blood suckers are fed a certain stream of blood, they take it for granted and want "moar." That's essentially the same problem as feudal time when farming technology stagnated, and the lords had to wage wars against each other in order to provide opportunities for looting each others' peasants.

It is important to realize that no amount of blood sucking can keep the vampires at bay for long. There are always more and more "friends" and "family," whores and hangers-on to feed. Such is the reality of politics.

If I have to pick one, the most fair tax system is probably "poll tax" in peace time. It gives everyone an incentive to keep the level of blood sucking down. The hubristic can pay extra to buy additional votes if they want; available for sale on the election day as a way of funding the government for the year. One person one vote; $5000 gives you a second vote! (or whatever budget requirement divided by 50% of natural person eligible, so the electorate is effectively enlarged by 50%, which is the money). Money printing in war time to enable system defense.

CaptainShuddup 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.

mell says

What if I buy stocks for myself with money that has already been income taxed? Why should I pay when I sell them for a gain?

Because you increase your total assets (i.e. income). That's the principle of income tax.

dublin hillz says

I am sorry but this absolutely ridiculous, but I am sure the restaurant industry would be happy to have this passed. Why the fuck would you tax people on imputed income or cost savings whatever the situation is whether it's cooking at home, owning a car or living in your primary residence?

Yes, it's ridiculous. But it's equally ridiculous to get taxed if you cook for a friend. Or if you cook for your neighbors and they give you money for it.

But the tax system doesn't care of how ridiculous it is. It cares about where it has a chance to get the money.

A couple of other interesting things about switzerland - they have no capital gains taxes at all and their fine for speeding are tied to a percentage of your salary. I have also heard from a very reliable source who was sent there on an expat assignment that there are cameras everwhere and that it's basically a police state.

ja says

Yes, it's ridiculous. But it's equally ridiculous to get taxed if you cook
for a friend. Or if you cook for your neighbors and they give you money for
it.

I guess in theory yes they could get taxed, but how many percentage of people would declare this income? 0.000001%?

Reality says

So, every time you have sex with your wife, should you or your wife pay uncle Sam? Would that be 25% on $150 or 25% on $5000? Is your wife a cheap whore or a high class call girl?

No. You should pay for both the price of having sex with the women and having sex with the man. Since, supposedly, having sex with your partner creates utility for both.

Or also if you masturbate or if you spend an hour watching a landscape (people can pay for that experience).

The whole idea of having to pay income tax on something people do for themselves is more than repugnant.

As repugnant as doing something for a friend, or for the market.

Income tax is a perversion of economics, since it doesn't incentive prodcution, and one day will get rid of it.

Then work on getting rid of it. Rape is repugnant; that doesn't mean it would be fair to toss either your wife or yourself into a sex-starved jail cell, so you two can get raped too!

In the meantime, if we cannot get rid of it, we should do a second best and try to apply it to everything in equal proportions.

It an troll got to rape a women of your tribe every night and you could not kill it, wouldn't it be fair to share the pain amongst or the women. Or men, if the troll was into that.

dublin hillz says

I guess in theory yes they could get taxed, but how many percentage of people would declare this income? 0.000001%?

That's a little problem I'm still working on. I suggest the government should install a chip on everybody's neck and control how much *real* income we are actually producing. The end of the black market of self-consumed production.

ja says

Yes, it's ridiculous. But it's equally ridiculous to get taxed if you cook for a friend. Or if you cook for your neighbors and they give you money for it.

Why would you be taxed for cooking for a friend? When you cook for a neighbor and get paid for it, that's where income tax comes in: the payment signifies income to you.

ja says

In the meantime, if we cannot get rid of it, we should do a second best and try to apply it to everything in equal proportions.

It an troll got to rape a women of your tribe every night and you could not kill it, wouldn't it be fair to share the pain amongst or the women. Or men, if the troll was into that.

You are proposing a new tax base and a new form of tax. What you are suggesting is essentially that because some women (and men) are raped, all women and men should get raped.

ja says

That's a little problem I'm still working on. I suggest the government should install a chip on everybody's neck and control how much *real* income we are actually producing. The end of the black market of self-consumed production.

Speaking like a true believer of the insane. Do you realize, your ideal of "fairness" is indeed an end state fantasy (like Communism), as in: we will all be equal when we are dead and buried, equally dead!

Meanwhile, we all have some living to do.

Reality says

Why would you be taxed for cooking for a friend? When you cook for a neighbor and get paid for it, that's where income tax comes in: the payment signifies income to you.

You are confusing income/money with value. Money is just a proxy (i.e. convenience) to transfer value. You could use a credit system to get paid when you cook to a neighbor, and paid with that credit when a neighbor cooks for you. This is almost barter economy, and it avoids paying tax, at the expense of being inefficient and using a currency with limited scope.

Reality says

You are proposing a new tax base and a new form of tax. What you are suggesting is essentially that because some women (and men) are raped, all women and men should get raped.

Read my comment. I'm saying it's better for 2 women to get raped once that for 1 women to get raped twice. IT's not a good example, but in a generic sense, it just means to share the costs.

Reality says

Speaking like a true believer of the insane. Do you realize, your ideal of "fairness" is indeed an end state fantasy (like Communism), as in: we will all be equal when we are dead and buried, equally dead!

Meanwhile, we all have some living to do.

I wasn't sure about answering, since it's something so stupid what you said that you probably realized soon after saying it. Anyway, I think it's clear that my concept of fair is not everybody being equal, but all our chosen activities being equally taxable in front of the government. Unless externality can be proven, it should be equally taxable if you build chairs or you bake bread.

ja says

I'm saying it's better for 2 women to get raped

That's where you lost me.

Regarding taxing imputed rents, it makes no sense to me due to this - one of the biggest motivators in america to buy a pad is to avoid paying rent especially when buy/rent ratios are in favor of buying and/or to create an inflation hedge. Taxing the so called imputed rent basically means that you are still paying part of that rent via marginal rate and you still have to pay the mortgage! That's a double whammy. No wonder only around 35% of swiss own a home. It is very hypocritical of them to do that especially when they have developed a reputation as a worldwide tax shelter for everyone else.

ja says

mell says

What if I buy stocks for myself with money that has already been income taxed? Why should I pay when I sell them for a gain?

Because you increase your total assets (i.e. income). That's the principle of income tax.

What about a person that increases their income by 1 million because another person gives that amount of post-tax money to them? How do you justify double taxation?

ja says

You are confusing income/money with value. Money is just a proxy (i.e. convenience) to transfer value. You could use a credit system to get paid when you cook to a neighbor, and paid with that credit when a neighbor cooks for you. This is almost barter economy, and it avoids paying tax, at the expense of being inefficient and using a currency with limited scope.

If you get paid for cooking for your neighbor as a form of barter, of course you are liable to income tax. The key is BEING PAID (and having a profit)! The payment doesn't have to be money; you are liable to income tax so long as it is quid pro quo. Cooking for oneself however does not at all constitute income liable to taxation, as there is no income. Nor does informal backyard BBQ's where nobody is earning a profit.

ja says

Read my comment. I'm saying it's better for 2 women to get raped once that for 1 women to get raped twice. IT's not a good example, but in a generic sense, it just means to share the costs.

Only because you are an idiot male who does not at all understand the psychological damage done to rape victims.

BTW, I'm a man too, and I date women. I also understand the less basket cases out there the better, for women and men who like them.

Your comment make you sound like a moronic dork who doesn't understand the chip you advocate would make things far worse than even the tax collection itself.