patrick.net

Good point! If you bid your tax rate, well, that was your own choice.

I also like it being fixed for some reasonably long time. 10 years seems a bit too long to me, since most owners actually own for only 6 years on average. But I could live with 10 years.

Of course there will be the cases where someone hits the 10 year mark and then gets outbid for their own land. The spectacle of people being forced out of what was their home for the last 10 years could be politically bad for this law. But then, it happens today with property taxes anyway.

Say, I think in China the government already is explicitly the landlord for all land. And their system seems to be working better than ours at the moment!

Say, I think in China the government already is explicitly the landlord for all land. Their seems seems to be working better than ours at the moment!

Yes, I was going to mention that as well.

It's still common in Chinese influenced cultures for land to be leased by wealthy old money land owners for long periods of time, and they have nothing to do with the activities or buildings on the land. They're just a parasite. Really it's the cornerstones of any feudal system. Your (land) Lord charges too much rent to farm their land and you go find another lord.

I see no reason not to turn Feudalism on it's head. Since somebody is going to be the parasite from land ownership, it might as well be the democratically elected government.

The way I see it, it is not up to the readers or even the moderator or owner of the Forum to determine which comments are properly motivated and why? But it is needless to say that what should be removed and moderated is unprofessional and irrelevant language.

I see it as a huge tax loophole. I'm not big on taxes, but I don't think someone making a large sum of money should be exempt from taxes on profits. It seems like there is a possibility a company down the street could potentially end up paying the same amount of taxes as homeowners, depending on how it is zoned, of course. It also seems like a way to place the tax burden on property owners. Taxes are necessary for a civilized society to function and I really think everyone should contribute. Not just property owners.

Say, I think in China the government already is explicitly the landlord for all land. Their seems seems to be working better than ours at the moment!

And how did that work out in the Soviet Union?

kc6zlv says

I don’t think someone making a large sum of money should be exempt from taxes on profits.....Not just property owners.

I see a huge difference between somebody who makes a profit through passive rent-seeking, and somebody who makes a profit from productive enterprise. The later should be discouraged, and the former encouraged.

SubOink says

gameisrigged says

Zillow is utter bullshit. It’s in a league of its own.

In my area, its spot on with rent price estimates. And it does show the exact price a house sold at. Not sure what’s utter BS about that. Do you mean the Zestimates? Those are sometimes good and sometimes off, because they don’t know if a house is updated inside, or mold infested. Our house got appraised by the bank within $1k of the zillow zestimate. I thought it was pretty interesting.

Sometimes good and sometimes off? Do you find that a laudable goal?

Be careful every one.. The banks are telling Brokers to list homes for up to $50,000 $80,000 more then they really want..

Why because the cash buyers are really coming in with low offers. the banks think they can get closer to what they want this way... WE CANT SELL THEM AT THE LOWER list PRICE?????? stupid f-uckers

I am an agent and we had to list a number of homes that did not sell , with a higher price of $50,000-$80,000.. more on top of the Original list price,,,,, we will never sell them homes..
the banks are so f-ucked up..

All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son's of a bytchs.

we arer not selling shitt in the office.

I have 2 friends that are realtors and they told me that they are having a very difficult time closing a deal because everytime they get an offer in, some cash investor comes along and snags it right in front of them. They are very frustrated and haven't seen a comission in months. This is in the LA neighborhood.

Of course, I don't feel too bad for them because they made a killing between 1998-2006. You win some, you loose some. Or, you could get a real job like the rest of us :)

Okay, that was mean...I apologize but it just slipped out. No pun intended.

kc6zlv says

And how did that work out in the Soviet Union?

Good point! The Soviet Union failed because it did not let people keep the results of their own work. That system is exactly the opposite of what is being proposed here.

Land is not the result of anyone's work. So land is exactly the right thing to tax. Not labor.

A land-value tax also has the practical advantage that you can't hide land, and taxes paid are all public record. No one can evade the tax, except by corrupting the laws to get exemptions for themselves. Say, for example, by exempting everyone over 60 regardless of wealth...

lisa and Daniel says

Be careful every one.. The banks are telling Brokers to list homes for up to $50,000 $80,000 more then they really want..
Why because the cash buyers are really coming in with low offers. the banks think they can get closer to what they want this way… WE CANT SELL THEM AT THE LOWER list PRICE?????? stupid f-uckers
I am an agent and we had to list a number of homes that did not sell , with a higher price of $50,000-$80,000.. more on top of the Original list price,,,,, we will never sell them homes..

the banks are so f-ucked up..
All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son’s of a bytchs.
we arer not selling shitt in the office.

Hey, too bad it is the banks and not the agents have nothing to do with higher listing price.

"Both ground- rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents, and the ordinary rent of land are, therefore, perhaps the species of revenue which can best bear to have a peculiar tax imposed upon them."

Adam Smith

lisa and Daniel says

All I can tell you folks out there is when you submit in offer on a home submit it $80,000 lower then asking, because its rigged by the banks,, their greedy son’s of a bytchs.

I'm going to look at a house this weekend. Foreclosure. Depending on how much work needs to be done, I'm not going to offer more than 90% of its list price. I can tell that they aren't pricing as low as they used to, so I'll start there and work my way down depending on how much $ the house needs. Then again, I might not make an offer at all. But your theory may be correct if my anecdotal observations aren't wrong. After all, they are controlling the volume of houses they're putting on the markets.

The predictions of economists are about as reliable as fortune tellers and those who read the entrails of dead goats.

The models are always accurate -- if all the presumptions are right and all the presumptions are never right. The result is a huge opportunity for error over certainty. See this gem from 2006:

http://www.youtube.com/watch?v=lPnA1cnewLA

Btw, I am curious who these cash buyers are?

I just heard about two transactions in my neighborhood, one is $1.6M all cash (not foreclosure), another one was $1M all cash (pretty much just for the land, the house is definitely a tear-down).

So my curiosity is, if I have $1.5M cash (not in gold, oil, stock etc., but idle cash) laying around, why would I be buying a house? A person with so much money should have long bought a house. Then if he is smart enough to amass several million, why would he NOT borrow? Borrowing at FHA rate is a no-brainer.

I guess my main question is, I acknowledge that there are plenty of loaded people out there looking for good deals in good areas, but I don't understand why they don't borrow when borrowing makes perfect financial sense. Will all-cash offers be looked upon more favorably compared to, say, 50% cash offer? I think not.

OO -- If the homes were sold as prime residences then I have a guess: Wealthy individuals whom I have known always buy their homes for cash and never have a mortgage, though there might be tax and liquidity advantages. The logic is that if everything goes wrong at least they will have a house and a roof over their heads.

Think about the people who took out mortgages so they could invest more with Bernie Madoff, Enron or WorldCom, etc., and you can understand such thinking....

oo,

The investors are back in full swing again. And FHA only covers around
$400K, and you have to pay 5% interest. If you borrow more, then
you obviously have to pay more interest. These investors have cash.
If they make 10% profit within a year, it is an outperforming investment.

This is a bad news for buyers as this will increase the price of housing.
Therefore I have a gut feeling the price of housing is about to rebound,
even though all the data point otherwise. I wish those guys burn
in hell for starting the first housing bubble in the first place. We should
boycott buying any properties from a flipper.

If I had 5 mil in cash, and wanted to buy a 1 mil house, I absolutely would pay all cash.

OurBroker says

Wealthy individuals whom I have known always buy their homes for cash and never have a mortgage, though there might be tax and liquidity advantages.

Certainly explains why San Diego to Beverly Hills, Ca RE prices tanked by 35-40% in early 90s.

Opps, there went the money!

sfbubblebuyer says

If I had 5 mil in cash, and wanted to buy a 1 mil house, I absolutely would pay all cash.

LOL! you more likely would leave SF and move to NV or FL, as many did! $1M will feed and house you and your family for 10-12 years without worring about working. Its a very different world on the other side.

OO says

Btw, I am curious who these cash buyers are?

I just heard about two transactions in my neighborhood, one is $1.6M all cash (not foreclosure), another one was $1M all cash (pretty much just for the land, the house is definitely a tear-down).

So my curiosity is, if I have $1.5M cash (not in gold, oil, stock etc., but idle cash) laying around, why would I be buying a house? A person with so much money should have long bought a house. Then if he is smart enough to amass several million, why would he NOT borrow? Borrowing at FHA rate is a no-brainer.

I guess my main question is, I acknowledge that there are plenty of loaded people out there looking for good deals in good areas, but I don’t understand why they don’t borrow when borrowing makes perfect financial sense. Will all-cash offers be looked upon more favorably compared to, say, 50% cash offer? I think not.

You are thinking it incorrectly.

If you are borrowing over 30 years you are paying someone interest rate. It's not free. Thats cash you are not investing and making money from.

As far as those 1.5 or 1 million sales.... rich people buy luxury, or builders buy land to speculate or build. One doesn't become a millionaire by giving away once fortune in exchange for a wooden box.

I understand that logic of paying cash for your primary residence.

But I am perplexed by the fact that these residences are by far NOT luxurious - you know what $1.6M can get you in west valley. Now if someone pays $2.5M cash for Portola Valley, or better still, $100M for Los Altos hills like the Russian dude, that I can understand perfectly. That $1.6M house is quite, well, underwhelming for the price tag.

If I have loads of idle cash (say $1.5M), that means my net worth is probably more than $10M, because what kind of wealthy person will be keeping USD cash nowadays? And if I have $10M, I assure you today's $1.5M house will be last item on the shopping list for me, hence my perplexity.

Yeah, I get it, April fools.

kc6zlv says

And how did that work out in the Soviet Union?

Good point! The Soviet Union failed because it did not let people keep the results of their own work. That system is exactly the opposite of what is being proposed here.
Land is not the result of anyone’s work. So land is exactly the right thing to tax. Not labor.
A land-value tax also has the practical advantage that you can’t hide land, and taxes paid are all public record. No one can evade the tax, except by corrupting the laws to get exemptions for themselves. Say, for example, by exempting everyone over 60 regardless of wealth…

Patrick,

The problem I have with it is that it has the potential to allow people to pay very little in taxes based on their income. Someone in another town where land is cheap could open a business making 50 million a year in revenue and pay the same taxes as someone making $30,000 a year with a home where the value of land is high.

And I don't have a problem with income taxes. I have a problem with the way the tax burden is distributed. I know $30,000 is far from a high income, but I think lower-income people should share some of the tax burden. Likewise, I can't see the argument that someone who is makes tens of millions a year and pays $500,000 in taxes isn't paying their share. Certainly someone making less should pay less, and someone making more should pay more, but I really don't think dinging someone $500,000 a year in taxes is fair.

Additionally, property taxes/land taxes (whatever you want to call them) don't allow any flexibility for people going through financial hardships. You have to pay that magic number regardless of your ability to pay. I would like to see a good portion of the tax burden shifted toward sales taxes on non-essential goods. I don't think it would reduce the amount of consumer spending where people have the money to buy DVD players or other junk, but it would still allow people the option to cut back spending if they are having financial difficulties.

And when it comes to all the talk about the need for more revenue, I disagree. The current budget negotiations at all levels of government around the country are good examples. The Federal Budget, for example, is more about cutting funding for domestic programs, which are much smaller than the foreign programs like the cost of military spending in the Middle East, foreign aid to countries that don't need it (Israel) and countries where no amount of money will solve anything (African countries). Likewise, in California politicians won't even acknowledge the $600 million a year Los Angeles County spends on various services for illegal immigrants, but they are concerned that college students aren't paying enough toward their education.

The real problems in this country aren't going to be solved because we, as a country, aren't willing to prioritize where we spend money.

they print dollars so that poor can trade labor in exchange for that magical green paper

Being rich is not = to being smart. Some people get good stock options at work, then invest all the money in the same company and wala turns out to be, say a google, or MSFT, or any number of winners, and all they did was get a good job. Not rocket science. Does not make them market sluth. I know many many smart rich people, who are THE SELLERS of homes, NOT buyers.

On a side note, I think the duck if offten wrong, at least about Real Estate NO doubt!

Could things be any more absurd? Yes, start a war with no purpose and no good guys in the fight.

So happy to see that some of the the best "investments" to be found are in shorting fraudsters who managed to get a public listing.

Go capitalism!

Hope those highly skilled CCME folk don't get penalized too bad for this, or they won't be able to contribute to society any more :(

This wasn't a give away of any kind. It was a collateralized loan, fully paid back. The Fed, and the US taxpayers (AKA citizens) PROFITED from this loan to Dexia, so I'm really not sure what you're complaining about.

thunderlips11 says

Healthcare? No Money.
Small Business Grants? No Money.
21st Century Infrastructure? No Money.

That's not the role of the Fed. It's up the the Treasury to tax or borrow for those things.

Dumb question, but do you think Sarah Palin would go for this tax?

Someone in another town where land is cheap could open a business making 50 million a year in revenue and pay the same taxes as someone making $30,000 a year with a home where the value of land is high.

That's a feature not a bug. The LVT encourages more efficient use of land, which reduces the deadloss we have now in this sector.

do you think Sarah Palin would go for this tax?

Given it's something Nader has gotten behind, no. Though the Alaska Permanent Fund is in fact entirely Georgist in conception, if not aggressive enough in collecting severance taxes that are available.

Frankly, no viable politician is going to touch this tax with a bargepole. LVT targets landowners and benefits renters. That's not the way the bread is buttered in this country.

I have been to China and I wish I knew how to do what thunderlips is doing, he's entirely correct. There is such a bubble over there and so much hanky-panky going on, on all levels. It starts from the top with giant construction projects so as to make the GDP look ever-higher. Everyone seems to be trying some scheme or other, everyone wants to get rich. Since Chinese have few investment choices, they buy apartments and Chinese stocks. Too bad it's hard to buy the A shares of Chinese stocks, I imagine there are plenty of shorting opportunities over there.

I would skip college all together and learn a trade or get an entry level govt. job and work my way up, even if I have to drive a bus or something of that kind. A college degree only makes sense if one wants to pursue healthcare.

shrekgrinch says

And why should a geny’er invest in the overly priced education for programming when it can be outsourced at a whim? It is smarter to apprentice themselves to an electrician or a plumber, if you ask me.

In part, for the same reason as why cute girls and guys flock to LA hoping to make it in movies.
Some smart youths who studied CS have become insanely wealthy very quickly, not just in .com era but (though less commonly) more recently. The average odds are not high, but there are examples that media publicizes daily. No such thing in plumbing or electrician trade.

Let's improve it (no exemptions for rich people over 60, for example) and start our own petition!

HousingWatcher says

or get an entry level govt. job and work my way up, even if I have to drive a bus or something of that kind.

How far up do you think you would work in the govt. without degree, even in better times such as until 2008 when govt. was expanding at a rapid pace?

Sad to day, but most degrees aren't worth the investment. There's no problem the right price won't solve. The cost of all types of higher education needs to come down. Undergrads shouldn't be going 100k into debt for a bachelor's. Medical students shouldn't be going another 200k into debt for their MD. There are people my age with M.D.s who are in residency. Their loans are now compounding and they probably owe close to 500k.

theoakman says

Undergrads shouldn’t be going 100k into debt for a bachelor’s. Medical students shouldn’t be going another 200k into debt for their MD. There are people my age with M.D.s who are in residency. Their loans are now compounding and they probably owe close to 500k.

A more typical number would be ~200 - 300 K, which is about 1 year income.
Would you rather have income and debt of 300 K or 40 K, even if the ratio is 1 in both cases?

"How far up do you think you would work in the govt. without degree, even in better times such as until 2008 when govt. was expanding at a rapid pace?"

There are plenty of people in govt. making $100k + without a degree. They include police officers and rail road conductors. The lowest paid employee at the Long Island Rail Road makes over $70,000.

"Some smart youths who studied CS have become insanely wealthy very quickly, not just in .com era but (though less commonly) more recently. The average odds are not high, but there are examples that media publicizes daily. No such thing in plumbing or electrician trade."

So people should study CS because there is a .000000001% chance they will become rich?

kc6zlv says

The problem I have with it is that it has the potential to allow people to pay very little in taxes based on their income. Someone in another town where land is cheap could open a business making 50 million a year in revenue and pay the same taxes as someone making $30,000 a year with a home where the value of land is high.

You're going to have a tough time attracting talented workers to your $50M/yr company in the Boondocks. If you succeed and the company is successful, the wages, and hence rental value of the land is going to go up.

And what is somebody making $30K doing living where the land value is high? If they did, they would be living in an apartment building, where the the tax is very low per person since you've got so many people on a small plot of land.