patrick.net

Any system, if left alone long enough, will start to brew a bunch of established stakeholders, who will do everything possible within their power to keep their stake growing. That is just human nature.

I don't blame those people who did these fancy zoning and interest group lobbying to preserve family wealth, I know I would do exactly the same, if not more, if I were lucky enough to be in their shoes. That is just the competition of genes at its best.

That's why every once in a while we need some systematic reshuffle. Recession, or depression, is the best way to shake up the old rules and create some new one to re-balance everything.

Here's an interesting note from the IRS in the instructions for line 6 of Schedule A for this year:

Include taxes....you paid on real estate you own that was not used for business, but only if the taxes are based on the assessed value of the property. Also, the assessment must be made uniformly on property throughout the community....

Does this imply that California property taxes, completely NOT uniform throughout the community due to Prop 13, are NOT tax deductable?

Not tax advice....tax headache.

Any system, if left alone long enough, will start to brew a bunch of established stakeholders, who will do everything possible within their power to keep their stake growing. That is just human nature.

I don’t blame those people who did these fancy zoning and interest group lobbying to preserve family wealth, I know I would do exactly the same, if not more, if I were lucky enough to be in their shoes. That is just the competition of ge-nes at its best.

That’s why every once in a while we need some sys-tematic reshuffle. Recession, or depression, is the best way to shake up the old establishments to make way for the new.

I think Warren might be playing a very dangerous game this go around. I think it is a clear attempt to corner to the muni insurance markets, which has been a very profitable underwriting business historically. But will it continue to be so?

Its all a risk game, and he will be making a wager on the default rate of muni bonds. Will he have flexibility to rapidly adjust to changes in performance of this debt? I don't know that past performance is any guarantee of future in this area. How optimistic are you about what is coming? I know my small locality is talking about issuing $100M in debt soon, to spend on water projects, some parks, some physical improvements. By my estimation, most not that necessary. Our local "leaders" are saying things such as 'we must move forward' and 'we believe in the future', ignoring the coming storm. And they already are carrying a huge debt load (if I was Warren, I would not want to insure that or it would be very, very expensive). Meanwhile, I see the tax base rapidly disintegrating. And I do mean disintegrating. I would imagine we will start seeing this everywhere. Budget numbers are predicated on continued growth, and they do not map to reality at all.

Probably Warren gets this, he is much smarter than I. But maybe there is some kool aid drinking going on there. Am I too pessimistic, will we see local government debt defaults over relatively near term?

OO - California doesn't have a sales tax on food - Arizona does. Arizona is tax-happy in fact, it's over 10% sales tax where I am. Businesses are leaving because of the high taxes.

ESR,

I don't think businesses are leaving because of tax, businesses are leaving because FBs can't afford to buy anything.

The reason why US has degraded so much in terms of quality of stuff offered on the market is because the sales tax is too low. I still remember that the socks that I bought in early 90s (made in Mexico) could last a few years and the socks I buy now (made in China) could only last a year. Sure, the price of the latter is about half, but if you amortize the cost over days worn, perhaps the former was a better deal. This perhaps applies to all imports.

I think there should be a fixed sales tax on different categories of merchandise. The fixed tax acts like an entry barrier to low-cost crap. If you have to pay 50 cents sales tax on all types of socks, you probably will choose the highest quality ones. If you need to pay $50 sales tax on all LCD monitors, you probably will pick the most durable one.

That's why I am more for a high, fixed sales tax than just land tax.

> As soon as some voters don’t have to pay any tax they don’t have any
> problem voting for higher taxes.

WHO would not have to pay any tax? Everyone living on this land would end up paying the land tax. Tenants would pay it indirectly, through the rent to their landlord, but they would most certainly pay it, no exceptions.

So you can be quite sure that people would be careful about voting unnecessary tax increases.

As for the rate, the most clever idea I've heard is this: pay whatever land tax you want. But every tax payment is also a legally binding offer to sell the land. So if you pay very little, you have valued your land at a low price, and someone else can just buy it from you!

Not sure I really like that, but it does seem fair.

"we must move forward"

Yeah it's the same BS every time major contractor firms smell a recession on the horizon. A nice little public works project to tide them over. All of a sudden Portland is very concerned about the state of our roads and they're talking about issuing over 125 mil. in bonds for the comm. coll. "expansion". What a joke.

I think all roads should be toll roads.

http://www.bloomberg.com/apps/news?pid=20601087&sid=az.e27ptjVuI&refer=home

"Paulson said that he's open to additional measures, while rejecting a Democratic proposal for the government to buy distressed mortgages."

A glimpse of things to come? The dominant political party seeks to socialize property ownership, and it's not even getting any real press.

Toll roads are fine so long as thoroughly and properly regulated. There is an egregious example here where Mobil Exxon developed this huge ex burb community, and through a much lauded private public partnership another group built a major highway from this community into the employment center. Alternatives double commute time. Toll rates have been steadily rising, and the owners lobby owns the system. Despite muted backlash outcries, another rate increase proposal is set to pass. No real public utilities commission looking out for the public interest.

Captive sheeple in their sh*tboxes, currently paying over $150 avg tolls monthly just to commute on this road. Not surprisingly, with the price of gas, the property values in this massive community are set to crash and already have fallen off the cliff. And these are the sh*tboxes supporting local government tax base.

The dominant political party seeks to socialize property ownership, and it’s not even getting any real press.

Scary. Hopefully the next Republican president will veto all such ideas.

DinOR,

>we must move forward”
>Yeah it’s the same BS every time major contractor firms smell a recession on the horizon.

Does this somehow tie in with the major "infrastructure push" on Wall St? I made a comment about the sudden popularity of pushing "infrastructure stock" a few threads ago,.

Toll roads are fine so long as thoroughly and properly regulated.

The idea is to deregulate such things. Hopefully, privatization of roadways will lead to competition.

Captive sheeple in their sh*tboxes, currently paying over $150 avg tolls monthly just to commute on this road.

People are responsible for their own decisions.

Private toll roads are the worst idea ever. Private owners will milk the public over and over and over again. A public road is built, and when it is paid off, everyone gets to use it for fun and profit, in perpetuity. Mainyentance does not really cost all that much, gas tax takes care of it.

justme said:
Regressive tax encourages one class of people to sit on their fat asses while another class of people do the production for them.

If you look at the big picture, "Progressive" taxes do the same thing.

In fact, I have given up trying to earn more income because of the f*cked up "progressive" crap. I actively seek out legal ways to make marginal income outside of the wage trap just to get around this b.s.

Toll road is better than gas tax because it can allocate resources best. When the operation of toll roads becomes profitable, more toll roads will be built, creating competitions. The result is lower cost for all.

We should also privatize all schools.

"Now servicers have to do triage" LOL!

MEDIC!

A glimpse? You KNOW I can't stand the sight of blood?

Thanks Quiet Renter.

Administrator Says:
As for the rate, the most clever idea I’ve heard is this: pay whatever land tax you want. But every tax payment is also a legally binding offer to sell the land. So if you pay very little, you have valued your land at a low price, and someone else can just buy it from you!

This is actually in effect for transactions in many countries that tax the transfer of assets.

If you declare a low valuation for the asset, to cheat the government of transfer-taxes, the government reserves the right to buy the asset from you for that price. Very difficult to game the system.

Just a lousy $150 bucks to drive on a slightly less f@cked up road with 10% LESS traffic! Sign me the f@ck up! Yeah buddy! :)

When the carpool lanes became an obvious and complete failure coming down from Scamcouver into Portland they sold a "pass" to allow you to drive almost with a lane to yourself!

I think toll roads would also eliminate a lot of "cruising". Dickheads with no where to go and all day to get there (expired plates) and no insurance will have to hang out behind 7-11! Good riddance!

Progressive taxation (or welfare in general) is there to keep the poor eternally poor.

If you declare a low valuation for the asset, to cheat the government of transfer-taxes, the government reserves the right to buy the asset from you for that price. Very difficult to game the system.

Yep. The best policy is achieved through balance, not regulation.

SP,

>If you look at the big picture, “Progressive” taxes do the same thing.

This is all about what the slope of the tax rate function should be [the function rate=f(income), if you will]. Peter P says the slope should be flat or negative, I say it should be positive, and noticeably so. Picking the slope exactly equal to zero seems very arbitrary. I don't see slope==0 to be some god-given constant of optimality, derived from the finer or cruder points of human nature. I do think that a positive number is optimal, and strikes the correct balance between "fairness" and "mobility", when viewing the economy as a dynamical system.

Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized. The time constant should be such that amassed wealth is mostly gone within 3 generations. Work should be rewarded through increasing pay, but one should also pay a larger share of taxes because wealth is always built on the backs of everyones labor. I personally find it foolish, egomaniacal and disengenious to think that ones wealth simply a function of ones own effort. Not that I'm accusing anyone of thinking that :-).

Patrick,

The name-your-price system of property valuation system is pure genius, but the problem is always that the system will be gamed, sooner or later. And I think I can guarantee there will be unintended consequences.

My accountant been doing taxes 40 years. He says there is constant 'flat tax' talk but every year the tax rules get more and more complex and byzantine. Witness the oct 2007 'dont tase me bro' walkaway tax free rule....(if you bought your house in certain years or walk away in certian years?)

The only way to wipe out all taxes and start over is to start a brand new country. And then after 30 years you will need better schools and have 2 wars and have new taxes every year just like the old country....

tax reform -its hopeless. Ron Paul has a better chance getting elected than any flat tax system.

Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized.

Why?

Why not penalize welfare recipients for sitting on their fat asses and breeding future welfare recipients like rabbits.

If we cannot get a flat tax we should at least hope for a cut in marginal tax rates.

Again, justme, we should agree to disagree. :)

Peter P,

I'm always agreeable to disagree with you about taxes, or any other controversial matter, for that sake :-). But I feel compelled to provide the alternative view when you are striking left and right (well, left mostly) with your pithy one-liners.

HelloKitty,

I agree with you.

Idaho has a novel take on sales tax of food items....
All items in the store are taxed. The merchant doesn't segregate items into taxable vs. non-taxable. But on your state income tax return you get a standard credit per person to repay you for the food sales tax. Currently the "grocery credit" is $20 per person ($45 for old folks) in one's household but the legislature is talking about bumping it up. In discussions with my state senator the other day, he said this is a smart move because tourists and ILLEGAL ALIENS will pay the tax but not get the credit. :)

DennisN

what is the sales tax rate on food (roughly for all counties) for ID?

General sales tax is 6%, so that credit only works out to about $330 a year for food. That's why the legislature is working on a new bill to bump it up....something more like $60-70 per person.

NVR,

Are you talking about the Dulles Greenway? Last time I was on it, I think it was about $6 for 10 miles of road. Is that the one?

Peter P.

Can you name a single example of when, "the operation of toll roads becomes profitable, more toll roads will be built, creating competitions" has actually occurred?

For example the PA turnpike (recently sold, as I recall), was opened in 1940 and was profitable for decades. No other road ever opened.

Not trying to be troublesome -- it's a serious question.

OK let's say you can eat for $3 a day. That's $1700 a year. At Arizona's 10% tax, that's $170 a year. Per person. I'd like to see a rebate for that!

Taxing food is just ..... weird.

For example the PA turnpike (recently sold, as I recall), was opened in 1940 and was profitable for decades. No other road ever opened.

Or, existing public roads can be sold to private companies. This creates two things:

1. much needed revenue to pay down the national debt
2. competition between tool road companies

Frequently, toll roads are not constructed because of NIMBYism, not economics.

Taxing food is just ….. weird.

I agree. :)

@Ed

Yup this is the nasty beast, the Dulles Greenway. 10 miles sounds about right, it's $3.50 each way 2 axel during prime commute hours, plus another $0.75 each way if you pass through the toll extension at Tysons in Mclean to Arlington/DC. So roughly $8.50 per day x 20 commute days per month = $170.00 per month. It is privately owned by the "Toll Road Investors Partnership II (TRIP II)". This is in turned owned by an Australian private company, Macquarie Infrastructure Group. I believe our friends at KBR (Kellogg Brown and Root) also own a big stake.

And the lovely exburb of Ashburn (aka as*burn) is obviously the locale of which I speak. I live in Middleburg area (horse country, my ex loved the horses. I don't recommend the horse women,btw and OT).

The Va State Corp Commission, which is the regulating body over the road, just approved annual increases to $4.80 each way on the greenway portion by 2012.

A little known fact is it was built to some degree to divert the sheeple and sprawl away from the hamlet of Middleburg by the rich old money around. Better to point that thing towards Leesburg than be subject to development which would have resulted otherwise. This area is home to the Mars families, Mellons, Duponts, you name it. Even Sandy Lerner, co founder of Cisco, has big place here. Shelia Johnson is another Billionaire who is making waves around town with a new resort.

justme said:
Personal wealth should decay exponentially with time through wealth and inheritance taxes, so that unproductive wealth (aka. sitting on ones fat ass) is penalized. The time constant should be such that amassed wealth is mostly gone within 3 generations.

Whenever some jackass starts talking about what should happen to other people's property, I generally tend to stop paying attention. Nothing personal.