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Cook County resident
2011 Aug 25, 11:05am
Instead of making senseless accusations like "wordfog," you should actually read what I wrote.
I read what you wrote. Whimsical tax assessments have been around long before Keynes and fiat money.Reality says
In no way did I favor Cronyism. All I said was that if the neighbor can find a pre-existing loophole in tax codes (that is open to all) and exploits it, it's not a bad thing.
It's legal, but I believe that complex tax structures are based on favoritism and are a precursor to corruption.
I won't call that a good thing.
I read what you wrote. Whimsical tax assessments have been around long before Keynes and fiat money
Keynesianism provide the intellectual framework to carry out favoritism / cronyism on a vast scale in post-1930's governments.
It's legal, but I believe that complex tax structures are based on favoritism and are a precursor to corruption.
I won't call that a good thing.
What complex tax structure are we talking about? Sales tax being non-existent in the neighboring state? How complex can literally "nothing" being written on the subject be?
Cook County resident
2011 Aug 25, 11:26am
Cook County resident says
In a monopolistic market, government regulation ought to serve as the check.
Piling monopoly on top of monopoly doesn't work.
Some monopolies are unavoidable. I can have only one gas company and the government acts as a check on their rates.
The track record of government self-regulation is even worse than industry self-regulation.
The real solution is free market choice and competition.
My government water department does a good job. The water is always clean and safe and water main breaks are fixed quickly. I don't think it's too expensive although I don't have anything to compare it to. They are certainly charging less than the market will bear. It's easily affordable.
Obviously, the check on the water department isn't a competing water department, it's the voters.
Cook County resident
2011 Aug 25, 11:36am
Keynesianism provide the intellectual framework to carry out favoritism / cronyism on a vast scale in post-1930's governments.
I had no idea an intellectual framework was necessary.
What complex tax structure are we talking about?
Property taxes.
I had no idea an intellectual framework was necessary.
hehe. As an intellectual framework, it certainly fooled enough people for the last 80 years. How many otherwise intelligent people would have supported handing money to the super rich at the expense of the poor and the middle class?
Property taxes.
If you are referring to Prop-13, it's a necessary formula tweak in order to collect higher tax on new home buyers at a rate that is simply not possible on grandparents on social security. Take for example, if the houses in an area were all similar and worth about $600k apiece. An across the board tax rate of 2% would mean $12,000 each, which is simply not enforceable on grandparents on social security. In order to make tax affordable to the old couple, $3000 a year is more like it. Without Prop-13, the town would have to lower tax rate to 0.5% in order to avoid a tax revolt by the elderly, who do vote consistently. The town bureaucrats then would have left $9,000 on the table that they could have collected from the young couple who have secure jobs and can afford to pay.
Remember, taxation is not about fairness, but about what the monopolistic bureaucratic rent-seeking cabal can get away with.
OTOH, is there some degree of fairness to it? perhaps, most new home buyers buy homes in order to register kids in particular schools. So hitting them with a higher tax for a few years is somewhat fair because 80-90% a typical town's budget go to the schools.
Like I explained earlier, tax code is designed to avoid pitchforks and shotguns.
This makes no sense. Very few other areas have anything like Prop 13, and yet I don't see an abundance of pitchforks and shotguns elsewhere.
We are talking about a single family home, right? Not some enormous estate.
Oh please, in many cases we're talking about multimillion dollar homes.
Don't even think for a moment the nominal rate can be applied to the entire housing stock across board at the recent peak or current price level.
And yet it happens in city after city except here.
Most localities in this country does not collect sales tax at all, only states do.
Many urban counties collect sales taxes. Certainly in California this is the case, and we're talking specifically about California.
against the peaceful tranquility that most residents take for granted in their blissful ignorance of the sharp teeth and bloodlust lurking around the townhall
Yeah, again, why is this different from everywhere else? That's really where your analysis falls apart.
This makes no sense. Very few other areas have anything like Prop 13, and yet I don't see an abundance of pitchforks and shotguns elsewhere.
California was just taking the lead in the nation, as usual. Oregan, Washington, Colorado and Massachussetts passed similar measures in the years following California did. Then the economy improved after 1982. The economic environment for tax revolt did not materialize again until recently. New York State just passed the 2% two months ago. The rest of the country may well follow soon if this slump continues.
Oh please, in many cases we're talking about multimillion dollar homes.
Still single-family homes. The number only goes to show how pathetically small the dollar has become . . . and how big the real estate price bubble has become. Single-family homes are not really income producers upon which a generational fortune can be built. If it's really worth multiple millions, the inheritance tax bite may well force sell quickly any way.
And yet it happens in city after city except here.
The most expensive locations seem to be following California lead to cap property tax rising rate.
Many urban counties collect sales taxes. Certainly in California this is the case, and we're talking specifically about California.
That's because California also cap nominal property tax rate (i.e. on new buyers too) to 1.2%. I find it rather interesting that urban areas always need higher tax rate, despite higher density theoretically would make service delivery easier.
Yeah, again, why is this different from everywhere else? That's really where your analysis falls apart.
Give other places more time. OR, WA, CO and MA followed in the years following CA; NY just followed a couple months ago.
Some monopolies are unavoidable. I can have only one gas company and the government acts as a check on their rates.
That's an old canard about "natural monopoly." People don't have to use gas; they can use electricity or oil. The so-called government-check functions more like a price guarantee preventing other players from entering the market place.Cook County resident says
My government water department does a good job. The water is always clean and safe and water main breaks are fixed quickly. I don't think it's too expensive although I don't have anything to compare it to.
That's the crux of the problem, you have nothing to compare to. So you have no idea if they are delivering clean and safe water at a competitive cost . . . in fact, they are guaranteed to be doing it not at a competitive cost.
They are certainly charging less than the market will bear. It's easily affordable.
Different areas are quite different. Some dictators may indeed be "beloved."
Obviously, the check on the water department isn't a competing water department, it's the voters.
How many voters would have voted for allocating R&D funding for iPod or iPhone before Steve Jobs took the entreprenuerial risk to do that? Everyone voting with their own wallets every minute of the day puts a much more effective check on existing profit centers in the economy than pulling levers in a election booth for very limited choices every few years . . . which is why the real super-rich establish with vested interest to protect tend to promote government bureaucratic solutions over individual choice.
Cook County resident
2011 Aug 26, 4:12am
That's an old canard about "natural monopoly." People don't have to use gas; they can use electricity or oil. The so-called government-check functions more like a price guarantee preventing other players from entering the market place
Around here people did use open market oil. Almost everybody switched to gas decades ago and stayed with it.
That's the crux of the problem, you have nothing to compare to. So you have no idea if they are delivering clean and safe water at a competitive cost . . . in fact, they are guaranteed to be doing it not at a competitive cost.
The water is cheap enough that I'm not worried about what it costs. A few bucks a month. If it were free it wouldn't much cheaper for me.
Government water is a pretty good deal.
They are certainly charging less than the market will bear. It's easily affordable.
Different areas are quite different. Some dictators may indeed be "beloved."
Huh?
How many voters would have voted for allocating R&D funding for iPod or iPhone before Steve Jobs took the entreprenuerial risk to do that?
Who cares? As long as Jobs isn't trying to open a water treatment iPlant and install iPipes and try to sell me iWater iWon't care either. In fact, nobody is going to try to install a competing infrastructure. This is one of the things that government does very well.
Around here people did use open market oil. Almost everybody switched to gas decades ago and stayed with it.
If gas price go up tremendously vis oil, people would just switch back. Isn't choice a good thing?
The water is cheap enough that I'm not worried about what it costs. A few bucks a month. If it were free it wouldn't much cheaper for me.
Government water is a pretty good deal.
Depending on where you live. Where you live, on the shores of the Great Lakes, water is almost a "superabundant" good.
In other places, it might not be. A friend of mine just paid a water bill costing over $10,000.
Huh?
Government monopolies are dictatorial, at least until the next election. Even then not all activities in the government monopoly can be realistically put on the ballot at election time. That's why it's far better to let people vote with wallets every minute of the day.
Who cares? As long as Jobs isn't trying to open a water treatment iPlant and install iPipes and try to sell me iWater iWon't care either. In fact, nobody is going to try to install a competing infrastructure. This is one of the things that government does very well.
On the shores of the Great Lakes, you don't care about water pricing. You would care about water pricing if you were in a desert. Is housing or medicine as "superabundant" as water where you live?
California was just taking the lead in the nation, as usual. Oregan, Washington, Colorado and Massachussetts passed similar measures in the years following California did.
Are you talking about deferral programs?
For example, in Oregon:
http://www.oregon.gov/DOR/SCD/changes-impacting-deferral.shtml
This is absolutely not the same as California. This type of program is directly targeted at low income seniors, has limits on principal, has limits on home value, requires recertification every 2 years, and the deferral has to be paid back on sale. Prop 13 is broadreaching and has many other consequences, and the money is never paid back.
Washington is also a deferral program and has limits:
http://dor.wa.gov/Content/FindTaxesAndRates/PropertyTax/IncentivePrograms.aspx
Massachusetts, deferral:
http://www.mass.gov/Ador/docs/dls/publ/forms/97_41A_application.pdf
Colorado, deferral:
http://www.co.pierce.wa.us/pc/abtus/ourorg/at/content.htm#Senior%20Citizen%20and%20Disabled%20Persons%20Exemptions
New York, deferral:
http://www.aging.ny.gov/Housing/Resources/PropertyTaxDeferral.cfm
If you think this is the same as Prop 13, you are dead wrong, and you fundamentally misunderstand the nature and consequences of Prop 13.
Are you talking about deferral programs?
No. I was talking about caps on how fast property tax can rise every year. WA caps at 1% per year by tax district (not on each house), OR caps at 3% annual increase on each house, MA caps at 2.5%, NY caps at 2%.
If you think this is the same as Prop 13, you are dead wrong, and you fundamentally misunderstand the nature and consequences of Prop 13.
As you can see, these are actual caps, similar to Prop 13's 2% annual increase limit. Let's try to keep poetic outbursts and elaborations to minimum.
Cook County resident
2011 Aug 26, 5:43am
If gas price go up tremendously vis oil, people would just switch back. Isn't choice a good thing?
Sure, but for the time being we can't beat the government regulated monopoly. And no waiting for the tanker truck. The infrastructure is already here.
Depending on where you live. Where you live, on the shores of the Great Lakes, water is almost a "superabundant" good.
In other places, it might not be. A friend of mine just paid a water bill costing over $10,000.
$10,000 a month for water? Time to fix that toilet!
Government monopolies are dictatorial, at least until the next election.
As long as their dictates are below my attention level, such as my water bill, they can dictate whatever they please.
Even then not all activities in the government monopoly can be realistically put on the ballot at election time. That's why it's far better to let people vote with wallets every minute of the day.
They were holding a water election at the grocery store today. My wallet voted for Government Dictator water.
On the shores of the Great Lakes, you don't care about water pricing. You would care about water pricing if you were in a desert.
But I"m stuck with whatever Government Dictator water costs, even if it costs $10,000. Even if water is superabundant, the distribution system is still a monopoly. There isn't any real competition. Yet, very good water is cheap and right at the tap everyday.
Thank you, Government Dictator Water Monopoly!
Is housing or medicine as "superabundant" as water where you live?
I've never seen so many For Sale signs in yards, and I'm sure the shadow inventory is much larger.
There's a couple of hospitals within a couple of miles and several clinics.
Sure, but for the time being we can't beat the government regulated monopoly. And no waiting for the tanker truck. The infrastructure is already here.
The latent supply from the ability to switch to oil provides some competition . . . and that's a good thing.
As long as their dictates are below my attention level, such as my water bill, they can dictate whatever they please.
In other words, water is almost superabundant in your area. i.e. it's almost outside the realm of discussion for economics, which talks about limited resources and their distribution/allocation . . . i.e. things that have market prices that you do care.
I've never seen so many For Sale signs in yards, and I'm sure the shadow inventory is much larger.
There's a couple of hospitals within a couple of miles and several clinics.
Try to find out if the sellers would give you the houses for almost free, or the doctors and nurses would come to work without being paid.
They probably would give you some water for free, if you ask nicely.
That's the difference between superabundant goods (which does not need economic efficiency) vs. limited resources, where economically efficient distribution and allocation is very important.
As you can see, these are actual caps, similar to Prop 13's 2% annual increase limit.
Well, that doesn't mean they're not equally misguided. If anything, people say the same things in those states from a quick survey -- state control is a huge issue. Certainly they still have the 6 problems I mentioned above, among other things. Your basic argument is "newcomers and young people should pay more" but that's not really a great tax policy and just defers the cost of things to future generation, much as the boomer generation has done. That's what causes pitchforks.
Your basic argument is "newcomers and young people should pay more" but that's not really a great tax policy and just defers the cost of things to future generation, much as the boomer generation has done. That's what causes pitchforks.
Please do not misquote me I did not say that "newcomers and young people should pay more." I said, the tax collectors can probably get away with collecting more tax from new home buyers . . . therefore they do.
There is no deferral involved here.
If we really want to find some small degree of fairness in that tax policy, then since most new home buyers buying into the expensive neighborhoods do that in order to register their kids in the schools, and the schools take up the vast majority of the town's budget , so there.
Like I mentioned before, it's a scheme for maximizing the amount of tax collected.
If we really want to find some small degree of fairness in that tax policy, then since most new home buyers buying into the expensive neighborhoods do that in order to register their kids in the schools, and the schools take up the vast majority of the town's budget , so there.
That's a dubious claim -- not everyone moves to expensive areas in order to get a good school district. Otherwise, large portions of San Francisco would be empty.
Second a large portion of school funding in CA comes from the state, not the locality. It used to be the reverse.
Third, many school district lines do not match with town lines in CA, so no, they don't take up most of town budgets. Counties accrue lots of property tax revenue, but little of this goes to schools (see how many times the word "school" shows up in the FY2011 Santa Clara County budget, if we're talking about expensive areas with good schools). Even in an expensive well off city like Los Altos, property taxes for Los Altos elementary district don't cover school budgets: http://www.losaltos.k12.ca.us/financial/PDF_Files/2010_11_exec_sum.pdf, and they point out that it's unusual that property taxes go as far as they do in Los Altos -- in many other cities, they don't cover anywhere near 64%.
Fourth, this rationale doesn't work for inter-generational transfers.
Like I mentioned before, it's a scheme for maximizing the amount of tax collected.
Yeah, that makes no sense.
Cook County resident
2011 Aug 26, 10:50am
The latent supply from the ability to switch to oil provides some competition . . . and that's a good thing.
Latent supply isn't an significant issue. As far as I know, there's only one heating oil supplier left and I haven't seen one of their tanker trucks in traffic in years. The cost of electric heat makes it a total non issue.
The regulated monopoly gas company has been the best choice for decades.
In other words, water is almost superabundant in your area. i.e. it's almost outside the realm of discussion for economics, which talks about limited resources and their distribution/allocation . . . i.e. things that have market prices that you do care.
Sure, I could take a bucket to the lake or river and fill it up, but the supply of clean drinkable water is limited to what's available from the Municipal Water Monopolies.
The Municipal Water Monopolies do an excellent job of reliably suppling very good water at a low price -- without competition.
Try to find out if the sellers would give you the houses for almost free, or the doctors and nurses would come to work without being paid.
There is a superabundance of homes for almost free in violent, jobless areas. I'm not interested.
There will never be the sort of superabundance of doctors and nurses which will have them working for almost free. They are capable people and will find other jobs. There is an argument which says we should supply free medical education for Docs and Nurses in order to increase the supply and reduce costs.
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The so-called "geolib" position has been long refuted many years ago:
http://mises.org/rothbard/georgism.pdf
Bob/Troy's pet link article written by Dan Sullivan makes several rudimentary errors:
1. It's a farce to make a distinction between "community" and "government" when the so-called "community" has the power to tax. "Communitarianism" is a just a new-age name for "communism" when the latter went out of fashion. A plantation owner is the government of the plantation regardless what he euphemistically calls his rule.
2. Arden is a corporation just like most towns in the US are incorporated. The fact that even the only alleged working example of "one-tax" in the entire article can only collect 1/4 of what it allegedly is entitled to goes to show just how absurd it is to try to tax the entire land rent. Incidentally, 1/4 of alleged land rent is comparable to 1-2.5% property tax, assuming properties are 10x-20x rent income and land accounting for about half of property value. It should be no surprise that most towns in the country pay for all their expenses out of property tax . . . so the whole Arden experiment is a farce, and little different from most other incorporated town that collect property tax or a giant trailer park, where the incorporated landlord rents out land and provide "community" service . . . and more importantly makes rules.
3. Land can certainly be created by human effort: land filling, for example. Half of Holland wouldn't exist if not for land making. Many city land plots on the two coasts would be under water too if not for man-made land.
4. Land is not a limiting factor in modern economic growth. Agriculture has ceased to be the primary economic engine since just about Henry George's time. High cost of rent in population centers has little to do with alleged land monopoly but everything to do with people's desire to be in those locations running up against zoning laws restricting housing supply. The most recent housing bubble was an experiment in bypassing the "landlords" altogether, and guess what happened? the cost of housing did not go down but went up instead! It's the competitive supply vs. demand that set price. "Landlords" with numerous others nearby to compete against do not collect a monopolist Rent.
5. The proposed "one-tax" "land tax" however would be monopolistic Rent imposed on the rest of the economy by the bureaucratic class. It's ironic that Dan Sullivan would use the term "royal libertarian" to describe his critics. Most land titles in the US have little to do with old feudal land titles. OTOH, his proposed land taxation to the full economic value of the land would concentrate land ownership into the hands of the government thereby creating a new land-based royalty. In other words, the so-called "geolibs" are the "royal libs" . . . in the same way that "communists" are often effectively feudalists/monarchists as their policy proposals would lead to feudal dark ages with a new class of royalty on top, like in North Korea, which incidentally does have all land owned by the government
6. Georgists are dealing with mythical concepts when they talk about "land" as separate from improvement, just like their use of terms "community" / "government" / "the public." There is not a "community" / "government" / "the public" separate from concrete actions by individuals on the ground. Likewise, "land," as nice as an abstract concept, can not be separated from improvement. Most land plots were reshaped by developers before selling to the current owners (or their predecessors) along with infrastructure that was part of the sale. Government had little to do with that.
7. Where the government does have a role, one which really confuses the Georgists, is that it maintains a record of deeds and titles that make future land disputes easier to settle in court. Having that record does not mean that the government owns all the land or is entitled to collect all rent on that land . . . any more than the registrar of motor vehicles has the right to collect the entire use value of your car! or on all the iron in your car! Iron as an element is actually finite on the planet and not made by human. Your exclusive right to the iron content in your car before the car is recycled is your property right, despite the title paper playing a significant role in settling disputes should any arise. Likewise, it would be silly to talk about the value of the iron in a car as separate from the car's manufacturing before the car is ready for recycling and reduced to components. Georgists are obviously not talking about the trash/recycling value of land (say, how much a plot is worth if the entire area is wiped clean by fire or flood) but trying to have the government monopoly collect rent on land with improvements just like steel as part of a working car's value. Land value is inseparable from improvement. Henry George eventually had to draw an arbitrary line that improvements lasting longer than the life span of the improver should be deemed part of "land." In other words, a policy of discouraging long term land improvement and management.
8. Why is this topic important to renters? Because it is important to understand that "rent" would become much higher in a monopolistic land management system. The term "Rent" originally refers to monopolistic market positions. The use-fees that owners of properties collect in competition against other property owners are not monopolistic rent. The Georgist one-tax (much higher tax) on land value would actually create a monopoly Rent to be imposed on the rest of the economy. While the property owners can and do compete on their own margins of operation, they do not compete on the tax portion, which all "landlords" have to collect on behalf of their Landlord, the government. The Georgist aim to collect the entire land rent means land would have zero value, and negative value during economic down turns. That means eventual government take-over of all land ownership. Just like what a nightmare things turned out in countries where "capitalists" were cut out and the government became the only employer (i.e. the soviet system where "they pretend to pay and we pretend to work"), letting the government become the only landlord without any sub-divided and competitive land and property maintenance/management services on the ground would be disasterous to renters seeking good housing at reasonable prices. It is another competitive capitalist employer's ability and willingness to pay just a little more to hire you away that keeps your real wage up; likewise, it is another competitive landlord's offer of better housing at lower price that lets you get the bang for your buck on housing.
#housing