Not just from the perspective of “tax the rich”, but does this even make sense in theory?
I think it’s kind of ridiculous that even after you’ve paid off your mortgage, you can still be literally priced out of your home because property tax is based on the current valuation of your home (more or less).
I don’t get this whole taxation in perpetuity thing (on a variable property value no less).
I mean sure. But I meant from a theoretical standpoint, how did taxing property even make sense to begin with? Like, you already paid the excise/sales tax when you bought the house.
Just seems weird that you can literally be forced to sell your home BECAUSE OF YOUR HOME even after you’ve fully paid for it.
When you buy property, you are also buying into a property tax that you will have to pay in perpetuity.
Yes, I know, adulting is hard.
And you are not following on to the natural corollary. In most places, the biggest component of property tax is paying for public schools. Old people who have paid off their house are naturally pretty pissy about having to pay for schools because they have no kids in those schools.
Also, it is dumb to pay off your house. Always keep a mortgage, a fixed rate mortgage. Suse Orman is wrong. A mortgage provides inflation protection.
Okay, that makes sense…I guess. Not sure it should be on current valuation though. It’s too much like taxing on unrealized capital gains which you can’t liquidate, not to mention you have to then get taxed on realized gains (>250k) when you sell.
But I get it.
Eh, I did get the memo. I’ve owned 3 houses. I’m questioning the rationale behind it, not whether or not I need to do it.
And my question was “why”
For me it was quite easy. But I brought this up because I read an article saying people literally can’t afford to pay their property taxes when a tech hub moves in. That bothers me. I don’t like people being forced to move when they own their homes 100%.
As noted earlier, states/municipalities use some combo of taxes on income, property, and sales to generate revenue. I don’t know why taxing property is any more or less fair than the others, particularly for municipalities where many services are tied to where you reside.
I do think tying school funding to property tax has been a generally harmful practice though.
What do you think would be a better way? Tie school funding to sales tax? So if there’s a lull in the economy there is no money to pay teachers? Or people drive out of town to buy their cars and appliances so they don’t have to pay a local sales tax?
the extremely local version of property value-based funding fuels a cycle where areas with low poverty values/low economic development have fewer funds for schools. or very high tax burden as a percentage of value.
if broadened to whole state prop as the basis, then sure, totally sound basis for that state IMO.
Which is why the funding model is mostly that school funding is a function of both state tax funded (from state income tax revenues) and local property tax.
A poor rural area gets by with the state funded portion and relatively little from the local property tax revenue.
A upper middle class suburb decides (votes) to increase property taxes on themselves to buy a better-than-state-minimums education for their kids.
In my state, the threat has been that the state will take away the state funded portion of the revenues from school districts that have local revenue. In other words, education funding becomes a welfare situation/transfer tax.
Ownership is a right protected by the state. The cost of that protection should be directly associated with the property being owned.
The value of property is dependent on the value of other close associated property and the services and support provided to the property. Associated owners can choose to pool costs for services to increase the value of all properties.
The real world application of providing protection or pooling costs of services are not necessarily direct as the ideal.
The result is that that on average 144 people per day are deciding to move out of the state. It’s not the poor people leaving. It is the people who have education and career mobility. The result is that things gets worse for those left behind.
If you increase taxes, tax revenues go down and you are in worse shape than when you started. Look it up here: Laffer Curve Definition
I am all for a billionaire’s tax on wealth (because billionaires have very little income). But if we passed a billionaires tax, do you think Bezos and Gates would stick around and pay it or move out of the country?
This is where I have trouble. I feel like a retired couple who bought their house for $150k 30 years ago which is now worth $1.5M should not be paying property tax on $1.5M. They literally would not be able to. There needs to be some rules planned around this situation.
I can agree with all of that, a little more convulted but more egalitarian in the end. Although estate taxes, I figured by context it would be on amounts above $X. Not going to take a portion of the $2000 somebody passes on, lol.