Fair Tax Act

[Gulliver Foyle]

IMO that's the right way to go about it. If you spread the tax burden across income, assets and consumption then it's less easy to avoid taxation through tax avoidance measures.

For example, if all a taxes were raised through consumption taxes, those who could would buy assets through offshore entities and then lease the assets in a tax efficient way. The average Joe or Jane couldn't afford to do this and so, once again, the tax burden would shift to the struggling middle.

Yeah, the problem is we don't tax capital gains or wealth (especially top end inherited wealth) nearly enough as is. The top 10% of earners/owners are getting away with paying a far too small a share of any state's expenditure burden.

 

[Gulliver Foyle]

Providing free beverages to your employee might be fine. Office chair is probably fine as well. You might need internet to do business (pretty hard to avoid in this day and age) so that would be fine.

Trying to explain how Disney+ is a business expense might be more problematic.

TV Cricket.

 

[lionking]

To a developer, my land is worth 1.5 million, but it only costs me $1000 per year in taxes to live here.

The assessed value is $600k (single house on a suburban block).

Should I be forced to sell my home to a developer?
(Who will get the profit from building four multi-storey homes on this block)

(Note I was recently offered $800k to sell, but if anyone gets the benefit of redeveloping my home, it's going to be me. Why should I be forced to hand over that profit to a developer?)

Capitalists hate people like me that have assets that they can't exploit.

I know it differs from place to place, but the cost of redevelopment can be crippling, particularly if neighbours complain about the redevelopment destroying the quality of their lives.

I know many savvy people who own large blocks of land have put in requests for subdivision, and because they are often older people on pensions, are treated leniently by councils. They then sell the land with the development approval to the developer.

Another thing some people are doing in sought after areas are joining with neighbours and selling multiple blocks at a time, sometimes up to ten. Developers can have a picnic with that much land.

Sell the land for much more than their value and let the pros look after developments.

 

[The Great Zaganza]

The suggested scheme will turn owners into renters.

It will benefit the already rich. Just what we need more of.

you are presuming that people want to own real estate for the heck of it, not for the income it can generate.

 

[The Don]

you are presuming that people want to own real estate for the heck of it, not for the income it can generate.

Well in the UK most (just under 65%) properties are owned by the people living in them so yes, people own them for the heck of it, not for the income they generate.

19% of properties are private rentals.

17% are social rentals.

Under 1/5 of properties are owned by the "rapacious" landlords that you're attempting to manage through the ridiculous COST. A significant proportion of those properties are owned by people like Mrs Don and I (and many of our friends) who own a single rental and/or holiday property rather than large corporates.

edited to add...

The US home ownership level is slightly higher than in the UK at a little over 65%.

My 80-year old mother in law lives in the house that she and her husband had built in 1967 and is reluctant to leave it for a large number of reasons including the sheer volume of stuff that she has and the fact that she knows the house and knows that it's in great shape. She pays the property taxes assessed on it in full.

Why should she be kicked out of her house and have to find a new one because a property developer wants to pay one dollar over the assessed value and spend tens of thousands of dollars in transaction and moving costs ?

 

[TragicMonkey]

you are presuming that people want to own real estate for the heck of it, not for the income it can generate.

Most people want to own real estate so they have somewhere to live. It's jerks who want to make money off it that screw things up for everyone.

 

[The Don]

Most people want to own real estate so they have somewhere to live. It's some jerks who want to make money off it that screw things up for everyone.

At least IMO.

Mrs Don and I own a rental flat (apartment) and we consider it part of our retirement portfolio. It's the flat we lived in for almost 20 years before we moved out to Don Towers so we haven't done too much to skew the local property market apart from not releasing it onto the market. The (market) rent that we charge is approximately half of what it would cost someone to borrow 90% of the value of the apartment at current mortgage rates - which are still low by historical standards.

 

[TragicMonkey]

At least IMO.

Mrs Don and I own a rental flat (apartment) and we consider it part of our retirement portfolio. It's the flat we lived in for almost 20 years before we moved out to Don Towers so we haven't done too much to skew the local property market apart from not releasing it onto the market. The (market) rent that we charge is approximately half of what it would cost someone to borrow 90% of the value of the apartment at current mortgage rates - which are still low by historical standards.

Nope, your hands are dyed deep in the blood of the proletariat as you savagely beat elderly pensioners with gardening implements (you have the garden implements and use them to savagely beat, I mean, not that you are implement-less and savagely beating elderly pensions who themselves are holding gardening implements; in the latter scenario one wonders why they wouldn't defend themselves with them, it really makes it sound like if they're not making the slightest effort they almost deserve to be beaten) in order to create your evil real estate monopoly! Oh, it starts off small, with a single house. But then you get another, and then two more, then you trade them in for a hotel! Before we know it everyone else is bankrupt, in jail, or searching desperately for free parking! All so you can sip fancy tea out of your gilded chalice with emeralds and cabochon rubies (did you know the etymology of "cabochon" comes from "cabbage"? Meaning "head". I always thought it was related to blisters). I hope you feel deeply, deeply ashamed of yourself. Either that or yeah, I meant the real estate investment corporations and those "flipping" on a large scale. Irregardless, I really want to drink my tea from a chalice because that would look so awesome on my morning video meetings.

 

[ahhell]

At least IMO.

Mrs Don and I own a rental flat (apartment) and we consider it part of our retirement portfolio. It's the flat we lived in for almost 20 years before we moved out to Don Towers so we haven't done too much to skew the local property market apart from not releasing it onto the market. The (market) rent that we charge is approximately half of what it would cost someone to borrow 90% of the value of the apartment at current mortgage rates - which are still low by historical standards.

That's the thing about markets. Individual actors rarely have much impact on the market. Lots of individual actors doing similar things however....

Related note, California has a law generally referred to as Prop 13. Basically, property taxes do not increase on housing until the housing is sold. It is one of the many factors that have created the housing shortage there. Lots of old people squatting on houses meant for their family of 5 that no longer live there. I undertand the argumetn that its unfair to force them out of their houses. On the other hand, it reduces the supply of housing and its unfair to drive up the cost of housing for the young families out there too.

ETA, it basically has the same impact as rent control. Artificially lowering the cost of housing for those that already have it generally reduces the availability of housing for those that don't.

 

[JoeMorgue]

A certain point a difference in scale BECOMES a difference in kind.

One person owning one rental property isn't a problem.

Huge businesses scooping up properties the moment they hit the market is.

It's the difference between reselling and scalping basically.

 

[Solitaire]

Wouldn't this type of a swap in taxation focus cause a massive inflation spike?

I can see some individual rich guys wanting this but in general this
would slaughter the economy and consumer market businesses or
am I just missing the magical economic genius in this?

Everyone working at a business pretty much pays income taxes directly out of
their wages and they never see that money. In theory consumption tax should
equal the withholding the and their take home pay will remain the same.

So no inflation.

 

[The Don]

Everyone working at a business pretty much pays income taxes directly out of
their wages and they never see that money. In theory consumption tax should
equal the withholding the and their take home pay will remain the same.

So no inflation.

Prices would go up by X

Take home pay for most people would go up by less than X (due to the progressive nature of payroll taxes).

There would be inflation - it doesn't matter if wages keep pace, it's still inflation, indeed wages keeping pace would tend to exacerbate the situation.

Most people would however suffer a fall in standard of living.

Those with big salaries would come out ahead - which is the whole point.

 

[The Great Zaganza]

The problem of housing in the US is mostly due to the lack of Public Housing, which is a normal part of the housing market everywhere else, and the ability of small local governments to set their own rules about what gets to be built or not.
Rent Control wouldn't be necessary if the state just provided cheap housing for the poorest 1/3 of renters, thus giving the other renters a much stronger negotiating position in the supply/demand for housing.

 

[The Don]

The problem of housing in the US is mostly due to the lack of Public Housing, which is a normal part of the housing market everywhere else, and the ability of small local governments to set their own rules about what gets to be built or not.
Rent Control wouldn't be necessary if the state just provided cheap housing for the poorest 1/3 of renters, thus giving the other renters a much stronger negotiating position in the supply/demand for housing.

And a property tax regime which allows houses to be bought out from underneath owner-occupiers (nearly 2/3 of households) fixes this how ?

In any case, IMO you're thinking too small. The poorest 1/3 or rentals is only 10% of households.

 

[novaphile]

That's the thing about markets. Individual actors rarely have much impact on the market. Lots of individual actors doing similar things however....

Related note, California has a law generally referred to as Prop 13. Basically, property taxes do not increase on housing until the housing is sold. It is one of the many factors that have created the housing shortage there. Lots of old people squatting on houses meant for their family of 5 that no longer live there. I undertand the argumetn that its unfair to force them out of their houses. On the other hand, it reduces the supply of housing and its unfair to drive up the cost of housing for the young families out there too.

ETA, it basically has the same impact as rent control. Artificially lowering the cost of housing for those that already have it generally reduces the availability of housing for those that don't.

Squatting? In a house that they own?

A lot of bitterness in that one comment there.

I read that as "Old people should get out of the way."

How about "old people are allowed to enjoy the things that they worked and paid for" hmmm?

 

[Solitaire]

Prices would go up by X

Take home pay for most people would go up by less than X
(due to the progressive nature of payroll taxes).

There would be inflation - it doesn't matter if wages keep pace, it's still
inflation, indeed wages keeping pace would tend to exacerbate the situation.

Most people would however suffer a fall in standard of living.

Those with big salaries would come out ahead - which is the whole point.

Prices would rise by 30% in the form of a sales tax. The lower half of the
tax paying population earns on average 20,000 dollars and pays 4% on
their income plus 16% on social security and medicare taxes. So they
would get a boost in income of 25% if paid in full, leaving a 5% deficit.

Hm.

But the 5000 dollar rebate changes that calculation. But I have to subtract
out the earned income tax credit of 4000 dollars leaving a 5% increase in
income. A 30% rise in income with a 30% rise in cost, no change.

Hm.

But the one's with large incomes pay less in taxes? Something missing here.

Digs out a table.

The top 5% of income earners average 560,000 dollars a year and pay about
25% of their income, which works out to about 140,000 dollars in taxes a year.
Okay, if they don't spend as much as their income they come out ahead.

Hm.

What did we spend last year?

OMG!

6.272 trillion!

We need to implement the fair tax and keep the current income tax now!

 

[dudalb]

Apparenly, despite McCarthy's promises, it is going to die without getting to a vote.
It never had a chance; most House GOP did not like it.

 

[ahhell]

The ostensible "Market value" of anything is not always equal to the personal value (utility?) to the owner. If I really love my house, I might turn down millions to sell it.

In fact, it could be argued that's how any market economy works, even fundamental bartering. Two people trade something that are of approximately the same "objective" value, to the extent there is such a thing, but each of them values what they receive more than what they're giving up.

There's a name for that, endowment effect or ownership effect. Most people tend to overvalue things they own. With a house there's also the expense and nuisance of movie which mean you'd have to pay some amount more than I know my house is worth to move just because moving is a pain in my ass. My uncle advised us to buy a bigger house rather than spend money on a new deck because that would give us a better return on investment. Sure, but then I'd have to move and be in a new house where I wanted to change some other thing.

Anyrate, no tax regime is perfect they all have their pros and cons. Wealth taxes are generally a poor choice, mostly because they are the easiest to avoid.

 

[ahhell]

Squatting? In a house that they own?

A lot of bitterness in that one comment there.
I read that as "Old people should get out of the way."

How about "old people are allowed to enjoy the things that they worked and paid for" hmmm?

You're reading way to much into it.

Setting property taxes too high has negative consequences, setting them too low has negative consequences. That's all I'm saying, I just thought saying the were squatting a better turn of a phrase.

 

[Crazy Chainsaw]

Providing free beverages to your employee might be fine. Office chair is probably fine as well. You might need internet to do business (pretty hard to avoid in this day and age) so that would be fine.

Trying to explain how Disney+ is a business expense might be more problematic.

Research might make Disney a business expense, your researching the Mental defects caused by watching Fairtales, so Fox Fraud News would also be for business because it's all Fairly tales as well.