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| | |-+  A sensible property tax proposal
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Poll
Question: Would you support such a proposal as law?
Yes - 2 (18.2%)
No - 7 (63.6%)
I do not understand the proposal - 0 (0%)
I would support the proposal with slight modifications described in my comment - 1 (9.1%)
Other (see comment) - 1 (9.1%)
Total Voters: 10

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Author Topic: A sensible property tax proposal  (Read 32482 times)
Bogdan
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A sensible property tax proposal
« on: September 08, 2010, 03:57:55 pm »

Over the course of reading and being involved in the multiple discussions on property rights/property taxes/etc. I think I've recognized a set of ideals that most people would agree to uphold.

1) A person should not lose their home because their property taxes rose too much.

2) An entity should be deterred from gaining monopolistic power and undermining competitive land/housing market conditions

3) All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all.


With these ideals in mind, I offer the following proposal on property taxes...

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Protection from tax hikes
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To prevent people from losing their homes due to property tax hikes, I believe that property taxes should be paid at a predictable rate. In order to ensure this, property tax payments should be considered as part of the deed when property is purchased. If you buy property for $50k, you should know what your taxes will be for the property as long as you decide to hang on to it.

Of course this lends to an easy way to cheat--I sell you my house for $1, you sell me your house for $1, then we sell them back to each other for $1.01 and end up paying practically no tax. To avoid this, the tax amount can be determined based on estimated market value at time of sale, and then recorded into the deed.

So, if I sell you my house for $1 when other similar properties sell for $100k, you (the buyer) must agree to pay taxes for a $100k property  which is reflected in your deed. Even if market value later falls or rises, you will continue paying taxes at $100k (adjusted for inflation) until you either abandon the property or resell it.

This way when you agree to a purchase, you also consent to a certain compensation-to-society payment in exchange for their enforcement of your property rights--and you know exactly what that payment will be.

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Deterrent to monopolistic land-grabs
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I think as a society we should accept the fact that no peaceful system of wealth distribution is perfect. Doesn't matter if it is socialism, or capitalism, all systems will likely have a way for some to cheat the system and gain wealth disproportional to the "value" they provide to society.

Once we accept this as a postulate, we can assume that any entity which has gained a large portion of the wealth in a system has done so through exploiting a flaw in the system rather than by generating true value. Such entities are able to become powerful market forces which undermine equal opportunities for other members of society and discourage the members of society from producing real value to society.

In order to deter this sort of behavior, the tax rates should be adjusted based on the total value one entity accumulates as a percentage of the total value available in society. With property taxes, this means that as one entity purchases more and more property, it should be increasingly more expensive for other members of society to recognize and enforce their property rights.

If one entity approaches 100% ownership of all land value in a society, the compensation that entity pays to other members of society should approach infinity.

This is a clear disincentive to become "king" of the society through manipulating (even in unknown ways) whatever peaceful wealth distribution system is in effect.

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Equal land value for equal property rights recognition
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Since all willing members of society give consent to recognize and enforce the property rights of others over a collectively protected area, all members of society are therefore entitled to an equal share of the value of the collectively protected area.

Such value can be calculated by this simple formula:

Total Land Value / Population = Value per person

If the total land value were $1000 and society consisted of 5 individuals, each individual is entitled to $200 worth of land, and as such, will be exempt from paying property taxes if they own $200 worth of land or less.

If they do not own land--they do not receive monetary compensation as this is a choice made of their own volition. If they own more land than $200 worth, the first $200-worth of land is not taxed, the rest is taxed at a graduated rate as previously described.

This allows all people in society the right to work and earn enough money to offer it in exchange for some private property which is willfully traded by a property seller. Then the other members of society honor this peaceful transfer of property--although they collect compensation if the purchase price exceeded the "value-per-person".

----------------------------

Any feedback on this? It seems very reasonable to me... but maybe I've tried to compromise for everyone and ended up satisfying nobody 
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B.D. Ross
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Re: A sensible property tax proposal
« Reply #1 on: September 08, 2010, 05:02:59 pm »

I think I've recognized a set of ideals that most people would agree to uphold.
...
3) All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all.

I'm not sure "most people" would agree to that.
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Bogdan
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Re: A sensible property tax proposal
« Reply #2 on: September 08, 2010, 05:47:52 pm »

I think I've recognized a set of ideals that most people would agree to uphold.
...
3) All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all.

I'm not sure "most people" would agree to that.

"Entitled to own an equal share of total land value" means the "cost of ownership" is nothing. The "cost of acquisition" is the purchase price. If you own "your share" of land value, you do not have to bribe other members of society to recognize your rights. In return, they do not bribe you to recognize their rights.

This does not mean that you are entitled to a check from them, or "the gov't".

This does not mean that private property is seized and redistributed for free.

All this means is that up to a certain level of value, you can own land "freely"--not acquire it freely.
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B.D. Ross
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Re: A sensible property tax proposal
« Reply #3 on: September 08, 2010, 06:24:26 pm »

I think I've recognized a set of ideals that most people would agree to uphold.
...
3) All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all.

I'm not sure "most people" would agree to that.

All this means is that up to a certain level of value, you can own land "freely"--not acquire it freely.

I have a feeling people would look at what was written and think something very different about:

"All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all."

All this means is that up to a certain level of value, you can own land "freely"--not acquire it freely.

Why not just "let" them own all of it freely?
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Bogdan
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Re: A sensible property tax proposal
« Reply #4 on: September 08, 2010, 06:42:37 pm »

I think I've recognized a set of ideals that most people would agree to uphold.
...
3) All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all.

I'm not sure "most people" would agree to that.

All this means is that up to a certain level of value, you can own land "freely"--not acquire it freely.

I have a feeling people would look at what was written and think something very different about:

"All persons are entitled to an equal share of total land value as compensation for granting/enforcing the property rights of all."

It could certainly be reworded in a manner that express my intent more effectively. I'm not saying the law needs to look exactly like my forum thread; just needs to embody the ideas.

Quote
All this means is that up to a certain level of value, you can own land "freely"--not acquire it freely.

Why not just "let" them own all of it freely?

Ideal #2 is the main reason... but also to help finance things like 911.
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PJM
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Re: A sensible property tax proposal
« Reply #5 on: September 08, 2010, 07:52:26 pm »

What are the prerequisites to be a member of society?
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Bogdan
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Re: A sensible property tax proposal
« Reply #6 on: September 08, 2010, 08:10:33 pm »

What are the prerequisites to be a member of society?

Interesting question, but probably outside of the scope of this thread. The simplest prerequisite would be having enough money to rent/buy space in the area controlled by the members of the society you are joining.

So, if you want to join the "NH Society" you would pay someone who currently is a member by either buying some property from them, or by renting it from them.
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B.D. Ross
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Re: A sensible property tax proposal
« Reply #7 on: September 08, 2010, 08:21:11 pm »

Ideal #2 is the main reason... but also to help finance things like 911.

Point 2 shouldn't be a large concern. Land is not concentrated in private hands now. It likely won't be concentrated in the future. I don't understand why some people have this irrational fear that someone is going to "Buy up all the land". It's like the same reasoning behind invading Iraq.

Aaaaaaah, I remember when 911 was a service you paid for through your phone company...
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PJM
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Re: A sensible property tax proposal
« Reply #8 on: September 08, 2010, 08:41:36 pm »

Let's see if I have this right. If an entity purchases an extensive amount of land and is producing value ,such as a business that is employing and manufacturing, would it be subject to incrementaly higher taxes?
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Bogdan
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Re: A sensible property tax proposal
« Reply #9 on: September 08, 2010, 08:49:36 pm »

Ideal #2 is the main reason... but also to help finance things like 911.

Point 2 shouldn't be a large concern. Land is not concentrated in private hands now. It likely won't be concentrated in the future. I don't understand why some people have this irrational fear that someone is going to "Buy up all the land".


It's not concentrated as much now... we also have property tax now. We also rely on land as a source of income much less, therefore we are less desirous of it.

The fear of land monopolies is not at all irrational. It has happened before, and one can easily see how it would be advantageous to own land when there is zero cost associated with doing so.

In fact there is no logical argument that has ever been presented to me which would suggest a land monopoly or oligopoly would be impossible if there were no property taxes.

In my proposed system it's clear to see how a land monopoly would be VERY unlikely (might be possible far in the future when someone has colonized space and is extracting value from space mines in order to pay the huge taxes for owning 99.9% of the land back on earth)... but still... not a big concern now or anytime soon...

Land monopolies and feudalism is possible now, and has been possible ever since we can remember... and has in fact happened...

So... without taking steps to ensure it doesn't happen, why would one just assume it wouldn't?
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Bogdan
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Re: A sensible property tax proposal
« Reply #10 on: September 08, 2010, 08:58:10 pm »

Let's see if I have this right. If an entity purchases an extensive amount of land and is producing value ,such as a business that is employing and manufacturing, would it be subject to incrementaly higher taxes?


If an entity purchases an expensive property (the acreage doesn't matter, "value" is a reflection of market forces, not size) they would be subject to higher taxes.

If I was an entity, and I was about to purchase a property for $X amount of dollars, I would know that yearly my taxes would be $Y. Therefore I could calculate my profit margin and decide whether or not the purchase was worth my while.

If I see that the purchase is not worth my while, I simply don't buy it. If no other entity exists which is able to generate a profit at the asking price in the market, the seller can either keep it, or lower the price.

The lowered price results in a lowered tax rate, which might result in a profit margin for me, so I would then purchase the property and agree to the tax rate associated with the purchase price.

I think this would encourage business entities as they would have fixed/predictable tax costs... and predictability is vastly important in business.

Also since the tax rate is fixed, next year when the multi-million dollar high-rise goes in next door... the property taxes stay the same for you, so you stay in business instead of being driven out of town by the sale price of your neighboring businesses. (Of course so many people might want to buy your land next to the high-rise that you get an offer you think is worth selling for)

But, does that explain it a bit better?
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PJM
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Re: A sensible property tax proposal
« Reply #11 on: September 08, 2010, 09:30:55 pm »

Interesting proposal. An issue would be calculating the amount members are entitled to. As population changes and land values fluctuate the base amount will change. This could be difficult to keep up with.
  If you took the current population in NH today and valued its land at an average of $2000 an acre the base tax exempt figure would be around $8.60.
 
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PJM
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Re: A sensible property tax proposal
« Reply #12 on: September 08, 2010, 09:33:50 pm »

correction ,$8650
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John Edward Mercier
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Re: A sensible property tax proposal
« Reply #13 on: September 08, 2010, 09:41:33 pm »

Because the underlying services increase in cost... this isn't possible.
At the same time, I don't know why everyone continues to suggest that you can lose your home to property taxes?
The bottom of each tax bill references whom to contact should you be unable to pay the tax.

The reason for not owning a non-performing asset is opportunity costs. Why would I want to hold $1 billion dollars worth of land, even if it had no property taxes, instead of investing in something with a higher rate of return?

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Bogdan
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Re: A sensible property tax proposal
« Reply #14 on: September 08, 2010, 10:03:58 pm »

Because the underlying services increase in cost... this isn't possible.

If the amount taxed is adjusted for inflation, the cost of services should theoretically stay the same, right?


Quote
At the same time, I don't know why everyone continues to suggest that you can lose your home to property taxes?
The bottom of each tax bill references whom to contact should you be unable to pay the tax.

Because it happens all the time? Losing your home might not mean that you are raided by the SWAT team that evicts you. Usually people lose their home because their property taxes rise so much they have no other option but to sell their home and move elsewhere.

It's a pretty shitty thing to have to sell a home where you grew up and are raising your children just because a bunch of bankers from NY decided your small town makes a nice vacation property and built a bunch of mansions around you to raise your property value through the roof.


Quote
The reason for not owning a non-performing asset is opportunity costs. Why would I want to hold $1 billion dollars worth of land, even if it had no property taxes, instead of investing in something with a higher rate of return?

If you own enough land to manipulate housing markets, you will be getting a large return. If you own all the land in a town... everyone who lives there/pays you rent, which is a return.

Why intentionally structure the law to allow such a situation to exist in the first place?

If you are so sure it won't be possible just on its own, then what harm does the law do?

It's like objecting to a law that forbids someone to drive faster than the speed of light in NH. If it can't/won't happen anyway, then it doesn't matter if we make laws against it, right? Wink

What possible reason could there be to oppose such a law... other than hoping to be one of the people who takes advantage of manipulating markets through owning large tracts of land...?
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