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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Wed Oct 13, 2010 9:13 am 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
I think this entire discussion may be somewhat off the mark (concentrating too much of public schools).

Why does tax exist? Because there are services you want the government to offer. And property tax needs to be one of the prongs because a simplistic tax system (income only or sales tax only) are too easy to game. If you no longer want the government to offer those services, vote in the people you want to cut those services.

I will just say that you should spend time in countries where tax is little or nothing to appreciate the difference government services and safety nets make. As an analogy, people grumble all the time about HOA fees. Guess what the buildings look like in countries without them? Run-down, dirty and resale value shot to hell. We are more interdependent than we realize -- the "I don't send my kids to public school so I shouldn't pay property tax" logic is too simplistic.

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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Wed Oct 13, 2010 10:17 am 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5275
MossySF wrote:
I think this entire discussion may be somewhat off the mark (concentrating too much of public schools).

Why does tax exist? Because there are services you want the government to offer. And property tax needs to be one of the prongs because a simplistic tax system (income only or sales tax only) are too easy to game. If you no longer want the government to offer those services, vote in the people you want to cut those services.

I will just say that you should spend time in countries where tax is little or nothing to appreciate the difference government services and safety nets make. As an analogy, people grumble all the time about HOA fees. Guess what the buildings look like in countries without them? Run-down, dirty and resale value shot to hell. We are more interdependent than we realize -- the "I don't send my kids to public school so I shouldn't pay property tax" logic is too simplistic.


You're right that we have focused a bit too much on public schools. I'm going to through out a little bit of a theoretical/philosophical argument and see what you guys think. The root need for taxation is to pay for government services. There are a wide range of government services.

Infrastructure and security - roads, bridges, courts, the legal system, customs and immigration, homeland security, and anything like this that make it possible for the nation to produce goods and services. These things provide a return that is enjoyed and used by everyone. Some people enjoy certain parts more than others but in general the nation benefits. For the most part these things are paid for out of the general fund (at each government level. Roads and bridges are often paid for by gas taxes because that at least partly charges more to the higher users.

Generally infrastructure and security are part of the capital stock of the country. It makes sense to me to pay for these out of income tax. In years when GDP and incomes are high we can afford to build to the capital stock. In lean years we should cut back on that. (We'd have cut back now except that the jobs created by building highways and bridges is stimulative.)

Property taxes are collected locally and should be used to build and maintain the local infrastructure. Rich areas with high property values naturally have higher taxes and more money to spend on better infrastructure (including schools.) Since income and sales are dependent on the economy it makes little sense to me to subject infrastructure maintenance funding to the variation.

It seems to me that property taxes should be collected and used to pay for the infrastructure that we need to keep going (though not necessarily add to) regardless of the state of the economy.

Income taxes are a direct tax on current production. It must be recognized that anything funded by income taxes should be on the chopping block during recessions.

Sales taxes charge people for consumption. Similar to income taxes, they should only be used for things that can be cut when times are difficult.

In reality most states and localities fund operations from property and sales taxes. The federal government operates mostly from income taxes.

I don't think our current tax regime in the US is unreasonable. I think most of us would agree that it should be tweaked in many areas but I doubt we could ever agree on exactly how.

The only way to reduce taxes overall and long term is to reduce government spending. That's not a political statement, that's an accounting fact. Whether government is paid for by sales taxes, property taxes, or income taxes really comes down to who you want to pay.

If you are just starting out your consumption is probably high compared to your income as you build your personal infrastructure. A sales tax is the worst thing for you. When you buy a house and finish furnishing it you move on to paying down the debt. You stop consuming so much. Your income rises but your deductions (kids, mortgage interest) do to. An income tax is great for you. Sales taxes are not so bad. But your property taxes on that McMansion might be staggering in comparison

Once you get older, have the mortgage paid off, makes tons of money from salary and investments, you start to like a national sales tax or a flat tax because it would shift the tax burden away from you. After all, you already have everything you need so you won't pay much sales tax. Plus, yachts, luxury cars, private jets, and homes after your third will be exempted from the sales tax because they are stimulative or because the sale takes place in an offshore jurisdiction.


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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Thu Oct 14, 2010 12:32 pm 

Joined: Wed Mar 26, 2008 1:35 pm
Posts: 437
Location: USA
Those this may be a bit of chicken and egg, those who may not have children but live in an area of good schools, have their houses appreciate more than comparable areas. There is demand for living in that area. So you can thank those darn kids (and school) for increasing the sale price of your home. If you are single/dont have kids and hate those high property taxes, simply move to an area/school district that has worst schools. You don't have to worry about the quality of the schools and the houses will be cheaper so you will pay less in property taxes. Ta da! Problem solved.

If you are complaining of paying high property taxes because you are a dink and the two of you live in a mcmansion, sorry, no sympathy. That's a lifestyle choice.


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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Thu Oct 14, 2010 12:39 pm 
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partgypsy wrote:
If you are complaining of paying high property taxes because you are a dink and the two of you live in a mcmansion, sorry, no sympathy. That's a lifestyle choice.


I for one have never been bothered by property taxes for schools. My only issue is with whether the school squanders the money. The property taxes where I live are about average but the school district is unbelievable wasteful.

I think you make a good point about property near good schools having a higher value.


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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Thu Oct 14, 2010 1:27 pm 

Joined: Wed Mar 26, 2008 1:35 pm
Posts: 437
Location: USA
The biggest predictor I think is whether the parents are involved, both in the school (pta, planning committees, etc) and personally with the child (accountability, expectations, role models etc), second is the general community values/atmosphere. So yeah the school system can spend alot of money without much in the way of improvement because of the parents and community or lack there of. Personally in general I think this society (US) places very little value on education, judging by my daughter telling me about hot topics in school being silly bands, playing cards, computer games, other "stuff" versus what she considers interesting.

I don't really have a good answer. It's more of a societal problem than a "school" problem. I wish I knew how to solve it. Believe me, just trying to "motivate" my 2nd grader to do homework, every evening I know how much work is involved to educate a child :@ (I personally think daily homework is a bit much for 2nd grade)


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 Post subject: Re: Why do Property Taxes still exist?
PostPosted: Thu Oct 14, 2010 1:39 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5275
partgypsy wrote:
The biggest predictor I think is whether the parents are involved, both in the school (pta, planning committees, etc) and personally with the child (accountability, expectations, role models etc), second is the general community values/atmosphere. So yeah the school system can spend alot of money without much in the way of improvement because of the parents and community or lack there of. Personally in general I think this society (US) places very little value on education, judging by my daughter telling me about hot topics in school being silly bands, playing cards, computer games, other "stuff" versus what she considers interesting.

I don't really have a good answer. It's more of a societal problem than a "school" problem. I wish I knew how to solve it. Believe me, just trying to "motivate" my 2nd grader to do homework, every evening I know how much work is involved to educate a child :@ (I personally think daily homework is a bit much for 2nd grade)


We help send my niece to a fairly expensive private school. The school spends about 1/3 LESS per child than the public school system here. The classrooms are in mobile trailers and are nothing special. The teachers are good but are not paid particularly well - less than the public schools.

The only difference I see it with the parents. They are involved and supportive of the school. And discipline problems are not tolerated. Oh, and when we drop her off at school in the morning, it's not Rolls Royces and Bentleys the parents are driving...there are a lot of contractor's pickups and that sort of thing.

Seeing that has made me firmly believe that money has nothing to do with the quality of education.


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