California Fires

[uhhello]

48 minutes ago, Smokin said:

And much like the Federal government, I doubt the surplus to deficit transition had nearly as much to do with tax revenue as expenditures.

They lost 25% their personal income tax base in 2023.  Don't understand why people would want to leave.....

California Lost $102 Billion in Income Due to Migration of Taxpayers, Tax Data Shows. More than $102 billion in income left California from 2020 to 2022 as people migrated to other states, according to IRS data cited in a July 31 report from the Legislative Analyst's Office

[ViperMan]

7 hours ago, Lord Ratner said:

That's a pretty hot take. The problem in California was that they didn't have enough tax money? 

I think at this point it's pretty obvious that there's nowhere in the country that doesn't have enough tax money. It is purely and entirely a function of choosing to spend it on the immediate gratification of social programs and neglecting the boring and unrewarding work of preventing catastrophes. 

"No one cares about the bomb that didn't go off." -Tenet

I don't disagree, but focusing on what's listed on paper is missing the point. I'm sure if I looked through their books the majority of their expenditures would be misallocated. That doesn't address the collection problem, however, or the actual deficit that is reflected in the way this disaster has unfolded. Much of CA's property tax base winds up in the pockets of private owners due to prop 13. No other state I'm aware of has a property tax policy which directly and systematically under funds their government quite like this one does. That has consequences over the long run - ones we are seeing right now.

The point I was making was more along the lines that if you design a tax policy around not collecting taxes from the people that live in your state, you're going to eventually run into the consequences of said tax policy. In this case I'm just pointing at prop 13 as having the largest / outsize impact on creating a massive accumulated deficit CA has avoided contending with. They may have had a "surplus" on paper for numerous years. Maybe now they have a "deficit." Politicians may have touted said surplus and maybe even some of them felt pretty good about themselves and got some kudos from their voter base. I bet it felt good to them. Maybe they had a $100 Bajillion dollars surplus in their Excel sheets or PowerPoint slides. Cool. It's an illusion. It's a number on a piece of paper. It means absolutely nothing. Reality keeps the actual balance sheet.

The truth is that there is a real, actual, physical, literal deficit buried in the ground, reflected by their crumbling infrastructure, empty reservoirs, ineffectual government, understaffed agencies, man-made drought due to policy choices favoring industries over citizenry, etc, etc. It took many 10s of years to create a problem this big. Running California properly costs a lot more than they spend. Too many people live there who "tax" the system without paying into it. That's what I'm talking about. That's the deficit that builds and builds over decades due to tax policy like prop 13 and which allows the party to continue right up until the balcony collapses.

This is that kind of deficit.

Or, if you like, you can look at it like this: all the insurance money and construction costs that are going to be incurred over the next number of years "rebuilding" CA was the actual deficit they weren't carrying on the books. At a minimum. Now start doing that math on all the other mismanaged forest or grassland in CA that's all still waiting to go up in smoke. You'll start to get an idea about how far behind they truly are.

*Note: nothing in this post should be construed as desire to increase taxes on "us" - we all pay too much as it is.

Edited 19 hours ago by ViperMan

[Lord Ratner]

6 hours ago, ViperMan said:

That's the deficit that builds and builds over decades due to tax policy like prop 13 and which allows the party to continue right up until the balcony collapses.

*Note: nothing in this post should be construed as desire to increase taxes on "us" - we all pay too much as it is.

While mathematically you're making a fairly obvious argument (if you increase your spending without increasing revenue, you will have a debt), the point is rather oblique. 

Prop 13 is not and has never been the problem. Prop 13 is maybe the only ethical element left in the California tax code. The repeated taxation of owned property is unethical. Full stop. Yeah I know property tax is a deeply enmeshed element of American government, but that doesn't change the core unethical nature of it as a wealth tax, which is why every state has had to grapple with that unethical argument in unique and inadequate ways. In California, the answer is prop 13. In Texas, they freeze your property tax when you turn 65. But both of those are bandages for the inherent unsustainability of taxing people on something they responsibly purchased merely because other irresponsible people irresponsibly purchased other property at irresponsible prices.

 

California has one of the largest tax revenues in the world. It is purely and entirely a function of their desire to spend that revenue on social projects and other non-returning ventures. I know that you also criticize the excesses of liberal government, but to even suggest that prop 13 is responsible is to adopt the very justifications that they have used to put themselves in this situation in the first place.

 

The "collection problem" does not exist if there is no allocation problem. 

12 hours ago, uhhello said:

they went from a $100 buh billion surplus to a $45 buh billion deficit in two years.

The surplus was a one-off artifact of an insane stock market rally.

The deficit is partially, as noted, a function of migration. However migration includes people leaving, which should lower the burden on services costs in a well-managed economy. Obviously we all know California is not well managed.

 

12 hours ago, Smokin said:

And much like the Federal government, I doubt the surplus to deficit transition had nearly as much to do with tax revenue as expenditures.

It's both, as always. One of the cute things about government is anytime they get an increase in tax revenues, they reformulate expenditures to use every penny of it. Then when the one-time increase goes away, they act as though that was the baseline.

[brabus]

Disclaimer: I hate taxes as much, or more, than everyone else on here. 
 

Question: Lets say property taxes went away, along with our current federal and state tax system, and we went to a flat income tax or simply a use/goods tax.

How are infrastructure and gov services (at state level primarily thinking transportation-related infrastructure and support, LE, EMS) funded? Take yourself out of a large city into most of America - do you toll every road in existence for “use tax?” (can’t imagine the undertaking of such a massive project). Is the Sheriff’s Office revenue generated only by a per-response payment (e.g. I called 911 and now get a bill for the SO showing up? I did use them…)  These are just two illustrations for discussion and far from an exhaustive list.

I don’t like our current property tax system, but I haven’t heard a good alternative for the above questions, and admittedly haven’t spent much time brainstorming one. When people yell “taxation is theft,” I get it, but what’s your solution to things like the above? 

Edited 11 hours ago by brabus

[ViperMan]

1 hour ago, Lord Ratner said:

While mathematically you're making a fairly obvious argument (if you increase your spending without increasing revenue, you will have a debt), the point is rather oblique. 

Prop 13 is not and has never been the problem. Prop 13 is maybe the only ethical element left in the California tax code. The repeated taxation of owned property is unethical. Full stop. Yeah I know property tax is a deeply enmeshed element of American government, but that doesn't change the core unethical nature of it as a wealth tax, which is why every state has had to grapple with that unethical argument in unique and inadequate ways. In California, the answer is prop 13. In Texas, they freeze your property tax when you turn 65. But both of those are bandages for the inherent unsustainability of taxing people on something they responsibly purchased merely because other irresponsible people irresponsibly purchased other property at irresponsible prices.

California has one of the largest tax revenues in the world. It is purely and entirely a function of their desire to spend that revenue on social projects and other non-returning ventures. I know that you also criticize the excesses of liberal government, but to even suggest that prop 13 is responsible is to adopt the very justifications that they have used to put themselves in this situation in the first place.

The "collection problem" does not exist if there is no allocation problem. 

The surplus was a one-off artifact of an insane stock market rally.

The deficit is partially, as noted, a function of migration. However migration includes people leaving, which should lower the burden on services costs in a well-managed economy. Obviously we all know California is not well managed.

It's both, as always. One of the cute things about government is anytime they get an increase in tax revenues, they reformulate expenditures to use every penny of it. Then when the one-time increase goes away, they act as though that was the baseline.

You didn't respond to the point I'm making though. I'm not disputing these things:

• Property tax may be an unethical manner for states to tax inhabitants - I have not challenged this in my previous post.
• California (and most other governments) absolutely misallocate their funds on social projects, climate "justice," saving the fish/squirrels, et al. They do this to the massive detriment of other, more important spending - like infrastructure.

So on those topics we can agree - or at least not disagree directly.

No, my point is that prop 13 has been a boon for certain property owners to the detriment of others, which is why it has become so entrenched. And the unintentional side effect of this has been to create a massive deficit in CA's budget, one which is mostly hidden, because people who don't live there don't understand how CA's unique property tax exclusions work. And others don't understand how much more expensive it would be to live there if tax burdens were equalized.

For instance, take two properties and compare them side-by-side. They're neighbors in San Francisco.

45 Liberty

23 Liberty

Google street view

If you compare them on google maps, you'll see they're effectively the same property.

One of them pays a yearly tithe to the state of $50,400. The other pays a yearly tithe of $1,800. That differential, of $48,600, accumulates over time, but it never shows up on any balance sheet. This is the actual, real, deficit I'm talking about. In the next 10 years it'll amount to a half a million dollars (more with interest) - and that's just between two neighboring properties. The aggregate effect of this massive, marginal under-taxation, is to generate insurmountable, unimaginable debts. I bet if you integrated a function like that, the total, hidden, debt would be in the hundreds of billions, even trillions of dollars over the last number of decades. These are the type of debts that insurance companies can't pay. The type of debts that lead to increased insurance premiums for people who don't even live in California. The type of debts that lead to the cost of eggs tripling and people wondering 'why'. The type of debts that lead cities and towns to make system level choices when it comes to allowing their infrastructure to collapse. The type of debts that bankrupt states. In essence, CA has been writing checks its politicians couldn't cash.

Yes, CA budgets their money incorrectly. It is also true that prop 13 has turned the state into a real estate cartel. One in which long-term owners are the ones pocketing property taxes that would otherwise go to fund the state's infrastructure, or would otherwise operate to prevent people who live in CA currently from living there because they can't afford its actually cost thereby preventing the debt from accumulating in the first place.

// Break //

I am not arguing that taxes need to increase in CA. I am not arguing that property taxes are fundamentally 'fair' or 'unfair'. Those are separate discussions. I'm pointing out that the property tax system in CA is fundamentally and uniquely different than in every other state I'm aware of wherein people who own similar properties pay massively different (10X or sometimes 100X) tax bills. See the above for proof.

So no, prop 13 is not ethical - it's one of the most insidious, discriminatory, and unethical laws in operation in our society, and we're witnessing it bear fruit right now. But because it has complex, hidden effects, grants certain people massive (and legal) $ arbitrage, it's simultaneously a very easy law whose effects are easy to obfuscate and also one that gets a lot of people to stand in defense of because they benefit from it directly.

It's also a reason I scoff when people say that CA contributes more to the federal tax base than any other state. Yeah, right, so long as you ignore the enormous hole they dig themselves deeper and deeper into year after year by passing and keeping laws like prop 13.

[Lord Ratner]

1 hour ago, ViperMan said:

You didn't respond to the point I'm making though. I'm not disputing these things

Sure I did:

3 hours ago, Lord Ratner said:

The "collection problem" does not exist if there is no allocation problem.

 

1 hour ago, ViperMan said:

And the unintentional side effect of this has been to create a massive deficit in CA's budget, one which is mostly hidden, because people who don't live there don't understand how CA's unique property tax exclusions work.

Your entire post is premised off this statement, and the statement is entirely false. A deficit is never a result of too little income. It is a result of too much spending. That's the short version of why your entire post is wrong. You frame it in the most progressive way imaginable, which is surprising coming from you. Prop 13 was a revolt against high taxes. It accomplished it's goal. 

 

1 hour ago, ViperMan said:

my point is that prop 13 has been a boon for certain property owners to the detriment of others

Correct. Those who properly budgeted for purchasing a house to account for being able to afford property taxes that can not be increased beyond their capacity to pay due entirely to the purchasing habits of others. No one in CA is being discriminated against. If you think your neighbor should have higher taxes because *you* paid more to buy a home, you are the problem. 

 

Please, tell me what things you own, completely and without debt, that you should be priced out of because other people decide they want it more at a later date. Your car? Your clothes? 

1 hour ago, ViperMan said:

The aggregate effect of this massive, marginal under-taxation, is to generate insurmountable, unimaginable debts.

Again, it's *never* under taxation. There is only taxation. The "over" and "under" can only be applied to spending. You are framing this like a liberal. Debt never happens without spending, regardless of the revenue. Ever. 

1 hour ago, ViperMan said:

In essence, CA has been writing checks its politicians couldn't cash.

No shit. "Writing checks," even your analogy supports my point. writing checks is *spending*

Besides, you can run the experiment in other liberal states with no Prop 13 analog. Both New York and New Jersey have deficits. No Prop 13 to lean on. Just look at the spending per captia of CA, which has nothing to do with revenue:

https://en.wikipedia.org/wiki/List_of_U.S._state_budgets

CA: $7,634

NY: $6,746

TX: $3,573

FL: $3,476

1 hour ago, ViperMan said:

It is also true that prop 13 has turned the state into a real estate cartel

Lol, a cartel? You need to elaborate on this one, and explain how the exploding real estate markets in Texas, Arizona, and Florida, all areas with devastating price increases and massive institutional buying, are somehow different. Be sure to account for California's decades-long attack on development and growth.

1 hour ago, ViperMan said:

One in which long-term owners are the ones pocketing property taxes that would otherwise go to fund the state's infrastructure, or would otherwise operate to prevent people who live in CA currently from living there because they can't afford its actually cost thereby preventing the debt from accumulating in the first place.

Again, unbelievable framing. Long-term property owners are "pocketing" property taxes? Who's? Yours? Did your taxes go up because of them? Nope. This is some Bernie Sanders level philosophy. It was their money to start with. They bought a house they could afford with a tax burden they could afford. Now because other people are *voluntarily* buying homes at higher prices, the long-term owners are "pocketing" taxes? Incredible. 

1 hour ago, ViperMan said:

So no, prop 13 is not ethical - it's one of the most insidious, discriminatory, and unethical laws in operation in our society, and we're witnessing it bear fruit right now.

Honestly it's stunning to see an alleged conservative misdiagnose the problem in California so thoroughly as to become progressive in the course of doing so. 

Even more alarming is what your entire premise leads to. There is only one logical solution to the deficit if the true problem, as you suggest, is under taxation. If you are making the argument that a limit on taxation leads to deficit spending, and deficit spending is ignored by the tax payers, leading to huge debts that explode in the future, and that increasing taxes would somehow limit deficits through public outrage... just look around. Higher revenues don't result in lower deficits unless the higher revenues are acute and unexpected, such as the 2021/2022 tax years. And the government is a goldfish, it will grow to fill whatever size tank you put it in.

Look at the federal budget... Even with record revenues and exploding GDP growth during the pandemic, our spending/GDP is at record levels.

Prop 13 is one of the purest expressions of limited taxation enacted by a population, and it is especially relevant because it limits an already-immoral form of taxation: wealth taxes. You are suggesting that not only is the wealth tax ethical, it should be unconstrained. 

Also, using the word "discriminatory" in this context is wildly dishonest. Who is being discriminated against? What is the characteristic targeted in this discrimination? An old couple on fixed income that has lived in the same home for 60 years, bought it when it was affordable and budgeted for the associated taxes, and have decided they would rather stay in their home then make the huge amount of money they would get from selling it, are discriminating against you and I because... what? We were born later? They should have to move to a cheaper state because *you* want more money for the state to spend?

Edited 9 hours ago by Lord Ratner

[Lord Ratner]

2 hours ago, brabus said:

Disclaimer: I hate taxes as much, or more, than everyone else on here. 
 

Question: Lets say property taxes went away, along with our current federal and state tax system, and we went to a flat income tax or simply a use/goods tax.

How are infrastructure and gov services (at state level primarily thinking transportation-related infrastructure and support, LE, EMS) funded? Take yourself out of a large city into most of America - do you toll every road in existence for “use tax?” (can’t imagine the undertaking of such a massive project). Is the Sheriff’s Office revenue generated only by a per-response payment (e.g. I called 911 and now get a bill for the SO showing up? I did use them…)  These are just two illustrations for discussion and far from an exhaustive list.

I don’t like our current property tax system, but I haven’t heard a good alternative for the above questions, and admittedly haven’t spent much time brainstorming one. When people yell “taxation is theft,” I get it, but what’s your solution to things like the above? 

Too many confounding variables. 

First, income taxes, sales/use taxes, and wealth taxes (property tax) are all different concepts. The effects of adding or removing them changes based on which ones you change. You suggest two workable options.

2 hours ago, brabus said:

How are infrastructure and gov services (at state level primarily thinking transportation-related infrastructure and support, LE, EMS) funded?

No different than they are now. With revenues. You can use already collected revenues (either of the three sources), or issue debt and use future revenues to pay  off the debt. The problem with debt isn't the debt itself. Alexander Hamilton understood how good debt could be, and we are a powerhouse because of it. It is *what* you spend it on. The things you ask about are not why we are broke. 

 

2 hours ago, brabus said:

do you toll every road in existence for “use tax?” (can’t imagine the undertaking of such a massive project)

We came up with a solution to this. Fuel taxes. they have had to be adjusted, and electric cars have presented another opportunity to adjust, but it is a very simple way to tax those who use the roads in a fairly consistent manner. 

2 hours ago, brabus said:

Is the Sheriff’s Office revenue generated only by a per-response payment (e.g. I called 911 and now get a bill for the SO showing up? I did use them…)  These are just two illustrations for discussion and far from an exhaustive list.

Yeah, that would be strange. But I'm not sure why income or sales taxes couldn't pay for these services. That's a separate conversation from property taxes. 

2 hours ago, brabus said:

When people yell “taxation is theft,” I get it, but what’s your solution to things like the above? 

Taxation is not theft. If you are pointing that question at me, I never made that claim. What I said is that "property tax is unethical." And I believe that any tax that is unpredictable is immoral. If there is a tax that will exist in a perpetual recurring state (which is already questionable), you should be able to predict the maximum amount of that tax for every single year that you may be paying it from the time of the imposition of the tax. 

So in the case of California, when you buy a home, you know that the tax will be x% of the price you paid, and it will never go up more than 2% per year. 

Edited 9 hours ago by Lord Ratner

[brabus]

@Lord Ratner First, just want to clarify I’m not directing these questions at anyone in particular, or necessarily because of anything written in this thread. I just see it as linked to the thread discussion and I’m genuinely curious at what thoughts are out there to re-do the tax system without heavy, unintended consequences. I suppose it could be its own thread, so understand if a mod wants to do that. 

With that said, obviously the quoted replies below are for you, but don’t take them as spears, just interested in the dialogue and wanting to see what’s out there that I haven’t thought about.

2 hours ago, Lord Ratner said:

No different than they are now. With revenues.

I understand the generalities revenue/debt discussion, but how do you generate enough revenue when property taxes vanish? That would be a massive loss of revenue, of which most states rely on for education, infrastructure, and public service funding. I don’t think my paid sales tax at Lowe’s is going to cover the spread. I know we could go down rabbit holes of fuck funding public education if I homeschool, etc., but let’s not get into weeds and focus on the bigger pic discussion.

2 hours ago, Lord Ratner said:

We came up with a solution to this. Fuel taxes. they have had to be adjusted, and electric cars have presented another opportunity to adjust, but it is a very simple way to tax those who use the roads in a fairly consistent manner. 

That makes sense generally. Though an unintended consequence is you would be effectively punishing people who live more rural (and people who drive for business, unless they maintain that deduction capability). That said, I guess I wouldn’t care that much if I also was not paying any property tax. 

2 hours ago, Lord Ratner said:

But I'm not sure why income or sales taxes couldn't pay for these services

We all need EMS/LE equally, so why do I have to pay a higher percentage simply because I earn more/purchase more? My wealth has nothing to do with my need level for EMS/LE. Under current system, everyone except the homeless pay property taxes (including renters, as every landlord factors that into the rent amount), thus funding these departments through property taxes is probably about as fair as you can make it…i think, of course I’d love to hear another way to fairly fund without using the large revenue stream of property taxes. 

 

2 hours ago, Lord Ratner said:

If there is a tax that will exist in a perpetual recurring state (which is already questionable), you should be able to predict the maximum amount of that tax for every single year that you may be paying it from the time of the imposition of the tax. 

So in the case of California, when you buy a home, you know that the tax will be x% of the price you paid, and it will never go up more than 2% per year. 

Agreed. I’d love to see property tax go away, it’s bullshit. But I also bring up the above questions because I don’t have a great answer for how to generally fund the things I mentioned at the state/county/town levels. I don’t think sales tax is going to cut it, unless maybe sales tax becomes insanely high to the point we crush our economy in an attempt to kill property tax.

I hear a lot of people (not you or anyone specific on here) yell about getting rid of property tax, and no they don’t want it replaced with a high sales tax, but also assumedly they don’t want to revert to 1800s level roads, utilities availability, basically zero LE/EMS services, etc. 

 

Edited 6 hours ago by brabus

[Lord Ratner]

No worries at all. Just want to make sure my position is clear, I am not anti-taxes.

2 minutes ago, brabus said:

I understand the generalities revenue/debt discussion, but how do you generate enough revenue when property taxes vanish? That would be a massive loss of revenue, of which most states rely on for education, infrastructure, and public service funding. I don’t think my paid sales tax at Lowe’s is going to cover the spread. I know we could go down rabbit holes of fuck funding public education if I homeschool, etc., but let’s not get into weeds and focus on the bigger pic discussion.

Personally, I would just boost consumption taxes into the stratosphere. If that makes the public lose their mind, great. People should know what governing costs. However, if we accept the "necessity" of a wealth tax, then it must be set at the time of taxation. So, whatever you paid for your house is what you will be assessed at. This is Prop 13 in a nutshell. 

More broadly, however, we need to cut the budget in half, at a minimum. We simply pay for too many things that we don't need to pay for. But that's not a taxation problem, that's a political/voting problem, and outside the context of the discussion.

It's not a coincidence Elon is in charge of DOGE. Twitter was a shot across the bow for every organization on Earth. Cutting 80% of your staff without changing the function of the organization reminded a whole lot of lazy capitalists that just because you are spending resources on something doesn't mean it's contributing to anything.

 

 

7 minutes ago, brabus said:

That makes sense generally. Though an unintended consequence is you would be effectively punishing people who live more rural (and people who drive for business, unless they maintain that deduction capability). That said, I guess I wouldn’t care that much if I also was not paying any property tax. 

That's not really a punishment though. They need the government funded roads more, they pay more. That is offset by many reduced costs in rural areas. 

8 minutes ago, brabus said:

We all need EMS/LE equally, so why do I have to pay a higher percentage simply because I earn more/purchase more? My wealth has nothing to do with my need level for EMS/LE. Under current system, everyone except the homeless pay property taxes (including renters, as every landlord factors that into the rent amount), thus funding these departments through property taxes is probably about as fair as you can make it…i think, of course I’d love to hear another way to fairly fund without using the large revenue stream of property taxes. 

Renters don't pay property taxes. Using that logic reduces all transactions to community purchases. Landlords charge what the market allows. If that covers property tax, great, but there is no mechanical reason why it has to. A parent renting to a child might be losing money on the transaction. A landlord who signed a 10 year lease doesn't get to raise the rate mid-term because the taxes went up. So no, renters don't pay property tax. But I'm not 100% sure what point you're getting towards, as I have never argued for a pure use-based system of taxation. Further, we do not in fact need EMS/LE equally, but again, I'm not sure that rabbit hole gets anywhere useful. 

14 minutes ago, brabus said:

Agreed. I’d love to see property tax go away, it’s bullshit. But I also bring up the above questions because I don’t have a great answer for how to generally fund the things I mentioned at the state/county/town levels. I don’t think sales tax is going to cut it, unless maybe sales tax becomes insanely high to the point we crush our economy in an attempt to kill property tax.

Why would it crush the economy? The people paying the highest property taxes are the ones paying the highest sales taxes (nominally). You would have to make allowances for the poor, which I endorse, and you actually have a more controllable way of helping the poor without creating loopholes for the rich. Here are some basic examples of sales-tax-only rules to cover social considerations:

• No sales tax on grocery store food purchases (limit on max exempt transaction amount)
• No sales tax on school supplies in August/Sept (many states do this already)
• No sales tax on the first $x,xxx of rent 
• No sales tax on the first $x,xxx of a vehicle purchase
• No sales tax on daycare

You put caps on these exemptions to prevent some billionaire from sending their kid to a $300,000/year "daycare," but you still end up exempting the poor from taxation on "human needs" while actually directing the charity of the tax system towards the things we want to help the poor with. No more using government money on drugs and vape and other non-essentials. And as a benefit, every American gets these benefits, not just the ones who are deemed poor by our overlords. No monitoring or verification required. All tax benefits are calculated at the register and applied on the spot. 

And no more filing taxes, a stupid industry unto itself. But that's just one way to do it. There are lots of proposals in this arena from much smarter people than me. 

[brabus]

@Lord Ratner Overall agree, good points. 
 

3 hours ago, Lord Ratner said:

Renters don't pay property taxes

I know they literally don’t, and understand your follow on points. But let’s be real, the vast majority (probably 99%) of landlords account for property tax in their rent amount. There are variances in say multi-year leases with a mid-lease property tax hike, but in the end, renters are effectively paying it for the most part. I’m not saying this is all a good reason to keep property tax, just a consideration in the discussion.

 

3 hours ago, Lord Ratner said:

Why would it crush the economy?

I’m just thinking what kind of sales tax would be required to replace the loss of property tax revenue. My state is right in the middle of property taxes nationwide (tax rate-wise, not total revenue), and in the top 10 least populated states.  In 2023 it had $1.8B in property tax revenue. I feel like that’s a lot of revenue to replace with sales tax, am I wrong? So if it takes a 25% state sales tax to make up that $1.8B (made up for discussion sake), how often do you think I’m going to buy shit that is totally unnecessary? The answer is rarely. Hospitality/food industry: $0, won’t miss it at all. Activities for my kids (gymnastics, etc.): $0, they’ve got plenty of shit to do outside of stuff like that.  New furniture, clothes, etc.: Very little - but we’re also not a “we need a refresh every year” family. An airplane…well yeah, I need that, so of course I’ll pay the tax! That’s the type of stuff I mean when I say it could really hurt the economy, at least in some areas. 

[Lord Ratner]

31 minutes ago, brabus said:

But let’s be real, the vast majority (probably 99%) of landlords account for property tax in their rent amount.

I would happily take the other side of that bet. The vast majority of landlords are going on Zillow, looking at what similar homes get, and hoping they can set their price $50 higher per month. Financial literacy is an endangered species, and I can't count how many landlords I've talked to who have no idea what their actual input costs are. In any case, it matters in the context of this conversation, when we are talking about financial incentives and burden distribution. 

31 minutes ago, brabus said:

how often do you think I’m going to buy shit that is totally unnecessary? The answer is rarely. Hospitality/food industry: $0, won’t miss it at all. Activities for my kids (gymnastics, etc.): $0, they’ve got plenty of shit to do outside of stuff like that.  New furniture, clothes, etc.: Very little - but we’re also not a “we need a refresh every year” family. An airplane…well yeah, I need that, so of course I’ll pay the tax! That’s the type of stuff I mean when I say it could really hurt the economy, at least in some areas. 

I'll take the opposite side of that bet too. You may buy less, but it would not be dramatically less. And it sure as shit wouldn't be zero. Take a look at what the UK pays in value-added tax. They most certainly have hospitality and food, activity for children, furniture, clothes, and all the other stuff. And they have property and income taxes on top of that. 

 

Now, there's a great argument that over taxation reduces spending, but we are talking about substituting one form of taxation with another. Honestly I'm not even sure why you think your spending would be reduced with a higher sales tax, considering this hypothetical is meant to replace one form of taxation that you believe everybody including renters is already paying, with another form that everybody would be paying. It's just moving from one bucket to another. 

 

It may be a psychological shock at first, but the mask shouldn't be particularly surprising.

 

Edit: Good chat by the way. You are asking all the most interesting questions.

Edited 1 hour ago by Lord Ratner