The right kind of property tax vs. the wrong kind

Lumpenproletariat

Veteran Member
Property tax assessment has always been a scandal, as shown by the following case, which might be a little worse than average, but the same corruption exists everywhere. There is a solution to this which would eliminate arbitrary "tax assessment" and replace it with market-based valuation of property. Many forms of this solution have been around for a long time but are taboo to the brain-dead idiots we put in power

https://www.illinoispolicy.org/feds-investigate-property-tax-bribery-scheme-in-cook-county/

FEDS INVESTIGATE PROPERTY TAX BRIBERY SCHEME IN COOK COUNTY

Patrick Andriesen
/ GOOD GOVERNMENT
JULY 19, 2021

Feds investigate property tax bribery scheme in Cook County

A Board of Review employee claims corruption is rampant in his Cook County office after an FBI affidavit states he was charging $2,000 to lower assessment on commercial properties and$1,000 for homes.

A Cook County Board of Review employee has come under FBI investigation for allegedly accepting thousands of dollars in bribes to lower property tax assessments, according to a federal court affidavit obtained by the Chicago Sun-Times.

The employee, an unnamed member of the administrative clerk’s staff, said the $43,000 he accepted in bribes was to be split with others in the Cook County office, insisting, “I’m just the middle guy.” The corruption claims involving the Board of Review are coming as property tax bills were expected to be mailed out. . . . The Cook County property tax scheme was revealed as part of a federal probe dating back to at least January 2019. The inquiry involves another unnamed individual secretly cooperating with the feds under a separate criminal investigation. That person has yet to be charged. According the 45-page affidavit, the cooperating witness approached the Board of Review worker about lowering property assessments in July 2020, eventually emailing the employee 18 commercial properties and seven residential properties owned by an associate on Jan. 5. The Board of Review employee under investigation told the witness later that day “everything’s doable” and allegedly offered to reduce property assessments in exchange for bribes. The Cook County employee charged$2,000 per commercial property and $1,000 per residential. I'll take a dozen. “Half now and half when it’s completed,” the employee allegedly said, later agreeing on$21,000 for the first payment. The affidavit contained a photo of the employee accepting the bribe in a Skokie parking lot Jan. 15.

The employee sent the cooperating witness the reduced property assessment in May, reportedly saving his associated around $99,000. A good-day's pay for a good-day's work. The Board of Review worker then requested to meet with the witness to collect the second$22,000 payment July 1 for completing the task. The feds filed their affidavit June 30 to search the employee and his phone.

After being made aware of the federal affidavit, Board of Review Commissioner Tammy Wendt told the Sun-Times, “It is not a surprise to me as I have discovered a culture at the Board of Review that believes it operates in a vacuum. I have pressed the issue of adhering to the Open Meetings Act, homeowner appeal denials, financial responsibility and other issues of concern in my short time at the Board.”

“I hope this serves as a wake-up call to everyone. If this was truly an organized crew inside the Cook County Board of Review, we need to do a full forensic accounting of any and all work touched by those named in this investigation,” Wendt said.

Commissioner Larry Rogers Jr. said in a written statement, “We take any allegation of impropriety very seriously and will be opening an investigation.”

The exposition of an alleged pay-to-play scheme in the Board of Review coincides as Cook County residents prepare to shoulder one of the highest property taxes in the nation.

Property taxes billed by Cook County’s local governments has been nearly triple the rate of inflation during the past 20 years, according to a study from 2020.

Cook County residents pay an average effective property tax rate of 2.1% of their homes’ values each year – almost double the national average of 1.1%. That burden is not equally shared.

Cook County performed worst among DuPage, Lake and St. Clair County for accuracy and fairness for assessing property values, according to an analysis of Illinois Department of Revenue data. This means properties with comparable features located in similar areas were more commonly assessed at different rates when compared to their county neighbors.

Cook County also saw owners of higher-value residential, commercial and industrial property with lower levels of assessed value than owners of less expensive property. Wealthier property owners in Cook County tended to catch a break in their assessed values, while poorer property owners did not.

While state residents expect higher property taxes to fund services that improve their communities and raise home values, less than 50 cents of every additional dollar paid in Illinois property taxes went to pay for services between 1996 and 2016. Meanwhile, 45 cents of every dollar went to supporting government worker pensions.

Illinois’ worst-in-the-nation pension crisis consumed 26.5% of the state’s total operating budget in 2020, up from less than 4% in 1990 through 1997. As a consequence, increased pension contributions have diverted property taxes from spending on core services that benefit the community and raise home values.

Curbing the growth of future, unearned public pension costs by amending the Illinois Constitution is a major element in digging out of the $317 billion pension hole and controlling the rise that make Illinois property taxes second-highest in the nation. The Solution to this Have all property owners put their property up for sale, perennially. Have them declare the selling price at which they are prepared to sell the property. The exact rules, precise conditions, are not what's important. But it might be something like this: If the owner receives 3 offers, then s/he is required to sell. To avoid selling, the owner only needs to increase the selling price after receiving 2 offers. To prevent excess offers, the buyers must pay a deposit, such as 10% of the selling price, and this would be refunded to the buyer only if there's no sale. And also there needs to be a nonrefundable price paid in order to register the offer. The buyers are entitled to some protection, but they must be discouraged from making non-serious offers. By having the owner required to declare the selling price, the need for the tax assessor is eliminated, because the real value is fixed by the market -- by the seller/owner and buyer -- reflecting the true value of the property rather than an arbitrary assessment by a public official who is easily subject to corruption/bribery. skepticalbip Contributor Corrupt government officials in Cook county? what a surprise... not. But your "solution" sucks. Why put a burden on the home owners? A better solution for this particular corruption would be much higher punishment for the corrupt government officials. Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe. Swammerdami Squadron Leader Staff member Corrupt government officials in Cook county? what a surprise... not. But your "solution" sucks. Why put a burden on the home owners? A better solution for this particular corruption would be much higher punishment for the corrupt government officials. Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe. I thought Lumpenproletariat's solution was quite clever! It's flawed: many property owners will have reasons of sentiment or convenience that make them unwilling to sell for MUCH more than the market price, but maybe there are clever workarounds to address that. But I also do agree with you about penalties for corruption. It is outrageous how much bribery is accepted in the USA. (There was a Governor who took several$100,000 in bribes, but had his conviction overturned a few years ago because there was no "smoking gun" audio recording where an explicit quid pro quo was arranged.)

In the USA, people have been executed on the spot for selling loosies, or attempting to pass a counterfeit note. I'd be happy to see capital punishment for bribed government officials.

bilby

Fair dinkum thinkum
Corrupt government officials in Cook county? what a surprise... not.

But your "solution" sucks. Why put a burden on the home owners? A better solution for this particular corruption would be much higher punishment for the corrupt government officials. Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe.

Mandatory sentencing is a generally bad idea, not least because it constitutes an unwarranted intrusion by legislature on matters that are properly the remit of the judiciary.

Every case is unique, and setting a minimum penalty is a dangerous thing to do.

If you want to deter crime, this can be achieved by setting a high(er) maximum sentence, and allowing judges to impose those in cases where the evidence and facts indicate that it is warranted to do so.

rjh01

Member
A major problem with the solution in the OP is that a potential buyer would have to inspect and make offers to many properties before they make one to someone who wants to accept it. This will make buying and selling very expensive.

A better solution is to have everything open. It should be easy to find out how much property taxes are for any property. Then if you find your neighbour is paying far less than what you are then you should be able to find out why. Revenue will then go down and enquiries will be made.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
Comrade, is there something related to social science here or is this a spam alama ding dong song?

Yes taxes are problematic at times and property owners pay for things like schools, would you like to offer a 'political' alternative that is more workable?

The thing about Marx and people like him in modern history is that they never have had to actually deal with practical realty and make something work with real not ideal people.

Using Marx as a guide is akin to using Trump as a guide for business. Some people hang unto Marx even with the failed experiments that all turned opressive, some hang onto Trump as a biasness guru despite all his business failures..

I like Bernie's idea, everything should just be free.

southernhybrid

Contributor
A major problem with the solution in the OP is that a potential buyer would have to inspect and make offers to many properties before they make one to someone who wants to accept it. This will make buying and selling very expensive.

A better solution is to have everything open. It should be easy to find out how much property taxes are for any property. Then if you find your neighbour is paying far less than what you are then you should be able to find out why. Revenue will then go down and enquiries will be made.

I already do this, sort of, by looking up local properties for sale on realtor.com. The taxes are very inconsistent and I doubt it's due to corruption in my town. I think it's more due to incompetence. I'm pretty sure that property taxes are public records, which one can probably ask to see, but I don't know the process or if there is a cost to requesting public records.

So, I strongly agree that the solution offered in the OP isn't a realistic one. There are other ways to check to see what one's neighbors are paying in property taxes. Plus, if you have a few friendly neighbors, you can ask. I know that my next door neighbor pays about 1/4 of what I do, despite her home being worth about 1/2 of what mine is worth. Why is that? I don't think those who do the assessments are very good at it. We tried to appeal our last assessment, but we lost. Perhaps this discussion would fit better under miscellaneous.

fromderinside

Mazzie Daius
Make tax payment voluntary. Link payment to uses for which tax goes. Adjust use expenditures to address to what payer contributes. Fine owner if uses are not up to code by the amount code meeting costs plus government costs for updating. Automate the whole damn thing.

Bomb#20

Contributor
Using Marx as a guide is akin to using Trump as a guide for business. Some people hang unto Marx even with the failed experiments that all turned opressive, some hang onto Trump as a biasness guru despite all his business failures..
Lumpen isn't a Marxist and that wasn't a particularly Marxist proposal. Seems like a bad idea to me, though. I can think of several better ways off the top of my head to use market-based pricing to eliminate the possibility of assessor corruption.

1. Pass a California-style Proposition 13. Tax is based on most recent sale price.

2. The government doesn't get money when it taxes property. It gets a lien: a claim on X% of the sales price of every house when it is next sold. If that doesn't satisfy the government because it wants its money now, it's free to sell the lien on the open market for whatever price the market will bear. If the homeowner doesn't want to give up X% of the equity in his house he's free to bid on the lien along with everyone else. If the liens amount to more than 50% when the homeowner dies then the probate court is allowed to sell the house over the objections of the heirs.

Or best of all,

3. Abolish property taxes. Raise the income tax to make up the lost revenue.

Loren Pechtel

Super Moderator
Staff member
Corrupt government officials in Cook county? what a surprise... not.

But your "solution" sucks. Why put a burden on the home owners? A better solution for this particular corruption would be much higher punishment for the corrupt government officials. Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe.

I thought Lumpenproletariat's solution was quite clever! It's flawed: many property owners will have reasons of sentiment or convenience that make them unwilling to sell for MUCH more than the market price, but maybe there are clever workarounds to address that.

I don't think there are, and I think it could be use abusively by the big guys.

There's also the problem that property has different value to different users, even if it is otherwise identical. Suppose you engage in pigeon racing--if you move you can't race again until you have a new generation of birds, the old birds are useless other than as breeding stock.

But I also do agree with you about penalties for corruption. It is outrageous how much bribery is accepted in the USA. (There was a Governor who took several $100,000 in bribes, but had his conviction overturned a few years ago because there was no "smoking gun" audio recording where an explicit quid pro quo was arranged.) In the USA, people have been executed on the spot for selling loosies, or attempting to pass a counterfeit note. I'd be happy to see capital punishment for bribed government officials. Yup. I'd like to see the law changed on corruption, the prosecution still has to prove it waddles and quacks (the payment and the favorable action), but at that point the burden of proof shifts to the defense to show that wasn't corruption--there's no need to prove they agreed to an improper deal. Loren Pechtel Super Moderator Staff member A major problem with the solution in the OP is that a potential buyer would have to inspect and make offers to many properties before they make one to someone who wants to accept it. This will make buying and selling very expensive. A better solution is to have everything open. It should be easy to find out how much property taxes are for any property. Then if you find your neighbour is paying far less than what you are then you should be able to find out why. Revenue will then go down and enquiries will be made. Locally, it took me 30 seconds to come up with the assessed value of our house--and one click away the assessed value of any house on our block. I could do the same thing for any place in the county if I had the address. It doesn't show the actual property tax but the shenanigans are with assessed value, not the conversion of assessed value to tax bill. It's possible for the tax bill to deviate from the assessed value differently for different houses but that's built into the law (there's a cap on how fast it can go up. If the actual value goes up faster than the cap the assessed value will lag behind.) Any auditor could easily see if there was anything dirty there. Lumpenproletariat Veteran Member By having the owner required to declare the selling price, the need for the tax assessor is eliminated, because the real value is fixed by the market -- by the seller/owner and buyer -- reflecting the true value of the property rather than an arbitrary assessment by a public official who is easily subject to corruption/bribery. Corrupt government officials in Cook county? what a surprise... not. But your "solution" sucks. Why put a burden on the home owners? How is it a "burden" for them to submit their selling price? And this is not just about residential properties, but commercial properties also. If there's a worry about the many small homeowners being inconvenienced, maybe the right approach would be to limit this to only the most expensive properties at first, like anything above 1 million or 5 million value. And later it would be extended to those lower. A better solution for this particular corruption would be much higher punishment for the corrupt government officials. No, the problem is not just "this particular corruption" but the more widespread corruption or distortion happening in the system without crime per se committed by someone. The extreme case of a blatantly corrupt official taking bribes is only a small percentage of the problem. By analogy, consider "corruption" in enforcement of the drug laws. Most of the problem is not corrupt cops making a deal with the traffickers so they get a cut in the profits. The problem is bad laws, or a bad system of enforcement which results in many violators totally circumventing the laws while other very small buyers/sellers are disproportionally punished for offences never intended to be punished by those who enacted the laws -- i.e., a small buyer being busted for possession of a small quantity. Many laws are easily distorted to do damage which was not intended by those laws. Another analogy is income tax loopholes. These cause significant loss of tax revenue, though it's usually not due to criminal violation which can be prosecuted. Assessing value of the property is too subjective, because there is no way to determine the value other than basing it on the actual selling price, which is not known if the property is not for sale. Such property assessment is faulty in the same way that price-setting by the state is faulty. There is no way the government can properly set the prices on everything, as some totalitarian countries have tried to do. Such pricing does great damage to the economy, even if there is no bribery of officials and payoffs which could be prosecuted. Basing the assessed value on what the actual selling price would be would probably result in net higher assessed values for taxing, as some properties are under-assessed, due to pressures to protect those wealthier property owners, though it does not take the form of blatant bribery or other crime which could be prosecuted. No doubt it would result in increased billions in property tax revenue annually in some states. While just prosecuting an extreme corrupt official who gets caught would not fix much. It would bring no additional revenue, but would drive up costs for enforcement. More cost-efficient is to remove the opportunity for the corruption, by taking the power away from the arbitrary subjectivity of the assessor or other official. There are many pressures on assessors causing the values to be reduced or increased contrary to anything about the real market value. Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe. No, just cracking down on a violator who carelessly gets caught once every 5 or 10 years would ignore 99% of the real problem. Just like catching a corrupt cop in an extreme case doesn't fix the systemic problem or address all the many distortions which happen without blatant criminal corruption which can be prosecuted. Bad laws lead to bad results even when everyone honestly tries to enforce them. E.g., if a law is enacted mandating Everyone is hereby ordered to pay their fair share, do you think all we need is honest officials who will get a "fair share" out of everyone or be prosecuted for bribery in each case of someone who underpays? Or, more realistically, how about labor law which requires an employer to "bargain in good faith" with the union. How is a law like that to really be enforced? "in good faith" is mostly subjective, and it's obvious that the same employer would be found guilty in one court but exonerated in another, depending on the sentiments of the judge(s). But that doesn't mean the judge(s) could be prosecuted on corruption charges. The basic problem is bad law, not corruption. Lumpenproletariat Veteran Member many property owners will have reasons of sentiment or convenience that make them unwilling to sell for MUCH more than the market price, . . . That's a contradiction. The "market price" is based on the demand/supply, and in this case the owner's desire for the property drives up the demand for it, making the real value higher. The true "market price" is the actual price that a buyer and seller agree on, no matter how low or high it is. So, if the current owner has a very high desire for that property, that high desire means the real value is higher. Such a very high desire for it makes it reasonable that the owner should pay a higher tax on it. That tax is essentially a price the owner pays for the greater value s/he enjoys from it. It is outrageous how much bribery is accepted in the USA. (There was a Governor who took several$100,000 in bribes, but had his conviction overturned a few years ago because there was no "smoking gun" audio recording where an explicit quid pro quo was arranged.)

That's why the solution sometimes is to change the law rather than rely only on prosecution of corrupt officials. Changing the law to take away arbitrary power and the subjectivity of those in power makes it impossible for the "corruption" to happen in those cases.

In the USA, people have been executed on the spot for selling loosies, or attempting to pass a counterfeit note. I'd be happy to see capital punishment for bribed government officials.

And yet in many cases a better solution is take away the occasion for the bribery and corruption, by changing the law and removing their power to make arbitrary decisions.

Lumpenproletariat

Veteran Member
The best "assessor" is the property owner.

some terminology:

This form of property-tax can be called Self-Assessment -- meaning the owner effectively fixes the value of the property rather than the tax assessor.

And the term "tax-assessor" is literally incorrect. This public official is really assessing the value of the property rather than the tax. So when we use the term "tax-assessor" it's really a misnomer. We have to stick to this term, but this person is not really a tax-assessor at all, but a property value assessor whose arbitrary assessed value is then used to fix the tax to be paid.

A major problem with the solution in the OP is that a potential buyer would have to inspect and make offers to many properties before they make one to someone who wants to accept it.

That's already what happens, though maybe self-assessment would make it happen more than it does already.

It depends on the particular conditions/rules. Perhaps instead of requiring 3 offers before the owner must sell, it would be only 2, or even just one but with the owner having ample opportunity to revise the selling price upward. So an offer can be refused. And if there's too many refusals, the rules can probably be changed to fix this. There might even be some form of penalty if some deadline is missed, so an owner can back up and do a correction. One way or another, an owner has an obligation to declare a realistic selling price.

Even in the present system a seller doesn't necessarily have to sell immediately to the first buyer who pops up.

Initially this new form of value-assessment, self-assessment, might be limited to only upper-value properties, such as above 1 million or above 5 million value, as a test, before being applied to all properties.

This will make buying and selling very expensive.

It's already very expensive. The current arbitrary assessing process is very expensive, unless it's done without any information or examination by the assessor who has to decide what the value is. Are all the properties of the same size and in the same location equal in value? If not, then how does the assessor go about judging between them to determine the value of this property in comparison to that one?

What are all the processes involved in determining that your property is more valuable (or less) than the one across the street or a block or half-mile away? The age might be a factor, the plumbing, the electrical wiring, the view, noise factors, the proximity to other buildings and streets and intersections and commerce and transportation, landscaping, vacant lots, types of other structures (apartment buildings or single-family, higher- or lower-density, commercial or residential) -- there is really an endless list of factors, depending on what buyers are seeking.

The state cannot dictate these factors to the buyers, but it would have to identify all the pertinent ones in each case, for individual buyers, to determine the real value for each property. Obviously it's not possible to calculate an exact value in every case, but even coming close is impossible, so that the assessor's assigned value cannot be taken seriously as being close to the real market value.

The assessor cannot really account for all the factors, or in a case where they try, the cost to society has to be excessive -- paying the costs necessary for all the information-gathering -- the whole process being much more expensive than a market-based system would be, which would leave it up to the buyers and sellers to investigate all the factors important to them.

Some buyers individually care extra about particular factors, which all goes into driving the real value of the property to its natural level, to the true market price. Much of the buyer's decision is based on guesswork, but more investigating and getting more information always increases the chance of getting a more predictable outcome.

The only way the current tax-assessor process can be less expensive is if it leaves out of account many actual factors determining the market value. Whereas taking more account of all the factors, as individual buyers and sellers do automatically, makes the assessment process more true to its purpose, which is to put the tax level in line with the real property value.

Admittedly, the concrete benefit of doing this is to INCREASE the total revenue from property tax, by getting some under-valued properties up to a higher tax bracket, which is a very legitimate goal to benefit all society which requires public revenue to pay for public needs, including to reduce reliance on other taxes in some cases.

It's not clear that such a tax system would be more "expensive" to the buyers and sellers, other than probably increasing some property taxes on under-valued properties. If something in the system causes more expense to the buyers, this can probably be corrected by adjusting the terms, such as the amount of deposit from buyers, or other terms requiring the owner to sell, or allowing the owner to increase the selling price (self-assessed value) to avoid having to sell.

Some burden on owners to avoid selling has to be corrected by the owners themselves posting a realistic selling price, rather than under-valuing the property. This is up to each owner, and it's best if that problem is left to each individual owner rather than having the tax assessors presume to assign the value arbitrarily as they do now.

It's not clear that such self-assessment has to make buying more "expensive" than it already is. The rules can be adjusted to mostly prevent this.

A better solution is to have everything open. It should be easy to find out how much property taxes are for any property. Then if you find your neighbour is paying far less than what you are then you should be able to find out why.

That may already be the case, at least officially. Are there cases of some owners being over-taxed compared to their neighbor? Where that seems to be so, there could very well be a legitimate reason for it, either due to real market value, or based on the current assessing procedure.

In any case, a self-assessment system is the best correction, if something needs correcting.

What's not legitimate is for any property higher in demand being under-assessed, or lower in demand being over-assessed, in relation to the real market value determined by the particular demand of potential buyers. There can be many factors causing an inappropriate discrepancy, all of which would be fixed by a self-assessment system instead of the current arbitrary "tax-assessor" system.

And in a case where
. . . you find your neighbour is paying far less than what you are then you should be able to find out why
the most efficient correction is that of self-assessment where you adjust your selling price downward, because you apparently set your price higher than necessary to avoid having to sell. And this correction requires no battle with some official making an arbitrary decision, because you as owner have total control over the assessed value.

Revenue will then go down and enquiries will be made.

Maybe or maybe not in the current "tax-assessor" system. You are subject to this official's arbitrary judgment of your property's value.

But in a self-assessment system, a case where a property is over-valued (by the owner) is easily corrected without any hassle from those in power.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
Any meaningful tax reform is politically impossible.

The version I go with. Nothing new.

1. Limited progressive tax across business and individuals.
2. No deductions or loopholes.
3. Below a threshold a citizen gets a check.
3. State residents pay for schools equally with property owners.

Loren Pechtel

Super Moderator
Staff member
some terminology:

This form of property-tax can be called Self-Assessment -- meaning the owner effectively fixes the value of the property rather than the tax assessor.

Which permits abuses by the rich.

And which means land will be valued based on the highest possible use, not the current use. People standing in the way of "progress" will get steamrollered.

Lumpenproletariat

Veteran Member
Society needs more revenue from wealthy real estate tycoons.

"wealthy" = (take your pick) the top 1% wealthiest property owners, or the top 20% or 30% wealthiest property owners.

Yes taxes are problematic at times and property owners pay for things like schools, would you . . .

Are wealthier property owners paying for schools? Are the most wealthy, like owners of mansions and private jets etc. really paying for schools?

. . . would you like to offer a 'political' alternative that is more workable?

Higher revenue from property tax is the point, and there's far too much under-taxed real estate, especially at the higher end. Property tax is probably the most legitimate of all taxes and should be relied on more as a source for revenue to pay for the public needs (all the public needs, not just education). The current pattern of higher and higher reliance on public debt is not "workable" and does both present and future damage. Since property taxes are not federal but state, federal taxes should include a tax on states which they could pay by means of higher property taxes, especially on the wealthier owners. (Or, at least federal payments to states should be reduced while states raise more of their own revenue by means of higher property taxes.)

There's a huge quantity of under-taxed real estate, held by wealthy owners. E.g.:

https://www.newsweek.com/2015/04/24/hidden-costs-ghost-apartments-322264.html

What we need is a progressive tax on real estate, putting proportionally higher tax rates on the wealthier properties, and having the properties assessed at their true market value rather than arbitrarily by a "tax assessor" who often puts the value much lower than its real value or market selling price.

This includes many undertaxed commercial properties as well as residential.

The only way to determine the real value is to have all the properties put up for sale and have buyers make offers for those having a low price set by the owners. This would cause many of the undertaxed but high-value properties to be assessed higher, as the owners who don't want to sell would have to increase their selling price high enough to discourage buyers.

Perhaps this would be limited, at least initially, to only properties above a certain minimum value, like 1 million (or 2 or 3 etc.). It can easily be targeted to only the wealthier properties if that's preferred.

Comrade, is there something related to social science here or is this a spam alama ding dong song? . . .

The thing about Marx and people like him in modern history is that they never have had to actually deal with practical reality and make something work with real not ideal people.

Using Marx as a guide is akin to using Trump as a guide for business. Some people hang unto Marx even with the failed experiments that all turned oppressive, some hang onto Trump as a biasness guru despite all his business failures..

I like Bernie's idea, everything should just be free.

Virtually none of the above chatter is worth responding to. Marx is irrelevant here, because his target was the bourgeoisie, not the aristocracy/real estate owners.

And Sanders is worth mentioning only for his good suggestion of having a tax on Wall Street as another legitimate revenue source. But this would not produce nearly as much revenue as progressive property taxes using the real market value for assessing the properties rather than a tax assessor.

The only relevancy to Trump is the fact that most of Trump's crooked deals would have been prevented by a progressive property tax system requiring him to post his selling price and taxing his properties based on this as the real value, rather than having the value fixed by the tax assessor, and also rather than taxing him based on the income from properties, which is easy to conceal. The real value of the property is what it would sell for, not what is supposed as the "income" derived from the property, which cannot be determined if the owner is dishonest and an experienced real estate tycoon.

steve_bank

Diabetic retinopathy and poor eyesight. Typos ...
The down side of the free market system is that all things are valued IAW suppky and demnd.

When I grew up a family bought a house as a lifelong investment. Flipping became the norm. Buy a house and sell as soon as you can make a profit and buy something else.

As to making the 'rich pay' that is the tax codes.

Puiing the econmic equities aside, those who hold welath can not just sit on it, inflation catches up.

Wealth is in the end invested in the economy. Jobs come from investment. Your retirement plans depend on the profitability of companies and investment. It is not as simple as saying tax the rich and give to the poor. It is however an easy mantra to recite.

Loren Pechtel

Super Moderator
Staff member
Puiing the econmic equities aside, those who hold welath can not just sit on it, inflation catches up.

And this is why deflation is so harmful--it makes sitting on your money a good thing.

Lumpenproletariat

Veteran Member
The right way to tax the rich

It should be easy to find out how much property taxes are for any property. Then if you find your neighbour is paying far less than what you are then you should be able to find out why. Revenue will then go down and enquiries will be made.

I already do this, sort of, by looking up local properties for sale on realtor.com. The taxes are very inconsistent and I doubt it's due to corruption in my town. I think it's more due to incompetence.

If so, it's not the kind of "incompetence" which can be corrected by replacing your particular "tax assessor" with someone better, or by electing better supervisors or better "representatives" who will serve the people better. It is an inevitable incompetence with any system giving arbitrary power to a "tax assessor" who supposedly will assess all the properties accurately.

I'm pretty sure that property taxes are public records, which one can probably ask to see, but I don't know the process or if there is a cost to requesting public records.

bottom line: We don't know, and it's difficult to find out. It's easy to say "go check all the tax assessments on every property," but in the end, you don't know why the other property owner is paying more or less, and you're not likely to find out.

Some of them get off easier than others. And probably a discrepancy is caused by an owner -- e.g., your neighbor -- just being lucky and getting their property assessed lower, for some reason. And if you discover it and report it and they correct it, the result is not that your tax goes down, but that your neighbor's goes UP. So that's the result when you check into it, as southernhybrid suggests, and you "find your neighbour is paying far less than what you are then you should be able to find out why" etc. -- your reward for all your effort is to cause your neighbor's tax to go up. Congratulations. You just made an enemy.

Meanwhile, the same thing goes on with the super-rich. Maybe no one knows what percentage of the rich are lucky and get a much lower tax bracket due to under-assessment. One thing you can be sure of is that any discrepancy is not due to a tycoon being generous and letting him/herself be OVER-assessed. And you can be sure that wheeler-dealer real estate tycoons getting rich know how to get under-assessed and will find all the tricks to avoid being taxed on the real value of their properties

And you can also be sure that no assessment system will consistently and even-handedly assess all properties equally if the assessment is by a "tax assessor" just making a guess at the value based on some supposed objective criteria. It is obviously subjective, and there are many lucky owners (especially in the top 1% or .1%) who are getting off much easier than others -- because the system seems to always work out that way, though no one can be convicted of any crimes/corruption.

Unlike income tax or sales tax, there is virtually no disincentive to production as a result of property tax. A higher property tax does little to discourage producers from performing, because that land is not going anywhere and will be put to whatever use is the most profitable, by whatever investor finds the best value to extract from it.

If the rich are undertaxed, it's mainly with respect to the low property taxes they pay, with income tax being less significant. There obviously could be vastly greater revenue from real estate, if it were taxed efficiently, according to its real market value or selling price (rather than arbitrarily by a "tax assessor"), and if this would be a progressive or graduated tax -- higher rates for higher property values -- rather than the standard flat-rate tax (which is effectively a regressive tax in many cases).

So, I strongly agree that the solution offered in the OP isn't a realistic one. There are other ways to check to see what one's neighbors are paying in property taxes.

Maybe there are ways to check, in some cases. But the most you can hope for is to cause your neighbor's tax to increase, because s/he had been gaining a lucky break, and you exposed it. Maybe a little extortion would produce a better outcome: your neighbor pays you to keep your mouth shut.

Plus, if you have a few friendly neighbors, you can ask. I know that my next door neighbor pays about 1/4 of what I do, despite her home being worth about 1/2 of what mine is worth. Why is that?

Probably because she lucked out. The best remedy you can hope for is to report it and get her tax increased without any benefit to yourself.

I don't think those who do the assessments are very good at it.

That's the point. This is an argument to replace the "tax assessor" system with one of self-assessment, where the owners declare a selling price, and this then is used as the basis for assessing the value rather than using the incompetent "tax assessor" who is not "very good at it."

We tried to appeal our last assessment, but we lost.

Probably because they determined that the assessment was correct, and meanwhile they just let that neighbor continue benefiting from whatever lucky break she was getting. They avoided hassling over the procedure to increase her tax and also explain to her that her neighbor had complained that she wasn't being taxed high enough.

bottom line: 90% of what's wrong with the rich paying too little is due to property not being taxed high enough. States could correct this by imposing progressive taxes onto property and assessing the value of properties based on the real selling price, or market price/value determined by having the owners declare the selling prices and being required to either sell at the declared price or increase the price in order to avoid selling. This would result in vast wealth transfer from the highest wealth brackets -- e.g., top 1% or 10% or 20% -- to the lower brackets, or to the state revenue. And with no disincentive to production as happens from increasing income tax.

laughing dog

Contributor
Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.

Jimmy Higgins

Contributor
How is it a "burden" for them to submit their selling price? And this is not just about residential properties, but commercial properties also.

If there's a worry about the many small homeowners being inconvenienced, maybe the right approach would be to limit this to only the most expensive properties at first, like anything above 1 million or 5 million value. And later it would be extended to those lower.

A better solution for this particular corruption would be much higher punishment for the corrupt government officials.

No, the problem is not just "this particular corruption" but the more widespread corruption or distortion happening in the system without crime per se committed by someone. The extreme case of a blatantly corrupt official taking bribes is only a small percentage of the problem.

By analogy, consider "corruption" in enforcement of the drug laws. Most of the problem is not corrupt cops making a deal with the traffickers so they get a cut in the profits. The problem is bad laws, or a bad system of enforcement which results in many violators totally circumventing the laws while other very small buyers/sellers are disproportionally punished for offences never intended to be punished by those who enacted the laws -- i.e., a small buyer being busted for possession of a small quantity.

Many laws are easily distorted to do damage which was not intended by those laws. Another analogy is income tax loopholes. These cause significant loss of tax revenue, though it's usually not due to criminal violation which can be prosecuted.

Assessing value of the property is too subjective, because there is no way to determine the value other than basing it on the actual selling price, which is not known if the property is not for sale. Such property assessment is faulty in the same way that price-setting by the state is faulty. There is no way the government can properly set the prices on everything, as some totalitarian countries have tried to do. Such pricing does great damage to the economy, even if there is no bribery of officials and payoffs which could be prosecuted.

Basing the assessed value on what the actual selling price would be would probably result in net higher assessed values for taxing, as some properties are under-assessed, due to pressures to protect those wealthier property owners, though it does not take the form of blatant bribery or other crime which could be prosecuted.

No doubt it would result in increased billions in property tax revenue annually in some states.

While just prosecuting an extreme corrupt official who gets caught would not fix much. It would bring no additional revenue, but would drive up costs for enforcement. More cost-efficient is to remove the opportunity for the corruption, by taking the power away from the arbitrary subjectivity of the assessor or other official. There are many pressures on assessors causing the values to be reduced or increased contrary to anything about the real market value.

Maybe a mandatory ten year prison sentence for any government employee caught soliciting or accepting a bribe.

No, just cracking down on a violator who carelessly gets caught once every 5 or 10 years would ignore 99% of the real problem. Just like catching a corrupt cop in an extreme case doesn't fix the systemic problem or address all the many distortions which happen without blatant criminal corruption which can be prosecuted.

E.g., if a law is enacted mandating Everyone is hereby ordered to pay their fair share, do you think all we need is honest officials who will get a "fair share" out of everyone or be prosecuted for bribery in each case of someone who underpays?

Or, more realistically, how about labor law which requires an employer to "bargain in good faith" with the union. How is a law like that to really be enforced? "in good faith" is mostly subjective, and it's obvious that the same employer would be found guilty in one court but exonerated in another, depending on the sentiments of the judge(s). But that doesn't mean the judge(s) could be prosecuted on corruption charges. The basic problem is bad law, not corruption.

There are likely dozens of reasons your solution would be utterly impossible to do. Anything from titling, mortgage filing, moving infrastructure, the cost of businesses moving, the simple mindless inconvenience of it, buying pool, inflation! One time a year would be a quarter of the year.

Loren Pechtel

Super Moderator
Staff member
Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.

But the cost to government has a substantial relationship with the value of the property. I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)

laughing dog

Contributor
Property taxation is a holdover from much earlier and simpler times when value of assets did not vary so much over time, and the idea of taxing income was almost non-existent. Taxing something on its imputed value (not actual market value) will always have difficulties.

But the cost to government has a substantial relationship with the value of the property.
Not really.
I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)
What a generous plan - using taxes to reduce the wealth of low income households even more.

Loren Pechtel

Super Moderator
Staff member
Not really.
I do not find property tax unreasonable so long as it has a fairly low permitted rate of change per year for residential property. (And, ideally, a system by which low income people can use their property to "pay" their property tax--basically a reverse mortgage operated by the tax department. Drawing out funds is never possible, it simply pays the property tax + interest from the value of the property, even if the remaining value drops to zero you can't be thrown out.)
What a generous plan - using taxes to reduce the wealth of low income households even more.

The point is that nobody is ever taxed out of their house. Better than the current system where your house can be taken for non-payment of property tax.