Depending on the jurisdiction, property taxes are usually a function of the property valuation. So at least if the property value goes down, theoretically so do your annual property taxes. The problem with a theoretical wealth tax, is that when the asset value goes down, too late you've already paid your wealth tax.
If my house is worth $1M in 2022, I pay tax on that $1M of value. If it goes down in value to $500K in 2023 (and is reassessed), I'd pay tax on $500K value in 2023.
If I own $1B of AMZN in 2022, I'd pay wealth tax on my $1B holdings in 2022, if the market tanks and AMZN is worth $50M in 2023, then I'd pay the wealth tax on $50M in 2023.
Just as with property taxes, a wealth tax is generally annual based on current assets.
It only feels weird because there is a concerted effort to make you feel that way. It is absolutely identical to property taxes on homes, but that doesn't make people feel icky in the same manner.
> but that doesn't make people feel icky in the same manner.
speak for yourself! a property tax makes sense in theory: you're contributing to the entity that ensures your land is safe in the first place, but basing it on valuations instead of something like flat rates based on sqft is preposterous.
I'd go so far as to say that the degree to which the knowledge of such a tax affects your decisions relating to the property is enough to constitute a violation of natural property rights.
There are no “natural property rights”, there’s what the person with the bigger stick can enforce.
But let’s take your premise. The more valuable the land, the more an entity will spend to procure it (bigger army etc), and the more you thus have to spend to defend it, thus the more it costs.
It's not as if I stole the money I bought my house with, the house I'm living in now. I paid taxes on them and keep paying taxes on the money I'm earning now. I really don't see why I have to pay a tax on something I already paid for. Taxes on taxes...
Oh crap you've discovered the loop-hole into which the billionaires are going to disappear! They are going to get massive loans to take their companies private and never have to pay that stinking wealth tax again. No more audited financial statements either. But the interest on their loans will be income tax deductible.
To be honest, we're dealing with this in the context of a really weird situation; that is the curious case of the existence of the billionaire! How strange is it indeed, that in a democracy there can arise individuals with access to such ridiculously outsized and concentrated power (relative to their individual contribution)?
When the equivalent power of millions of people can become concentrated into a single person, you get all sorts of weird consequences! Most of them not good for the public as a whole, and often with a corrupting influence on liberal democracy. It is indeed fitting then, that a solution targeted at this very rare and specific problem would look a little weird; even though it's extremely similar to the existing property tax that every home owner pays.
I mean, it also feels weird to have to pay anyone just for.. making money through labor. Why owning something should be any different than making the money to buy it in the first place? If anything, taxing money as it is earned really hurts the potential compounding effect.
Why would you get paid for owning stuff? Are you talking about dividents?
I think that’s more being paid for having given someone a whole bunch of money up front, that they can now use to more quickly earn enough money to pay you (loan in a different name).
I'm actually in this situation on my property taxes.
In San Francisco there is a 2.5 month window to appeal your property tax assessment. I did that for 2020, and was successful (the hearing was like a year+ later) and they gave me a refund.
I failed to do it for 2021, because I was under the mistaken assumption that they'd they'd also adjust my 2021 assessment after my appeal. They didn't. I guess that's on me?
I just sold that property for a loss and 15% less than my tax assessment, and I'm well past the appeal period for 2021/2022 sales tax year. So I think I'm out of luck. I just over-paid by 15%.
I thought things are capped in California, that Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. This "assessed value" may be increased only by a maximum of 2% per year until, and unless, the property has a change of ownership? No such joy in Texas (yet).
It's definitely One of the reasons. I've compared some real estate prices in some low-cost areas to relatively high-cost areas, and found that once factoring in property tax, the actual cost was close to the same.
Thank goodness you did not buy that property for cents on the dollar 30 years ago and now have to also pay a fictitious wealth tax on the property when it was at the peak of its "value". Count your blessings.
Your point seems a little orthogonal. If I pay tax on X value in year 1, value goes up and now I pay X*1.1 in year 2, then back to X in year 3 because the home value lowers again, I don’t get a refund for the extra 10% paid in year 2 despite the fact that I never realized any value in the fact that my home appreciated for a year.
So in 2020 I inherit $16k and decide to buy 1 BTC for $16,082 on Nov 12, 2020. Later that day the wealth tax department is created and levies a 20% tax on all unrealized appreciated assets. Your reporting day is on the anniversary of the original asset purchase. So a year later (Nov 12, 21) Bitcoin is at $64,400. My accumulated unrealized appreciation is $48,318. I file my wealth tax return and have to borrow the $9,663.60 to pay my wealth tax. Bear in mind, I still own my 1 BTC. Have not sold it. Have not enjoyed these promising riches. Six months later BTC is $40k and sliding down in price. By Nov 12, 2022, at the end of the 12 month reporting cycle, let's say BTC collapses all the way to $5k. I sell my 1 BTC for the $5k, and now own nothing but I am "happy" to only still owe $4,663.60 on my wealth tax loan.
Sounds a lot like the AMT situation for stock options where people pay taxes on the paper value of the stock when exercised, even if they don't (or even can) sell it -- the IRS can provide a way to recover taxes paid on unrealized gain if you sell the asset at a loss from where it was taxed.
But I'd recommend selling enough of your BTC to pay taxes so you're not underwater if it goes down in value.
why do we need to keep growing gov't and adding more and more rules/programs/etc.? Certainly we don't need to keep spending more and more, cut it off and some point and stop growing it for some period..
why do we need to keep growing gov't and adding more and more rules/programs/etc.?
Here's one good reason -- decades of underinvestment in infrastructure. The top tax bracket in the 1950's when the Interstate highway system was funded was 90% - now it's 37% and even that is mostly avoided by the most wealthy.
Another reason is the impending climate disaster -- former arable land will become unfarmable, many coastal areas will become uninhabitable or need expensive flood control, etc. This is going to cause huge costs and will almost certainly require government assistance.
But our tax base is greater now than it was then. And don't even get a trucker started on explaining how many taxes they have to pay. Could it be that corporate lobbyists successfully promoted their questionable projects like the Vietnam war, the Iraq War, etc, etc, to spend our infrastructure budget instead on making defense contractors wealthy?
Perhaps too we can stop irrigating desert and grow things like almonds (and actual food) in places like Iowa (with the most class 1 farm land in the US), instead of Iowa growing animal fodder and ethanol.
Most of these "crises" are self-inflicted crises in management.
For sure, projects like war and the military industrial complex don't help. But while the tax base has grown larger, infrastructure has also grown larger. There are many many more miles of road to maintain, many more miles of cable, many more bridges. Also back then, when this infrastructure was built, they were not hit with maintenance cost. The bridge over there, then it was brand new and would be fine for 10 years with maybe just a quick inspection. Now that bridge has 50 years of rust built up on. But not only that bridge, so does that one and that one and that one. Now our infrastructure has some age and it has a cost to maintain it that was not present decades ago. And some of that rust is because previous generations just kicked the can down the road. Frankly, I am 28 with two kids and I don't want to kick the can down the road for them deal with.
A really interesting read on the rust and cost is the book "Rust: the longest war." It outlines how quickly costs escalate over time when something as simple as Rust is not dealt with and it left to build up.
Err, but you're asserting that we _need_ to grow this revenue without saying why?
Also, 90% top marginal tax wasn't really paid. Look at our historic tax revenue vs GPD. it's remarkably consistent, around ~17-20% no matter what policies we have floating around.
I am certain that we could reduce billions in spending to find money for actually important things. we do not need to keep increasing spending/revenue. we need to decrease spending and keep the same revenue. that's the easiest path.
Not if people living in 'reasonable' properties are not taxed much at all. If a family lives in a 100sqm house, probably should be nothing additional. If they live in 2000sqm mansion, they probably can afford a decent sized tax.
Of course size is not the only factor, which makes it complicated. Land or property value is probably a good proxy. If you house is >$1M it probably means you are wealthy.
Now you get one of two things in each individual case: Either people downsizing (good, frees up property for other people) or people paying tax (good for society).
The problem with this logic is that real estate values are out of control. In my city not uncommon to see stories of families who have owned a home for generation or more being forced to sell it because the value of the land went from $200k to $800k in 10 years and is now taxed as such.
If the value of the land goes up with increased economic activity, but you're not economically active enough to continue living in the area, how is it unreasonable to be expected to sell?
The other side of every "family was forced to sell" is "another family was very happy to move in".
I agree with you mostly, even though it's somewhat heartless and maybe too black and white. I'm from an area where this exact scenario is happening to a lot of home owners.
There is a point where I think it's okay to factor an unexpected large housing market increase into the equation. To raise a community's property tax unrealistically because a mass influx of buyers are willing to overextend their credit doesn't make much sense to me.
Also, I think this applies even more to our current situation and the fact that a lot of these communities had nothing to do with the politically charged economic decisions our politicians made with close to zero debate, and ultimately, the economic fallout it has created.
In my home state in the Midwest I have always thought a better way to go about it in the future would be to factor median salary and wages into the mix. That, along with an unrealistic housing market increase. I'm not sure what unrealistic would be defined as, but median value increasing 2x in five years is definitely unrealistic. At the very least things like this should be debated.
What's the purpose of buying a house if you can't stay in it more or less indefinitely? (Yes, I know people sometimes buy houses planning to only stay in one place a few years, but I would wager most don't.)
You can stay in that house as long as you pay the property taxes. If you can't pay the property taxes, that is a forcing function to get you to move. You aren't entitled to live somewhere all your life. You aren't entitled to have your taxes be subsidized by the next generation of folks so that you can keep living somewhere. It is placing the burden on the next generation of people because you happened to be there first and creates bad market incentives.
Then make it price adjusted for that to some extent. Use medians.
And being forced to sell to some degree is by design. One elderly lady hogging the land that could house 100 apartment dwellings in the middle of a city for example.
“Owning Land” is a human construct.
And it would be no worse than compulsory purchases by government for infrastructure.
Or someone leasing where the landlord wants more rent so they get kicked out.
Got it, so the widow living on a fixed income, in her modest home that was once in a lower middle class neighborhood that has now gentrified, is forced out so that someone really contributing to society (like FANG employee) can live closer to work? She now has to live somewhere else, what property was freed up exactly, (so no net new housing creation)? (Not even going to address paying tax = good for society)
I live in a "hot" real estate market, my house has appreciated nearly 50% in 2 years. It's entirely possible that it will depreciate 20% or more over the next year.
I don't get that tax back if I end up selling my house for half what it was taxed for last year. But I can appeal the evaluation for this year.