207 points

It’s the same across the world.

The problem is that real estate has become an asset, a form of capital.

The only way out of this mess is to shift taxation away from labor and onto capital.

Higher property taxes (1-2%), that can be subtracted from income tax for working people are the answer.

Let’s say Joe the Plumber and Elon the Muskrat both have an income of $100K and pay an income tax of $25K.

Joe owns one property worth $1M that he lives in and pays 2% tax on it, $20K. Which gets subtracted from the $25K income tax, meaning he effectively pays $5K income tax + $20K property tax = $25K combined property and income tax. Pretty sweet deal.

Elon owns 20 properties valued $500M collectively, which means $10M in property taxes. He officially resides in the most expensive $100M property and gets a $50K credit for that. The $50K is larger than the $25K, so he pays zero income tax.

Total tax is $10M.

This (or something like it) is the system the whole world must move towards if we want to simultaneously (a) lower taxes on working people (b) increase taxes on property and © not let working people lose economic power relative to the capitalists over the longterm.

The middle class has to outsmart the owning class if we want our children to remain middle class.

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46 points

I really hate all the replies attempting to poke holes with minimal effort. Thanks for this comment and your robust set of examples.

Housing shouldn’t be a vehicle for interest or making a living, I’d take it more extreme than what you have if I’m being honest. You can own the buildings you use 60% of the year for work or for housing but nothing else. We don’t sell stocks in bananas, we sell stocks in farms. Housing should be a consumable commodity not a line item in a corp’s assets sheet.

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20 points

What would stop owners from shifting the burden to the renters?

As of right now this is already how property taxes are handled by most landlords: mortgage + tax + est. cost to fix incidentals + time managing paperwork = rent (in a fair situation - though most will tack on as much extra for “profit” as they can)

So if you have a house worth 600k (12k tax), the mortgage is $3500/mo, they would just charge $4500+ a month to cover their costs.

I think the only way is to add extremely progressive property tax to multiple ownerships, and a name always has to be attached as “owner”. So your first house and second might have limited property taxes, but your third would be double, fourth would be quadruple, fifth would be 8x etc.

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16 points

My example is already an extremely progressive property tax on multiple ownership, but yeah, it can be tailored as needed.

I, personlly, would be in favor of doubling the tax if no one is living there.

As for rent: the price of rent cannot be arbitrarily raised. If renters can buy more cheaply than renting, then landlords will have empty units.

So in your example, renters would just buy and pay the $3500 mortgage instead of renting.

Of course real life is more complex. Renters need access to financing, etc.

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8 points

I feel like the rent crisis is not something that can be resolved by taxes alone. What is needed is a blanket ban on private rentals.

Got an extra house that you’re not living in for some reason? If you want to rent it, then you hand over control to the ministry of housing. No more discrimination against renters, no more invasion of renters privacy, and no more extorsionate rents.

Don’t want the government renting it out to ‘undesirables’ or think they arent paying you enough rent? Quit hoarding and sell it.

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5 points

Why do you think that “ministry of housing” would not discriminate, not invade privacy and charge fair rent? I’m always fascinated how people believe that some government entity would act as a compassionate and just human being, at the same time bashing rich for being assholes.

Power corrupts. In capitalist society capital brings power, and in socialist state it’s bureaucracy. So here you have rich assholes, and when you switch more power to government you’ll get paper shifting assholes. Not much will change for people with no power. Probably it will be worse because rich people and their corporations produce valuable goods and services, while paper shifters usually don’t need to produce anything apart from more papers.

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3 points

This sounds awfully lot like communism, not socialism.

Blanket bans are never the answer as it will hurt just as many people as it might help.

Not being able to rent a property will mean people with money won’t buy them. Which in turn will mean no one wants to pay or finance large developments.

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2 points

I’m glad we currently don’t have this tax system in place otherwise rents would be absurd and growing right now!

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19 points

This is a good idea which is why it will never implemented

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4 points

There’s a dozen ways to fix the housing problem. Knowing how to fix it isn’t the problem. Getting politicians who are paid not to fix the problem to do it anyway, is the problem.

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2 points

It will if poor people can work together against the common enemy.

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2 points

Poor people can’t come together if you elevate one part of them to a privileged position over the other part which is placed at a right-less position. The privileged workers don’t want to lose their power over their degraded compatriots, so they will fight tooth and nail (on behalf of the owners) to prevent any attempt from their degraded compatriots to free themselves.

Scapegoats of the world unite.

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16 points

It’s such a simple proposal, but I think this might actually be the solution.

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22 points

It wouldn’t. They already run around solutions like this by using proxies, so they are never the official owner of assets they wish to hide from the tax man.

I am all to reform, but this can only ever successfully happen if you target these oligarchs directly and dedicate extraordinary amounts of resources on taking them down and whacking every single loop hole until you finally got them cornered.

This is a never ending cycle.

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20 points

By shifting the tax to property and away from income tax, you break that cycle.

Elon can have a Panama based LLC that doesn’t pay income tax, but that only means he avoids the $25K income tax and loses the $50K tax benefit.

The $10M property tax must still be paid, because it is levied on the properties.

He might be able to then subtract the $10M from his tax obligations in Panama, but for the country where the property resides (e.g. USA), that does not matter.

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1 point
Deleted by creator
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9 points

I’d assume it’s a Federally levied property tax, the rebate applied to Federal income. Could be on the basis of the county assessed value of your property though.

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2 points

You know how the state taxes your income and the feds tax your income? It would be like that but with property instead of income. Your county taxes your property and the feds tax your property. But balanced correctly, you shouldn’t be paying more taxes to the fed because they’ll cancel out with your income tax.

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14 points

Housing cannot be both affordable and an investment.

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9 points

It theoretically can. Yes. It realistically won’t, no. Your home should be a security and not an investment. Speculation and hoarding with relation to housing should be largely outlawed. And usury being restricted to the point of being almost pointless.

If we, as a society prioritize desirable public housing for members of our society. Who the fuck cares if a house is an investment or not. That simple security is worth far more than any so-called investment could ever be. If people wanted to work extra hard and save up for something better, that’s always an option. But that shouldn’t be the premise for basic housing entirely.

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3 points

Whats your plan for investment groups that back corporations buying 1000 houses each month to rent?

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15 points

They will need to pay the property tax with no possibility of getting a tax discount, so they will have a competitive handicap against owner-occupiers, who will be able to outbid them in contrast to the current situation.

Government could consider providing a discount if the houses are rented out at affordable rates.

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1 point

That just makes the asset more expensive and would likely get passed onto the renter. There’s got to be something done to curb their purchases. Making it more expensive on the backend won’t change them paying cash up front to outbid a regular family.

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-5 points

What if the property tax is higher than the income tax? They get money back?

What about those who have to sell at a loss and are now stuck with a debt instead of profit for their retirement? Heck, some of them might be forced to go bankrupt because you can’t have a mortgage for a house you don’t own anymore!

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15 points

I literally covered these situations in the example, which leads me to believe you are just slinging mud and not seeking to understand.

If you own $500M in property and have a $10M tax bill but only have $100K in income, you can figure it out, even if it means downsizing and hoarding less real estate.

We have to stop feeling sorry for the top 0.1% of society and start taking care of the 99.9%.

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0 points
*

I’m talking about my 90 years old grandma who bought her house in the 70s and now lives on whatever’s left of my late grandfather’s pension, my parents who will have a mortgage to pay and never had a pension fund at work, they’re not fucking millionaires! You guys always seem to forget about regular folks that will lose their house while the rich will find ways to dodge whatever tax you would love to see implemented because they have the means to do it

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-5 points

Yes, he’s slinging mud. Can’t possibly be that there are holes in your perfect plan or that you explained it poorly

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5 points

Should’ve thought about that before they decided to hoard real estate!

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0 points

Hoard? Owning one house as a couple is hoarding them?

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80 points

Assuming you can even win the bidding war to buy a house right now. Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.

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35 points

In my area there always seems to be a cash buyer so even if you have a strong offer and are prequalified the seller isn’t going to pick you. They need to heavily tax non-primary residences and housing owned by companies. These robobuyers have destroyed any chance people have of buying a first home.

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25 points

Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.

And it’s not only companies. Lots of homeowners with low-interest mortgages from 2020-21 rent out their home instead of selling when they move, which in turn depresses inventory and puts upward pressure on prices.

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4 points

That’s crazy, I’m actually getting ready to sell my house right now and it’s going to be a struggle to not lose money… and I live in the fastest growing county in Utah.

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2 points
Deleted by creator
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64 points

It really doesn’t make sense to talk about averages for something like this in a country as large and diverse as[US is. Median home price in Hawaii is $973k. In West Virginia it’s $158k. The average isn’t relevant to most people, just the tiny fraction who live in a place where it’s about in the middle. Also worth noting that average salaries vary pretty widely, too.

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12 points

It does make sense because the average house price has gone up for everyone.

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3 points

The article is about median prices.

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2 points

Yep, got that. I’m saying the standard deviation is so high that there’s not a lot of use in discussing median prices across the country.

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2 points

I’m thinking about the argument that people should just move to a cheaper area if they can’t afford the city. Doesn’t this graph suggest that even if everyone could move anywhere without reducing their salary most working people would still not be able to afford a home?

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18 points
*

Its also very expensive to be homeless. There is no legal place to loiter or park your car. Even teh public spaces are strictly enforced with no loitering. Where I live anyways, public space is highly protected. If you dont have a private space you can do go, you are forced to constantly be nomadic going from one place to the next until you tire and cannot run away from the enforcement authorities and are jailed. When you exit jail, there is a halfway house or something you are allowed to go in, but thats only temporary and only if you have addiction problems.

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6 points
Deleted by creator
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2 points
*

Idk, I’d imagine they’d get a cell phone for wifi reasons over loitering coverage, even though that could be an additional benefit

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15 points
*

Housing is just a pump that transfers money from the bottom to the top. THE COST OF HOUSING USED TO BE 3 ANNUAL SALARIES. We could also turn air into a similar pump but air is more difficult to fence off…

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17 points

When my wife and I started looking at buying a house, there were new houses in a brand new development going for absolutely screaming deals. Houses twice the size of similarly priced houses. They were bland, soulless husks, each one bordering on ugly. You could even just buy the land and build your own home, ordered from a catalog. No estimate on time, of course.

And nestled in to the fine print at every single one, an HOA. The worst being 400+ dollars a month.

New housing isn’t being built, at least not for most Americans. We’re above average earners in a low cost of living area. What we can afford is not typical, and these crappy catalog mcmansions were just at the top of our price range, before the HOA.

The only solution I see to the housing problem, is mandating that middle-low income housing be built. Right now there’s no incentive to. The money is in keeping it scarce, or milking a covenant.

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5 points

Sorry, but for the non-americans, what is HOA?

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8 points

Home owner’s association. Neighborhoods have common needs such as landscaping and other infrastructure that doesn’t fall in someone’s property. In theory these make sense, you have a group of people who set guidelines to keep the neighborhood nice. However, what often ends up happening is the group pushes their own agendas and it is no longer for the common good.

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4 points

Additionally, they set rules about really nitpicky things like house paint color, mail box standardization, how often you mow and water your lawn, what kind of holiday decorations you can have and when they can be up, whether you store your trash cans in a way that is visible from the street when it’s not collection day, guests parking on the street too often, that kind of thing. They can fine or even kick you out of your house for violations.

What is a group of Karens called?

A homeowners association.

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2 points

Home Owners Association

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1 point

Your proposed solution is too narrow. All housing makes housing more affordable. Just let developers actually build the places people are demanding, whatever they are. No housing you build will ever be affordable unless there is enough of it.

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3 points

I see your point, and I don’t disagree. But we’re currently allowing developers to pick and choose which housing to focus on, and so the only housing being built is the housing with the most to profit from, the higher end housing.

I say mandate middle and lower income housing because it’s not being built, leaving a growing population to scramble for a decreasing supply of units.

Mixed use buildings and neighborhoods are also disappearing, and mixed use buildings are going to be key in the future.

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