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Income Inequality

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property taxes on real estate are more use taxes than a wealth tax

 

also, real property tax is highly inefficient and easily manipulated by those in the know. It is not a great way to tax wealth. When you have an inefficient marketplace such as fixed assets or real estate or closely held companies, you cannot easily determine the "true" value of something.

Edited by Brutus_buckeye

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I have heard that some of the states in the northeast have a personal property tax on things like cars and boats that can be pretty onerous.  Sounds like a wealth tax.  Anyone have any experience with that?

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Kentucky and WV have that as well. One time I bought a used motorcycle in Kentucky and didn't have to pay sales tax on it in Ohio because the property tax had already been paid.

Edited by GCrites80s

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Those aren't wealth taxes, they're just taxes on the value of some things that one owns.  Or something.  Eh, Brutus?

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7 hours ago, X said:

Those aren't wealth taxes, they're just taxes on the value of some things that one owns.  Or something.  Eh, Brutus?

They are consumption taxes.  In Kentucky and Indiana, the personal property tax phases out after 5 years and are essentially based on the amount of consumption. If you have a 10 year old car, you are just paying a basic "fee" for your tags, if you have a 1 year old Mercedes you pay a lot more than the 10 year old chevy for your tags. However, at the end of the day, these taxes are tied to consumption.

 

The wealth tax is essentially taxed on the "perceived" value of a person's wealth and assets and is taxed just on the fact that they hold the asset, whether it is income generating or not. It creates a disincentive to investment or incentive to pursue risker investments. In addition, it is extremely difficult to measure. Most of the assets that make up such a portfolio are unique and illiquid.  Take Donald Trump for example, on some days, he claims he is worth $10 billion, on others he claims it is $2 billion. If the tax man asked, it may be even less. The reason being is that the value of his assets is very fluid and illiquid that it can be whatever you say it is at a given time. This is a horrible way to tax people, it will create huge admin burdens and be extremely difficult and costly to enforce that it is almost not really worth the time. This is why almost every European country that has had a wealth tax in the past has repealed it. It is just a stupid idea.

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Let's consider a specific example.

 

There is a privately held chain of grocery stores in the greater Akron area that has been in existence since 1891, with a related real estate holding company business that primarily owns the land the stores and distribution center sit upon but also owns warehouse and office space.  A number of great-descendants of the original founder still run the business.  It looks from the outside like there is considerable wealth there; even though the grocery business is low-margin, the fact that the business has been around for 125+ years means that capital has had time to accumulate.

 

However, the local neighborhood grocery model is under intense threat at the moment.  Amazon is lurking in the background, and they have one toe in the market already with a Whole Foods 365 within easy walking distance of one of of that local chain's locations.  Home delivery is becoming more and more of a thing and the local chain arguably lags considerably in developing that capability, or even curbside takeaway (at least just to my eyes, Giant Eagle has been pushing that offering more than anyone else in the area, particularly through the massive Giant Eagle Market District in Cuyahoga Falls).

 

As I noted, the local chain is privately held.  Even if the income, cash flow, and balance sheet statements were public, it would not tell you the enterprise value of the company; financial statements are a major ingredient in that calculation but it's more complex than that because you need to have a justification for what multiple you put on earnings or sales or whatever to justify an enterprise valuation.  This grocery chain enjoyed a secure footing for generations but now is under siege.  It still does significant business but has also taken on considerable new debt recently for expansion of many of its stores.  How do you value the "wealth" of the family that owns this business for the purposes of the proposed wealth tax?  Depending on what those confidential financial statements show over time, you might even be able to make an argument that the wealth is actually shrinking because of the increased competitive threats from much larger players, as well as from smaller niche groceries like Mustard Seed.  That would contract the multiple that you'd get if you sold equity in the company even as income continues to be positive, simply because it would be a much riskier investment.

 

Taxing wealth is ridiculously complicated simply because assessing wealth is ridiculously complicated.  It's more complicated than assessing income, and as the size of the income tax portion of the Internal Revenue Code (and associated regulations and Tax Court decisions) already makes clear, even that is a far more complex undertaking than you might think.

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13 hours ago, Brutus_buckeye said:

They are consumption taxes.  In Kentucky and Indiana, the personal property tax phases out after 5 years and are essentially based on the amount of consumption. If you have a 10 year old car, you are just paying a basic "fee" for your tags, if you have a 1 year old Mercedes you pay a lot more than the 10 year old chevy for your tags. However, at the end of the day, these taxes are tied to consumption.

 

The wealth tax is essentially taxed on the "perceived" value of a person's wealth and assets and is taxed just on the fact that they hold the asset, whether it is income generating or not. It creates a disincentive to investment or incentive to pursue risker investments. In addition, it is extremely difficult to measure. Most of the assets that make up such a portfolio are unique and illiquid.  Take Donald Trump for example, on some days, he claims he is worth $10 billion, on others he claims it is $2 billion. If the tax man asked, it may be even less. The reason being is that the value of his assets is very fluid and illiquid that it can be whatever you say it is at a given time. This is a horrible way to tax people, it will create huge admin burdens and be extremely difficult and costly to enforce that it is almost not really worth the time. This is why almost every European country that has had a wealth tax in the past has repealed it. It is just a stupid idea.

 

 

Sounds to me like they are being taxed based on the value of the vehicle, which declines with the age of the vehicle.  A mileage tax would be a consumption tax.

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The mileage isn't listed on the title until the vehicle sells. Boats don't keep track of mileage at all but I don't know if the hour meter is listed on the titles or not in the various states. I'm wondering if the values of cars and bikes are indexed to Kelley Blue Book or another source.

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9 hours ago, X said:

 

 

Sounds to me like they are being taxed based on the value of the vehicle, which declines with the age of the vehicle.  A mileage tax would be a consumption tax.

Depreciation is a form of consumption. If it is a 5 year property, it is deemed to have a 5 year "useful" life. Useful is the key term here, not to be confused with "total". In each year, you consume 20% of the value of the vehicle based on the indexes used.  So yes, it is ultimately based on consumption.

 

 

8 hours ago, GCrites80s said:

The mileage isn't listed on the title until the vehicle sells. Boats don't keep track of mileage at all but I don't know if the hour meter is listed on the titles or not in the various states. I'm wondering if the values of cars and bikes are indexed to Kelley Blue Book or another source.

In most states they are pegged to a Kelly Blue Book or some common index. If the vehicle is totaled out or a complete loss, there are ways to get it down further in many cases but it is a bunch of paperwork

 

 

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21 hours ago, Gramarye said:

Let's consider a specific example.

 

There is a privately held chain of grocery stores in the greater Akron area that has been in existence since 1891, with a related real estate holding company business that primarily owns the land the stores and distribution center sit upon but also owns warehouse and office space.  A number of great-descendants of the original founder still run the business.  It looks from the outside like there is considerable wealth there; even though the grocery business is low-margin, the fact that the business has been around for 125+ years means that capital has had time to accumulate.

 

However, the local neighborhood grocery model is under intense threat at the moment.  Amazon is lurking in the background, and they have one toe in the market already with a Whole Foods 365 within easy walking distance of one of of that local chain's locations.  Home delivery is becoming more and more of a thing and the local chain arguably lags considerably in developing that capability, or even curbside takeaway (at least just to my eyes, Giant Eagle has been pushing that offering more than anyone else in the area, particularly through the massive Giant Eagle Market District in Cuyahoga Falls).

 

As I noted, the local chain is privately held.  Even if the income, cash flow, and balance sheet statements were public, it would not tell you the enterprise value of the company; financial statements are a major ingredient in that calculation but it's more complex than that because you need to have a justification for what multiple you put on earnings or sales or whatever to justify an enterprise valuation.  This grocery chain enjoyed a secure footing for generations but now is under siege.  It still does significant business but has also taken on considerable new debt recently for expansion of many of its stores.  How do you value the "wealth" of the family that owns this business for the purposes of the proposed wealth tax?  Depending on what those confidential financial statements show over time, you might even be able to make an argument that the wealth is actually shrinking because of the increased competitive threats from much larger players, as well as from smaller niche groceries like Mustard Seed.  That would contract the multiple that you'd get if you sold equity in the company even as income continues to be positive, simply because it would be a much riskier investment.

 

Taxing wealth is ridiculously complicated simply because assessing wealth is ridiculously complicated.  It's more complicated than assessing income, and as the size of the income tax portion of the Internal Revenue Code (and associated regulations and Tax Court decisions) already makes clear, even that is a far more complex undertaking than you might think.

To even add onto your point.

 

If you want to see a rapid destruction of capital, the wealth tax will do that. Depending on how much pain Warren wants to provide by it, you will have significant paper write downs of asset values to escape the wealth tax thresholds, not to mention the people who will be chased to invest in new exotic investments as a way to escape the tax. You will also have a significant slowdown in lending because banks will not be able to lend because the value of the assets on their books will have been significantly diminished. Many loans to good borrowers may need to be called in because of the new diminished capital values and paper write downs, as the asset no longer conforms with debt covenants.  It could essentially create a 2008 type contraction as lenders will not be able to lend.

 

But..... hey, at least we stuck it to the rich guy.

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3 minutes ago, GCrites80s said:

A lot of Boomer wealth will be destroyed when nobody younger than them will buy their 5BR mcmanshions located too far away from businesses. 

 

Especially considering millennials want to live in walkable neighborhoods with close proximity to the CBD.  They generally dont own cars and have less children.

 

I was just watching, caldwell banker report that says millineiuls want "turn key" but will buy and renovated homes where cosmetic changes  / minor renovations can be made. I feel like there is going to be a resurgence of buyers in the in city nabes and inner ring 'burbs.

 

 

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Already seeing this play out in Geauga county. Regular SFHs in the $150k-350k range are selling immediately. All the McMansion stuff at $400K+ is taking forever to move. I know two recent retirees who took over a year to sell and  got nowhere near the $800k+ they wanted


And they reckon that the last thing she saw in her life was
Sting, singing on the roof of the Barbican

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52 minutes ago, roman totale XVII said:

Already seeing this play out in Geauga county. Regular SFHs in the $150k-350k range are selling immediately. All the McMansion stuff at $400K+ is taking forever to move. I know two recent retirees who took over a year to sell and  got nowhere near the $800k+ they wanted

800k for a newer house in Geauga? 

 

giphy.gif

 

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America's oligarchy continues to increase its power through the government it owns....

 

 


"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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"Nope, nothing to see here. Just look the other way." -- every American oligarch

 

 


"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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4 minutes ago, GCrites80s said:

Do you think that would stick at this level? Back then he considered her a founder for helping out a lot in the beginning.

 

She worked a lot smarter & harder than I did at the 2-3 companies I was hired at that went out of business. 

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2 hours ago, jmecklenborg said:

bezos.jpg

Well good for her for sticking it to Bezos after his bullsh#t location "contest". And scr#w the corporations making more money than ever but paying a lower tax rate on it. Disgusting.

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On 12/2/2019 at 3:46 PM, KJP said:

"Nope, nothing to see here. Just look the other way." -- every American oligarch

 

 

I just don't get why so many of the people getting scr#wed this way do not see this! Also funny how Liberalism "officially" died in the US just about 50 years ago in 1968, and here we are with the highest tax bracket falling lower and lower and the gap widening and widening-and so many people are just blind to it. smh.

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3 minutes ago, GCrites80s said:

Right-Wing think tanks have been cranking out so much manipulative rhetoric over the past 35 years that people literally have no idea how to think.

This. And the internet has not helped at. all. 

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1 minute ago, Toddguy said:

This. And the internet has not helped at. all. 

 

Yep, the internet made everything worse.  Music is worse.  Art is worse.  Writing is worse.  Politics is somehow even worse.  

 

My friend who teaches at a small college said they've had to stop giving writing assignments in virtually every field because the students plagiarize absolutely everything off Wikipedia, etc., and if they booted everyone out the school would have to close.  

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2 hours ago, GCrites80s said:

Do you think that would stick at this level? Back then he considered her a founder for helping out a lot in the beginning.

 

I'm not a lawyer so I have no idea lol


Very Stable Genius

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13 minutes ago, GCrites80s said:

Right-Wing think tanks have been cranking out so much manipulative rhetoric over the past 35 years that people literally have no idea how to think.

 

Oh, no, people are thinking exactly how they (the right) want them to think.  "I'm a future millionaire" type of thinking.  Basically, they have everyone convinced they are going to hit it big...any year now...so we need to have a "pro business environment" in place now for that to happen.  Something like that.


Very Stable Genius

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4 hours ago, DarkandStormy said:

^His fault for not signing a prenup.

Prenup would not have helped. They both had no assets when they first married. All his income from Amazon would be considered marital income.

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2 hours ago, Brutus_buckeye said:

Prenup would not have helped. They both had no assets when they first married. All his income from Amazon would be considered marital income.

 

What's crazy is that Bezos borrowed $300,000 from his parents right at the beginning of Amazon.  They own like 8% of the company, so they're worth upwards of $10 billion themselves now.  Does Jeff inherit Amazon stock when they die?!!!

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Oldie but a goodie. In short: the only "trickle down" is when they piss on you, which is all the time in the United Oligarchs of America....

 

What Working-class and Poor White People Need to Understand About Rich White People

https://medium.com/@jonnaivin/what-working-class-and-poor-white-people-need-to-understand-about-rich-white-people-44157a370c8f


"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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29 minutes ago, KJP said:

Oldie but a goodie. In short: the only "trickle down" is when they piss on you, which is all the time in the United Oligarchs of America....

 

What Working-class and Poor White People Need to Understand About Rich White People

https://medium.com/@jonnaivin/what-working-class-and-poor-white-people-need-to-understand-about-rich-white-people-44157a370c8f

 

KJP, you know that no rich person with take the time to piss on you, they would have the staff do it! 

 

That article was so on point.

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23 hours ago, KJP said:

Oldie but a goodie. In short: the only "trickle down" is when they piss on you, which is all the time in the United Oligarchs of America....

 

What Working-class and Poor White People Need to Understand About Rich White People

https://medium.com/@jonnaivin/what-working-class-and-poor-white-people-need-to-understand-about-rich-white-people-44157a370c8f

 

"Black and Brown people are not the reason you’re poor, rich white people are the reason you‘re poor."

 

If I tried all day, I don't think I could come up with a single phrase that more succinctly represents almost everything that's wrong with politics in 2019.

 

Hopefully a time will come in which we look back at identify politics with the same disgust we have for things like slavery and other terrible institutions our country as survived.

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On ‎12‎/‎13‎/‎2019 at 5:03 PM, jmecklenborg said:

 

What's crazy is that Bezos borrowed $300,000 from his parents right at the beginning of Amazon.  They own like 8% of the company, so they're worth upwards of $10 billion themselves now.  Does Jeff inherit Amazon stock when they die?!!!

Depends if they leave ti to him in their will. I would imagine given Jeff's status, they are probably passing it elsewhere

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21 hours ago, GCrites80s said:

Saying "identity politics" equals "I'm a straight white guy and I want all the attention on me at all times"

 

Don't forget Christian.  Remember, we didn't hear "Merry Christmas" said AT ALL from 2008-2016.


Very Stable Genius

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"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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For a change of pace, here's some good news (this could go in a number of threads):

 

The 2010s Have Been Amazing

https://www.wsj.com/articles/the-2010s-have-been-amazing-11576540377

 

The 2010s have been the best decade ever. The evidence is overwhelming. Start with the United Nations Development Report. Framed as a warning about inequality, it plays down the good news: “The gap in basic living standards is narrowing, with an unprecedented number of people in the world escaping poverty, hunger and disease.”

 

The World Bank reports that the world-wide rate of extreme poverty fell more than half, from 18.2% to 8.6%, between 2008 and 2018. Last year the World Data Lab calculated that for the first time, more than half the world’s population can be considered “middle class.”

 

 

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^ LOL -- meanwhile the USA and UK are the only two "wealthy" nations with real declining wages, life expectancy, quality of life, etc. That oligarchy sure is serving us well.

 

Example...

 

Edited by KJP

"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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Yup

FB_IMG_1577830637509.jpg


"Most of us have been conditioned to regard military combat as exciting and glamorous -- an opportunity for men to prove their competence and courage. Since armies are legal, we feel that war is acceptable; in general, nobody feels that that war is criminal or that accepting it is a criminal attitude. In fact, we have been brainwashed. War is neither glamorous nor attractive. It is monstrous. Its very nature is one of tragedy and suffering" --Dalai Lama

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