Forclosures on poor elderly

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anonymous_coward
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@Economike:"From a supply

@Economike:"From a supply-side perspective, the property tax on residential property is efficient, since the homeowner's tax burden doesn't rise with additional income. In this sense, property tax is voluntary in comparison with income tax.

Fixed-income hardship cases who owe back taxes are exceptional. A means of relieving them may be good policy, but I not convinced that scrapping the property tax entirely is likely to help."

The problem arises when people put an overly large value on inertia. "I've lived here my entire life and I'm not moving" is sappy BS, and feeding the narrative that, "the gummint is takin our homes" is just enabling this lazy behavior.

Ugenetoo
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It's unimaginable the damage

It's unimaginable the damage done by liberals to the poor in the arrogant pursuit of feeling good about themselves.

Watcher
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A-C, I guess you don't know

A-C, I guess you don't know or choose to be ignorant that property taxes go up almost every year because the teachers and school administrators want more money, more benefits, bigger swimming pools, large and spiffy new palaces of learning (school buildings) more special ed assistants, more lap-tops etc. The local municipality also wants more moolah for their hard, hard working clerks and dump employees. Voluntary? Surely you cannot be that stupid! I can control my income tax by controlling my income. I cannot control what the nit-wit hired by the town thinks my property is worth this year and I cannot control what the jerks who moved here from Mass and ALWAYS vote to increase the budget and ALWAYS pay more for their property than it is worth and ALWAYS approve every bond issue floated down the pike.

The sentence where you opine about an "overly large value on inertia" when people don't want to be forced to move from their homes is purposely meant to cast derision on and demean those who value their community, their church, their friends, family heritage, volunteering at community activities...on and on. How very Liberal of you.

Economike
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I think Mr. Anon has a point,

I think Mr. Anon has a point, although provocatively expressed.

Can we agree that rent control, which ostensibly aims to prevent homelessness among poor people, creates counterproductive results which actually raise housing costs and create scarcity?

If I proposed a government program to subsidize ownership of housing people otherwise couldn't afford, who'd be in favor?

Matt
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Sure is funny to see Watcher

Sure is funny to see Watcher and Stoolsmith crying about gentrification and rich people screwing things up. You can’t argue for how the one percent should be able to leave their hard earned millions to their kids, and then complain when said children drive up property values and vote to spend money on everything because theyve got cash to burn and don’t know the true value of a dollar.

Either acknowledge that an extremely high estate tax is necessary and just, or take your own conservative advice and get off your duff and make more money so you can live where you want. Hey, it’s America, the land of opportunity. If you’re scratching by on a fixed income, it’s your own damn fault. Right?

Mainelion
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Half the harm that is done in

Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm; but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.

T.S. Eliot

Economike
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I wonder if New Hampshire,

I wonder if New Hampshire, which relies heavily on the property tax for revenue, has a similar incidence of tax delinquency among low-income householders?

I ask because New Hampshire's per capita income (BEA, 2016) is $55,984. Maine's is $44,053.

I also wonder about this: if the property tax is so unfair and regressive that it ought to be abolished, why does a state that relies heavily on that source of revenue seem to be so conspicuously prosperous?

We've discussed this question before. For examples,

http://www.asmainegoes.com/content/maine-caught-its-own-safety-netunlike-nh
http://www.asmainegoes.com/content/cuzzi-lepage-budget-shift-property-ta...
http://www.asmainegoes.com/content/new-hampshire%E2%80%99s-dilemma#comme...

Fifty years ago, Maine and New Hampshire were nearly twins, in terms of population and income. What happened to cause Maine to fall so far behind?

The explanation that springs to mind is this: Maine enacted an income tax that effectively strangled its economy.

If I had to choose between reliance on property tax or income tax, I'd opt for property tax.

Toolsmith
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Property tax is not as

Property tax is not as burdensome on lower income than an income tax. The rich rarely pay the full income tax percentage due to legal loopholes. Whereas property tax has few loopholes, so the tax ends up being paid - most ways to avoid property tax involve losing control of the property.

Ugenetoo
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Fifty years ago, Maine and

Fifty years ago, Maine and New Hampshire were nearly twins, in terms of population and income. What happened to cause Maine to fall so far behind?

Middle class young wage earners were, and still are, being driven away due to a lack of jobs caused by radical environmentalism.

JackStrawFromWichita
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“Property tax is not as

Property tax is not as burdensome on lower income than an income tax.

Huh? Say an elderly couple’s only source of income is Social Security and they have a $1,500 property tax assessment. Now their income tax is $0 but their property tax is still $1,500. Now they could get a property tax credit in Maine of up to $900 but they’ll still have a net $600 expense.

Let’s use real numbers here-$20,000 in Social Security and a $1,500 property tax. Their income tax is $0 and their Maine credit is $150. So the net property tax is $1,350 .

If $1,350 is not more than $0, let me know…

Toolsmith
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Most poor do not own property

Most poor do not own property, and thus do not pay property tax.

We've been discussing the problem of those who bought property when their income was higher, and now falling income or rising property values they cannot control threaten to force them out. Those who who were always poor never have that problem.

Bruce Libby
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Actually this started with

Actually this started with the issue of dealing with foreclosure procedures on delinquent property tax payers
and how to deal with certain type of individuals.
Jackfrom ........math is completely accurate and on point.

Toolsmith
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That's how the foreclosures

That's how the foreclosures are happening... either income from or valuation increase causes the property to become unaffordable, with selling out or foreclosure the only possible results.

This does not happen to those who were always poor. This only happens to those who were able to buy property in the first place.

Matt
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Anyone can take out a reverse

Anyone can take out a reverse mortgage. It’s not like increased property value is a horrible thing. It’s generally what people who buy a house hope for or expect.

Watcher
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Toolsmith said - "Most poor

Toolsmith said - "Most poor do not own property, and thus do not pay property tax. "

Not true. Unless the poor are living in the woods, they rent. The landlord pays property tax and the rent reflects that. The property tax is just passed on in the rent.

Toolsmith
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Every time I see this, I

Every time I see this, I remember that market forces determine actual rent. That, and the government subsidy for those in assistance. Landlords can't "just pass on the tax".

Anyone actually have rental property? I did, for over 25 years. When I couldn't get enough rent to cover expenses, repairs, and tax due to market rent in the area I got out. You can't just raise rent whenever you want.

Bruce Libby
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But it is easy to not drop

But it is easy to not drop that subsidy check !

Watcher
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Toolsmith, you said it

Toolsmith, you said it yourself...you included your property taxes in the rent you charged and I bet it figured in future rent charges until the rent became too high...because, in part, of the property tax. Until that point, you passed it on and then, you quit renting. The fact is that part of the cost a landlord must recover to make renting financially viable is property tax. That means that your tenants lost their home (rental residence) due in part to Property taxes.

Toolsmith
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No, I didn't. You charge what

No, I didn't. You charge what the market will bear. You pay your bills, including taxes, out if it. There is no magic increase to allow raising rents whenever the politicos decide they want more money. They squeezed until there was no income left - rents did not increase.

Amazing the fairy tale worlds people live in...

Watcher
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Oh, I get it. You rented

Oh, I get it. You rented your property at market rates even if you lost money every month. I rented my house in Maine before I moved here. I remolded it and improved it considerably as the prior owners let it run down. The property taxes went up dramatically due to fixing it up and a Town-wide reevaluation. I raised the rent to cover that increase. Still was able to rent it with no problem because every one else also had property tax increases. Market value is not a static number.
My original point stands...property taxes are a component of the cost of owning a property and indeed figure into the amount one need to get as rent and thus are paid by the renter.

These are your words...not mine:
"When I couldn't get enough rent to cover expenses, repairs, and tax due to market rent in the area I got out. "

anonymous_coward
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@Economike:

@Economike:
"Fifty years ago, Maine and New Hampshire were nearly twins, in terms of population and income. What happened to cause Maine to fall so far behind?

The explanation that springs to mind is this: Maine enacted an income tax that effectively strangled its economy.

If I had to choose between reliance on property tax or income tax, I'd opt for property tax."

This is actually a really good experiment - since NH & Maine are so close in population, geography, etc.

Would love to see this examined more closely to filter out other variables.

anonymous_coward
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@Economike:

@Economike:
Actual question - is the burden of property tax entirely borne by the property owners, or does some land on renters?

I would think that imposing/raising a property tax would reduce overall sales prices (since it directly impacts PITI/monthly cash flow), which makes it more expensive for builders to build new houses, which reduces supply, which increases rent.

But what ratio of that amount shows up in rent? Would renters simply move somewhere else (say, Maine instead of NH)?

Watcher
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A-C, your question is a good

A-C, your question is a good one. I pay more in property taxes in Maine than I do in income tax both State and Federal. If I add my income tax and my property tax and my Maine auto excise tax, I am paying a hell of a lot of tax. Not complaining mind you, just saying. After all, I moved here. If I moved to a no income tax state I might or might not be better off depending on the property tax.

My point remains valid I think. Taxing property to fund schools and government made sense 150 years ago. It is now makes no sense because, for the private citizen, ones property is not an income generator. Perhaps a sales tax, perhaps a per-capita fee, perhaps a great er income tax. The sales tax and the per-capita fee means no freeloaders. Even the poorest among us can afford $50 per year.

Economike
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As Toolsmith and Watcher

As Toolsmith and Watcher and I agree (I think), property tax is a cost like any other cost to the landlord. The landlord tries to recoup costs from the tenant. Does a property tax in a locality make the rental business less profitable? I doubt it. The value of rental property is a function of the income to be made by renters within commuting distance. Property tax is just a part of the tax mix paid by renters.

From an economic standpoint, a homeowner derives income from his property: the value of implied rent. (In fact, this is how the income value of home ownership is calculated when the gummint publishes GDP statistics.) In this real sense, home ownership generates income.

I think I get Watcher's principled objection to property tax but, as a practical consideration, property tax is better than, for example, a progressive income tax as both a source of revenue and an incentive for economic growth, as my comparison with New Hampshire suggests.

anonymous_coward
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@Watcher: "ones property is

@Watcher: "ones property is not an income generator"

Well if you're a landlord, it is. And Economike's point stands, if you didn't own a home, you'd be paying rent, so the income generated by the home is equivalent to the rent you'd be paying otherwise.

I guess my original question was more, if you were to raise property taxes by 1%, how much of that would be borne by landlords, homeowners, and renters?

Are there any studies on that?

Watcher
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A-C, I agree that rental

A-C, I agree that rental property does generate income. If the tax assessors did their job correctly, in two identical house where one earns rental income, the rental house would pay more property taxes because the house is worth more. That never seems to enter into the calculations for property taxes in my Town.

When I say that "ones property is not an income generator" I refer to non-rental, residential homes only. Of course I know stores, manufacturing sites, rental properties etc earn money.

To beat a dead horse, I will say again, property taxes are so unfair, arcane, subjective and incompetently administered, how in hell can anyone be for them...

Economike
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In order to think about the

In order to think about the effects of property tax, we need to think dynamically. For example, the question "Who bears the burden of a 1% rise in property tax?" doesn't provide sufficient information. Does the rise in this tax reduce some other tax? Is the extra revenue spent well or wasted? That is, where are we on the Laffer Curve for property tax?

I think it's evident that a reliance on property tax, compared to progressive income tax (and possibly sales tax), frees productive resources and leads to economic growth. New Hampshire is Exhibit A.

A New Hampshire resident can earn an extra $10,000 and keep it. A Maine resident keeps $9,300, more or less. As I've noted before (using data from taxfoundation.org), the privilege of Maine residency costs about 3% of income per annum, compared with the average state. Over time, that marginal difference compounds. (That's 50% over 24 years!) It's no coincidence that Maine can't keep or attract productive younger workers.

In Maine, scrapping the property tax would be disastrous if it increased reliance on the income tax.

All taxes are unfair, depending on which principle one applies. In practice, an effective tax regime is a matter of convention, of balance among interests.

Islander
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As soon as I sell my house,

As soon as I sell my house, is it not an income generator? Or an home equity loan?

Watcher
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No Islander. In my opinion,

No Islander. In my opinion, if I sell my home for more than I paid for it plus all of the repairs, maintenance and property taxes I paid over the years then I may have made a profit. Most people think that if I paid $100,000 for a house and 10 years later sell it for $110,000, I made a profit of $10,000. Over the years I paid $5,000 in property taxes, $3,000 for a new roof, etc. To determine if I made a profit, I must add all the money I spent and then subtract the money I got.

As for the equity loan, If I borrow $500 from you and a week later, I pay you $510 back did I have income of $500? No, borrowing money you have to pay back with interest is certainly not income.

Islander
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Watcher, sounds no different

Watcher, sounds no different than a landlord putting money into his property, imo. Unless you are assuming that there is a large profit to be made from renting and not used to fix the place up. Kind of like parents collecting rent from adult children who still live at home, is that now an income property? Right now I am renting from the bank, until mortgage is paid off, someone is making money off my property. How does a home business differ from rental property.
I will say that this is the first town I ever lived in that unanswered our taxes some years. We vote to raise taxes for various reasons, then lower them when the reason is paid for. So it can be done

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