Why should there be a cap? If you're so rich as to own some property, why do you need protection from paying a reasonable rate of tax?

A major problem with decoupling property taxes on owner-occupied housing from market prices is that it removes the biggest incentive for a homeowner to vote for policies that keep the local real estate market in check. An owner occupied house in a desirable area where there is no disincentive to politically engineering a supply shortage becomes a financial investment. Any increase in housing value becomes profit for the owner (or their descendants). This leads to supply restrictions and escalating prices and an increasingly unhealthy society as the young and the poorer are pushed out of the city, county, or even state.

This is essentially what has happened in coastal California over the last 60 years.

> One way out could be to tax the value gain at the time of sale, or when the house gets rented out, thus no longer being “owner occupied”.

My local government put exactly this on the ballot: a small percentage transfer tax on the sale price of the home, which would offset some of the costs we currently pay in ad valorem property taxes.

The local real estate community had a meltdown and poured hundreds of thousands of dollars into defeating it, which my neighbors obliged and did.

The issue with that is the disincentive to sell (or buy), which leads a lot of people to stay put in their oversized home during retirement, for example.

In the UK, 'stamp duty' is something that buyers pay (as opposed to sellers), but sellers also have to buy, so everyone pays to move and everyone stays put to avoid paying.

(And of course no one builds, which is the biggest issue).

I'd say it's OK to defer your property taxes until you sell (or die), but it shouldn't be the default, only something you apply for if you're in a vulnerable position.

I think it's a great idea to let land taxes create the incentives to build efficiently.

> Any gain in value cannot easily be realized since it’s not a liquid asset.

Reverse mortgage

Or just loosen supply side restrictions so much that houses typically don’t go up in value.

That's basic Econ101: households optimize for (subjective) utility, not for profit on some balance sheet. Taxing households for non-realized gains doesn't take into account liquidity nor the (subjective) negative utility and opportunity cost of selling your home and moving away.

This will drive rent up, punishing people who lack the credit to purchase.

I disagree. In my country we are currently in a inheritance boom. Everyone who has parents is getting free money.

> One way out could be to tax the value gain at the time of sale

Stamp duty in the UK, horrendous tax. It's better than nothing at offsetting the unearned increase in house (land) value, but far worse than a regular tax.

If you live somewhere for 10 years, then move, then repeat for 40 years, you pay far more than if you never move. This encourages people to live in less suitable houses for longer.

As to your worry about land values increasing -- the owner is deriving benefit. The higher the land value is, the more benefit the owner gets from the land.

> One way out could be to tax the value gain at the time of sale, or when the house gets rented out, thus no longer being “owner occupied”.

Forcing renters and buyers to pay for the local services instead of property owners seems extremely unfair.

> Any increase in housing value (and thus property taxes) is mostly an increase in the cost of living.

So? If the property values go up then cost of living is going up for renters too. Why should property owners be shielded from this by imposing local service costs on renters who generally have even lower incomes than owners.

> One way out could be to tax the value gain at the time of sale

This is how it works for sales in Sweden, via the so called "reavinstskatt", or profit realisation tax. Funnily enough, it is mostly applied to individuals in practice. To avoid the taxation, companies package properties in subsidiaries, which can then be sold and traded like any other stock. The tax is then postponed until the de jure sale of the property, which never occurs. Individuals are not eligible because the loophole is closed if the legal owner also occupies the property they own.

In New York state half of property taxes is for county contributions to the state medicaid fund. This excludes the seperate schools tax which is property based. Health care costs drive up many costs in the US including all libality insurances. The second part of this tax mess comes from the excessive military budgets since the late 1970s most of our national debt as of the mid 1990s was from that waste of resources. I understand we shouldn't just cut abruptly but our spend on weapons needs to slowly decline while we fund the transfer of workers out of the military industrial complex. And there are a lot of structural accounting problems like how personal credit card and automobile financing isn't tax deductbable but leveraged buyout interest is. The tax exemption for share buybacks is another budget drain. My instinct is we need a universal national income tax along with a land tax that in some ways exempts housing up to some middle or upper middleclass level.

I don't know about Austin, but where I am the single biggest source of rising costs for the city seems to be its pension fund. Which seems to have severely underperformed the market thanks to the efforts of hedge fund managers who were all hype about dotcoms in 1999, mortgage-backed securities in 2006, cryptocurrencies in 2018, and are probably pretty excited about AI right now.

People, as a rule, do not want less service. Services generally function like a ratchet, where once one has been added it is incredibly difficult to get rid of.

So not only is the cost of service to be thought of, but the quantity of services.

The same happens within services too. The police got a helicopter 5 years ago, are they going to turn down another one, or are they going to explain why the new one needs to be more expensive with more capability? Multiply that across every agency.

> Neighbors who can afford and are willing to participate in ridiculously scaled housing markets also tend to take better care of their properties and local communities.

Whereas you take great care of your local community by even refusing to live around anyone not as well off as you ?

Imagine the horror of having to live within 10 miles of a low class smelly poor plebeian, you might have to lay your eyes on their 3 days overgrown lawn from time to time.

You should be concerned if you have 100+ psi water pressure. Anything above 70 is atypical for a residence.

This works in other areas of life. A courtesy charge creates a better environment by giving participants skin in the game and filtering out actors who wouldn’t mind abusing you but wont pay to do so.

Someone is pocketing a large fraction of that $2500 while paying 2-3 people a minimum wage to get things done.

Wait until you get a tyrannical HOA board and realize you have to make a choice between dealing with them or moving. Dealing with them typically involves lawsuits which come out of your HOA fees, which will go up along with all your neighbors who are now angry that their fees have gone up as well. (Ask me about open records my HOA hasn’t delivered for over 350 days.

I pay my city for sewer, water, and trash. I pay an ISP for fiber to the home, a power company for electricity. If you get all those things for $2500/year from your HOA, congratulations.

Don't have HOA, have everything you have, AMA

all of those services are ones that should be realized by the city, from taxes paid to the city. If they are not, the problem is that people vote for wrong people

I have heard way too many horror stories about obnoxious neighbors in HOAs to ever want to live in one, personally

Let’s say you wee solid middle class and bought your forever home, in what was at the time, the near suburbs. Now that neighbourhood is unaffordable. The city might set a percentage of the home value as their target but now your well placed forever home is beyond your what your pension can afford. This happened a lot in Canada.

The worst part is that for all these taxes, the level of service has dropped since that home was bought.

Depends on the jurisdiction. I've lived in both, budget based rates like you describe (Minnesota), and fixed rates with market based assessments (D.C.). I wonder which is more common.

Economics class is usually in high school and it's optional.

Schools are really expensive to operate. Most districts and schools make it easy to graduate to maximize their graduation rates. Standardized testing is suppose to catch local lowering of standards but state departments of education are also under pressure to maximize test pass rate. So resources flow into pulling the bottom quintile of students up to a minimum standard. This means teaching to the test on math and English, and de-prioritizing other subjects or dropping them entirely.

We could expand the breadth of educational basic standards. This would require a cultural shift in valuing formal education more, increasing teacher training/recruiting resources, making schools year round, more centralization of education budgets at the state or even Federal level.

Generally speaking public schools tend to be better in states like Massachusetts than Kansas.

Most people aren't capable of understanding numbers: https://politifact.com/factchecks/2020/mar/06/msnbc/bad-math.... You can't educate them to do it, any more than you can educate your average person to be able to reliably hit three pointers. It's a physical limitation.

That's why socialization is so important. You can't get voters to understand the difference between billions and trillions or put anything in context when the numbers get that big. All you can do is socialize them from an early age to have directionally correct gut feelings like, "there's no such thing as a free lunch" or "saving is good."

Scarcity of instructors competent to teach such subjects? Followed by the natural bureaucratic response: Pretend no such need exists.

Destruction? It's by design:

"One man gathers what another man spills."

If calculators had never been invented then perhaps arithmetic and economic literacy would be required of citizens. A big problem is that we invented a tool for something that's most powerful when you can do it easily and constantly in your head. People are not pulling out the tool to use it constantly because there's friction to that.

I wouldn’t count somewhere I don’t want to live being cheaper as the prices of all other homes falling… ;) Nor as lack of need to stay either - if real estate prices were the only thing keeping people around, cities might not exist.

> Buy in a VHCOL area like San Francisco

How does this work? VHCOL does not mean that prices will appreciate or even sustain.

ATX real estate is still in free fall. You can win making a move within the state at this point.

Just dont complain about loss of relationships and community while also advocating for policies that make lasting community ties impossible.

True it's not a direct property tax, but house value is included in total wealth and is thus taxed through the general wealth tax.

School system and taxation for schools in NH is very specific to NH « low/no taxes » mantra. I am a resident of a neighbor state with several co-workers living in NH and I recall 15 years ago that there were massive school funding differences between towns. So there was an attempt at redistributing taxes to help pay for other schools from other towns, which was extended to all schools (freedom!) - so home schooling etc. Is NH state funding local schools in some form ? Typically it’s a mix of local, state and federal funds…

If you really want to rage, read about Hasidic cults in NY/NJ gaming government funds.

> There’s no reason the local government budget should increase at the same rate as the property values in the taxed area.

There's some reason. City workers may need to live in the area. If housing becomes more expensive, the city may need to pay higher wages.

Sure. But that’s why schools in California are underfunded.

If the value of a house doesn't increase, then the property taxes, upkeep, mortgage interest, and selling fees would make home ownership untenable and worse than renting. And then if you rent the problem gets pushed up to the landlords anyway.

It's nice that you would like the world to be this way but it's time to put this tired old canard to bed. It's not individuals but the financial system that treats houses as assets. They do so by extending mortgages. Try getting one for your car.

Yeah, I view my house as a consumer good and I don't want the value of my home to increase relative to inflation - ignoring taxes if I have to sell it I'd just have to buy another house at an increased price which will take up any realized gains from the transaction. Plus the fees involved in the cost of buying/selling are higher now b/c they are usually a percentage of the transaction.

But isn't it understandable? You work your whole life to buy a piece of property. But not just a piece of property anywhere. It's a specific one, in a specific neighborhood, in a specific zone. All of these things tie into the $ that you paid for that property. Regardless of the change in value, a change there impacts how you perceive living there.

If all of the sudden the neighborhood behind you gets rezoned to industrial and you get a datacenter nearby, everybody understands you're up in arms.

If at the same time the neighborhood behind you gets converted from 200 single-family homes to 200 8-plexes, complaining is NIMBY. Even though it has the same dramatic impact on the quality of life you bought into. Way more noise, way more street parking, cars racing late at night etc.

You need extremely high levels of trust and community to incentive the kind of behavior you are asking for. That is not reinforced or taught at any of our schools or government institutions. It only exists in small family or religious communities.

So absent of that, I think your personal incentives also lead you to your current housing policy preferences. Don’t you?

Yes there is. You own a more valuable asset, so now even if you want to keep it you could take out a loan against it for a greater amount than if it hadn't appreciated.

It is basically the billionaire/ unrealized gains argument.

I can take a loan against or collateralized my home value.

I can have greater operational flexibility if I know I have a deep financial backup.

There is something to it, even if overstated

Is there any country where I can walk into town with a bag of money, buy a house in cash, and never have to pay taxes on it again? EU countries either have a property tax or a wealth tax that includes people's first homes.

Surely one missed tax payment is not enough for the government to evict and assume ownership? I see these cases in SF occasionally and it takes years of non-payment.

> Is that true and how is this not perpetual serfdom if you can't ever really own a home?

https://phillipslytle.com/a-review-of-new-yorks-response-to-...

Until 2023, some (many?) would sell off your house and pocket the difference, even if it exceeded the tax liability!

Fine, you win. We're all serfs. You've redefined "serfdom" to mean living in a modern civilization with public infrastructure, and the property tax tradeoff that comes with it. I'll choose this serfdom until a better viable option presents itself.

Because Serfs didnt own the land. Lords did but had taxes.

In so many ways it helps to focus more deeply on the fundamentals.

For one thing, in the 1970's lots of true "baby boomers" were still too young to vote.

Maybe what you mean is old folks in general, they were the ones in California who were desperate enough to support the proposition which might be able to save their homes.

They should know, lots of them had been through The Great Depression, and were so much older than boomers they could be their grandparents, well they actually were if you do the math.

And they did the math, getting by just by the skin of their teeth while those just a little bit older who had been on a fixed income earlier had already been taxed out beyond recovery before the proposition.

They already ate the pain, I guess it's difficult to remember how up-front it was if you never spent that many years among Depression survivors.

Nobody ever wanted a depression again, and losing your home through no fault of your own was one of the most visible outcomes that ordinary people could do something about before it got out of hand.

This was supposed to be big, and it is bigger than ever, this is by design.

The problem comes from trying to work against it when the entire economic system surrounding "real estate" was supposed to evolve by now to where nobody pays more tax by now than the most proposition-protected properties.

The idea was for it not to end up making any difference as the years went by, nothing could be more fair than that.

The pearl-clutching comes from the failure of following generations to evolve away from taxing properties or wealth, with all levies eventually falling exclusively onto commerce instead so that only those who are actively making big transactions at the time are logically expected to be able to afford anything at all at the time.

Otherwise things are going to stay as medieval as they can, and the torture will continue until the attitude improves.

> Because taxes are there to pay for services, there's absolutely no reason why they should increase just because the value of your property... Oh that's not how local governments see it?

Actually that often is how local governments see it in many places.

Local bond issues, which are paid for by property taxes, are often not a fixed rate. They are often a fixed amount (e.g., $2 million/year for 5 years) or a fixed initial amount with some growth allowed (e.g., $2 million/year for 5 years with inflation adjustments, often capped at some maximum adjustment).

With these each year the rate changes to keep the amount collected on target. If aggregate property values go up the rate goes down and if aggregate property values go down the rate goes up. If everyone's property values went up or down by the same percentage the amount of tax each person paid would stay the same.

Your share of the tax is proportional to your share of the aggregate property value, so our individual taxes can change regardless of any changes in aggregate value. For example if aggregate value goes up 5%, but your assessed value us up 10% and mine is up 3% your tax for a fixed amount bond will go up and mine will go down.

Why would government services not be subject to the same cost pressures due to inflation as the rest of society?

If the price of housing the rises, the cost of living will rise, employees will demand raises, and the cost of providing services will increase. Even if housing prices remain flat, there will be inflation leading to the same result.

But I agree that pinning all hopes of class mobility or comfortable retirement on perpetually increasing housing costs cannot work for very much longer.

Of course. Everyone wants the money they have to increase, the amount of services they receive increase or stay the same, and the money they pay to decrease or stay the same.

This isn't something special with taxes.

Would highly recommend, will be doing it again soon :)

Piece of cake really, compared to getting lucky trying to lower taxes.

not my downvote btw