[LMB] Re: Taxes OT:

Nicholas Rosen ndrosen at erols.com
Thu, 17 Jan 2002 23:08:51 -0500

James M. Bryant writes:

> Nicholas Rosen sees:-
>  >...no good reason for the Smiths to pay much higher
>  >taxes on their house, which they bought last month
>  >for 300K, than the Joneses do on their similar house,
>  >which they bought thirty years ago for 50K.
> [A] The Smiths have shown that they HAVE $300K, the
> Joneses may not have. Taxes on assessed value of
> property take no account of ability to pay the tax
> (unless you sell the property - and then where do
> you live?)

Michael Dolbear has already pointed out that [A1]
the Smiths *had* the 300K, which doesn't mean that
they have it now, and [A2] that's capital, not income.

> [B] By setting the value at purchase you encourage
> improvement of housing stock - by increasing the
> tax with increase in "value" you discourage it.

Good point.  Better still, tax the value of the land
without regard to improvements, and stop discouraging
both the improvement of existing homes by their owners,
and the construction of valuable houses for sale.  I'd
also like to point out that when the value of a house
climbs from 50K to 300K, it isn't usually because of
improvements, but because of rising prices, especially
land prices.

Nicholas Rosen