[giantg2]

"I totally agree and I think property taxes are way more fair and equitable for a society than income taxes."

Until you retire and no longer can pay the tax and are kicked out of your home.

Logically, it makes more sense to tax people who are actually making money (income and capital gains) since that means they actually have money. Taxing people on a fundamental need (shelter) could potentially increase homelessness, especially if you hit a rough time economically like with the pandemic.

"Income taxes disincentivize people from earning more"

I don't see how flat or even marginal income taxes disincentivize people from making more money.

[corpMaverick]

After retirement you have the option to downsize your home.

[giantg2]

There's only so far you can downsize. Some of the people being kicked out are lower income and already live in modest homes.

I guess you could also make the argument that you must relocate to cheaper areas, leaving behind your friends and family.

The real question is any if that is "right". Should we force people out of a home that they own or make them move out of the region they lived in, in some case for 30-50 years?

[mamon]

>> I don't see how flat or even marginal income taxes disincentivize people from making more money

When you hit higher tax brackets it gets more difficult to negotiate a raise with your employer, because to get X more money for yourself you need your employer to spend 1.4X more on your salary. Flat tax rates have no such effect.

[giantg2]

But as a marginal system only taxes the income above the cutoff at the higher rate, you would still make more money.

For example, you are making $99k and paying 4% (pretty close to many state income taxes) on that with the next bracket at $100k with a 6% rate. You get a raise to $110k which means you are making an additional $10360 after tax and only paying an additional $200 in tax (4% vs 6% on that $10k). I don't see why you need a 40% increase.

[lukeramsden]

Couldn't you give property tax breaks to retirees, or to people temporarily out of work?

[gangstead]

Seniors do get a slight property tax discount here in Texas. Still I suppose it does encourage people to downsize when they are empty nesters and no longer need to house a big family. In California you get the opposite problem where people can't afford to move as their needs change since their property tax would no longer be kept low.

[Domenic_S]

There is an exception in CA (it's complicated and only good in some counties) where an older person can transfer their tax basis, once, to a new house for precisely this situation.

Once again young people get the shaft in CA though.

[telotortium]

The exceptions are easier to get now with the passage of Prop 19 this year. The summary on Ballotpedia (https://ballotpedia.org/California_Proposition_19,_Property_...) is pretty good:

- allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;

- increase the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;

- require that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and

- allocate additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.

[giantg2]

Seems like a convoluted system to tax people based on property while still making it means based. What was the reasoning they gave for not just using an income based system, which should more implicitly align with one's means?

[Domenic_S]

Makes gaming the system harder. Once you're rich enough you could only take compensation every other (3rd/5th/etc) year and pay property tax only then. Unlike compensation once the property tax year's gone it's gone, there's no deferring situation (eg, vis a vis deferring comp where the big chunk in later years would still be taxed)

It's not an unusual situation in urban CA for an elderly person to have bought a house currently worth many millions back in the day for <$100k. Downsizing for them means still spending many hundreds of thousands of dollars, far beyond the tax basis of their current home. I think the current system encourages (or at least doesn't disincentivize) older folks with expensive homes to sell and downsize, meaning the tax basis for that same home will increase a whole bunch for the new buyer (since tax basis is recast as the purchase price when sold), ultimately driving more tax revenue.

[giantg2]

"Once you're rich enough..."

Which means you had to recieve that money at some point and it would have been taxed.

I'm sure rich people can avoid or find a way to deduct property taxes anyways. For example, setting up an anonymous Wyoming LLC or some form of trust.

It sounds like the system you are describing for the elderly is specific to CA.

[giantg2]

Yeah, PA gives a small discount too.

It depends on how far someone is willing to downsize. Many 1500sqft single homes in that region are paying about $8k-9k per year in property tax. I guess you could cut that in half if you live in a row home of about 900 sqft. That can be a big lifestyle change depending on one's hobbies (gardening, keeping a classic car, beekeeping, etc may require more space). Not to mention $4k-5k could still be around or over 10% of a retired persons income, or even working families too (Philadelphia has the highest rate of extreme poverty of any city in the US measured as families of 4 making <$12k per year).

[giantg2]

You could. But you see, that's really working as an income tax then, but even less efficiently/equitably because you now need a mechanism and oversight to classify people/households as retired/out of work and that classification may not be taking into account the difference between someone making more money in retirement than others might make while working.

For example, if I'm retired and making 5% annually on $5M dollars, that's more income than many working class people. Why should I get a break on property tax? If it's income tax, then it applies to everyone equally and you don't need special exceptions for people who lost their income since it would automatically remove the need to pay the tax (no income to withhold from).

[ramses0]

AGE 65 OR OLDER OR DISABLED EXEMPTIONS FREQUENTLY ASKED QUESTIONS:

https://comptroller.texas.gov/taxes/property-tax/exemptions/...

[jelliclesfarm]

texas has waivers if you are over 65 and then there is the homestead exemption etc.

the high property tax is only for the income earners who pay no income tax.