this post was submitted on 21 Oct 2023

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You have to earn $115,000 a year to afford a typical house now in the US (www.axios.com)

submitted 1 year ago by [email protected] to c/[email protected]

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[–] [email protected] 207 points 1 year ago (19 children)

It's the same across the world.

The problem is that real estate has become an asset, a form of capital.

The only way out of this mess is to shift taxation away from labor and onto capital.

Higher property taxes (1-2%), that can be subtracted from income tax for working people are the answer.

Let's say Joe the Plumber and Elon the Muskrat both have an income of $100K and pay an income tax of $25K.

Joe owns one property worth $1M that he lives in and pays 2% tax on it, $20K. Which gets subtracted from the $25K income tax, meaning he effectively pays $5K income tax + $20K property tax = $25K combined property and income tax. Pretty sweet deal.

Elon owns 20 properties valued $500M collectively, which means $10M in property taxes. He officially resides in the most expensive $100M property and gets a $50K credit for that. The $50K is larger than the $25K, so he pays zero income tax.

Total tax is $10M.

This (or something like it) is the system the whole world must move towards if we want to simultaneously (a) lower taxes on working people (b) increase taxes on property and (C) not let working people lose economic power relative to the capitalists over the longterm.

The middle class has to outsmart the owning class if we want our children to remain middle class.

[–] [email protected] 46 points 1 year ago

I really hate all the replies attempting to poke holes with minimal effort. Thanks for this comment and your robust set of examples.

Housing shouldn't be a vehicle for interest or making a living, I'd take it more extreme than what you have if I'm being honest. You can own the buildings you use 60% of the year for work or for housing but nothing else. We don't sell stocks in bananas, we sell stocks in farms. Housing should be a consumable commodity not a line item in a corp's assets sheet.

[–] [email protected] 20 points 1 year ago (3 children)

What would stop owners from shifting the burden to the renters?

As of right now this is already how property taxes are handled by most landlords: mortgage + tax + est. cost to fix incidentals + time managing paperwork = rent (in a fair situation - though most will tack on as much extra for "profit" as they can)

So if you have a house worth 600k (12k tax), the mortgage is $3500/mo, they would just charge $4500+ a month to cover their costs.

I think the only way is to add extremely progressive property tax to multiple ownerships, and a name always has to be attached as "owner". So your first house and second might have limited property taxes, but your third would be double, fourth would be quadruple, fifth would be 8x etc.

[–] [email protected] 16 points 1 year ago

My example is already an extremely progressive property tax on multiple ownership, but yeah, it can be tailored as needed.

I, personlly, would be in favor of doubling the tax if no one is living there.

As for rent: the price of rent cannot be arbitrarily raised. If renters can buy more cheaply than renting, then landlords will have empty units.

So in your example, renters would just buy and pay the $3500 mortgage instead of renting.

Of course real life is more complex. Renters need access to financing, etc.

[–] [email protected] 8 points 1 year ago (2 children)

I feel like the rent crisis is not something that can be resolved by taxes alone. What is needed is a blanket ban on private rentals.

Got an extra house that you're not living in for some reason? If you want to rent it, then you hand over control to the ministry of housing. No more discrimination against renters, no more invasion of renters privacy, and no more extorsionate rents.

Don't want the government renting it out to 'undesirables' or think they arent paying you enough rent? Quit hoarding and sell it.

[–] [email protected] 5 points 1 year ago (3 children)

Why do you think that "ministry of housing" would not discriminate, not invade privacy and charge fair rent? I'm always fascinated how people believe that some government entity would act as a compassionate and just human being, at the same time bashing rich for being assholes.

Power corrupts. In capitalist society capital brings power, and in socialist state it's bureaucracy. So here you have rich assholes, and when you switch more power to government you'll get paper shifting assholes. Not much will change for people with no power. Probably it will be worse because rich people and their corporations produce valuable goods and services, while paper shifters usually don't need to produce anything apart from more papers.

[–] [email protected] 7 points 1 year ago (1 children)

If power corrupts, then why not vest that power in a democratic institution controlled by the people, rather than leaving it in the hands of whoever has exploited enough of the lir peers to monopolise housing?

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[–] [email protected] 19 points 1 year ago (3 children)

This is a good idea which is why it will never implemented

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[–] [email protected] 16 points 1 year ago (4 children)

It's such a simple proposal, but I think this might actually be the solution.

[–] [email protected] 22 points 1 year ago (1 children)

It wouldn't. They already run around solutions like this by using proxies, so they are never the official owner of assets they wish to hide from the tax man.

I am all to reform, but this can only ever successfully happen if you target these oligarchs directly and dedicate extraordinary amounts of resources on taking them down and whacking every single loop hole until you finally got them cornered.

This is a never ending cycle.

[–] [email protected] 20 points 1 year ago (7 children)

By shifting the tax to property and away from income tax, you break that cycle.

Elon can have a Panama based LLC that doesn't pay income tax, but that only means he avoids the $25K income tax and loses the $50K tax benefit.

The $10M property tax must still be paid, because it is levied on the properties.

He might be able to then subtract the $10M from his tax obligations in Panama, but for the country where the property resides (e.g. USA), that does not matter.

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[–] [email protected] 13 points 1 year ago (1 children)

Housing cannot be both affordable and an investment.

[–] [email protected] 9 points 1 year ago

It theoretically can. Yes. It realistically won't, no. Your home should be a security and not an investment. Speculation and hoarding with relation to housing should be largely outlawed. And usury being restricted to the point of being almost pointless.

If we, as a society prioritize desirable public housing for members of our society. Who the fuck cares if a house is an investment or not. That simple security is worth far more than any so-called investment could ever be. If people wanted to work extra hard and save up for something better, that's always an option. But that shouldn't be the premise for basic housing entirely.

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[–] [email protected] 80 points 1 year ago (4 children)

Assuming you can even win the bidding war to buy a house right now. Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.

[–] [email protected] 35 points 1 year ago

In my area there always seems to be a cash buyer so even if you have a strong offer and are prequalified the seller isn’t going to pick you. They need to heavily tax non-primary residences and housing owned by companies. These robobuyers have destroyed any chance people have of buying a first home.

[–] [email protected] 23 points 1 year ago

Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.

And it's not only companies. Lots of homeowners with low-interest mortgages from 2020-21 rent out their home instead of selling when they move, which in turn depresses inventory and puts upward pressure on prices.

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[–] [email protected] 64 points 1 year ago (5 children)

It really doesn't make sense to talk about averages for something like this in a country as large and diverse as[US is. Median home price in Hawaii is $973k. In West Virginia it's $158k. The average isn't relevant to most people, just the tiny fraction who live in a place where it's about in the middle. Also worth noting that average salaries vary pretty widely, too.

[–] [email protected] 12 points 1 year ago

It does make sense because the average house price has gone up for everyone.

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[–] [email protected] 18 points 1 year ago* (last edited 1 year ago) (1 children)

Its also very expensive to be homeless. There is no legal place to loiter or park your car. Even teh public spaces are strictly enforced with no loitering. Where I live anyways, public space is highly protected. If you dont have a private space you can do go, you are forced to constantly be nomadic going from one place to the next until you tire and cannot run away from the enforcement authorities and are jailed. When you exit jail, there is a halfway house or something you are allowed to go in, but thats only temporary and only if you have addiction problems.

[–] [email protected] 15 points 1 year ago* (last edited 1 year ago) (1 children)

Housing is just a pump that transfers money from the bottom to the top. THE COST OF HOUSING USED TO BE 3 ANNUAL SALARIES. We could also turn air into a similar pump but air is more difficult to fence off...

[–] [email protected] 17 points 1 year ago (3 children)

When my wife and I started looking at buying a house, there were new houses in a brand new development going for absolutely screaming deals. Houses twice the size of similarly priced houses. They were bland, soulless husks, each one bordering on ugly. You could even just buy the land and build your own home, ordered from a catalog. No estimate on time, of course.

And nestled in to the fine print at every single one, an HOA. The worst being 400+ dollars a month.

New housing isn't being built, at least not for most Americans. We're above average earners in a low cost of living area. What we can afford is not typical, and these crappy catalog mcmansions were just at the top of our price range, before the HOA.

The only solution I see to the housing problem, is mandating that middle-low income housing be built. Right now there's no incentive to. The money is in keeping it scarce, or milking a covenant.

[–] [email protected] 5 points 1 year ago (3 children)

Sorry, but for the non-americans, what is HOA?

[–] [email protected] 8 points 1 year ago (2 children)

Home owner's association. Neighborhoods have common needs such as landscaping and other infrastructure that doesn't fall in someone's property. In theory these make sense, you have a group of people who set guidelines to keep the neighborhood nice. However, what often ends up happening is the group pushes their own agendas and it is no longer for the common good.

[–] [email protected] 5 points 1 year ago (1 children)

To elaborate for the curious, basically a community sets up a committee that will handle these things. You would normally pay HOA fees to cover things like paying for the streetlights in a private community, the pool or fitness center, or whatever a long those lines. Basically for a private community it's a way to say "Hey, we need some things done to keep things nice, everyone pay in so the flowers look good this year". Normally, not a bad idea. There are usually two things that go wrong though. One, the money is mismanaged and/or people are heavily overcharged and the extra money disappears. The other is that HOAs also have rules for the community to keep things orderly on their own property. No cars in your yard, no blaring music after 9pm, etc. But you hear about a lot of cases where this stuff gets out of hand and suddenly people are getting fined for having trash cans out too long or the wrong colored curtains.

Because of this, people have justifiably built up a lot of hate for HOAs. Imagine buying a house, your own property, then paying +$100 a month to keep the neighborhood nice, then some picky Karen comes by to tell you that you can't hang up your sports team flag and if you don't take it down they'll fine you $50 a day.

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[–] [email protected] 11 points 1 year ago (2 children)

We got our house before all of this bullshit back in 2014 before all of this bullshit happened, so we have a decent mortgage, but we really want to move to another town and we'll never be able to afford it until my rich mother dies and I inherit her money and sell her house. Which sucks, because one of the reasons to move is because she lives there.

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