Taxing Nothing: Make Owners Of Vacant Property Pay

[xchrom]

http://www.nationofchange.org/taxing-nothing-make-owners-vacant-property-pay-1318085585

Vir­tu­ally all fore­cast­ers are now pro­ject­ing the un­em­ploy­ment rate to re­main high for years into the fu­ture. This is the re­sult of the po­lit­i­cal dead­lock in Wash­ing­ton, where the Re­pub­li­can lead­er­ship has made it clear that it will op­pose any fur­ther mea­sures to cre­ate jobs.

If noth­ing hap­pens in Wash­ing­ton, then state and local gov­ern­ments are left to fend for them­selves. Un­for­tu­nately state and local gov­ern­ments have two se­ri­ous dis­ad­van­tages in the job cre­ation ef­fort rel­a­tive to Wash­ing­ton. They can’t run deficits, since most are re­quired to bal­ance their bud­gets. And, they can’t just print money like the Fed­eral Re­serve Board.

As a re­sult, the range of ac­tion for state and local pol­i­cy­mak­ers is lim­ited to what they can pay for. With the re­ces­sion sharply cur­tail­ing rev­enue, that doesn’t leave much money for in­ven­tive job-cre­at­ing agen­das. These gov­ern­ments can raise taxes, but there is a limit to how much taxes can be in­creased with­out send­ing busi­ness into neigh­bor­ing states, even if the po­lit­i­cal will ex­ists.

How­ever, there is one tax that state and local gov­ern­ments can raise with­out fear of los­ing busi­nesses or peo­ple. They can tax va­cant prop­er­ties.

[SoCalNative]

1. The author states that the vacant properties

aren't generating any tax revenue, which is not true. Property taxes are still being assessed and paid whether the property is vacant or not.

[jwirr]

14. There is an old saying : you cannot get blood from a turnip. If the

banks own the property then they should pay the taxes or forfeit the property to the government. But if the banks do not own it and the owner is broke how are they going to get him/her to pay? Many of the houses that are empty already belong to the government - if they do not get sold or rented they will not generate taxes.

[surrealAmerican]

2. It never occurred to me that there were places where ...

... vacant property was exempted from taxes.

[SoCalDem]

15. They may not be "exempted"...just non-compliant

If a house is foreclosed, and taxes are owed on it, those unpaid taxes probably get rolled into the purchase price when (and if) the property is re-sold, but until then, they are just piling up/unpaid.

In an area where many properties are "bank-owned", and have unpaid tax liabilities attached to them, taxes for those properties are owed-but-not paid.

Perhaps legislatures need to pass laws that allow municipalities/counties/states to confiscate properties from banks who do not bring their repos up to date on taxes. They could rent them out as low income housing, or sell them themselves to generate some money:evilgrin:

[WillowTree]

3. What makes you think that owners of vacant properties aren't already paying property taxes?

[On the Road]

4. Actually, All Vacant Properties are Taxed

The owners still have to pay property tax. And with a vacant property, the property tax is pure money for the local government -- no services to offset the cost.

[FormerDittoHead]

5. An unworkable idea.

on edit: I changed my mind because of the problem with enforcement and evasion.

It would be easy for an empty store front landlord to simply say it was rented, even if it's for some made-up business, say its hours are by appt only, etc etc. Point is this would just be another hoop for businesses to jump through and nothing would change.


before consideration of above:

I can't help but think this is, to a reasonable extent, a good idea. I can't say how much (10% above their present property tax?) but having *some* punishment / motivator is a good thing, IMO.

Living in one of the many small towns whose local retail stores were all but wiped out thanks to Walmart and other big box stores, I've seen empty store fronts in my town for decades now.

It seems that the owners, however, would rather wait for some fantasy miracle to happen than to simply lower their asking prices to rates which the renting market would really support. They can rent month to month, so the argument that they don't want to be locked in and miss some opportunity is moot.

Supply and demand doesn't work in a market where sellers aren't willing to lower their prices even though they'd still make a profit (some rent is better than no rent).

[LooseWilly]

17. Landlord can't simply "say" it's rented and make up a name... w/o also paying taxes on made up rent

Landlords pay taxes on rent. They can deduct expenses— in fact, they can deduct expenses whether or not the property is occupied... and that includes writing off local/state property taxes on a federal return. If, however, the property shows no rental income then all interest payments, property taxes and maintenance (as well as advertising for tenants etc.) are all deductions against the landlords' other income streams (up to a $25K limit on losses, presuming that the other revenue for the landlord isn't in excess of something like $125K for the year... after which the $25K special allowance is reduced and the losses become passive income losses that can only be deducted against passive income gains in future years...)

The long and the short of it is that all that needs to happen is that a rental floor has to be set up (and there are already guidelines for such because rental of a unit for significantly below market rates are already grounds for revoking the $25K allowance of rental income loss offsetting regular income)... if a landlord wants to "make up" a renter and pay taxes on the "made up" rental income... so be it. If they want to take the losses... then a revised tax code can penalize them for operating rental property that is unoccupied.

At which point... all your arguments about the usefulness of such a tax in order to force landlords to adhere to the "laws" of supply and demand and actually lower prices to accommodate demand with their supply... become compelling all over again.

In the meantime, those with the capital to allow them to do so will defy the "laws" of supply and demand and hope that desperation will force the "demand"ers to improvise some way to meet the prices being exhorted by the controllers of the supply (which is more like a drug dealer's mechanism for exploitation of elasticities of demand...).

Of course, if the suppliers refuse to obey the "laws" of supply and demand... the question arises: Why should the demanders/consumers obey said "laws"?

[Tuesday Afternoon]

6. so fallow land is worthless . . .?

of course we pay land taxes.

this is nothing new.

[Cool Logic]

7. Aside from the erroneous nature of your analysis regarding property taxes...

you also make the mistake of assuming that jobs are created by politicians.

[xchrom]

8. If the state builds a bridge - the state creates a job. Nt

[FrodosPet]

18. At least until the bridge is finished

What then? Tear it down and build it again? Build it poorly so it will need a lot of maintenance? What happens when there is no place left to build any more roads and bridges?

I'm not discounting the fact that there IS a lot of infrastructure work to be done, but I am curious about what happens when it IS done? Unless you are building crap (and endangering the public and their vehicles in the process), the maintenance on the infrastructure requires a small portion of the labor as the original construction.

I suppose there is the "make work" idea, but then, you are using machines and processes with large carbon footprints for no real, useful, productive purpose. We need solutions above and beyond building and rebuilding stuff.

[MADem]

9. I have a house that is vacant most of the year--I pay full taxes on it.

So, because there's no one living in the property, I should pay MORE? That's IDIOTIC.

This guy is arguing that because these properties aren't rented, they aren't bringing in income to the cities/towns in the form of consumers and he wants a SURTAX on the taxes already paid. Well, the fact that they are vacant also means that there's no one living in them who is wearing out the roads with their big fat SUV, polluting the local air, loading up the schools with their kids that need to be taught, burdening the water/sewer system, demanding an ambulance in the dead of night and "taxing" city services in other fashions.

Talk about grabbing for the low-hanging fruit! The guy also "assumes" that the people who own the properties don't live in the town, as he declares "There is one tax that state and local governments can raise without fear of losing businesses or people"--where does he pull this shit from?

If people do not maintain their property, that's one thing--that can be managed with FINES, not taxes. But if they pay the taxes that are owed on it it and keep it in condition mandated by the community, is not Big Brother's business if they live in the property, or rent it, or NOT.

This is probably the most moronic idea I've seen in a long, long time. Talk about getting up in people's business!

[liberalhistorian]

10. Vacant properties have always been taxed, there's nothing

new about that. Property taxes are owed whether or not a property is actually being occupied or, in the case of fallow land, used. So I'm not clear on why this is considered such a new policy.

What is new is the vastly larger amounts of owners simply unable to pay the tax. You can assess property taxes, but that doesn't mean they'll be paid and that owners will be able to pay them. That's why a lot of municipalities are being more aggressive with tax foreclosures for unpaid property taxes.

[louis-t]

11. In some states, vacant houses are taxed more.

If the home is not the principal residence of the owner in MI and some other states, it is taxed at a higher rate. Vacant land is a different issue. Still taxed.

[WillyT]

12. K & R !!!

:hi:

:kick:

[kenny blankenship]

13. This would do nothing but accelerate the concentration of wealth into fewer hands.

As others have already said, vacant property is taxed already. Raising a surtax on vacant properties in addition to existing property taxes would distress property values further by forcing sales from weaker to stronger hands, and would therefore serve to concentrate land ownership in the hands of banks (further). I thought we all agreed that highly concentrated land ownership/landlordship was a bad, more or less oligarchical idea?

[FrodosPet]

19. I think the idea for some is for the property...

I think the idea for some people is for the properties to end up in the hands of the various local governments. They would then be responsible for repairing it, maintaining it, and finding uses for it.

The upside is a potential for low income housing. The downside is, many low income people are unable to maintain it themselves, so you have an ongoing expense for the already cash strapped cities and towns.

Or, like someone else said, sell it to a small number of wealthy people who CAN afford to pay the added expenses and give them even MORE stuff to control.

[iris27]

16. And how long a grace period would an owner get before this kicked in?

What about ordinary people who have been forced to move, and are trying to sell or rent? They still face months-long gaps before finding a buyer or renter.

We had to move states for my husband's job and it took quite a bit before we finally got a renter in our house. (Selling was out of the question since we owed over $80k and there were dozens of foreclosures in the neighborhood selling for $65k or less.) Paying double housing expenses in that gap time hurt our finances pretty severely. And still with what we ended up renting it for, we will get a few bucks a month LESS than our mortgage payment, so it's not like we'll be making back that loss. Should we have had to pay even MORE just because we didn't want to walk away and let the bank foreclose?