Author Topic: Why are we subsidizing property taxes of millionaires?  (Read 235 times)

Offline TimG

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Okay, I agree with that. People who rent apartments generally don't pay too close attention to property taxes because it has an indirect effect on them. I don't agree with your overly simplistic idea of supply and demand when it comes to rentals though.
The law of supply and demand in a perfect free market is an abstraction but there are always issues in the real world because there is no such thing as a perfect free market because barriers prevent more supply from being created or limit the ability of buyers to choose not to buy. That said, when discussing policy it useful to ask what can be done to remove factors that prevent the market from functioning like a perfect free market. With rental housing it is important to understand that regulatory barriers discourage people from making rental units available so if you want cheaper rents you need to think carefully about what barriers are really needed. Adding more regulatory barriers is only going to make the problems worse.

Offline the_squid

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Corporate property tax rates could be lowered if individuals didn't receive subsidized property taxes. 

Which would be a good thing.  I benefit from the 1st time home buyer grant tax subsidy...  but it makes no sense.

Offline msj

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I also doubt that people living in apartment buildings are voting en mass in municipal elections. 
I've gotta have more cow bell! -Bruce Dickinson

Offline cybercoma

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I also doubt that people living in apartment buildings are voting en mass in municipal elections.
I don't think anyone is voting en masse in municipal elections. Voter turnout for municipal elections is often below 50% across the country, afaik.

Offline msj

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35% or less is the usual turnout across most cities and towns.

I've gotta have more cow bell! -Bruce Dickinson

Offline kimmy

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Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k

Offline msj

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Tim seems to think so.

I doubt it too, though. 
I've gotta have more cow bell! -Bruce Dickinson

Offline dia

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Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k

Have to admit that my interest in municipal elections has always been non-existent, until I became a home-owner, when my interest skyrocketed to "Oh, there's a municipal election this year?".   
Discussion is impossible with someone who claims not to seek the truth, but already to possess it.

Offline cybercoma

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Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?  This seems highly far-fetched.

 -k
It's one of those conclusions you come to when you work theories in your head to support your beliefs without actually thinking about how they would play out in reality.

Offline TimG

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Is this really a concern?  That renters are such a powerful voting block that they'll elect politicians with ludicrous spending plans, because they don't pay property taxes directly?
It is the principle that matters. They can vote and they don't pay taxes that they are aware of. This is not true for other levels of government where everyone pays PST or GST even if they have no income.

Offline kimmy

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I was using the term "bad decision" as a statement of economics rather than morality. Credit cards hide the costs and therefore charge more than they would be able to charge if the cost was in the open. This is bad from an economic perspective.

I believe that most renters are renting because they lack the financial resources to own, not because they lack the information about hidden costs in their rent. (and as I mentioned before, I know that for landlords renting properties like mine in my area, tax is an insignificant amount compared to the rents being charged.)


These activities are called "creating rental properties". People do not have to rent out basements if they do then those are new rental properties that never existed. Investors can and do buy properties for capital gain. They do not have to offer them as rentals. Choosing to offer them as rentals is expanding rental supply.

Scooping up real estate to turn it into rental properties does nothing to increase the supply of housing. Same number number of suites... more rental units, fewer opportunities to own. Buying properties to rent out is extremely profitable, and people are willing to pay high prices because they know the return will be high.  They don't need an extra $570+ subsidy to convince them to rent them out.

Perhaps incentivizing the creation of basement suites is a good idea-- that actually does create new housing.

But giving people further incentive to buy up existing homes as rental properties is counter productive.  It's probably doing at least as much to drive up real estate prices as the hated "foreign investor" who keeps getting blamed for Vancouver home prices. If anything there should probably be barriers, not more incentives.

The prices are not going to be affected by a single building. It takes time for prices to adjust to new supply and a city that encourages people to rent out housing will see lower rents than a city that puts up barriers..

The free market is doing a great job of encouraging people to rent out housing. The profit motive is so persuasive that nobody needs an extra $570+ to convince them.  It's like giving away gold, and then deciding to give people free gas to drive to the mine to collect it too.

Homes are being built as fast as possible. The barrier isn't the lack of profit to be made.

 -k

Offline ?Impact

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It would be interesting to look at the demographics of renters and their involvement in municipal politics. I am assuming there are a large percentage of young renters without children that are fairly mobile and don't concern themselves with local politics because they don't see themselves staying in that location for a long time. Once people start to think about raising a family then local politics start to play an important role because they begin to settle down in one area and become less mobile. They may remain renters or purchase a home, and they move from house to house, but do they remain within the same municipality for longer periods of time?

Offline cybercoma

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This article compares and contrasts renter demographics in Vancouver with the rest of Canada.

http://www.theglobeandmail.com/news/british-columbia/the-picture-of-renters-in-vancouvers-tight-rentalmarket/article31111809/

Nothing on voting behaviour, but given the demos, I highly doubt there's any consistent or statistically significant differences that can't be explained by confounding influences.

Offline Manob

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Less subsidies and less tax complexity means less economic distortion. Absolutely cancel the subsidy.

Offline kimmy

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It is the principle that matters. They can vote and they don't pay taxes that they are aware of. This is not true for other levels of government where everyone pays PST or GST even if they have no income.

It might also be the case that homeowners and landlords support policies that help keep rents and property values high (for example, zoning restrictions and enforcement of anti-rental bylaws at the municipal level, the BC homeowner grant at the provincial level, and mortgage policies and interest rates at the federal level) without considering the economic cost to their communities and ultimately themselves.

 -k