Move over Prop 13, Arizona legislator has an even dumber idea

[Zorba]

A lot of elderly people live on a fixed income that's just enough to get by on, I know several in that category, they're not asking for a hand out, just to have less taken from them. That doesn't seem unreasonable to me, and it appears the majority of voters agree.

Having property taxes waived is a hand out.

 

[Zorba]

It’s deliberate sneakiness that’s happened with every flat tax proposal I’ve seen. The reason is easy to understand - a lower rate makes it easier to sell to the public.

Switching entirely to a consumption based tax is more economically efficient and there’s nothing inherently wrong with it - you could easily craft a plan that maintains the current progressive nature of our federal system. (federal only, state taxes are highly regressive) Improving tax efficiency is not the goal though, cutting taxes on rich people is.

I have a hard time believing you could make a consumption tax as progressive as income. The super rich would also easily get out of it by buying abroad.

 

[Greenman]

Having property taxes waived is a hand out.

Actually, it's a discount.

 

[fskimospy]

I have a hard time believing you could make a consumption tax as progressive as income. The super rich would also easily get out of it by buying abroad.

I agree you might need some sort of AMT for the super rich or something but lots of purchases aren’t practical to make abroad. Like, you can’t live in your house abroad, that’s just living in another country.

For everyone but the super rich though you can make it progressive through a prebate. Basically you give everyone $10,000 (made up number) to start off the year. If you’re poor that covers all your sales tax for the year so you pay $0. As your income and consumption go up you pay over that amount and that is your new real tax rate.

 

[thilanliyan]

A lot of elderly people live on a fixed income that's just enough to get by on, I know several in that category, they're not asking for a hand out, just to have less taken from them. That doesn't seem unreasonable to me, and it appears the majority of voters agree.

That's fair enough, but applying it only to people who own their homes isn't right. Those people are probably wealthier to begin with and likely don't need that break. Should apply across the board if anything.

 

[Zorba]

Actually, it's a discount.

Same thing by different words. Other people have to pay more because they pay less.

 

[Zorba]

I agree you might need some sort of AMT for the super rich or something but lots of purchases aren’t practical to make abroad. Like, you can’t live in your house abroad, that’s just living in another country.

For everyone but the super rich though you can make it progressive through a prebate. Basically you give everyone $10,000 (made up number) to start off the year. If you’re poor that covers all your sales tax for the year so you pay $0. As your income and consumption go up you pay over that amount and that is your new real tax rate.

Yeah, the low end is easy.

But like your house abroad example. Today if I want a house abroad I have use post-tax dollars to do it. Under a consumption tax, I'd never pay US taxes on the money used for that purchase. Things like Yachts and planes would be even easier to buy/hold abroad.

 

[fskimospy]

Yeah, the low end is easy.

But like your house abroad example. Today if I want a house abroad I have use post-tax dollars to do it. Under a consumption tax, I'd never pay US taxes on the money used for that purchase. Things like Yachts and planes would be even easier to buy/hold abroad.

Didn't you hear? If you're super rich you just take out loans against your assets and then pay no tax at all!

 

[IronWing]

Hmm, 23% sales tax on political bribes, maybe like.

 

[pmv]

A lot of elderly people live on a fixed income that's just enough to get by on, I know several in that category, they're not asking for a hand out, just to have less taken from them. That doesn't seem unreasonable to me, and it appears the majority of voters agree.

Again, though, it's the wrong way to do it. I get that people don't like to have to downsize, moving is stressful, and older people might not want to move from where they've lived all their lives. For that reason I don't favour bringing in punitive incentives to get people to move (like the "bedroom tax" the Tories introduced here for council tenants). But just continuing to levy property taxes at the same level they've always been seems perfectly justifiable to me. Just leave such taxes at the same level, neither raise or lower them just because people have gotten older.

 

[Zorba]

r
Didn't you hear? If you're super rich you just take out loans against your assets and then pay no tax at all!

True. I was thinking more of high income earners as opposed to the actual super wealthy. But yeah, the super wealthy already get out of everything.

 

[[DHT]Osiris]

https://twitter.com/x/status/1612931558662365184

National GOP is pushing 23% (and up) sales tax instead of income and estate tax that the wealthy don't like. And apparently they'd get rid of IRS, because no one would ever cheat on paying sales tax, amirite?

Fuck, imagine how expensive eggs are going to get.

 

[pmv]

I agree you might need some sort of AMT for the super rich or something but lots of purchases aren’t practical to make abroad. Like, you can’t live in your house abroad, that’s just living in another country.

For everyone but the super rich though you can make it progressive through a prebate. Basically you give everyone $10,000 (made up number) to start off the year. If you’re poor that covers all your sales tax for the year so you pay $0. As your income and consumption go up you pay over that amount and that is your new real tax rate.

Interesting idea. Does seem to me that consumption taxes are generally regressive.

One thing that reduces that effect a lot is to exempt the essentials that poorer people spend most of their income on, like food or children's clothing, as is the case here.

But that was also an argument for Brexit - that the EU made it hard to do that, because EU rules meant you couldn't reduce sales tax to zero on anything if it had ever previously been non-zero, hence tampons were subject to VAT, despite being rather essential for half the population, and the excuse for not removing it was always that "The EU won't let us".

Your suggestion makes me wonder why nobody suggested just paying all adult women a flat sum each year that would effectively be a rebate on the VAT they would be paying on tampons. It doesn't seem like it would have been very difficult to work out a figure for that. Irrelevant now as post-Brexit they've finally been zero-rated.

 

[Zorba]

Interesting idea. Does seem to me that consumption taxes are generally regressive.

One thing that reduces that effect a lot is to exempt the essentials that poorer people spend most of their income on, like food or children's clothing, as is the case here.

But that was also an argument for Brexit - that the EU made it hard to do that, because EU rules meant you couldn't reduce sales tax to zero on anything if it had ever previously been non-zero, hence tampons were subject to VAT, despite being rather essential for half the population, and the excuse for not removing it was always that "The EU won't let us".

Your suggestion makes me wonder why nobody suggested just paying all adult women a flat sum each year that would effectively be a rebate on the VAT they would be paying on tampons. It doesn't seem like it would have been very difficult to work out a figure for that. Irrelevant now as post-Brexit they've finally been zero-rated.

Yet another problem with consumption taxes, why are tampons different from food, clothes, soap, drugs, etc. There would be endless special interest groups getting it waived for their special items, just like there is now with state/local sales taxes and (as this thread shows) property taxes.

Although the probate idea who make it less regressive, it doesn't really fix the problem. People in high cost of living areas would pay much more than those in low cost areas. Those with big families that don't save much would pay a higher percentage of their income for goods. The more money you make, the less as percentage you spend (my monthly budget is actually lower now than a decade ago and my family income has doubled). It would be very hard to make a consumption tax anywhere near as fair/progressive as a progressive income tax. And as I already said, taxing consumption discourages consumption, taxing income does not discourage getting more income.

 

[brycejones]

Yet another problem with consumption taxes, why are tampons different from food,

Women need to pay for Eve's sins. It's been all downhill since then.

 

[Brainonska511]

A policy that only benefits people on a fixed income who own homes is dumb. If you really want to help people who need help don't do it through property taxes because that will exclude large numbers of people.

If only there was some type of financial product available for someone who owned a home as their primary wealth tool that would allow them to tap into that equity...

 

[pmv]

Yet another problem with consumption taxes, why are tampons different from food, clothes, soap, drugs, etc. There would be endless special interest groups getting it waived for their special items, just like there is now with state/local sales taxes and (as this thread shows) property taxes.

Not sure what point exactly you are making. Food here _is_ zero-rated for sales tax. The argument was always that tampons should be likewise.

It's true that there are arguments over things like soap (some "what about the men" types argued that if tampons got zero-rating so should shaving equipment). And the Conservatives have constantly tried to expand the things covered by sales tax (putting it on hot takeaway food, and on domestic heating bills, for example) and also constantly raising the level of it (I think they've progressively increased it from 8% to 20% over the years).

They do seem pretty regressive, presumbably why the Tories like them so much. But as long as there are big exemptions like food that effect seems to be limited.

 

[pcgeek11]

Not really. Homestead exemption does nothing to help seniors that are renting, living with family, etc. At least the way it is done in Oklahoma and the law you posted, it helps everyone with a house about equally. The AZ proposal would help people with more expensive houses the most.

Well people that are renting, living with family etc are not paying property taxes on a home... I know that the rental payments probably account for the owners property taxes...

 

[pmv]

If only there was some type of financial product available for someone who owned a home as their primary wealth tool that would allow them to tap into that equity...

Yeah, having looked into that myself, though that product exists, it's a lot more limited and harder to access than you are implying. There are all sorts of constraints on remorgaging and equity-release, that prevent a lot of people from qualifying.

 

[fskimospy]

Yeah, having looked into that myself, though that product exists, it's a lot more limited and harder to access than you are implying. There are all sorts of constraints on remorgaging and equity-release, that prevent a lot of people from qualifying.

I think he's referring to a reverse mortgage, which is available to basically any old person in the US who owns their home unless they have gone bankrupt like seven times or whatever.

 

[pmv]

I think he's referring to a reverse mortgage, which is available to basically any old person in the US who owns their home unless they have gone bankrupt like seven times or whatever.

Going by wikipedia, sounds as if we don't have that here, but it seems similar to what's called here 'equity release', but that scheme at least has all sorts of restrictions and rules round it that makes it much less widely-available than a normal mortgage.

Anyway, a totally-different context in any case (even renters pay "property tax" here - it's a tax on residence not on property ownership).

 

[Brainonska511]

I think he's referring to a reverse mortgage, which is available to basically any old person in the US who owns their home unless they have gone bankrupt like seven times or whatever.

Yes, or a HELOC or refinance/cash out. Or just sell the place and downsize.

People always talk about homes as "investments": well, maybe it's time they use the value they've accrued after a lifetime of ownership.

 

[Greenman]

That's fair enough, but applying it only to people who own their homes isn't right. Those people are probably wealthier to begin with and likely don't need that break. Should apply across the board if anything.

I agree.

 

[Zorba]

Well people that are renting, living with family etc are not paying property taxes on a home... I know that the rental payments probably account for the owners property taxes...

That is why it isn't "6 in one, half a dozen in the other." If you want to help seniors, direct cash is much more effective than property tax reductions and aren't at all the same as you attempts to imply.

 

[MtnMan]

Well that is extreme, however property taxes need to be reined in.
I do not have a mortgage... haven't for decades.

Just paid the property taxes on my home.
My taxes exceed every other necessary expense I have combined.

Every homeowner pays for energy, be it power, gas, oil, or combination of these​

Every homeowner pays for insurance on the home.​

Most pay for water and sewer, otherwise there is the expense of maintain a well or septic system​

Every homeowner needs communication, a phone line or cell phone as a minimum.​

My water, sewage, garbage, power, oil (oil furnace), insurance, phone, etc., combined are less than the property tax on my home.