[pbleighton]

"Well if the goal is to tax the rich until the rich are no more and transfer whatever there is to the poorest of the poor it is start"

Who said that this is the goal, Mike?

Except you, of course

Peter

[mike777]

Well no one stated any goal at this point that makes any better logic for these arguments

Also I wish you posters would notice when I use qualifiers in my statements, such as if or maybe.....

[luke warm]

mike777, on Mar 10 2007, 04:01 PM, said:

Well no one stated any goal at this point that makes any better logic for these arguments

Also I wish you posters would notice when I use qualifiers in my statements, such as if or maybe.....

i notice ... actually, i think matt did say that, or something similar, when he said, "... we should tax the rich more and distribute it to the poor."

of course there is no justification for that, imo...

[Echognome]

luke warm, on Mar 10 2007, 02:46 PM, said:

mike777, on Mar 10 2007, 04:01 PM, said:

Well no one stated any goal at this point that makes any better logic for these arguments

Also I wish you posters would notice when I use qualifiers in my statements, such as if or maybe.....

i notice ... actually, i think matt did say that, or something similar, when he said, "... we should tax the rich more and distribute it to the poor."

of course there is no justification for that, imo...

My qualification was "when we are maximimizing societal utility..."

If that is not a goal, then you will obviously find different conclusions.

[mike777]

Now if we can just agree on what that means and how to measure it so we can maximize it.

[pbleighton]

"Also I wish you posters would notice when I use qualifiers in my statements, such as if or maybe....."

When you say "Well, if the goal is x" in a thread, you are implying that someone in the thread stated that the goal should be x.

If you don't like being misunderstood, be more careful in your posts.

Peter

[mike777]

pbleighton, on Mar 10 2007, 08:01 PM, said:

"Also I wish you posters would notice when I use qualifiers in my statements, such as if or maybe....."

When you say "Well, if the goal is x" in a thread, you are implying that someone in the thread stated that the goal should be x.

If you don't like being misunderstood, be more careful in your posts.

Peter

No Peter I am not implying that at all but anyway.

This reminds me of an old and continuing debate in Finance.

Should the goal of a company/business be to maximize shareholder value or should there be an equally important social goal or goals.

[hrothgar]

mike777, on Mar 11 2007, 04:03 AM, said:

This reminds me of an old and continuing debate in Finance.

Should the goal of a company/business be to maximize shareholder value or should there be an equally important social goal or goals.

One size doesn't fit all...

Companies can do whatever they damn well please so long as

1. They aren't breaking any laws
2. Individuals are able to make an informed decision about whether or not to invest

I see no reason why some companies can't follow a policy of explicit profit maximization while other explictly focus on social responsible investment.

As for myself, I base a lot of my purchasing patterns on political considerations. I do not support companies like Walmart, Dominos, Home Depot, or Bank of America. This very week I found some ugly stuff about about Amazon which means that I won't shop there any more and I'm tearing down my "wish list".

[pbleighton]

"No Peter I am not implying that at all but anyway."

Then you were setting up a straw man

Peter

[mike777]

hrothgar, on Mar 10 2007, 08:34 PM, said:

mike777, on Mar 11 2007, 04:03 AM, said:

This reminds me of an old and continuing debate in Finance.

Should the goal of a company/business be to maximize shareholder value or should there be an equally important social goal or goals.

One size doesn't fit all...

Companies can do whatever they damn well please so long as

1. They aren't breaking any laws
2. Individuals are able to make an informed decision about whether or not to invest

I see no reason why some companies can't follow a policy of explicit profit maximization while other explictly focus on social responsible investment.

As for myself, I base a lot of my purchasing patterns on political considerations. I do not support companies like Walmart, Dominos, Home Depot, or Bank of America. This very week I found some ugly stuff about about Amazon which means that I won't shop there any more and I'm tearing down my "wish list".

That is part of the debate, should one size fit all to use your turn of a phrase.

This is quite the debate, should companies do whatever they please or not and who should decide? This is really quite complex but the overriding thinking in the field is no they should not do whatever they want, they should maximize shareholder value.

I do not say this is right or wrong just stating the generally accepted thinking at this time and for quite awhile.

BTW when you say purchasing decisions it sounds like you are speaking as a consumer and not an owner. If you make your ownership purchasing decisions on this basis Ok...Many do invest in so called Green(socially correct) Mutual funds.
Keep in mind we are talking about capital decisions here not consumer purchasing which is another discussion.

[hrothgar]

mike777, on Mar 11 2007, 05:18 AM, said:

This is quite the debate, should companies do whatever they please or not and who should decide? This is really quite complex but the overriding thinking in the field is no they should not do whatever they want, they should maximize shareholder value.

Strange

I spent a fair amount of time studying at MIT's Sloan School of Management. Got a degree from there, in fact. We discussed the whole topic of socially responsible investment in depth.

The statement that you are making here simply is not true.

[mike777]

I never said it was not discussed. I said what the generally accepted finding is in Finance. I do not say this is right or wrong, but it is generally considered the current gospel and has been for decades.

Yes sigh it is true...I have no idea why you guys keep thinking I make this stuff up.

[pclayton]

Echognome, on Mar 10 2007, 11:47 AM, said:

pclayton said:

I'm still a little perplexed about an earlier comment that said property taxes are also regressive.

Would it help if I said that property tax affects both property owners and renters (who get taxes passed off to them)?

Not really. Residential leases are 'gross', so the landlord pays for property taxes, maintenance, and insurance. In contrast, many commercial properties are 'triple-net', where these expenses are a direct pass-thru to the tenant.

Matt, if you are talking in the abstract in that somehow these expenses are passed along to renters, I still don't agree.

Here's an illustration. (Note: I am speaking from a California perspective that limits property tax increases to 2% a year and only reasseses upon transfers. Other states have different methods of reassessment).

Apartment building "A" rents for $1,000 per unit per month. It has 20 units and was sold to the current owner 20 years ago for say $1,000,000. Increases in rents have far outpaced 2% (currently rents in our area are escalating at 5% per year), so A owner pays about $14,800 per year in property taxes on a basic 1% rate.

Apartment "B" was just sold. It rents for the same $1,000 / month. Gross Income is $240,000 per year, and expenses are $5,000 per month. At a 6% cap rate, the project sold for $2,300,000, and thats what the new tax basis is. At 1%, his taxes are $23,000 per year.

So, "A" makes $8,000 more per year than "B". The rents they charge are a function of the market, not what the property taxes are. If the taxes were truly a pass-thru, then the rents would be different.

[mike777]

Phil I hope you are not suggesting that taxes and other expenses are not for the most part passed on to the renter.

If I need an 8% or 20% return to justify my buying and accepting the risk of being a landlord, I will sell if I am not getting my return and cannot pass on my expenses and put my money somewhere else.

Property taxes are a huge factor in considering the market price or market rent.
To repeat if I cannot get a real return worth the risk I sell and buy something else.

[pclayton]

mike777, on Mar 10 2007, 07:13 PM, said:

Phil I hope you are not suggesting that taxes and other expenses are not for the most part passed on to the renter.

If I need an 8% or 20% return to justify my buying and accepting the risk of being a landlord, I will sell if I am not getting my return and cannot pass on my expenses and put my money somewhere else.

Property taxes are a huge factor in considering the market price or market rent.
To repeat if I cannot get a real return worth the risk I sell and buy something else.

Dude; you get a 20% return on any property and I will line up for that deal.

Of course property taxes are factored into the definition of income. This has nothing to do with what a landlord can charge however.

Quote

Property taxes are a huge factor in considering the market price or market rent.

Market price - yes; market rent - no.

[mike777]

lol....for me 20% is not near enough return to be a landlord..so if you want me to eat property taxes...I sell and move out of calif..wait....I DID

[Echognome]

pclayton, on Mar 10 2007, 07:04 PM, said:

Echognome, on Mar 10 2007, 11:47 AM, said:

pclayton said:

I'm still a little perplexed about an earlier comment that said property taxes are also regressive.

Would it help if I said that property tax affects both property owners and renters (who get taxes passed off to them)?

Not really. Residential leases are 'gross', so the landlord pays for property taxes, maintenance, and insurance. In contrast, many commercial properties are 'triple-net', where these expenses are a direct pass-thru to the tenant.

Matt, if you are talking in the abstract in that somehow these expenses are passed along to renters, I still don't agree.

Here's an illustration. (Note: I am speaking from a California perspective that limits property tax increases to 2% a year and only reasseses upon transfers. Other states have different methods of reassessment).

Apartment building "A" rents for $1,000 per unit per month. It has 20 units and was sold to the current owner 20 years ago for say $1,000,000. Increases in rents have far outpaced 2% (currently rents in our area are escalating at 5% per year), so A owner pays about $14,800 per year in property taxes on a basic 1% rate.

Apartment "B" was just sold. It rents for the same $1,000 / month. Gross Income is $240,000 per year, and expenses are $5,000 per month. At a 6% cap rate, the project sold for $2,300,000, and thats what the new tax basis is. At 1%, his taxes are $23,000 per year.

So, "A" makes $8,000 more per year than "B". The rents they charge are a function of the market, not what the property taxes are. If the taxes were truly a pass-thru, then the rents would be different.

I'm making a simple argument and one you may or may not agree to.

A landlord bases his rent on market forces, sure. But as for all the landlords in the markets, their price is a function of their cost. Their cost includes taxes (along with some utilities, maintenance, building insurance, mortgage etc.). How much of that cost that passes along to consumers is dependent upon the elasticities of demand (basically on market forces). I'm simply saying that if you increase landlords' costs then their prices will reflect that cost and thus affect renters. It may be "sticky" because of leases, rent control, etc. But nonetheless the costs will eventually go through. I do not believe this to be controversial.

[helene_t]

Echognome, on Mar 10 2007, 09:47 PM, said:

pclayton said:

I'm still a little perplexed about an earlier comment that said property taxes are also regressive.

Would it help if I said that property tax affects both property owners and renters (who get taxes passed off to them)?

Two points:

1) I was told when I studied economics (just a minor, or GDBA as it's called there) in Copenhagen back in the 80'es that housing is a luxury commodity, i.e. taxing on housing is progressive. This may be different in the U.S. than in Denmark (I doubt that) or it may be different now from in the 80's (I doubt that as well). Of course it's complicated to measure because taxable income as well as housing expences can be measured in different ways. The rent that I pay is kept artificially high by some regulations/subsidies and artificially low by others and out of equilibrium due to a f...d up property market and the actual rent that I pay is lower due to VAT exemption and I also receive compensation from my employer or from the social office, and my taxable income would (technically) have been different if my house was financed in a different way, and some of my housing expenses may or may not be considered housing expenses depending on the mode of payment. And if I owned my house part of my mortgages would effectively be saving rather than expenses etc.......

2) Landlords cannot just pass taxes on to renters. The rent is dertermined by supply and demand and supply of real estate cannot ajust to prices (expect in the case of reclaiming land from the sea). Taxes depreciate the value of the propoerty, so the next owner will pay lower mortgages as a compensation for the taxes. But maybe government regulations allow landlords to increase rents when they are bellow market equilibrium. And taxes on the value of new buildings will lead to less new buildings and therefore less supply -> higher rents in the long run.

[pbleighton]

"Yes sigh it is true...I have no idea why you guys keep thinking I make this stuff up."

Because you do

Peter

[hrothgar]

pbleighton, on Mar 11 2007, 02:35 PM, said:

"Yes sigh it is true...I have no idea why you guys keep thinking I make this stuff up."

Because you do

Peter

Actually, more often than not Mike, simply recycles talking points from different parts of the far right blogsphere.

All his talk about victory, Cambodia, the Middle East are transparantly forwarded with nary a bit of critical thinking.