Forclosures on poor elderly

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anonymous_coward
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@Economike: "In order to

@Economike: "In order to think about the effects of property tax, we need to think dynamically. For example, the question "Who bears the burden of a 1% rise in property tax?" doesn't provide sufficient information. Does the rise in this tax reduce some other tax? Is the extra revenue spent well or wasted? That is, where are we on the Laffer Curve for property tax?"

Right well, I wasn't asking about how the money is spent. Before we start down that road, let's just start by assuming the money disappears into a giant empty hole of government inefficiency.

If it costs 1% more to own a house, how do those costs fall on landlords vs. homeowners vs. renters?

(We can add in where the money is spent later on.)

Economike
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anon -

anon -

I'd say that the extra tax is a cost like any other cost, such as insurance or heat. The cost falls on the paying occupant, whether owner or renter.

anonymous_coward
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"I'd say that the extra tax

"I'd say that the extra tax is a cost like any other cost, such as insurance or heat. The cost falls on the paying occupant, whether owner or renter."

Well the tax is assessed on the owner. But the price of rent is determined by the supply of rental units and the demand of renters.

Does it necessarily follow that the supply decreases by the amount necessary to increase the rent exactly that amount?

Economike
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Yes, although I wouldn't say

Yes, although I wouldn't say "exactly" since the "supply of rental units" isn't a discrete number of uniform living spaces. Substitution effects apply.

When rental costs rise, some renters downsize. (Take smaller, cheaper apartments, share spaces, live with parents, and so on.)

But, yes. Property tax is a cost of housing, among many costs.

Mainelion
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Are you saying that there is

Are you saying that there is zero elasticity in the demand for rentals?

anonymous_coward
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Well property tax is local,

Well property tax is local, so you can always move to another locality without incurring too much friction (though obviously there is some for most people).

Watcher
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I guess I can move to the

I guess I can move to the closet town to where I live...their property values are so much lower than they are in my trendy town but...the millage rate is doubled so...no change.

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