From: ahk@chinet.com   
      
   Stephen Sprunk  wrote:   
   >On 30-Mar-15 17:26, Adam H. Kerman wrote:   
   >>Stephen Sprunk  wrote:   
   >>>On 30-Mar-15 00:16, Adam H. Kerman wrote:   
   >>>>hancock4@bbs.cpcn.com wrote:   
      
   >>>>>Many, many years ago government got away from just taxing real   
   >>>>>estate and taxed income and commerce.  Generally, these were   
   >>>>>percentage--not flat fee taxes--so they more money one earned   
   >>>>>or spent, the more in taxes they paid.  This was seen to be   
   >>>>>more fair.   
      
   >>>>By landowners, yeah. By tenants, not so much.   
      
   >>>Landowners just pass on property taxes to their tenants anyway, so   
   >>>there is no reason for them to prefer any other form of tax--unless   
   >>>they have no tenants, i.e. they're speculators.   
      
   >>In my state, whenever they argue that there should be more state   
   >>funding for schools, that means a shift from property tax support to   
   >>income tax support because the state hasn't levied property taxes in   
   >>decades (and isn't likely to in future).   
      
   >>So, if schools improve,   
      
   >Spending more on schools doesn't improve performance; in fact, the   
   >worst-performing schools _already_ have the highest costs per student.   
   >The reason is that most of the money ends up going to overhead, such as   
   >executive salaries, consultants, security and corporate welfare.   
      
   I'm not arguing that lots of spending is ineffective. I am fed up with   
   those who claim, We're a poor community! We can't afford to improve our   
   own schools (or whatever the government service is). We need state assistance!   
      
   Well, no, what you can't afford is NOT to improve schools! That's what   
   keeps your land values to very low.   
      
   >>tenants pay twice: Their rent rises, because better schools mean   
   >>higher land value. Part of the rent goes toward the land tax portion   
   >>of the real estate tax (which is difficult to pass on the tenant and   
   >>generally isn't); the building tax portion of the real estate tax is   
   >>paid in part by the tenant and in part in reduced net income by the   
   >>landlord.   
      
   >Not in the real world.   
      
   I said that in a rather confusing way. As a general matter, tenants   
   pay in rent exactly what the land value is. A portion is retained by   
   the landlord, a portion is paid in taxes. Can't charge more; tenants   
   will go elsewhere. Rent for the building is a little different; there   
   are characteristics that would appeal to the tenant, there's the   
   building's condition; these are negotiable.   
      
   >The rule of thumb is market rent should be 1% of the home's value.   
      
   >At current rates, the P&I on a $150k mortgage is $760/mo.  Then figure   
   >in another $1500/yr ($125/mo) for insurance, $3000/yr ($250/mo) for   
   >taxes, and a couple hundred per month reserved for maintenance.  That's   
   >$1500/mo, or 1%, with no profit for the landlord aside from the mortgage   
   >principal reduction.   
      
   >If property taxes go up, the rent has to go up too because the landlord   
   >obviously isn't going to _lose_ money renting out the property; if so,   
   >he wouldn't have bought it in the first place.   
      
   They still count on speculative increase in land value, despite the   
   recent experience with land values returning to more realistic levels.   
      
   It's quite possible for there to be a small operating loss.   
      
   >(The property's value may go up over time and his mortgage payment   
   >shouldn't, but his taxes and maintenance costs will go up to match,   
   >leaving him with no real profits until the mortgage is paid off.)   
      
   Right; that's what they're counting on.   
      
   I sort of caused a bit of topic drift here.   
      
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