Taxing Nothing: Make Owners of Vacant Property Pay

Economist Dean Baker has an idea that could slow down foreclosures and lower rents.

"property owners often have difficulty coming to grips with the new market environment. They saw the run-up in prices of the bubble years and they expect that these prices will soon return. Rather than accept a lower price to sell or rent their vacant properties, they are waiting for prices to return to their bubble peak.

As a result, these pie-in-the-sky property owners are holding property that returns them no income. And, the whole economy suffers as a result of not deriving any value from these idle structures.

A vacant property tax would help these property owners to see reality. By providing an additional incentive to actually use vacant property this tax can both raise a substantial sum of money and bring down the cost of renting housing and commercial property."

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/taxing-nothing-make-owners-of-vacant-property-pay

More at the link.

happened to catch it on the first go-round!

Perhaps you didn't read the article closely.

The article's well worth the read

Whether it is vacant or not.

You are proposing that the tax rate be higher on vacant property than occupied property? Anyone leaving property vacant is already taking a hit on the rent that they are foregoing. Not sure that another 1% if that is what is proposed would make a difference.

fuck em

I know that and so does he - he's a freakin' PhD in economics. He's suggesting a (small) additional tax to address an imbalance - most vacant properties are owned by banks, landlords, and speculators. Rents are (still) too high. People are homeless, and entrepreneurs need space.

Or the ones that are vacant are in some stage of foreclosure before they are sold.

That said, some cities like Detroit have a huge problem with vacant homes, but that seems to be a problem with the time it takes for the city to take possession for non-payment of taxes and get title to the property. By the time they do, it is time to call out the bulldozers and excavators.

That's not too far from my home. Speculators are snapping up foreclosures and doing nothing with them.

I'm not sure why you say a lot of vacant properties are second homes. The article does not provide a definition of vacancy. Second homes might be categorized otherwise. And, just for the sake of argument, suppose they're not: then the tax would clearly fall into the "progressive" category, an idea most anyone on a Democratic party message board would support in principle.

Just curious. The fact speculators buy them means the banks aren't getting stuck with defaulted mortgages. Since banks don't seem to do much with these homes either.

As far as I can see, the net effect of the tax would kill speculation but wouldn't solve the problem of vacant houses.

The effect is that small investors, maybe looking for a second home or a rental property or just the house next door are unable to even entertain a bid because the properties are bundled in groups of 50 or 100 houses.

This is deliberate. Last time around, during the 30s, neighbors would get together and limit bidding at sheriffs auctions and then move the family that was foreclosed on, right back in with a new title, free and clear. This time around, the peasants aren't getting a chance to game the system.

A tax on top of the tax--what if you can't find a renter, though? What if you use the property as a holiday home?


It is a crazy idea; poorly thought through--talk about insane government interference at the municipal level! It's an intolerable concept. There are mechanisms in place already to deal with dilapidated properties, or with property owners who don't pay taxes. Suggesting that someone have to pay more because someone isn't living in the property is just absurd. No vacation home/condo for YOU! Sounds very 'soviet' to me!

(i.e, "what if you can't find a renter") And I wondered about vacation properties, too.

I don't know that I'd call the notion "intolerable," though. And to suggest that it's government interference is ridiculous - governments tax, and taxes are an acceptable instrument of policy. (Maybe you're a libertarian?) I do, however, think "intolerable" is a fair word to apply to the level of homelessness.

Tax people extra because someone isn't living in their property and NOT burdening the city with a need for services? That's as crazy as taxing Irish property owners more than Portuguese, or taxing married property owners more than single ones. It's arbitrary. Who's the "occupancy" police? T'aint nobody's business if someone is living in the house or not, so long as the owner stays current on their bills. And if the owner doesn't pay their taxes, get to garnishing.

I mean, really--do you want "The Government" taking note of where you live in that fashion? Ooops, you're leaving your vacation cottage--you'd better be back here in "x" time or we're going to tax you extra!

It's asinine, and it is unworkable. It's also unfair. Get people for not paying their taxes, but don't punish people who do pay them just because there are a few deadbeats. If people don't maintain their property, get them with "eyesore" laws, but don't tax people extra for doing what they want with their OWN property.

You've reduced this to the small, personal scale

Sounds like you're NOT a commercial real estate conglomerate sitting on several millions worth of property that could be in use

own a little piece of property with a camp on it, or a mobile home, or a cottage, and that's their little piece of heaven, their getaway. They're not rich, they're careful with their money, and they don't have too much house where they work, so they can afford their little bolt-hole. Same deal with people who buy a piece of land to build a retirement home on, one day. They are going to be punished for planning for their future?

There are an awful lot of people in that kind of boat, and this "one size fits all" notion of a tax because some rich assholes let their property deteriorate is just idiotic. Get them with eyesore fines. Require them to keep their property repaired, painted, no broken windows, etc. That's the way you focus the blame where it is deserved.

How do you put a tenant in a storefront in a blighted area where there's no one with money to buy, and no one willing to take their life in their hands to try and sell? Where do you find someone to go into an empty mall? What's the owner supposed to do with the property--business or residential-- if they can't get someone to move in? Not all property owners are rich bastards. In small towns across the US, there are plenty of people who are not rich who own an in-town store, or a house--that doesn't make them moguls.

What would happen is that you'd see cities and towns burdened with properties that are uninhabitable, as owners just say "Fuck it" and walk away, and the cities/towns would not have the cash to fix them--or they'd have to tax the remaining property owners even MORE to get the money to do that. It would take a mess and make it a bigger mess.

It's just a horrible idea.

This isn't about vacation homes

And I seriously doubt working class people are the owners of vacant storefronts, strip malls, and industrial works in Everytown USA

my VACATION home?" How do you prove that a vacant home isn't a vacation home? Some people have odd tastes when it comes to holidays.

My vacation home is in a town that would never be mistaken for a resort--it's a humble little place full of hardworking people and old folks. What it does have is rural charm and clean air and water.

Who runs around checking up, making lists, doing enforcement? All of that costs MONEY.

Why are you emphasizing working class people? Are you suggesting that middle class people don't have rights? I happen to know middle class people who own little storefronts--one guy I know has had three tenants in two years in a little Main Street store, and he's charging just enough to pay the utilities (light/heat) with maybe a little left over for maintenance. He's not making a dime. People don't want to buy frou-frou crap in this economy, so his tenants went belly-up. He's not rich, either--he runs the store on the other side of the building and barely is making ends meet. Last time I saw him, he had the FOR RENT sign up--again.

Recently, I saw a strip mall (five storefronts in a row) for sale for the bargain price of $139K, in a toney resort area. It needed a little work. The guy who bought it (and I'm thinking he paid less than the asking price) has fixed it up, repaired the plumbing/sewer, put up the FOR RENT sign....and has yet to get a bite. People are not starting new businesses. Should this guy be punished for fixing up the crappy little strip mall, because no one is inclined to move in and start a business in this climate? Would it be better for the thing to sit there and rot? Is he "wrong" to invest in the community?

See, for every asshole speculator, there are a dozen real people out there who are just average schmucks, investing in their town, who would get sucked into this vortex. If the properties look shitty, make people maintain them and fine them if they don't. Don't run around pointing at people and saying "You--you look rich, so we'll tax your property more! To hell with the assessment tables--you are less deserving of fairness because of your wealth!"

You want to tax the rich? Tax their damn income. Remove some of the bullshit exemptions that the rest of us do NOT get, that reduce their tax burden to zero. Don't give them a reason to claim "unequal treatment under the law." That's just shortsighted and not smart.

Or a tax based for single rental properties that was based on the rental income on top of a modest fee?

I could get on board with those exceptions. Could you?

The government has no right to tell you how many houses you are "allowed" to own. That's just stupid. What if you have ten kids and you want to buy each one of them a house, and you work an extra job to make that gift possible?

And who decides what is a "rental" property? I'd say the person OWNING it does--not the government.

What happens to the person who owns a house, a vacation home, and then Gramma and Gramps die? Do they have to go into debt because they can't sell their parents' crappy house because the market sucks, it's in poor repair, and they can't afford the extra tax?

You're hitting the wrong target. Go after INCOME, and tax that appropriately. Trying to demand that people pay "sliding scale property tax" is just stupid and probably illegal.

I'm in a buttle-ish mood.

First, a tax doesn't restrict anyones right to purchase homes or properties. It makes no claim of allowances.

Second, if you gift a home to a child, it becomes that child's and not yours. At least for tax purposes. Or you could gift it to a trust. There are so many ways around this one.

About your third point a reasonable limit (with a mechanism for review and adjustment on a case by case basis) could be established so that the tax wouldn't kick in for at least 1 full calendar year post-mortem. Perhaps a longer period would be reasonable, what do you think?

Another way around this would be to have an income exception to this rule and only have it kick in after a certain income is met.

As for your last point, I agree completely, although income should be redefined to include capital gains somehow. Income taxes are the only taxes that are based on your ability to pay for them and are only assessed AFTER you have received the money of which you are paying only a percentage of. As such it is a truly progressive tax.

I'm in a buttle-ish mood.

First, a tax doesn't restrict anyones right to purchase homes or properties. It makes no claim of allowances.

Second, if you gift a home to a child, it becomes that child's and not yours. At least for tax purposes. Or you could gift it to a trust. There are so many ways around this one.

About your third point a reasonable limit (with a mechanism for review and adjustment on a case by case basis) could be established so that the tax wouldn't kick in for at least 1 full calendar year post-mortem. Perhaps a longer period would be reasonable, what do you think?

Another way around this would be to have an income exception to this rule and only have it kick in after a certain income is met.

As for your last point, I agree completely, although income should be redefined to include capital gains somehow. Income taxes are the only taxes that are based on your ability to pay for them and are only assessed AFTER you have received the money of which you are paying only a percentage of. As such it is a truly progressive tax.

A tax in and of itself doesn't restrict, but it sure as hell de-incentivizes. Also, an unequal tax on property (which has nothing to do with income unless you wrongly tie it to income) is unequal protection under the law. While rich people are not the flavor of the month these days, taxing them unfairly is just wrong. It's no more right than over-taxing the poor or the middle class, or taxing people based on their ethnicity (poll tax, anyone?). That's not how the US is supposed to work.

And that, rather than being an argument for torturously trying to over-tax their property, is an argument to tax their INCOME as "fairly" as we tax their property--i.e., no more "tax breaks for the wealthy"--get rid of some of those "torturous" exemptions that lower the tax burden to less than nothing.

You can buy a house for a child when he is two--he's not going to live in it for awhile, though, is he? What if it's a crappy property and needs some fixing up, that might take years because you don't have the money? What if you are building your home by hand, and taking your time? What if the market sucks and you can't rent it? What if you do not WANT to rent it? You let the government "make" you?

And the minute you start "adjusting and reviewing" or setting income limits, or making exceptions, or establishing time limits, you need PEOPLE to monitor that. Town, city, county employees, who get paid a hefty salary, have a secretary or two, a municipally-provided vehicle, who run around sending out paperwork, receiving paperwork, filing paperwork, tabulating, checking up on people to make sure they aren't lying... and these people will also need health care, vacation time, sick days in addition to their salary, and of course a pension at the end of their service, which will all come out of the taxpayers' pockets, at the end of the day.. What you're doing is building a mindless bureaucracy, full of silly rules and exceptions and self-important employees, designed to monitor/punish based on how many properties a person has and how rich they happen to be. You'll end up swallowing up any government "profit" in yet another make-work job that produces nothing of benefit for the community.

It's no one's doggone business how many houses people own or how much money they make, so long as the person pays their taxes and maintains their property. If they don't, get 'em.

The minute you start disincentivizing people making money, the more tax cheats you'll have, who will hide their money offshore, and the more of a black market economy you'll see, the more assets will be hidden amongst n'er do well relatives, and things will get WORSE, not better. Tax assessors will be bribed to lower property values, and nothing will change except maybe the level of corruption.

Also, communities that rightly think "this idea is bullshit" will refuse to go along with it. Property taxes are local, not federal, and people will flock to those communities that hoist the bullshit flag and build their nicer homes, further concentrating the wealth in specific areas, and leaving the distressed areas to crumble even further, with an ever-shrinking tax base and a load of ruined buildings full of rats to deal with.

Especially given that the US is still mired in funding education and other expenses using local taxes. And I think you are right that this might upset the crappy balance we already don't have.

I need to think on this one.

Sales tax, income tax, etc. (And your ethnic analogy makes no sense.) "The government" already monitors residency for tax purposes. And not just your primary residence. I know this; we have vacation property. The law outlining such a tax would require a definition of vacancy. Maybe it would exempt second homes, maybe not.

Also, it's far from arbitrary. It's specific disincentive for speculation - i.e. holding unused (unproductive assets).

It may be undesirable ("asinine?" such strong language...) from your point of view. It's totally fair to have an opinion. But it's not unworkable.

that pack of gum, and then, as you exit the convenience store, someone stops you and says "Hey, YOU--I want five more cents, right here, right now." Why? Because you are somehow "different" than the other customers. Maybe you've bought too many packs of gum this week, or you bought the supersize pack. And that was the point of the ethnic analogy--the property owner who doesn't live in the house is "different" from those who do, but his money is the same color as anyone else's, and he may have his reasons for not living in the house. Reasons that are no one's business but his.

And people pay sales/income taxes without even owning a home--those aren't taxes on top of taxes, they are taxes of a different category. People pay those regardless of their property ownership status.

Paying a surcharge on a tax already paid is the problem, here.

I don't go for that Nanny State crap, and states don't, either, because the administration of this kind of tax is just crazy stupid way-too-hard. Who runs around knocking on doors to see if someone lives in the house? Who pays that person? Who keeps the lists of who's in and who's out? Who bills the people who are not living in the properties? Who goes to court when the property owner protests the assessment? Do you punish the deployed soldier for not living in his house? How many people get exemptions, and what is a "good" excuse as opposed to a lousy one? Who keeps track of these people, and who is/is not exempted? Surely you'd need to "prove" you were in Afghanistan, or aboard USS Leakybilge, and someone would have to receive and tabulate that info. How about people who have the nerve to be hospitalized or get sent to a nursing home because they're ill? You there-in the coma--we are going to tax you MORE for not living in your house!! What happens when someone dies and the estate takes a while to settle? Taxing the dead--that one WILL send the righties over the edge!

And the view that this is just stupid is not "Libertarian" or "Right Wing." It's a simple matter that the cure would cost WAY more than the disease, in oversight expenditures alone--to say nothing of enforcement.

Further, I can believe that homelessness should be addressed in a robust fashion without thinking that setting up state or landlord-sponsored bunk beds in that blighted mall on Hellhole Avenue is the answer, or that forcing landlords to rent to irresponsible tenants with no way to pay the rent is workable, either. You cure homelessness with JOBS, and job training/education, and temporary assistance (transitional housing/mental health support/substance abuse programs, etc.), not by swiping a dumpy property from someone and saying "Hey you poor people---go squat there."

It's just a ghastly idea, and I have to say I do see it as totally unworkable, not just undesirable. It punishes people unjustly for doing nothing wrong. It turns people who save their money and invest into bad guys if they don't move quick enough to convert their investment into something that people who see the world through "profit" eyes regard as viable--even if the market will not support it--to suit some arbitrary deadline. It throws small business people and people who are saving and buying homes for their children, who may be in kindergarten now but will grow up to inherit a home from their parents--into the same category as Big Cheese speculators. I can't imagine anyone voting for such a plan. I'd rather have someone buy a blighted mall, sit on it waiting for a better day--AND throw a little maintenance at it (the eyesore law provisions I have mentioned)--while paying taxes on it, rather than have the owner just walk away and have the town/city take possession of it; then it's the taxpayers' burden because no one is writing that property tax check.

I would never have bought the little house I bought had this provision been in force. When I bought the place, for a veritable song, it was a neighborhood eyesore. An absolute shithole. Mowing the lawn alone brought every neighbor out to clap me on the back and cheer. Over the years, I have slowly, painstakingly repaired the place, from roof to cellar, inside and out. Now it is one of the more appealing homes on the block, simple and neat. When I am not there, I have a guy come and keep the lawn mowed and check the place. If I had to meet a timeline to make the place habitable (and it was not when I bought it) I couldn't have done it, because I didn't have the cash to make those kinds of repairs all at once. My little "hobby" (and owning the house is basically a hobby) has benefited a community and given me a bit of enjoyment, but I don't think I should have to pay extra just because I don't reside there and suck up local resources, costing the town more to run, every day.

It's not much different in principle from marginal tax brackets, which you can agree or disagree with. Perhaps you side with Steve Forbes, I don't know.

Also, door-knocking is not required. Data on whether or not property is commercial or residential, if residential is it a primary or secondary residence or rental property exists or is easy to collect through papers that are already filed. Vacant rental properties, or speculative purchases are what Baker suggest the tax target.

Nor is he suggesting confiscation - just an incentive to put the property to use. That might require dropping rents, which creates more affordable housing.

Not liking the proposal is one thing - I don't know if I like it, I just thought it was a radical suggestion and might be fun to talk about - but you are attacking straw men.

That's insane. You're taxing the PERSON, and not the property. Why not just let the assessors tax people on the basis of their looks, or their personality?

I think a Constitutional scholar would probably be able to find a reason to rip this to shreds. We're all created equal, after all--or supposedly so.

Door knocking would absolutely be required--otherwise, how would "the authorities" know if the owner's wife or adult child wasn't living there, rent free? Or maybe his old mother, having problems with gramps, or that n'er-do-well sister or that lazy nephew. You're saying that VACANT property is taxed more, the only way you can determine if the property is vacant is to go bang on the door. Repeatedly.

Was the "Steve Forbes" crack designed to paint me as a champion of the rich? That was not terribly mature, really. Bit of a low blow because you don't like my logic? I am simply on the side of fairness. Let me reiterate--I'd like it if we taxed INCOME a bit more fairly--but to tax property differently because the owner is perceived as "rich" or a "speculator" is just, well, asinine.

I'm astounded at your enthusiasm for this level of government intrusion. Would you like it if the government decided to quarter troops or the poor in your home, because you have "too much room?" You don't need that spare bedroom for yourself--let's put Homeless Annie the Crackhead in it, or if you don't like that, you can, instead, pay more taxes than the family next door in the exact same model home, but who are using that extra room because they have two more kids than you have. There's essentially no difference in making this sort of demand, or insisting that people rent their buildings or pay more in taxes. The only difference is that Crackhead Annie is a bit closer to the involuntary landlord.

Telling people what they must do with their private property, above and beyond maintaining it as local law requires, and paying taxes when billed, is a terribly slippery slope. That sort of thing, as regards quartering of troops (3rd Amendment) was one of the roots of the American Revolution, you know. We don't like to be told by the government that we HAVE to be landlords.

I think the author needs to go back to the drawing board.

And would cost way more than an additional tax would bring in.

I'm also thinking of many elderly retirees who get sick and have to move to nursing homes. Their primary residences are left vacant, sometimes for years. So should we hit these retirees with extra taxes?

The less your property is worth, the higher the taxes should be. Because it encourages people to sell... to... umm... someone.

I own a building classified as residential apartment building and classified by its size of greater than six units as commercial, as such my property tax percentage is theoretically higher than non-commercial residential, but I have the added benefit that I can subtract vacant units from my taxes, so if my building were totally vacant, my property taxes would be much much lower than many smaller non-commercial residential buildings. Actually there is sometimes an unintended consequence, that it might cost less money to have a large building vacant, rather then to rent to only a small number of renters.

Speculators who can't or won't find use for a property should pay up or sell to someone who will

I use it as a bolt-hole/vacation place. It's way too small to rent to a famiy, and even a single person could get more bang for their buck in an area apartment (free heat, hot water, and snow shovelling). It's empty most of the year, but I maintain the property, pay full taxes, and don't burden the town with use of services like kids in schools, police, ambulance, tearing up the roads, wearing out the sewage system, etc. I don't think I should have to pay more for paying full fare taxes and being a light user of the town's resources. It doesn't make sense. I'm also not a big-wig, a speculator, or a Richie Rich type. If I were forced to put my house on the market, I would not get back anything close to what little I paid for it, and even at that it would probably stay on the market for a year or more. It's a buyer's market in that aarea. Also, I don't want to sell the place. I like it, I take care of it, it's an asset to the neighborhood--not an eyesore.

Odd thing is, if I lived in the place full time, I'd pay WAY fewer taxes--almost nothing, actually-- because the property is eligible for a homestead exemption.

your opinion would also likely be different if your second home was on a block that 8 of the 10 other homes were owned by the same owner, unoccupied and unmaintained. he doesn't care about your comfort or your property value, he wants you do die or move so he can buy your house so he can build a huge resort complex or apartment building.

I've provided examples elsewhere in the thread that have nothing to do with "my personal situation."

However, in the town where I have my little bolt-hole home, there are an awful lot of unoccupied homes, and some of them are unmaintained and even derelict. I'd have to rent my house at break-even or LESS prices, were I inclined to rent it out (and I'm not).

If you are living on a block of empty homes that are unmaintained, get your ass down to the city council and get them to make/enforce eyesore laws.

I'm betting most of those hypothetical homes on that big old street aren't owned by "speculators," either--but by banks. If they are owned by speculators, make the owner pay you a pretty penny for your home AND give you the deed to a free condo at the resort--if you're the only one holding up his wheels of progress. Let's make a deal! Turn your trash into treasure! Then, sell the condo and donate the money to the Sisters of Charity, if you don't feel you deserve it...!

Another clueless "economist" with an idiot "finger in the damn" idea. How...original.

He'd suggest taxing a woman's uterus for not producing another potential taxpayer next. Yeah, I know the type.

And I'm not even saying I'm favor of it - just that it's worth discussion. If you disagree, you might consider stating your reasons.

You'd have to ask him his opinions on a potential "womb tax." I think he'd laugh at you.

Own vacant land? Pay up. There's no "future retiree who owns a lot in Florida that wants to build their dream home there someday" clause. Does it assist speculators? Hmmmm...vacant land isn't using resources. Hell, I pay a bunch of money for schools here in my taxes, yet I have no kids. I don't mind, because I reside on that property and wish to contribute to the community. If they aren't using resources, nor making money off it why tax them for it?

You want a good opportunity tax that this "economist" could otherwise promote? Go to an offshoring company and say, "hey, I realize that you've sent 10,000 jobs overseas that could otherwise be done here by folks that don't have jobs which would otherwise be paying taxes and not needing government benefits because of it. So...here's a bill for that. Please remit within 90 days. Thanks."

Calling it an opportunity tax on vacant property is fair. Disliking that idea is far. The law outlining such a tax would require a definition of vacancy. Maybe it would exempt second homes, maybe not.

You ask "If they aren't using resources, nor making money off it why tax them for it" He explains why.

Offshoring is a different problem and he addresses that in other articles and books.

It would appear that he's talking about a property that's owned, but not occupied as opposed to a truly vacant property (no building, just dirt).

I'm unsure what taxing authority taxes on a basis on if a property has a person or family in residence (or not) as far as property taxes go.

I'd want my property exempted! Sorta. Sometimes I consider my privilege and wonder why I shouldn't contribute more, since I have more, just like earning more puts one in a higher bracket.

Also, I should mention that it's not that we have to occupy our summer home for any length of time, but we are required to maintain it to a certain standard. And it's at the end of a private road, which we have to maintain and close at least once a year (or the state will take it). I suppose we could keep away and have someone else do those things, though.

On edit: PS. My primary home is in one state, the summer home another. I wonder about the ramifications there? Property taxes are a local issue.

vacant is not the same as seasonal use or unimproved.

Properties standing vacant in this town have become targets for vagrants, vandals and vermin, the vandals stripping every bit of copper out of them, leaving them without plumbing or wiring and often water damaged and fit only for a bulldozer.

I would dearly love to see a vacant property surcharge.

Nothing to say you couldn't rent multiple properties to the same person.

Whether the politicians are Democrats or Republicans, the real estate interests are hugely influential in local politics. The owners, developers, lawyers, civil engineering firms, community bankers, real estate agents, mortgage brokers and politicians are thick as thieves (and I mean that literally).

Most local power is held by owners of income producing property (real estate & businesses). Newspapers were once a significant part of local power coalitions, but not so much any longer.

bought by investors. The yards are full of weeds that are invading my parent's yard. Some are five feet tall.

creating an eyesore or fostering an environment for vermin. They should be fined after being given a brief time limit to clean up the mess, or have the town public works go in there and charge them for a "thousand dollar mow" if they don't get it done themselves.

That's how you handle that kind of thing. People who aren't taking care of their property are probably not paying the taxes, either, though, and at that point the town needs to take legal action against the owners, which could involve taking possession of the property and then auctioning it off to meet the debt.

If they do have one, Dad needs to wander down to the police station and file a complaint.

If I understand Baker's proposal, that's exactly what he's trying to combat.

Stupid idea, of course, but similar to the OP. In any case, property is valued about the same for tax purposes whether its occupied or not, and taxes are due whether occupied or not.

I suppose the guy is suggesting that more tax be levied on a property if its empty than if its used? I think that would create more of an incentive for owners to walk away from properties altogether than to continue to pay...I know how many empty buildings there are in my town, where there's no market to sell them, and no market to lease them for anything. Owners typically just keep paying the taxes, hoping things will turn around someday.

...the analogy in your subject line. I don't think it can hold up to scrutiny.

Yes, he is absolutely suggesting that unused property be taxed at a higher rate. The tax provides an additional incentive to rent the property (perhaps that means you have to drop your rents, which is what he wants to see) or sell it to someone who will use it.

He does agree on the possibility you suggest, though. In his words:

"In some cases property owners may not be able to pay the tax and simply give up the property. That is unfortunate, but it is better that the property be in the hands of someone who can use it productively than have it just sit idle."


PS. I've answered nearly every negative reaction by explaining and defending his logic. I really don't know if I agree with his idea. I do agree that vacancy, rents, and homelessness need to be addressed somehow.

The same as unoccupied real estate isn't unoccupied because the owners enjoy having it sit empty.

In both cases, you would place a financial penalty on what is basically a hardship. How about some extra penalties on late mortgage payments, while we're at it? Perhaps if people were kicked out of their houses quicker, then they could be replaced by those who would pay their bills on time?

If you want to use an analogy, the proper one if of a baseball free agent who isn't signed with any team (ie. unemployed), and is holding out signing with a team (ie becoming employed), in hopes of driving up his wages.

The problem isn't waiting until the values go up higher, its owing more money on the property than it can be sold for, and having dropped rent costs far below the mortgage payments and still finding no renters.

Just not in this particular article. He thinks debt relief is needed.

...are not owners of un-utilized, potentially income-producing property. It's not the same. A bank-owned foreclosure, or a land purchase by a speculator does not represent a hardship.

the problem is wishing to take empty properties away from people who are paying taxes on them, and imagining some equitable way to transfer properties to someone more deserving people, who will somehow magically make them occupied and profitable, and continue to pay taxes on them.

The reasons properties are empty depend on local circumstances and types of property of course, but for the most part it has to do with the rotten economy. Switching out owners does nothing, and certainly doesn't help with the tax situation - which is quite important to local economies.

Even in ideal circumstances and with a good understanding of the laws involved, dealing with rental property is a gigantic pain in the ass.

You are right about that. But what reasons do people own property besides to using it, renting it, or for speculation?

:shrug:

Then siezed property could be transferred to Housing authorities and/or non-profit affordable housing producers to
rent to low-income and/or homeless people.

The municipality has to pay the affected individual the assessed value of the property, and that's subject to review if the assessment is out of line. I've known people who have protested the assessed value as a consquence of a street widening, and won.

Municipalities can barely make ends meet now. Where are they going to get the money to pay for the property they take?

taxes on it...which has risen considerably since I got it and all I did was put a fence around it. The tax on it has gone up about 4 times since it was purchased.

:wtf: is he talking about?

baker doesn't mention it, but it also helps slow (to a small extent) the upward concentration of wealth.

this is just another loophole bullshit smoke and mirrors tactic.

This is just one article on one issue.

I tend to agree with reply #47 in this thread.

Right, they just want property to sit around growing more and more dilapidated. Maybe the reason it's vacant is that the economy has tanked and no one wants to open a factory or a business there. And the landlords get stuck with property that's not appreciating, but depreciating instead. I'm sure they'd love to have a little rental income.

Also, does this work the same for farmland or open space? Would this mean that big tracts of farmland, instead of being allowed to stay farmland, must be sold to developers to avoid paying extra taxes on it?

He believes the data indicates that landlords could rent property if they charged more reasonable rates. Property values and rents historically track the rate of inflation. The last 10 or 15 years they rose much, much faster (the housing bubble - this was due in no small part to lending practices).

Re farmland: You'd have to ask him. As I keep pointing out, it wasn't my idea, and I'm undecided on its merits.

"He believes the data indicates that landlords could rent property if they charged more reasonable rates"

Right, because property owners are so dumb that they don't know how to make money on their homes. How about this guy sinks some of his own money into some properties, have the rents/values crash and then he can tell us what a brilliant idea it is to rent the house out to someone that wants to pay rock bottom rates (because they always take such good care of the house) or immediately sell it at a big loss, or just pay extra taxes for making a poorly timed investment.

Sounds like an updated version of Debtors Prison.

I've got one of these houses in my neighborhood that looks like crap and I know the owner lives in a nearby subdivision. The best we can do is get the homeowner's association to lean on him/fine him for a poorly maintained property. If the guy wants to keep it vacant until he can sell it vs putting someone in it as a renter which would effectively tie it up for a year, that's his business.

I appreciate the sentiment but it's just unworkwable blantaly unfair.

...that properties do not go unsold and/or unrented because of price. This is demonstrably false. The "sunk cost fallacy" manifests itself in real estate and plenty of other business.

The owner has some reason for not selling, but that's the beauty of ownership; you can do as you please (within the law and ordinances).

Don't get the impression that I approve of the way property owners handle their affairs all the time. For example, a standard practice in Houston for someone that purchases a nice tract of forested land, say on FM1960, is to immediately cut down all the trees, sell the timber to finance the purchase, then slap a for sale sign up there and watch the weeds grow for the next 10 years. I've seen this happen so many times I can't count. I even called up one of the real estate agents to complain. She said she totally agreed but it's their property and sells better when cleared so that's that.

Not being an owner of "Huge tracks of Land", I can't really comment. However, that particular stretch of road now has some of the worst commercial vacancy rates in town, due in no large part to such practices and the reluctance of local owners to pool their resources and build up the area because that would be socialism ;) But, now that they've seen their values plummet, maybe they'll take a fresh look at how they do things and make a change for the better. Hopefully, but they are the owners.

Let's create another real estate balloon. Yeah, that should help.

But this plan would have the opposite effect. Part of the problem this addresses is that property values have seriously outpaced other prices (most pertinently, wages) and are way out of line with underlying fundamentals. (Thanks, bankers.)

I can see a lot more benefit to the state giving landlords tax credits if they allow their building to be used for a homeless family.

Noble idea but good luck kicking them out when you have a paying tennant that wants to move in. My uncle used to rent houses and finally got out of the business because if you get someone living there that decides they don't want to pay you anymore, you're looking at 6 months to pry them out. And after that there's a good chances they've thrashed the house. Totally not worth it.

Now they did do some of that in Houston after Katrina by giving, or at least severely discounting/subsidising houses that weren't selling, in a less than desireable location etc to displaced families. I don't know if it was a permanent deal but several new homes at the entrance of a subdivision near my home were given to Katrina families.

It has downsides, though. That subtracts from public coffers, while one objective of Baker's plan to raise revenue, and it's possible taxes would be hiked on everyone else to make up the difference.

For example - vehicles, that are not driven at least 22000 miles every year, will have a 15% surcharge on the registration.
Clothes you are not gong to wear at least 4 days a week will cost more.
Foods you don't eat every a week will be billed extra.
And don't get me started on wives that are not being used at least 3 times a week - 22% extra on taxes will teach you that hoarding natural resources is wrong!

All sensible ideas, I'm sure all her will agree.