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View Diary: The Devil Is in the Details -- State and Local Taxes (40 comments)

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  •  what I meant by that paragraph (1+ / 0-)
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    smileycreek

    is that you cannot raise revenue on money that isn't there. A taxpayer who has a high income can, by definition, pay taxes. The ability to earn money is the most reliable tax base. If all income and capital gains "go away", then we have more serious worries than falling tax revenues.

    Property taxes, while reliable in good times, hit the poor most heavily in bad times. Everybody needs a few square feet of roof over their heads. If I "own" a 150K house with a 120K mortgage on it, I must pay taxes on the 150K even though I "own" only 20% of it. If the household income has gone down because one of us is out of work, then the mortgage interest deduction may have become essentially worthless to me.

    When recession comes along, it's too late for me to try to access the value of my house. I can't sell it because there are no buyers, and I can no longer afford the taxes. As you point out, the assessed valuation is "sticky", and that works very much against me.

    In the worst case scenario, my 150K house might become a financial liability. I might have a 30K equity on paper, but that's not worth anything in foreclosure.

    It is not much consolation that this recession is has hit real estate values unusually hard. "Unusually" doesn't help make my house payment.

    Occupy is the symptom. Fundamental reform is the cure.

    by Tim DeLaney on Sat Dec 03, 2011 at 10:30:25 PM PST

    [ Parent ]

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