…the fractional assessment of homes was easily the largest single government housing subsidy in the postwar era, and it was among the largest categories of social expenditure of any kind, direct or indirect. Fractional assessment of residential property provided a subsidy that was forty times greater than federal spending for public housing. It was ten times greater than the home mortgage interest deduction. It was five times as costly as more controversial "welfare" programs like Aid to Families with Dependent Children. Although fractional assessment did not show up on official government budgets, on the eve of the tax revolt it was providing more benefits than any other social policy in America except for the twin blockbusters of the federal budget, Social Security and Medicare.
That is from the new book The Permanent Tax Revolt: How the Property Tax Transformed American Politics, by Isaac Martin. The main thesis of this book is overstated, namely that the professionalization of property tax assessments is the root cause of American exceptionalism on tax politics; nonetheless I found this a very informative and stimulating read.
I haven’t read the book, but it strikes me that there is an absent counter-factual. You can levy a large tax on the fractional value of a house, or a small tax on the full value. The key fact for the home owner is the tax bill, not the math used to derive it. Does the author deal with the probability that if the local authorities raised assessments, homeowners would require them to reduce rates? Or am I missing something obvious?
While I’ve enjoyed a number of the books Tyler has recommended I think I’ll pass on this one.
How do people continue to get a pass on calling reduced taxes a “cost” to government? They very notion is ludicrous.
perlanwyr says: Fractional assessment is actually very complicated and leads to some bizarre outcomes. It is also extremely prone to error. Its practical result was that homeowners paid far less than businesses did on properties of similar value, which is why this is rightly seen as a subsidy, and not “ludicrous” at all.
So this means that when any person is taxed at a lower rate than the someone else, that person is being subsidized? So when the top marginal income tax rate in the U.S. was 91% in the 1950s and early 1960s, anyone being taxed at less than 91% was being subsidized? This is a simple, and important, misuse of language.
“So when the top marginal income tax rate in the U.S. was 91% in the 1950s and early 1960s, anyone being taxed at less than 91% was being subsidized? ”
In fact yes, they were and are. Today, the top 5% of earners pay over 50% of all income taxes. Unless you can show that they consume over 50% of the resources for which their taxes pay, this absolutely means that they subsidize the tax burden of the remaining 95%.
That’s like considering a punch in the face instead of a kick in the balls a “reward,” isn’t it?
Unless funds are being taken from the government’s giant, Scrooge McDuck-style cash silo and handed over to homeowners, where is the subsidy? Or are we rewriting words like “subsidy” so that we can use language to make things sound like they are other things–when they aren’t?
Guh, I thought I deleted that last paragraph at the end there.
“ts practical result was that homeowners paid far less than businesses did on properties of similar value, which is why this is rightly seen as a subsidy, and not “ludicrous” at all.”
I have no idea about fractional assessment, but I know what a subsidy is. It is only a subsidy if something is being subsidized. My home value (that value added over what it would be in its natural state) is a boon to the government, not a cost to them. If I am being subsidized, in reality-based meaning and not politician-speak, then that means I’m using services at the expense of the business. I doubt that. I only drive a small car on the roads, for which I overpay gas taxes, not a truck.
What is the basis? Value, while traditionally accepted, is completely arbitrary. Why should an individual pay the same rate as a business based on the arbitrary of property value? A homeowner’s residence does not provide cash flow, so there is no “ability to pay” the tax assessed. From that standpoint a business should be charged more taxes. Does a homeowner use more governmnent services? I doubt it.
In fact, the libertarian in me says we are probably both being overcharged for the miniscule services we get for the money. We are both subsidizing government bureaucracy.
George, a burglar doesn’t do anything for you in return. If your dad took the stuff, and pawned it to pay the rent, that would be more like it. What you’re getting from the subsidy is stereo-financed rent, not the stereo itself.
Now you, as a taxpayer, don’t feel you’re getting anything worthwhile out of the government. But you, as a kid, would probably complain about losing your TV and stereo more than you would appreciate having the rent paid, too. The rent’s still more important even if it doesn’t feel that way.
Is it realistic?
it is a good idea
Forty years ago, Don ED hardy
blew off a Yale fine-art fellowship to pursue the rogue art of tattoo, a timeless and often taboo tradition that captivated him as a boy in the Orange County beach town of Corona del Mar. By 10 he was drawing cars and eagles on kids’ backs and arms with wet colored pencils and Maybelline eyeliner. After that he begun to design the Ed hardy picture
At the San Francisco Art Institute in the early ’60s, Hardy mastered the demanding art of intaglio etching under the tutelage of the late Gordon Cook, a no-jive blue-collar guy who instilled in Hardy a love of craft, Asian art and the quiet power of Giorgio Morandi’s little still life pictures. Which like love kills slowly
But it worked out well for the plucky Hardy boy, who blurred the supposed boundary between “high” and “low” art and carved a path through the worlds of art and commerce. He has drawn images on torsos
, canvases and giant scrolls with equal conviction and aplomb.
Comments on this entry are closed.