The decline of Illinois

Discussion in 'Budget & Taxes' started by kazenatsu, Jun 14, 2019.

  1. kazenatsu

    kazenatsu Well-Known Member Donor

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  2. MB74

    MB74 Member

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    Chicago is not as wealthy as NYC or LA. They don't have as much money to address their issues.
     
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  3. bringiton

    bringiton Well-Known Member

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    High property tax rates reduce the cost of real estate, attracting in-migration. Look at Texas vs CA.
     
  4. kazenatsu

    kazenatsu Well-Known Member Donor

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    That is theoretically true. However, I believe in many parts of Illinois the tax rates have gone beyond simply just the level that results in a correlating decrease in property values.
    People are leaving because the property taxes are so high.

    The type of people who are going to be attracted in return are the renting class.
     
  5. bringiton

    bringiton Well-Known Member

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    Also practically.
    Where? What is the rate?
    No they aren't.
    Nope. Low prices mean houses are affordable to buy. That's why home ownership rates are higher in high-property-tax-rate states like TX and NH, low in low-rate states like CA and HI.
     
  6. kazenatsu

    kazenatsu Well-Known Member Donor

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    Wow, you just never understand what I'm trying to say, do you?

    I'm sure there might be a correlation, but it's likely not the direct cause & effect one you think it is.
    Michigan is also one of the high property tax states and has high unemployment. Ohio has higher property tax rates than neighboring Illinois, and also has higher unemployment and a lower homeownership rate. New York has a relatively high property tax rate and low homeownership rate.
    So I've noticed your claimed correlation doesn't seem to be extremely strong or hold consistently.
     
    Last edited: Jun 24, 2019
  7. kazenatsu

    kazenatsu Well-Known Member Donor

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    They're only more affordable to buy because they're less affordable to live in. The previous owner isn't able to sell it for as much money because buyers are not willing to pay as much, knowing it will be costly in property taxes to live there.

    Don't misunderstand me, I see what you're saying, but there's another side to this too.

    Probably moderate property taxes don't end up increasing the overall cost of living, for new buyers, because it balances out, but higher property taxes might go beyond that.

    Imagine for example going to a car dealership and you can only buy a car on a long drawn-out financing plan, they won't allow you to pay the cash upfront. With no equity in the house, it is going to end up costing them more, in the long-term.
     
    Last edited: Jun 24, 2019
  8. bringiton

    bringiton Well-Known Member

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    Right. The difference is, lower prices cut out the something-for-nothing payment to the bankster.
    It's true that property taxes can be too high. When they are low, they fall mainly on land, and can usefully be increased. But when they are high, as in places like Detroit, they fall almost entirely on improvements, which penalizes improvement and stifles construction. It's complicated, but a property tax rate that exceeds the discount rate should probably be turned into a land value tax to avoid Detroit-like outcomes.
     
  9. bringiton

    bringiton Well-Known Member

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    It's pretty strong, though of course there are confounding variables, and it may not be decisive if the rate difference between two states is small.
     
  10. jay runner

    jay runner Well-Known Member

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    High property taxes ARE a cost of real estate. Before you buy you want to know the taxes, insurance, and see the last five years' utility bills (always asked for here). Then you have a fairly good idea of all the real estate costs and can determine if you can make all those payments, or not, and if you have any safety factor should adversity come. Interest rate is important also, governing how quickly or slowly you gain equity.
     
  11. bringiton

    bringiton Well-Known Member

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    They are a cost of owning which reduce the cost of buying. Because buying almost always means mortgage debt, property taxes reduce the something-for-nothing payment to banksters. Moreover, higher property taxes mean lower other taxes, which also increases disposable income and thus affordability.
     
  12. jay runner

    jay runner Well-Known Member

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    Real estate taxes can be such a high real estate cost that they make buying unpalatable, like in Taxachusetts. So you find a better state to buy and settle down in.
     
  13. bringiton

    bringiton Well-Known Member

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    It's possible when the property tax is so high that it crushes land value and almost all falls on improvement value, as in Detroit, but not under normal conditions. Certainly it is not the property taxes that make real estate unaffordable in Massachusetts, but the high prices and the burden of other taxes.
    Property taxes are paradoxical because they consist of two opposite taxes: the tax on improvement value, which measures what the owner contributes to the wealth of the community, and the tax on land value, which measures what the community contributes to the wealth of the landowner. Plus, they affect land value but not improvement value, so if they are low, they should be raised, but if they are too high, they should be lowered.
     
  14. kazenatsu

    kazenatsu Well-Known Member Donor

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    I believe paying in installment payments (property taxes) rather than all at once (property value) will appeal more to some types of buyers than others so it will still appeal to lower net worth individuals more than higher net worth individuals.

    There also will be less motivation to improve the value of the land or build a big house on it (because that also gets taxed), so again, not really appealing to wealthier middle class people.

    If you drive them away, it may not really be good for the tax base or local economy.
     
  15. vman12

    vman12 Well-Known Member Past Donor

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  16. bringiton

    bringiton Well-Known Member

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    That's right. I am correct.
    Where does that say they are leaving because of high property taxes?

    Oh, no, wait a minute, that's right: it doesn't. You'll notice that Oregon, with high property tax rates, has been drawing in-migration for over 30 years despite a rainy climate. In general, the advent of air conditioning has meant that people want to move from the north and east to the south.
     
  17. vman12

    vman12 Well-Known Member Past Donor

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    Sure.

    https://www.bizjournals.com/chicago...half-of-illinois-residents-want-to-leave.html

    What is making Illinois residents want out? The No. 1 reason in in the poll is taxes

    Specifically 27 percent cited taxes as the motive for departing, 16 percent said weather, 15 percent noted government and just behind were jobs and education at 13 percent.
     
    Last edited: Jul 15, 2019
  18. bringiton

    bringiton Well-Known Member

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    LOL!! Oh, dear. You just made a prize fool of yourself. You'll find that happening a lot, as long as you presume to dispute with me:

    https://ballotpedia.org/Illinois_state_budget_and_finances#Revenues

    Property taxes account for just 0.2% of Illinois's state tax revenue. Income tax is 44%, Sales and receipts tax 47.6%, and licenses 7%. The income and sales taxes are crushing, unjust burdens, so I can see someone wanting to escape them. But the VERY LAST REASON anyone would leave Illinois would be property taxes.

    You are destroyed.
     
  19. vman12

    vman12 Well-Known Member Past Donor

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    Oh yes I just destroyed myself for repeating the answer people in Illinois gave for leaving.

    How will I ever recover.

    In your glee you'll notice I never said "property taxes".

    I simply said "taxes".
     
    Last edited: Jul 15, 2019
  20. bringiton

    bringiton Well-Known Member

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    Your initial response was to my post #5 in this thread, which refuted a specific claim that people were leaving Illinois because of high property taxes. They aren't, as I showed. I would certainly agree that high income and sales taxes are an unjust burden that would drive people away, as they are doing in Illinois, CA, and other high-income and -sales tax but low property tax states.
     
  21. vman12

    vman12 Well-Known Member Past Donor

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    Yeah I don't think one specific tax is ever the issue.

    The point is that the totality of the taxes in Illinois, and pretty much all Democrat-heavy states, are characterized by high taxation in general.
     
  22. jdog

    jdog Banned

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    Liberal politics and economics are self destructive and this is simply another example. Any system which penalizes the productive and rewards the unproductive will eventually collapse.
     
  23. bringiton

    bringiton Well-Known Member

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    You mean like the current system, which penalizes productive working people to subsidize unproductive landowners?
     
  24. jdog

    jdog Banned

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    People acquire assets because they are productive.. If you were among that demographic, you would know that.
     
  25. bringiton

    bringiton Well-Known Member

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    Garbage. People acquire assets for lots of different reasons. The productive working poor often have few or no assets, while the unproductive, privileged, parasitic rich have lots of assets.
    <yawn> I am among that demographic, which is how I know you are wrong.
     

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