# "Forced purchase" option for assets at their appraised tax value **URL:** \ **Category:** Great Debates\ **Created:** [August 18, 2017, 8:53pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003 "2017-08-18T20:53:48Z")\ **Posts on this page:** 6\ **Page:** 3
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 21, 2017, 7:47pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/41 "2017-08-21T19:47:36Z")
> [@iamthewalrus\_3](#): > > You are correct that “single yahoo who wants to screw with my life” is a weakness of this plan. Although, I think it’s a vastly more limited one than you assume. I mean, lord protect me from nefarious villains who want to pay me $300k more than my house is worth. > > Yes, someone with money to burn could certainly be a jerk about such things. I’m not convinced that’s a serious exploitable problem though. Someone willing to devote hundreds of thousands of dollars to being a jerk can _surely_ find some way to do so without vastly overpaying for your house, or else they’re not a very creative wealthy jerk. > > In the vast majority of cases, though, if someone comes along and offers you, say, 10% more than the appraised value of your house, then your house is _actually_ worth 10% more than you think. And it’s not at all unreasonable to be taxed on that actual value. But in this case, we are talking about a system in which landowners are essentially being coerced (feel free to quibble with that term) into entering into contracts that they may simply not wish to do. Recall the outrage in many quarters about people being forced to buy health insurance, or pay tax penalties. Now we’re talking about forcing people to either sell their home or pay tax penalties. The playing field is being tilted towards buyers, since buyers are in no way penalized in this system. They (the general they) are free to keep bidding on a property until an owner has no choice but to sell, which could have serious implications for cases like Ms. Vera Coking of Atlantic City. In essence, it is like giving the power of eminent domain to private interests. > [@](#): > > Property tax is generally already based on the most valuable use of a property, and people are forced to move because they can’t afford the taxes on their houses. Attempting to fix that problem is why California’s property tax system is so fucked up, so there are tradeoffs to valuing stability over efficient use of property. I totally agree that California’s response to the problem of forcing people out of their houses has been a disaster. And yet, the proposed solution in this thread is to make it far, far easier to force people out of their houses. That’s a disaster in the other direction. > [@](#): > > Right now, if you want to dispute a tax valuation, you get your appraisal, and you fight silly proxy battles over how much your mountain views are worth, or whether the noise from the nearby bus line detracts $5k or $7k of value. I have had my houses appraised several times, and never once have I argued over the bus lines and whatnot. Am I doing it wrong? > [@](#): > > The bit about someone buying your running shoes out of your closet is a serious scenario you are worried about? It’s an illustration of the economic inefficiency of forcing people into markets that they do not seek to participate in. It’s no more cartoonish than the system people are, for whatever reason, taking seriously as a means of assessing property taxes, except with the potential for substantial penalties for homeowners. This thread reminds me of the definition of cynics, who know the price of everything and the value of nothing. Turning taxation on one’s home into an exercise in game theory is really disturbing, frankly. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [August 21, 2017, 9:28pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/42 "2017-08-21T21:28:21Z")
> [@Ravenman](#): > > But in this case, we are talking about a system in which landowners are essentially being coerced (feel free to quibble with that term) into entering into contracts that they may simply not wish to do. No, I won’t quibble. And I don’t dispute the fact that this idea has some downsides for people who would rather just have predictable property taxes and live where they live. Any tax system where the tax goes up in unpredictable ways is going to have some coercive effect on those people. And as we both agree, systems like California’s where the tax can’t go up fast enough to match the market are horribly distorting. So, to some extent at least, we have to let actual market price determine the value to be taxed. Perhaps it just has to be one of several inputs, with some additional bias toward stability. And consider how much better this system is for people who actually can’t afford the tax and have to move. They have a ready and willing buyer at hand! I’m not suggesting this as a panacea. But, once you accept that tax should be paid on the actual value of property, I think a system that uses actual bona fide offers to determine that value is a reasonable one. > [@](#): > > I have had my houses appraised several times, and never once have I argued over the bus lines and whatnot. Am I doing it wrong? I don’t know, maybe? My house appraisal had some complicated formula for how much of the property you could see the mountains from. I don’t know, maybe that formula is a good estimator of value, or maybe (my opinion) it’s totally full of shit. The amount that people are willing to offer seems like a much better input. And house appraisals around sales always manage to find out that the house is worth exactly as much as the buyers are willing to pay. It’s only _not_ around sale time that things get wishy-washy. > [@](#): > > It’s no more cartoonish than the system people are, for whatever reason, taking seriously as a means of assessing property taxes, except with the potential for substantial penalties for homeowners. Sure, but somebody’s paying the tax somewhere. If the homeowners aren’t paying extra tax based on the real value of their property, someone else is paying it. You describe those costs as substantial penalties when they’re allocated to certain specific homeowners, but ignore them when they’re paid by other not-as-clearly-defined groups. > [@](#): > > This thread reminds me of the definition of cynics, who know the price of everything and the value of nothing. Turning taxation on one’s home into an exercise in game theory is really disturbing, frankly. I don’t deny that there’s value in predictability and being able to keep living in your house if you want. But there’s also value in people paying roughly the same tax rate, and in land being used for a more societally optimal purpose. I don’t think it’s cynical to consider alternate models that weigh those values differently. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [August 23, 2017, 3:31pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/43 "2017-08-23T15:31:18Z")
> [@Ravenman](#): > > Because that’s not fair market value. Fair market value is not defined as the price as which one particular person wants for something that isn’t on the market.(snip) I never said that was fair market value. I said the fair market value was at least that. It establishes a minimum. What, if someone offers $850,000 for a piece of property you contend the fair market value is lower? That sounds wrong. And if the owner refuses to accept the offer, what then of the value? We can assume it is definitely higher than the offer. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 23, 2017, 3:47pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/44 "2017-08-23T15:47:15Z")
> [@Bill\_Door](#): > > I never said that was fair market value. I said the fair market value was at least that. It establishes a minimum. What, if someone offers $850,000 for a piece of property you contend the fair market value is lower? That sounds wrong. And if the owner refuses to accept the offer, what then of the value? We can assume it is definitely higher than the offer. Fair market value depends on two people generally wanting to engage in a transaction. If one party does not want to engage in the transaction, then the price is distorted. For example, if a seller is not interested in selling something, but is compelled to, his asking price would exceed the fair market price. If a buyer doesn’t want to buy something, but is compelled to, his bid price would be under the fair market price. ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [August 23, 2017, 4:11pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/45 "2017-08-23T16:11:47Z")
I live in Virginia, I find the car tax annoying but not oppressive. If tax on my vehicle goes towards maintaining roads I’m ok with that. If somehow the car tax disappeared the state would get the money from citizens through some other tax. ---
**Author:** ![Darren\_Garrison](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/darren_garrison/32/92_2.png) [@Darren\_Garrison](https://boards.straightdope.com/u/Darren_Garrison)\ **Post date:** [August 23, 2017, 4:40pm UTC](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003/46 "2017-08-23T16:40:15Z")
> [@GaryM](#): > > Missouri also has personal property tax. You are taxed on farm animals, farm equipment, ATVs, cars & trucks, airplanes, boats etc. It used to include your furniture as well, but that went away years back. IIRC you are taxed at 1/3 of appraised value. Past [personal property taxes](https://www.agriculture.purdue.edu/agcomm/newscolumns/archives/CC/2013/December/131218CC.html#.WZ2vgCspXTk) [are mentioned in](https://books.google.com/books?id=cHpM9jx9roIC&pg=PA220&lpg=PA220&dq=%22The+Indiana+personal+property+tax+was+very+personal.%22&source=bl&ots=DvPST7fdeR&sig=X5AuAZsqGZq0zZFAJb27eDYyYAU&hl=en&sa=X&ved=0ahUKEwjS2uel5O3VAhWCJCYKHUFfCXgQ6AEINTAC#v=onepage&q&f=false) Gene Shepard’s _In God We Trust, All Others Pay Cash_. (tr;dl: tax assessors go into your house and appraise everything that you own.) [Previous page](https://boards.straightdope.com/t/forced-purchase-option-for-assets-at-their-appraised-tax-value/794003.md?page=2)