Rich people have it so hard in America, it makes me sad.
Actually, what ends up happening is if the price of a house is agreed to at 1.05 million. They’ll write one check for 999,995 for the house and one for 50,005 for the furniture or appliances.
I would have “no sympathy” for a 1% tax on being Bill Gates, but I could still think that it is strange and would be opposed to it.
Plus, I pay all my taxes, as do most others in similar situations to me. I wouldn’t know a tax shelter if I was living in one.
Again, I don’t oppose paying more in taxes, it’s just that this one seems arbitrary. Not to mention that it’s not adjusted for inflation or the housing market. When the tax was passed into law, perhaps 1 million was a truly expensive house, but now with the housing boom it is often quite modest. If you’re going to tax overly expensive homes, it should be adjusted for inflation, market conditions and cost of living. If you’re going to consider all home ownership a luxury, because as others pointed out one can always rent, then it should be applied to all homes, regardless of price.
Actually, with the way the mortgage market has gone recently, including things like negative amortization loans, many banks would be happy to give such mortgages and worse. If I did get a million dollar house (which as I mentioned is unlikely) I would end up taking a mortgage for well over a third, but not half, of my household income, and wouldn’t have any trouble getting it.
I think I got derailed for a bit.
My main point of contention is that this tax will hit a young urban family buying a 3 bedroom 1600 square foot condo in New York City for 1.1 million while the guy buying the 7 bedroom, 4 bath 4000 square foot house on three acres in rural New Jersey can avoid it.
If they don’t like it, they don’t have to live in the city.
Living in a city IS a luxury. Living in a first-class city like Frisco or NYC is an even bigger luxury. Owning a house in a city is a very big luxury indeed. Just because the physical house itself is modest doesn’t mean that the house’s situation is not luxurious. And come on, if you drop a mil on a house you can surely spare another ten gees. I’ve got no problem taxing people who can spend a lot of money, whether or not they are “the rich.” Another benefit of this tax could be the driving down of inflated prices, although there are ways around that like the writing of two checks so it probably wouldn’t be a big benefit.
Whether the tax is justified or not doesn’t really matter to me; I’m not going to be crying a river over someone having to pay an extra $10,000 when that is only a little less than I make in a whole year.
(I could get a house just like the one you described in Pittsburgh for less than $80,000. The SF housing market is OOC.)
Living in the city is not the luxury being taxed. If it were, by putting a 1% tax on all home sales in city limits, I would have no problem with it.
Shagnasty has nailed this one. It’s vindictive, unfair and just wrong to have such a tax. The rich are already paying more taxes. This tax is a bad idea.
One other thing I’d like to point out is that everyone here seems to have a notion that someone living in a million dollar home must simply be able to afford a million dollar mortgage. Not true. My father’s house is on the market right now for 1.3 million. He built that house less than ten years ago for $300,000. He’s already going to get slammed by capital gains when he sells and he’s being taxed heavily by regular property taxes. Why add another tax? It’s a stupid idea.
That has no relevance to the question posed in the OP. If the SDMB management declared that everybody else pays $4.95 to renew but you have to pay $19.95, that would not be onerous, but it would certainly be unfair.
That depends on the specific tax. Taxes designed to penalize “bad” behaviors (e.g. “sin” taxes) certainly have an element of vindictiveness, for example.
He has a $500,000 exclusion. That means of his ONE MILLION DOLLARS of profit, he’s only going to pay taxes on no more than $500,000. And, he’ll have a maximum Capital gains rate of 20%, instead of 35%. In other words, if any of us earned an extra $1,000,000 at a job, we’d pay $350,000 in FIT (plus FICA & FUTA for a total of some $45K extra). Your father will only pay $100,000- a savings of at least $250,000. No sympathy from me. Sorry.
From this example, you can see that a 1% tax is very fair. Dudes who seel their million dollar house pay FIT of something like 10% (assuming a pretty high gain %, etc as in the above example). Dudes who EARN a Million will pay a 35% FIT, plus Social Security ect of some 15% (the biggest part of which tops off at around $90K, but 2.9% is payable on all of it).
Sorry, but you aren’t going to get any sympathy for having to pay a tax on a $1M home. Even from someone who has lived and worked in the NY/NJ/CT area most of his life. Ya’ know dere be some po’ people out dere!
But to answer your question of a “mansion tax”, yes, I think it’s fair. For actual “mansions” Like if you move into a neighborhood, tear down the house and then construct some monstrosity in it’s place. Or maybe the towns should do a better job of zoning. I guess it depends on the objectives of the town.
It should be based on square footage, not price as it is the style, not the price that makes a house a mansion.
It’s not vindictiveness. It’s to provide disincentives for certain behaviors without banning them outright.
I think these taxes you describe are already punishingly high. However, if you don’t like them that’s fine. We can discuss changing them, or what the correct level of taxation for such things should be. However, adding a completely new and seperate tax just for “mansions” is a stupid way to go about doing it.
The exclusion you mention only applies to people who have lived in their homes for two of the past five years. This is a fair deduction. It saves people from paying extremely high taxes just for selling thier own homes, but doesn’t save a professional builder from having to pay taxes when he sells homes for a living.
It’s very odd that you look at paying a tax of $100,000 as “savings” of $250,000. If I walk up to you on the street with a gun and pistol whip you, did I “save” you from being shot? After all, getting pistol whipped is much prefereble to getting shot, right? So, I really would be doing you a favor. 
I would agree with all of this.
The question posed by the OP is “Is the Mansion tax fair?”, which presupposes (and the OP concedes) that *some * taxation is thus fair.
If your debate point is that the “Mansion tax” is unfair as all taxation is theft, then there’s really no use debating with you in this thread, is there?
You’re making the false assumption that the government needs that $10,000.
What is the purpose of this mansion tax anyway? It seems fairly arbitrary to me.
Whether or not we consider that such a “mansion tax” is fair in principle, I don’t see how we can argue that supporting it implies ignorance of what currently constitutes “luxury” in the high-rent housing markets. According to you, the tax is being adopted on a state-by-state basis. And surely the state legislatures of NY and CA are quite well aware of what housing prices are like in, say, New York City and San Francisco, respectively.
So why did they decide that $1M was a satisfactory lower limit on the price of a “mansion” in their state? I presume they had some reason for setting the bar at that point, and I’d need to know what it is before I know whether I agree with their reasoning.
As Dr Deth replied to Debaser, it’s kind of pointless to argue against the “mansion tax” in particular on the grounds that taxes in general are too high or wastefully spent. The OP specifically ruled out that kind of general objection:
So the debate here is not “Are taxes overall too high?” or “Does the government really need the revenues from this tax?”, but rather: “If the government decides to impose a surtax on luxury housing, is this scenario a fair way to implement it?” Skip the vague libertarian grouching about how awful taxes are in general.
Where are you getting this from? Please let me know where I posted that I am opposed to all taxation.
Hey, now…
I only grouched about taxes when I was specifically responding to DrDeth, who was the first to bring up unrelated taxes like FICA and income taxes. That’s certainly fair game. I don’t think it makes me guilty of bringing the thread off track.
However, it’s certainly reasonable for this discussion to have some references to existing taxes that already affect the sale of a million dollar home. As far as whether “taxes in general are too high or wastefully spent” I think that this could be relevent as well. If a resident of NY finds the spending there already too high or wasteful, that is certainly a valid reason to complain about yet another tax being added.
It’s unreasonable to expect a discussion of this new tax in a vacuum.
[QUOTE=Kimstu]
So why did they decide that $1M was a satisfactory lower limit on the price of a “mansion” in their state? I presume they had some reason for setting the bar at that point, and I’d need to know what it is before I know whether I agree with their reasoning.
[QUOTE]
The number was chosen at least a few years ago (pre housing boom), when it is possible that even in city limits a million dollar house could be considered a mansion. You can do a quick search through any real estate site and look for 800K places in NYC (if it’s listed at 800K, it will likely sell for over 1 million), and see for yourself that these are no mansions. The average one bedroom apartment sold for nearly 700K a few months ago in NYC.
It’s moot though because the actual number is meaningless nomatter what it is. Because a million dollar home in upstate New York is never going to be anything similar to a million dollar home in NYC. The only way to have a fair tax in this regard is to link it to square footage or the market.