They do pay property tax, in that if the property tax goes up, so will their rent. Your position is like saying that when you order a cheeseburger at mcdonald’s, you are only paying for the meat, not the bun, condiments, or wrapper.
Commercial tenants do pay property tax. Even though I rent from a landlord, property taxes are part of my CAM, so I get the breakdown, and pay it more or less directly. (I do still send the money to my landlord for him to disburse, but there is a one for one relationship between property taxes due on my property and property taxes that I pay on my rented property.)
Yay, someone brought this back. Given some states give renters a refund to offset the property tax included in their rent, I’d guess they conclude tenants are paying the property tax, too.
I disagree. At McDonald’s, I’m paying for the finished product, not the individual components. The company’s costs are irrelevant to the buying decision. The same thing applies to Whack-a-Mole’s automobile example. I’m not buying plastic, rubber, and metal, I’m buying a car.
The renter absolutely does not pay property taxes except in a meaningless indirect way. For an easy way to understand this, consider the apartment complex that has a 0% occupancy rate. The property taxes still have to get paid but there are no renters to pay it. Rental rates are based off of supply and demand. It is absolutely not the case that a business can just automatically pass on 100% of increased costs onto their customers. This idea completely ignores price elasticity. The fact is that in any business, profit margins go up and down (including into negative territory) based on numerous variables.
They have no revenue, they go bankrupt, they pay no taxes.
I am not sure what this resistance is. Is it a matter of fungibility of money?
I will agree that the apartment renter does pay those taxes in an indirect way, but not meaningless, part of what they pay into rent gets turned over into property taxes.
In the case of commercial renters, it is made even more obvious that this is the case, given that we get a CAM breakdown, which includes our share of the property taxes. Now, in this case, it is the same as in your hypothetical, in that if there is only half the bays rented, then the landlord is actually responsible for the half the property taxes that is not paid by tenants.
In any case, are you going to deny that a renter contributes to property taxes, or do you think that the landlord does not take property taxes into account when they set the rent?
Because the rent is what the landlord makes off of his investment.
The CAM is what renters pay towards common area maintenance.
These costs are variable, as they include stuff like electricity for outdoor lighting, trash removal, snow removal, landscaping, and taxes.
Many tenants actually set up a CAM like an HOA, and administer it amongst the tenants in the building, or hire a management company, rather than having the landlord administer it.
Not really. The price is determined by what someone is willing to sell it for, and what someone else is willing to pay for it. You seem to skip the second part.
That’s not true, either.
To use the McDonald’s analogy further, if I buy a McDouble off the Dollar Menu, it will cost the same at a pricey downtown prime location store with high property taxes as it will in a suburban strip mall with lower taxes, $1.00.
This is tautologous, and therefore not really instructive. Things have production costs, and those affect markets.
Increases in the cost of ingredients is certainly reflected in overall prices. Look at the current avocado shortage: guacamole is getting more expensive, and so are guacamole burgers.
That’s only because McD’s is big enough to spread its costs around over all its locations. They’re paying property tax on all their locations, and subsidizing the expensive spots. Your point does not actually refute anything said here.
Go back to the apartment landlord. If his property taxes go up by $1,000, does the rent rise by $1,000? No. Sometimes it’s less, and sometimes it’s more. Same with avocados and cheeseburgers.
Adding this up in my head puts the top .1% earning around 2 trillion ± a few hundred billion.
So, yeah, not enough to cover the federal budget.
But yeah, they are paying less than I am, as a percentage of their income, which I think is kinda uncool. And, as beren has pointed out, if you tax someone 30% on $100, they only have $70 left. If you tax someone 30% on a billion, they have $700 million left. I do agree that taxes should be much more progressive, with the top earners paying a much higher tax rate. I wouldn’t even be against the idea of a wage cap, where taxes become an effective 100%, but I would put it at least 3 orders of magnitude higher than beren’s $100,000 proposal.
There are a few reasons for taxes. I will list them in order of simplicity, and inverse order of importance.
The first is to fund the govt. That’s easy enough.
The second is to prevent inflation. The govt could just print money to cover its costs, and not take any taxes, but this would create a pretty unstable economic environment that would likely not be stable for long. Therefore, the govt needs to take out approximately what it puts in, minus trade deficits and economic growth. Where to get that money is a good question. I believe that it would be best to pick that money up in places where it has begun to stagnate, and is no longer acting in a multiplicative fashion. That place is at the top, where a dollar in a wealthy person’s bank account stimulates the economy far far less than when it is in a working class person’s hand.
And the third is to create incentives. We tax things that we feel are bad for society, but not bad enough to outright legally prohibit. This makes sense for cigarettes and soft drinks, from a health perspective, but also needs to address economic health. A low tax rate on investments incentivizes people to remove money from their investments and to instead put the money into their own pockets for personal use. A high tax on investments incentivises people to leave their investment money in the company where it is, allowing the company to continue to have that equity to grow. My proposal on that score would be a very high tax, which I would define as increasing 2 tax brackets from your marginal income, for short term investments, which I would define as less than 5 years. After 5 years, it would only be one bracket up, and at 10, it would be paid as normal income. I would go even further, to encourage people to think long term, and make at 15, it is taxed at a bracket below your marginal rate, and at 20, not only do you get 2 brackets down, but you get to write off all the inflation (based on CPI) from your cost basis. I believe that this sort of tax policy would encourage people to look at longer term investments, rather than always worrying about the bottom line of the next fiscal quarter.
Yes, in the real world there can be many reasons to accept a loss temporarily (or even permanently in some cases).
Those are extraneous to this discussion.
Bottom line, Econ-101, your income needs to exceed your costs. Those costs are everything you spend on your business including electricity, stamps and print toner.
When someone buys your product they are covering those costs and, usually, with some profit to boot. If not you are not making money and need to reassess your business or go bankrupt.
Do you have a cite for “a dollar in a wealthy person’s bank account stimulates the economy far far less than when it is in a working class person’s hand”?
Agreed…and so what? The renters are still paying the property tax, and the customers are still paying for the avocado. If the costs go up, so do the prices. No one said the relationship is exactly one-to-one and linear.