Economics Question number 2 - please provide answers

[TheOraclePaul]

Question to a problem I don't know the answer to: In a free market society, property rights are completely respected. I assume that there would be no 'confiscatory' tax like property taxes, which seek to slowly deprive a person of their property over time, and also imply to the owner that the state has a claim on their land. So, how would one handle a situation in which someone decides not to perform any upkeep on their property and it lowers the values of neighboring properties? Let's say they don't directly impact their neighbors by polluting the air or anything like that, but they paint their house horrible colors, don't mow the grass, don't perform repairs, and leave broken down cars allover their lot. Is there anything neighbors can do that doesn't violate the sanctity of private property? I'm assuming it would be handled on a case by case basis in the court system but want to hear opinions. Thanks!

 

[Steven Douglas]

Different laws entirely. There is nothing that would prevent the state, or community, from passing and enforcing nuisance and other laws like the ones you described, even if all confiscatory taxes were completely abolished.

There are already laws that enable tax collectors (of non-property taxes) to put a lien on your house if the tax is unpaid. Likewise, legal fines and penalties, if not paid, can result in liens, as they are treated just like any other debt. The difference with a property tax is not that non-payment of a tax, fine, or anything else could cause you to lose your property, but rather the basis upon which the property tax is levied, which makes it the most pernicious, unfair (and rightly most hated) tax of all.

The property tax is an ad valorem tax, meaning "based on value" -- a regressive tax that is not based on, nor is it concerned with, your income, ability or inability to pay. In other words, you do not have the right to own property - ("...to be secure in your...houses...") and be poor at the same time.

If you are poor and are creating a nuisance in the community, you may be without an excuse, because cleanup does not necessarily cost (like an unfunded mandate). Likewise, if you are poor, and have no income, there is no income tax. If you are poor and are not buying anything, then there is no sales tax. But if you are poor and have real property - you still have a tax bill to pay, regardless -- one that does not give a shit that you are poor. Pay up, or else you can, and WILL be evicted.

The property tax is based only on the value of what you have already paid for, or gone into debt for -- but do not, and cannot ever, completely own. All the lumber and materials used to improve your property -- included in the tax. You already paid the excise tax on those materials, but if it becomes part of the property, it now becomes subject to a property tax, as you must PAY PERPETUAL RENT TO THE GOVERNMENT FOR WHAT YOU ALREADY PAID FOR (including the taxes).

To add insult to tax injury, the property tax is not based strictly on the value of your property in most cases. There is usually a "mill rate" (or multiplier of some kind) involved, which is usually determined by government budget requirements. In other words, simplistically speaking, the government first determines what it needs, then it determines whatever else needs to be factored in as rates - in an equation such that the assessed taxable value of all property ends up being close to the amount the government budgeted for revenue.

Anyway, sorry to ramble. The bottom line is that property rights (like any other rights) are respected, inasmuch as they don't interfere with other people's rights.

 

[TheOraclePaul]

Ok...you did a great job explaining what property taxes are and why they are unfair, but I still don't understand how you ensure someone's property isn't affecting the value of yours. I can only think of one way to do that without violating property rights, and that is having it handled through the court system on a case by case basis, in which you must prove that your neighbor is 'violating your property rights' by diminishing it's value through poor upkeep. Let me know what you think.

 

[fisharmor]

The property tax is based only on the value of what you have already paid for, or gone into debt for -- but do not, and cannot ever, completely own.

I usually make it a point whenever possible to show that property ownership is a myth in most of the world.
If you're occupying a plot of land, and you have to make periodic payments to someone else because you occupy that land, and failure to make those periodic payments means the payee takes possession of that land and kicks you out, that's the dictionary definition of rent.

The 95 cent word we should push is "allodial". It originally references possession where you are free from obligation to a feudal lord. As far as I can tell, the word is only outdated because that is the last time anyone was able to truly own property without having to pay someone else.

But back to the question...

So, how would one handle a situation in which someone decides not to perform any upkeep on their property and it lowers the values of neighboring properties?

Easy. Buy the pig out.
Everyone has a sale price. Period.
If the pig is sitting on a property valued at $5000, and the neighboring properties are all valued at $40k and should be more like $80k, that means the neighbors can each afford to spend upwards of $20k to correct the problem.
In a free market economy, you also have a stable currency. We don't have a stable currency, so it's kind of hard to envision this - but what if someone offered you twice the amount of your mortgage to buy your house? If we weren't in a situation where houses were actually selling for twice what they are now only a few years ago, wouldn't you take it?
I sure as hell would! Especially if half of the profit wasn't going to get confiscated as well.

Long story short, if there was no regulation of this sort of thing, people would have to start catching flies with honey, instead of just calling the local thugs to come out and shoot their dogs and put them on a terror watch list.

 

[enoch150]

I usually make it a point whenever possible to show that property ownership is a myth in most of the world.
If you're occupying a plot of land, and you have to make periodic payments to someone else because you occupy that land, and failure to make those periodic payments means the payee takes possession of that land and kicks you out, that's the dictionary definition of rent.

The 95 cent word we should push is "allodial". It originally references possession where you are free from obligation to a feudal lord. As far as I can tell, the word is only outdated because that is the last time anyone was able to truly own property without having to pay someone else.

But back to the question...

Easy. Buy the pig out.
Everyone has a sale price. Period.
If the pig is sitting on a property valued at $5000, and the neighboring properties are all valued at $40k and should be more like $80k, that means the neighbors can each afford to spend upwards of $20k to correct the problem.
In a free market economy, you also have a stable currency. We don't have a stable currency, so it's kind of hard to envision this - but what if someone offered you twice the amount of your mortgage to buy your house? If we weren't in a situation where houses were actually selling for twice what they are now only a few years ago, wouldn't you take it?
I sure as hell would! Especially if half of the profit wasn't going to get confiscated as well.

Long story short, if there was no regulation of this sort of thing, people would have to start catching flies with honey, instead of just calling the local thugs to come out and shoot their dogs and put them on a terror watch list.

Agreed. The neighbors could also build a wall along their stretch of property bordering the problem owner.

However, I have to point out to OP that value is subjective. Most people would not want to live adjacent to an electric producer with high power lines running all around and so they would pay very little for such a property. However, if you want to produce something that uses a tremendous amount of electricity, such as refining titanium, then you would find the property more valuable. A property covered in broken down cars might be desired by a scrap metal dealer.

 

[onlyrp]

Question to a problem I don't know the answer to: In a free market society, property rights are completely respected. I assume that there would be no 'confiscatory' tax like property taxes, which seek to slowly deprive a person of their property over time, and also imply to the owner that the state has a claim on their land. So, how would one handle a situation in which someone decides not to perform any upkeep on their property and it lowers the values of neighboring properties? Let's say they don't directly impact their neighbors by polluting the air or anything like that, but they paint their house horrible colors, don't mow the grass, don't perform repairs, and leave broken down cars allover their lot. Is there anything neighbors can do that doesn't violate the sanctity of private property? I'm assuming it would be handled on a case by case basis in the court system but want to hear opinions. Thanks!

No, there is nothing the neighbors can do, other than sell their place and move away. Or, they can prevent it in advance by having them sign a contract. The price of private property is that you can't tell a person what do with it, even if it "devalues" the neighbors.

The better question is "Why does it devalue your property just because your neighbor's land is a shithole"? You'll never use it, you only see it. If property were actually respected, most likely people DON'T care about their neighbors until either the odor or noise affects them.

 

[onlyrp]

Agreed. The neighbors could also build a wall along their stretch of property bordering the problem owner.

However, I have to point out to OP that value is subjective. Most people would not want to live adjacent to an electric producer with high power lines running all around and so they would pay very little for such a property. However, if you want to produce something that uses a tremendous amount of electricity, such as refining titanium, then you would find the property more valuable. A property covered in broken down cars might be desired by a scrap metal dealer.

Yes, value is subjective, we've been lead to buy this stupid collectivist scam that somehow just because YOU didn't upkeep your property, your neighbors are allowed to complain about it.

 

[onlyrp]

Ok...you did a great job explaining what property taxes are and why they are unfair, but I still don't understand how you ensure someone's property isn't affecting the value of yours. I can only think of one way to do that without violating property rights, and that is having it handled through the court system on a case by case basis, in which you must prove that your neighbor is 'violating your property rights' by diminishing it's value through poor upkeep. Let me know what you think.

why are you so convinced it'll affect the value of yours? Why have you no faith in the market that they'll value your property for what it's worth, not the neighbors? This is very collectivist thinking to group houses by location and their neighbors, perhaps that's why we have white flight and ghettos. What happened to individualism and judging each person, each house, on its own merits?

worst comes to worst, buy the person out. Everybody has a price.

 

[hazek]

Question to a problem I don't know the answer to: In a free market society, property rights are completely respected. I assume that there would be no 'confiscatory' tax like property taxes, which seek to slowly deprive a person of their property over time, and also imply to the owner that the state has a claim on their land. So, how would one handle a situation in which someone decides not to perform any upkeep on their property and it lowers the values of neighboring properties? Let's say they don't directly impact their neighbors by polluting the air or anything like that, but they paint their house horrible colors, don't mow the grass, don't perform repairs, and leave broken down cars allover their lot. Is there anything neighbors can do that doesn't violate the sanctity of private property? I'm assuming it would be handled on a case by case basis in the court system but want to hear opinions. Thanks!

Conflict resolution businesses.

 

[Victor Grey]

Nothing is completely perfect, and nothing ever fully will be in a reality where scarcity is simply an aspect of the universe we live in.

My best solution I can come up with is to leave these matters up to the local level.

In an ideal world, you could do whatever pleases you with your property, that doesn't harm anyone else. If you chose to let your yard grow into a field of hay, and have children's
toys or old cars strewn around, that would be your prerogative.

We don't live however, in an ideal world. Since that can be a factor in things, I would prefer that matters on what rules to how the social group where a person lives behave toward one another, be as localized as possible.

It isn't a perfect solution, nothing practical is; but, as society goes along, technology progresses and ease of relocating to another area becomes more and more easier
to do, it should also become easier to move into areas which suit the person's preferences.

For me, I don't really mind eyesores as much as other people. They don't particularly offend me, an old car hull is an old car hull. Whatever the other property owner likes.
I buy land with intention to keep it for myself for the long term and not so much an investment I would consider turning.
A situation where there weren't land taxes would be great toward that. I would say for a retiree, land taxes become a burden. Same for those who would want to live outside of
the daily usual mainstream society.

The possible freedoms to do whatever I would want with that land, should I take a notion to, outweigh the benefits that a high resell value is more insured.
For others, those values and living in a setting that is pleasing to the eye, are more important.

As long as that different approach is allowed the most accommodation as is practically possible, I can't really fault the people that place different values toward their
land ownership.

We are dealing with land, and we don't live in a world where relocating is a snap of the fingers, but it's a far cry for most of human existence where you'd have to load up the wagon or ride a sailboat for weeks to get on another plot. I myself lean toward people being generally freer to do as they will, but if people decide differently,
localize that decision.

So again, nothing is perfect, but I'd expect as time goes on the same trend will continue and living where you want under what rules the local community agrees with will become more and more easier.

I would say leave these decisions up to the local community.

 

[TheOraclePaul]

Ok so discounting conventional ways of dealing with the problem (example: buying the guys property from him) - any other proposed solutions that don't violate the sanctity of private property? I'm asking about a particularly thorny case whereby a property owner may not be swayed by money and for example, opens up a strip joint right next to a children's playground (or come up with your own example of a difficult case). Would this be handled by the court system and by what clause or reason would they reach their verdict?

I like the 'contractual obligation' part, where when you initially bought the property in a neighborhood you agreed to certain provisions. Therefore, if you don't meet those provisions you are violating your contract and could be subject to penalties. But there might exist certain areas or pockets of property that don't have that 'clause' in their contract that could lead them to making a decision that impacts others (not physically, but through the degradation of their own property, or for example in the strip joint argument made above).

Any answers would be helpful in this discussion. I find it fascinating to think about their very difficult scenarios - I need to know the answer so I know how to counter arguments from all angles

 

[Liberty's Landing]

I bought my house because I liked it and wanted to live there. I did not buy it as an investment of any kind. This is important to my point: my property value in terms of dollars is irrelevent to me.

Now, if I had bought my home as some kind of investment, then I would be concerned about dollar value. If we can assume that a bad neighbor can affect my property resale value in a negative way, I would hope that I could pursuade him to clean it up. Otherwise, I might lose money instead of make money.

Interesting...that sounds like an investment. A real investment, because there is risk involved. You see, an investment with no risk is no investment at all...it is a scam.

So I would say that if you, in this hypothetical situation, bought a house as an investment, you assumed the risk. That risk is what qualifies you to potential profit someday. If we use the force of government to secure your profit, it has been at the expense of someone's liberty.

Just my .02, for what it is worth.

 

[TheOraclePaul]

That was a very well put argument - didn't think of it that way. Even though that pretty much summed it up in a very simple manner and I'm definitely satisfied now, there's still a part of me that wonders what the person who, in your example, bought the property just because they liked it and then had to live next to a terrible neighbor (let's say they tore down their house and built a strip club there etc...). However, interesting point you had - simplest answer is usually the correct one.