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Real Estate is finite and by definition... unique.
Yep, so perhaps it should not be treated like other goods?
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Originally Posted by Ultrarunner
Homes could be bought for one dollar in my city back in the 1970's...
As they can be today in Detroit. The important question is why does this happen? Could it be related to the way we handle land rights?
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Originally Posted by Ultrarunner
Nothing is more boom and bust than Real Estate...
Yes, but unlike equities and other investment types the average person can't prevent themselves from being effected by the speculative cycles in real estate.
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Originally Posted by Ultrarunner
Property Owners are the only class of people that cannot simply pack and move... Property is inherently illiquid and fixed...
Hence why taxing it is so efficient. Replace income taxes with land evaluation taxes and we could get rid of the IRS, all the annoying tax returns, etc.
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Originally Posted by Ultrarunner
Ownership is what makes America different... it's what led many to pull up stakes and immigrate...
No its not, most countries (especially western ones) allow the private ownership of land. Why wouldn't they? Its one of the most efficient ways of stealing money from the working class.
Regardless, people often talk about the high taxes in California but the real estate situation in the state is just as problematic if not more. Tax wise California is not bad for all businesses, but any business that requires a decent amount of property will be effected by California's highly speculative real estate environment. Why build a factory in California when its half the price else where? Why keep your factory in California when some sleazy developer is willing to pay you enough to build 3 somewhere else for your property? The real estate situation is also driving out the middle-class. Indeed, the bay area now has the worst distribution of wealth in the nation. Why is that? Its certainly not the highly progressive income taxes!
[quote]
Originally Posted by Ultrarunner
Real Estate is finite and by definition... unique.[quote]
Yep, so perhaps it should not be treated like other goods?
It isn't... your are allowed to depreciate goods and improvements... land cannot be... and this is a huge difference.
Quote:
Originally Posted by Ultrarunner
Homes could be bought for one dollar in my city back in the 1970's...
As they can be today in Detroit. The important question is why does this happen? Could it be related to the way we handle land rights?
Price is based on supply and demand... demand is at an all time low in some areas because of the lack of a vibrant economy and in some areas... safety.
Quote:
Originally Posted by Ultrarunner
Nothing is more boom and bust than Real Estate...
Yes, but unlike equities and other investment types the average person can't prevent themselves from being effected by the speculative cycles in real estate.
Yes they can... plenty of people got out when the market was high and are gradually buying in today... also, tons of Californians... at least too many that I know personally cashed out of their high value CA property and relocated to low cost areas... AR was a big beneficiary and low property tax is one reason...
Quote:
Originally Posted by Ultrarunner
Property Owners are the only class of people that cannot simply pack and move... Property is inherently illiquid and fixed...
Hence why taxing it is so efficient. Replace income taxes with land evaluation taxes and we could get rid of the IRS, all the annoying tax returns, etc.
Hence why it is so draconian... and must be tempered. Same thing could be said for taxing food or adding VAT tax.
Quote:
Originally Posted by Ultrarunner
Ownership is what makes America different... it's what led many to pull up stakes and immigrate...
No its not, most countries (especially western ones) allow the private ownership of land. Why wouldn't they? Its one of the most efficient ways of stealing money from the working class.
We must live in different circles... the SF Bay Area is know as a very diverse region... friends and acquaintances from Fuji, China, Ukraine, Cambodia, Laos and Viet Nam have all said America is different because it allowed them the means to own their homes and business property.
Regardless, people often talk about the high taxes in California but the real estate situation in the state is just as problematic if not more. Tax wise California is not bad for all businesses, but any business that requires a decent amount of property will be effected by California's highly speculative real estate environment. Why build a factory in California when its half the price else where? Why keep your factory in California when some sleazy developer is willing to pay you enough to build 3 somewhere else for your property? The real estate situation is also driving out the middle-class. Indeed, the bay area now has the worst distribution of wealth in the nation. Why is that? Its certainly not the highly progressive income taxes!
We have strict zoning and even then... a property may be zoned residential and building prohibited due to open space or endangered species act...
Agribusiness is still thriving in CA... and without land... there is no farming.
Speculation has always been part of the human experience... people moved... just as our ancestors moved here looking for opportunity... the bay area has tons of people that are not wealthy.... just look at the demographics of Oakland and Richmond.
It isn't... your are allowed to depreciate goods and improvements... land cannot be... and this is a huge difference.
This has nothing to do with what I'm talking about, this is because land is an asset and not a piece of equipment,etc. I'm speaking about ownership and land is rather unique, yet we buy, sale, trade etc it just like anything else.
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Originally Posted by Ultrarunner
Price is based on supply and demand... demand is at an all time low in some areas because of the lack of a vibrant economy and in some areas... safety.
You are plowing right over the actual issue. And why do the economies become lackluster? Is there a connection between blight and economic decline and the way we handle real estate?
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Originally Posted by Ultrarunner
Yes they can... plenty of people got out when the market was high and are gradually buying in today... also,
Unless you plan to become homeless you can't avoid the real estate market. Also, not sure why you think your examples are contrary to my point. You are citing examples of people that are leaving because the real estate environment! They are not finding away around matters, they are leaving outright.
So now extend the same idea to businesses. What happens when you price them out of the area? They leave...but wait so do the jobs and tax revenue! A speculative real estate environment is just as bad for business as high taxes and regulations. The more people ignore the root causes of California's problems the more likely California will repeat the Michigan experience.
There is also nothing draconian about land value taxes. The IRS and state government can already put a lien on your property if you don't pay your taxes.
People I've cited often retire to places like AR and lower taxes is a reason... especially property taxes...
If people are leaving for lower taxes... raising California's Property Tax would provide even greater incentive to leave.
Land is unique by definition... there are other items that are unique... a painting from one of the Great Masters, the last Shelby Cobra built, Certain Gemstones, Works of Art... etc.
Economies become lack luster for a number of reasons... oppressive taxation, lack of demand, Exchange Rates, Dependence on limited resources...
Logging was the mainstay for many a northern CA town... when logging stopped or was sharply curtailed... local economies suffered and it was artificially induced because the demand for Redwood remained steady.
Business owners I know that relocated to other States did so for a number of reasons... advancing goverment regulation was cited most often, followed by the high cost of compliance...
In my tenure working in the medical field... my facility has had to hire full time employees just to stay ahead of the regulatory compliance issues... and it's not enough to be compliant on Federal or State Level... there are tens of local agencies that each have a say and often it will be contradictory...
A local Restaurant wanted to put in a wood fired Pizza Oven... just like another one across town... he had received city approval and started construction before it was halted... the planning department said the restaurant proximity to the hospital was over looked and approval was withdrawn...
Keep repeating the same issues and it's no wonder why people flee in search of a simpler lifestyle...
I have to send all my chrome plating work out of state because all of the local platers closed up due to regulatory issues...
The hospital has a 15 year old top of the line emergency power generator that is like new... it is rated to run for tens of thousands of hours and has so far clocked a little more than 300 hours... I've been put on notice that the air district plans to require mandatory retirement of this equipment... again the question is who's going to pay?
The price of land is the least of my worries... it is staying in compliance in an ever changing regulatory setting.
Chevron is for the first time in nearly 100 years considering leaving the Bay Area... it had applied for and received regulatory approval to install mandated pollution equipment and local lawsuits have stopped the project cold after it started...
NUMMI is leaving for Texas... NUMMI had sought to expand on plant land bought for the purpose of expansion only to have plans put on indefinete hold because of a family of owls... owls can be relocated... well now it's the factory that is being relocated to Texas and Canada.
Heck... I can't even burn a wood fire in my EPA certified tier II catalyst equipped wood stove without Air Management Approval... this is the same stove pushed with Federal Tax Credits as clean burning and using America's abundant renewable timber resource... The carbon footprint of a piece of wood rotting in the forest or providing warmth is the same.
Can't even give away season, split Oak delivered to my co-workers for free... harvested from storm blown over trees.
So yes...plenty of people are thinking of or have moved from California... eliminating Prop 13 would just increase the rush to leave... it's the one stable, predictable part of owning a home in California that remains.
I like Michigan and have spent time there.... Greenfield Village is one of my favorite places to see and learn about America's Industrial Age... I don't like winters in Michigan and that is at least one thing California doesn't have to worry about... Michigan type winters.
Last edited by Ultrarunner; 02-27-2010 at 11:12 PM..
People I've cited often retire to places like AR and lower taxes is a reason... especially property taxes...
California has one of the lowest property taxes, people are leaving California for a lower cost of living.
And in terms of people leaving because of taxes, to say it again I'm not talking about raising aggregate taxes rather shifting where the revenue comes from.
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Originally Posted by Ultrarunner
Land is unique by definition... there are other items that are unique...
What?! All you're doing is focusing on the word "unique". The issue with land is that it is both a natural resource and required for both business and personal use. You can't avoid it, yet we allow its monopolization.
Regardless, the issue is not really the status of land rights. The issue is that the real estate situation in California is a major reason why California is having troubles. Prop 13 plays a role in this, though is not the sole cause. It is very unlikely that California is going to recover without changing its tax policy to be more friendly towards business and less friendly towards speculators. California punishes producers and rewards rent seekers and the system is now collapsing.
Luckily Californian businesses have other states they can move to (e.g., Texas) where they can escape the continuous theft from all the rent seeking activities supported in California. People are going to move where the businesses are moving. The larger California tries to deny reality by keeping its real estate inflated, by having high productivity taxes etc the bigger the problems are going to be.
Also, have no idea why you think the NUMMI plant is being moved to Texas because of some owls. The plant is not moving, its being closed. GM pulled out of the joint venture and it no longer made sense for Toyota. Toyota now will shift the production to an existing factory in Texas.
"Shifting Taxes" will not achieve a lower cost of living... it is naive to think so in light of California history on taxation...
Specific Performance is generally limited to things that are unique... the courts have long classified Real Estate as unique and permit suits for specific performance instead of a monetary amount... hence Real Estate is Unique.
Making California Business friendly means granted relief from the huge burden of multiple agencies with overlapping jurisdictions... having to employ people just to stay on top of regulatory matters just adds to the cost of doing business in this State.
I live in the SF Bay Area... I see the NUMMI plant every day and have friends that work there... plant production is being moved to Texas AND Canada... workers are eligible for special benefits because some production is leaving the country.
Don't dismiss the plant's thwarted attempt at expansion... it was a real issue and one that resonated all the way to Japan... GM accounted for less than 10% of plant output... it is for all intents a Toyota facility... with Toyota management...
The Texas plant will need some expansion... per media reports...
Don't get hung up on land living... again, it may be a Bay Area thing... a few people I work with don't own or rent a home... they live on their boats in the SF Bay. Actually, living on a boat is one of the least expensive ways to afford the bay area...
It's big news here for years is that NUMMI's 45 million dollar expansion was derailed because of an Owl... not even listed as endangered... it's part of the business climate companies have to deal with...
And if you smoke enough weed, you won't notice any of the huge problems
In what way do any of these "problems" affect you personally?
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