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Well, there's a bit more to it. People who buy a new house will have to pay a tax, probably a one time thing, but also probably a hefty tax (if you put it that way.)
The OVERWHELMING majority of home purchases are EXISTING (used, untaxed) and the overwhelming majority of homeowners never ever buy a new house.
Buy an existing house, no tax. Rent the same existing tax, pay tax forever (until you buy a house or, if you can never buy a house, until you die).
Would you see renters go out of business? What happens if that happens? Renters will have apartments because it is all they have. Renters have apartments in order to provide places for people to live. My wife and finally reached a point where I could move to a modest house, but then I have to pay taxes on the property and insurance, as well as maintenance. Ah well...
I assume you're referring to landlords here. (I use 'renters' to describe tenants.) Landlords are not going to go out of business, as people ALWAYS need a place to live. (And that is why so many renters are paying half their income for shelter - people will give up or forgo many things before they give up the roof over their head.)
So many times I see homeowners complain about property taxes, but the inconvenient truth is that rental property is taxed at higher rates than owner-occupied homes in many states. Since landlords are in business to make a profit, they simply pass their costs to their tenants in the form of higher rents. When enough homeowners consider property taxes an undue burden, political pressure brings property tax relief - for homeowners.
Never ever ever have I seen property tax relief specifically for rental property or for renters.
Never ever ever have I seen property tax relief specifically for rental property or for renters.
Homeowners get "Homestead Exemptions" which normally reduce the taxes that a Landlord does not enjoy. You are right that most Rental Property pays a higher tax.
Do you think a president should be poor? I don't think so, and so it is with senators.
No, I don't believe a president or a senator should be poor. But the House specifically was intended to be a body of the people, and I believe some poor people should be serving in it, especially since at least a few districts are chock full of poor people.
Homeowners get "Homestead Exemptions" which normally reduce the taxes that a Landlord does not enjoy. You are right that most Rental Property pays a higher tax.
While I understand the feel-good political appeal of preferential tax rates for homeowners, there is one aspect I totally do not understand.
When I ask people why property taxes are higher on rental property than on owner-occupied homes (Michigan actually has a "nonhomestead tax" on rental property), some people say it's appropriate because rental property is used as a business (to make profit).
If that reasoning is valid, why isn't or why shouldn't business income be taxed at a higher rate than wage or salary income? Funny how some conservatives believe it's appropriate to tax rental property at higher rates but would never support higher taxes on business income.
The bill is to be passed or not passed at all -- it's the way it is passed.
Then there is ALWAYS the rulemaking process which determines the way the passed bill is implemented, and this is in the hands of unelected officials (e.g. the Secretary of HHS is writing the implementing rules for Obamacare).
The FairTax says rent is a taxable service, but that leaves plenty of room for interpretation by the Treasury Secretary. For example, if an adult child is living with parents and paying rent, will the parents have to remit FairTax to the government? I think they should be required to do so, but I doubt that the implementing rules will require this. And how is that "fair" to adults who don't (or can't) live with parents and who must rent from landlords and pay tax?
Note that the difference in rent with tax, vs taxes out of check is $2.00 till the PREBATE kicks in, which covers that $2.00 and then some.
While people with higher incomes tend to spend in a lesser proportion, let's look at that.
Person 1 makes 25K and spends all of it.
Person 2 makes 225K and spends 200K of it, we will deduct the 36K he spent on mortgage, leaving 164K being taxed on spending.
So yes, person 2 spent less of the money they made, they spent 8 times the amount of money made by person #1, and made 9 times what person 1 made.
The difference is, person 1, who made 25K doesn't have the almost 25% take out of his check and even with taxes added to rent, the prebate check covers it, and increases his spending power in totality.,
The person who made 225K had they paid 30% in taxes, once they filed for a refund, when all is said and done, they probably would end up have only having 15% paid in taxes, vs, a real 25% on at least 164K of their income, meaning, instead of paying $33,740, they actually pay $41,000, an increase to the government of $7260.
Additionally, people who make their living ONLY on stocks and stuff ONLY pay 15% in capital gains anyways.. This increases THEIR taxes, and now consider everyone being paid under the table and everyone making an illegaly unreported income...
I am skeptical that a person who earns $25K and spends it all will see increased purchasing power...at least not if he rents.
Rents will soar under the FairTax because rental property currently enjoys favorable treatment under the income tax. (The largest tax by far embedded in rent is the property tax, which isn't going anywhere under the FairTax.) I see no way renters spending half their income on rent - most low-income renters - will see increased purchasing power when their rents soar.
Ask her if she thinks the FairTax is good for rent slaves who will never be able to buy a house.
Why should a renter who can't buy a home pay more tax than a homeowner with the same income and the same spending?
Most people are in that situation because it is their own fault. People do not save money, they buy a car every years, they go dancing, they buy the latest and greatest online game, and in general.
My car is twelve years old, I do not spend money on games, and I live within my means.
Bottom line, renters will get the prebate in order to pay rent, food, and so forth. I don't see the problem.
Most people are in that situation because it is their own fault. People do not save money, they buy a car every years, they go dancing, they buy the latest and greatest online game, and in general.
My car is twelve years old, I do not spend money on games, and I live within my means.
Bottom line, renters will get the prebate in order to pay rent, food, and so forth. I don't see the problem.
I'm in that situation because my income is insufficient to qualify for a mortgage. Nobody has ever accused me of overspending.
It's rather strange to tax people MORE for earning and spending less.
Homeowners get the same prebate as renters, so a homeowner can spend more than a renter while paying less tax than the renter. How is THAT fair?
I'm in that situation because my income is insufficient to qualify for a mortgage. Nobody has ever accused me of overspending.
It's rather strange to tax people MORE for earning and spending less.
Homeowners get the same prebate as renters, so a homeowner can spend more than a renter while paying less tax than the renter. How is THAT fair?
I see it as class warfare top-down.
Actually, it is not being taxed MORE for spending less. It has been the same way everywhere. There'll be an estimated eleven million illegal aliens paying the full tax. Same with crooks and international travelers. I see this as possibly saving social security or possibly medicare.
And with the the mega-banks full of money in Panama and the islands, this money would immediately move back to the United States.
Surely this can be a good thing?
And with people living in apartments all over the US, we will always be renters -- those who wish to live in apartments in New York or San Fransisco and others who will live in New Mexico or Oklahoma.
I still see this as a net gain by getting away from the IRS... Big time.
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