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Author Topic: Are you paying your fair share?
Pyrtolin
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quote:
Originally posted by Seneca:
quote:
The "moral" issue is completely absurd, because it it comes from a position that is completely ignorant of what money is
I don't think many here agree with your idea of money.
The disagree that the Federal Government issues money?
That it reports every dollar appropriated to the Federal Reserve, so the Federal reserve can create deposit accounts (debts) to service those appropriations?
That the Fed maintains a master record of all money so appropriated?
That the fed sells shares of the difference between the total of all current appropriation account balances and that master "debt" record to the public as savings bonds?
That the IRS credits all of its collections back to that master record, basically reducing the total of all appropriations outstanding?

Which, exactly, of these ideas about money, that are defined in law, by the way, are you suggesting that disagreement even matters about?

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RedVW on a Laptop
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Tom

If you aren't even close to 50%, bravo. But then again you seem to have an amazing level of luck. I'm not going to post my tax return for your approval before you accept my personal reality.

Then again I did post pretty much all my insurance changes verbatim from my insurer and was still told it couldn't possibly be correct and I must be telling a lie to win points in an Internet debate. The fact that my experience became part of the statistical outrage that is now the lead story concerning obamacare might lend credence that I was telling the truth.

Just as I'm telling the truth about this.

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Seneca
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quote:
Originally posted by Pyrtolin:
quote:
Originally posted by Seneca:
quote:
The "moral" issue is completely absurd, because it it comes from a position that is completely ignorant of what money is
I don't think many here agree with your idea of money.
The disagree that the Federal Government issues money?
That it reports every dollar appropriated to the Federal Reserve, so the Federal reserve can create deposit accounts (debts) to service those appropriations?
That the Fed maintains a master record of all money so appropriated?
That the fed sells shares of the difference between the total of all current appropriation account balances and that master "debt" record to the public as savings bonds?
That the IRS credits all of its collections back to that master record, basically reducing the total of all appropriations outstanding?

Which, exactly, of these ideas about money, that are defined in law, by the way, are you suggesting that disagreement even matters about?

The disagreement is about what it represents, it's worth relative to how it comes to people and the right of people to use it how they see fit rather than the government.
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Pyrtolin
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quote:
The disagreement is about what it represents, it's worth relative to how it comes to people and the right of people to use it how they see fit rather than the government.
Perhaps, but none of those were germane to what was being said above, and the last one is nonsensical, because there's no "rather than" in the process, because the federal government issues money, it doesn't ever use any that came from anyone else (see the last point- one tax dollar that's collected gets added to a negative one dollar in the record of money issued, and thus ceases to exist, never to be used by anyone again)
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Seneca
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quote:
Originally posted by Pyrtolin:
quote:
The disagreement is about what it represents, it's worth relative to how it comes to people and the right of people to use it how they see fit rather than the government.
Perhaps, but none of those were germane to what was being said above, and the last one is nonsensical, because there's no "rather than" in the process, because the federal government issues money, it doesn't ever use any that came from anyone else (see the last point- one tax dollar that's collected gets added to a negative one dollar in the record of money issued, and thus ceases to exist, never to be used by anyone again)
And therein lies the problem, you don't seem to accept that money is merely a symbolic representation of economic activity and when the government taxes that, it is stealing the economic activity generated by others and disincentivising future activity. It is morally wrong to steal, and the way the government takes from one to give to another is immoral.
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Pyrtolin
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quote:
And therein lies the problem, you don't seem to accept that money is merely a symbolic representation of economic activity
How does that contradict anything I've said?

quote:
and when the government taxes that, it is stealing the economic activity generated by others and disincentivising future activity.
That's nonsensical given that relative nominal prices adjust to accommodate taxes. The incentive to activity lies in what you can buy with the money that you end up with, not in the money itself, which has no commodity value. If a tax does not affect your ability to buy things, then the tax has no direct affect on the level of incentive that you have to be economically active.. It's only when taxes manifestly affect purchasing power that they become a concern, which is only relevant on low incomes or limited resources. In the former case I fully agree taht they're counterproductive and should be reduced or eliminated, which is the entire point of a graduated tax system, that even includes outright rebates on the bottom end to prevent suppressed purchasing power. On the other hand, when they simply limit the scale of bidding over limited resources but don't change the overall winner of the auctions on them, then they're a very useful inflation control that serve to preserve purchasing power across the economy with no actual adjustment to the incentive for high income people to be productive. They still get just as much stuff, they just can't force prices up as high in the process of doing so.

quote:
It is morally wrong to steal, and the way the government takes from one to give to another is immoral.
I fully agree with putting strong controls on eminent domain certainly, but that's about the only place where that argument is relevant. Federal taxes don't take anything away from most people, they just serve to moderate prices to remain in line with what the majority can afford to spend. And taxes don't give anything to anyone, they just zero out issued money.

We should significantly reduce most tax levels to the point where they don't buy into anyone's purchasing power, and simply just use them as a check on inflation and financial manipulation. Heck- my overall position is that, instead of introducing money to the system through a bundle of politically tangled programs that are poorly coordinate with each other, we should start everyone out at positive baseline income level, effectively making the total tax rate for most people negative, and then only introducing taxes at high net income levels to reduce the inflationary pressure that they create without actually affecting their net purchasing power.

But, again, by the very laws the define out monetary system the idea that anything is being taken away from anyone is nonsense, because it's the transaction that being taxed- the point where the money is in transit between two parties and not in possession of either of them, not the amount left after the transaction that federal taxes are applied to. The money isn't stolen, it's just the transaction cost of having and using the money in question in the first place, and it isn't given to anyone, because it cease to exist as soon as it's collected.

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KidTokyo
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quote:
money is merely a symbolic representation of economic activity and when the government taxes that, it is stealing the economic activity generated by others and disincentivising future activity. It is morally wrong to steal, and the way the government takes from one to give to another is immoral.
In many ways this is the basis of everything I've argued.

I am merely pointing out that the government has other ways of stealing aside from taxation, and that when all is accounted for and balanced out, it is not the wealthy who are the victims of theft.

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PSRT
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quote:
you don't seem to accept that money is merely a symbolic representation of economic activity and when the government taxes that, it is stealing the economic activity generated by others and disincentivising future activity.
Except that, by virtue of pretty much everything else the government does, money gets placed into the hands of the people who did NOT engage in the economic activity that actually produced the wealth that the dollars represent.

Yeah. THeft is happening. Taxation is not where you should aim your anger, though. You should be aiming it at the anti union laws, banking laws, corporate laws, stock market regulations, free trade laws... these are the laws that actually steal from people who produce wealth, and prevent people from negotiating to receive the money that represents the wealth they produce.

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Mynnion
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My company just posted record profits for the third quarter and the stock sailed to an all time high. Today they are announcing the layoff of 10% of their field staff. I guess a 25% stock growth wasn't enough for at least the halves where I work. That 10% will now start collecting unemployment instead of paying taxes. Another hidden societal cost benefiting the haves.
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Greg Davidson
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quote:
If you aren't even close to 50%, bravo. But then again you seem to have an amazing level of luck. I'm not going to post my tax return for your approval before you accept my personal reality.
Red, you don't need to post your tax returns. But to shed light on the point you are trying to make, could you possibly provide the following

Federal tax (%)
State Tax (%)
Property Tax (%)
Local Tax (you can put your street, sewer, and even trash collection charges in this percentage, but also remember you claimed you get no benefit from your 50%(%)
Social Security Tax (7.65% - or is it 15.3% as self-employed?)
Ad Valorem Tax (%)

I am still puzzled, although that may be my ignorance. The only way I could see to get to 50% would be if your income is not primarily based on wages, but rather on more complex business arrangements, and that your reported income is a relatively small fraction of the overall value of financial assets, Some of which generate additional tax liabilities against a smaller income base). And you case would not only be different from a few of us here, but also different from the vast majority of Americans who get most of their income from wages. That would not invalidate your point, but it would limit its applicability to the overall population.

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AI Wessex
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quote:
Originally posted by Mynnion:
My company just posted record profits for the third quarter and the stock sailed to an all time high. Today they are announcing the layoff of 10% of their field staff. I guess a 25% stock growth wasn't enough for at least the halves where I work. That 10% will now start collecting unemployment instead of paying taxes. Another hidden societal cost benefiting the haves.

For some investors making profit isn't the goal; for them winning is taking as much money as possible out of companies they own. That's how Bain Capital made a lot of its money under Romney and how many private equity firms conduct their business day in and day out.

Part of the theory is that the parts are worth more than the whole, so if you break up a functioning business that is under-performing you can sell the individual business units for proportionally more than their current net value. One way to make a company appear to be struggling is for the equity owners to extract huge chunks of money through "management fees" or payments for other services, thereby stripping the company of cash and weakening its ability to compete.

It sounds like you may have run into a different scenario where the company drives up sales beyond sustainable levels and then cuts staff to increase the ratio of profits to costs and inflate the value of the company. That's how HP got screwed by Autonomy. If that's what's happening here, you may see your company sold off in the very near future.

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Greg Davidson
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Slightly off topic, but I liked this quote by NFL Player Orlando Scandrick, discussing why he signed an extension that actually cut his average level of pay:
quote:
I wanted to be here... My kids come here. It’s not all about me. You can’t chase the dollar forever, man. It’s not all about the money. I don’t play this game for money.... I mean, I’ve made a ton of money, over $20 million... What the hell? What can’t I buy with 20 than I can buy with 24 or 25?

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LetterRip
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AI,

quote:
It sounds like you may have run into a different scenario where the company drives up sales beyond sustainable levels and then cuts staff to increase the ratio of profits to costs and inflate the value of the company. That's how HP got screwed by Autonomy. If that's what's happening here, you may see your company sold off in the very near future.
That was exactly my thoughts. The other likely scenario is that the CEO is trying to game a contractual bonus based on hitting particular ratios and numbers.
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RedVW on a Laptop
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Greg I'm pretty sure I used to do that back in they day. Been doing this thread topic for years. You can watch my tax go up yearly.
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RedVW on a Laptop
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And as to your NFL player, he is likely well under forty. Because most nfl players have neither maturity nor perspective most end up broke and saddled with debts. I worked with two former pro bowlers. Matter of fact I was still working with one when I joined ornery. Both broke as a bent nail.

Give the guy that made the quite a couple years out of the nfl and find him again when he's in his sixties and then ask if his comment matches reality.

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TomDavidson
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quote:
Give the guy that made the quite a couple years out of the nfl and find him again when he's in his sixties and then ask if his comment matches reality.
You believe that making an extra $4 million a year would make a meaningful difference to him? Even if he turns out to be a wastrel, why would it?
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Greg Davidson
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Red, it's fine - you don't have to share your percentages. But when you introduce your own experience as an argument, and then you are unable or unwilling to spend two minutes to provide a little substantiation (seriously, there is not a whole lot of sensitive information in splitting 50+% into 5 or so standard categories), count me as skeptical. Particularly, as I can't make the math work out with my understanding of the federal tax system, and what I thought were general trends in state and local taxes.

Maybe I am wrong - maybe there are wrinkles I have not thought about. All I am asking you to do is to provide even a little substantiation or background. Because either (a) there are features of the tax system that I am unaware of, or (b) you have an unusual tax situation, or (c) you are not actually paying more than 50% of your income in taxes. You don't have to reveal your intimate tax information, but you should be able to show that the cause is (a) or (b) without doing so.

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RedVW on a Laptop
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Lol Tom way back in 2000 it was 37%. It's been going up incrementally over the last 12 years. Few years back I was at 48%. In three years it's gone up two more percent. Deal with it .
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TomDavidson
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Are you loling at me, Red, or were you actually loling at Greg? [Smile]
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AI Wessex
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Red, I don't understand how your tax rate could be so high. You've made clear that your income is relatively modest, but here's the description of how much you would pay on a net income of $200,000. I can't see how anyone could possibly pay 50%, even if you include all forms of taxes at all levels:
quote:
Progressive tax rates are "marginal," meaning that each rate applies to specific portions of your taxable income within a specified range, or tax bracket. For example, if you are single and have taxable income of $200,000 in 2013, then you are in the 33 percent "bracket."

However, you will not pay 33 percent on all taxable income. Instead, you pay 10 percent on everything up to $8,925, then 15 percent on the excess up to $36,250, 25 percent on taxable income between $36,251 and $87,850, 28 percent on the amount over $87,850 up to $183,250, 33 percent on the amount over $183,250 up to $398,350, 35 percent on the amount over $398,350 up to $400,000, and 39.6 percent on the rest.


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Pete at Home
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He is counting all forms of taxes at all levels. He is paying a total of over 50% of his income in taxes. Not income tax particularly
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Greg Davidson
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As I said, I can't even get to a 50% scenario for any income level including sales tax; if there is a way, it has to involve forms of taxation that I am unaware of.
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AI Wessex
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Let's assume Red pays the highest federal income tax rate, which is a marginal 39.6% for net income > $450,000. I know he doesn't because he has said his income is much lower than that, but to emphasize the point. On top of that he pays 4% Georgia sales tax on some items, but assume he spends all but $400 and pays sales tax for everything, as well as the maximum 6% state income tax. Add SS and Medicare taxes for another 9%, assuming all his income is salary (ignoring the $113,000 cap on SS tax).

All of that adds up to about 60%, but in reality he's paying a lot less than that. I'm no accountant, but I can't see any way all of his taxes add up to 50% in any realistic scenario.

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scifibum
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I would suppose Red is counting things like fuel taxes too.
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Pete at Home
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quote:
Originally posted by Greg Davidson:
As I said, I can't even get to a 50% scenario for any income level including sales tax; if there is a way, it has to involve forms of taxation that I am unaware of.

Try self employed double FICA with state income tax, property tax. That reaches IMO unfair levels for someone at 90 grand/ yr
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Seneca
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Just goes to show why we should scrap the 70k pages of federal tax code and replace it with a few paragraphs at most and have a low flat tax with no exemptions or deductions
Get everyone in the game. I also have a huge problem with property taxes. I'd rather have localities charge a sales tax on a parcel's initial sale than a constant property tax.

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LetterRip
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Why do you have a problem with property taxes? Your benefit from most taxes is proportional to net worth, so it is a far more logical tax than taxes on income. Your household consumes fire, police, road maintenance, sanitation, waterworks, electricty, and other services provided by the government every year.
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AI Wessex
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quote:
Originally posted by Seneca:
Just goes to show why we should scrap the 70k pages of federal tax code and replace it with a few paragraphs at most and have a low flat tax with no exemptions or deductions
Get everyone in the game. I also have a huge problem with property taxes. I'd rather have localities charge a sales tax on a parcel's initial sale than a constant property tax.

What kind of flat tax? Municipal? State? Federal? You allow a sales tax on property, at what level?

My guess is that your "flat tax" would be on the order of 30-40% for everything (or do your few paragraphs have exceptions for certain items like food or medical payments).

Do you consider the civic services LR mentioned important, or do you think people should provide for them individually? That's not technically a tax, but you would be paying profit-oriented companies for them, which would raise their cost.

Seems to me that you have an abundance of ideas that violate Einstein's dictum that a solution to a problem should be as simple as possible, but not moreso.

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Greg Davidson
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There's a big difference between a marginal level of taxes over 50%, and paying 50%+ taxes on your income. At $450K of taxable income (that is, after all deductions and credits are accounted for), you are paying less than 28% of your AGI in taxes. And since social security taxes cap out at 114K, the total max percentage of federal income taxes and social security at $450K is 29%. And if he were paying 6% state income tax, that would provide a $27,000 deduction in his AGI which would pull his fed tax + SS percentage back down to 27%, making the total for fed/state/soc sec = 33%.

I could see adding another 1.5% if self-employed, and there's also the medicare tax which is another 1-2% at income that high, so I start getting close to 35-36%.

To get about 50% taxes there would need to be an additional 15% ($68K) of local taxes andf property taxes, except those would also constitute income tax deductions, meaning the level would be even higher. Someone with a very high dollar value of property that was not generating much income could make the numbers work, but we would be talking a large amount of wealth needed to turn the numbers around

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Pete at Home
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quote:
Originally posted by LetterRip:
Why do you have a problem with property taxes? Your benefit from most taxes is proportional to net worth, so it is a far more logical tax than taxes on income. Your household consumes fire, police, road maintenance, sanitation, waterworks, electricty, and other services provided by the government every year.

A cunning big government lefty would use Seneca's arguments to get rid of property taxes, thereby eliminating the advantages that the rich have in terms of fire, police, road maintenance, sanitation, waterworks, electricity, SCHOOLS, and other services.
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Seneca
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The problem with property taxes are that you can't control the way you are taxed as with income and payroll taxes. For those who want to go off the grid and subsist, they can't opt out of those taxes the same way they can not earn a typical modern income/payroll.
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Greg Davidson
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Seneca, what if you go off the grid in a ship in international waters?
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Seneca
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I shouldn't have to do that as a US citizen. Our country wasn't founded with these conditions, they are despotic and contrary to what our founders envisioned.
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LetterRip
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Property taxes have been around since long before the founding of the nation - ie there were property taxes in Massachusetts since before 1634, and by 1796 - 14 of the 15 states had property taxes.

http://en.wikipedia.org/wiki/Property_tax_in_the_United_States

So in fact our country was founded with property taxes, and they were in force in almost every state since before the civil war. They aren't 'despotic' in the least - they are one of the most fair taxes there are since they largely go to pay for services that benefit is derived proportionally to property.

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Seneca
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quote:
almost
key word you seemed to gloss over there.

In fact these are often unfair taxes. I've known many elderly people who worked hard and in retirement couldn't afford high property taxes and lost their property despite a lifetime of paying those taxes.

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AI Wessex
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It can happen and I'm sure does in very small numbers. You have to balance that "harm" against other kinds of harm that people would suffer because of a *lack* of government services if you took them away. How many elderly would would stay in their houses without the burden of property taxes but die from an untreated illness because they didn't have Medicare, for instance?

Seneca, I'd really like to hear details about your "few paragraphs" sales tax. Give the broad outlines with enough information so we can see how you think it should work.

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Seneca
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http://offgridsurvival.com/losinghomesovertaxliens/

quote:
The American Dream: Owning a home has become the American Nightmare for a growing number of people across the country.
Imagine owning your home free and clear, after decades of hard work and faithful payments, only to lose it over a $40 tax lien. Well that’s exactly what’s happening to a growing number of Americans who have had their homes stolen from them, after governments around the country sold miniscule tax liens and allowed greedy investors to then seize the homes.
Believe it or not, you could be at risk of losing your home over even minute amounts of unpaid property taxes. Earlier this week, the Washington Post covered the story of a 76-year-old Marine Veteran who lost his $197,000 home over a $134 property tax debt.
It all happened because governments around the country have been placing liens on properties when home owners fail to pay their property tax bills. The homes are then sold to greedy investors who foreclose on the homes, raking in profits that sometimes add up to hundreds of thousands of dollars.
The system allows investors to take these tiny debts and then add legal fees and fines that are so high the home owner can no longer afford to pay the original debt. A $100 delinquency, like the one Marine Veteran Bennie Coleman had, can then skyrocket to $4,999 — in some cases much more.

Even worse, as in Coleman’s case, the investors then take everything. Not only are they allowed to collect on the debt and all the phony fees, but they are allowed to keep everything when they sell the house. That means an investor who purchases a $100 tax lien from the government can then turn around and foreclose on a home that’s worth 10, 100, even 10,000 times what the original lien was worth.
While these local governments would like you to believe these people are tax cheats, a 10 month investigation by the post revealed that in Washington D.C. alone, one-third of the nearly 200 homeowners who lost their properties in recent years had liens of less than $1,000. One person highlighted in the investigation had a $287 tax lien that sold it less than eight weeks for $129,000.
Even more troubling, was the investigation found over 1,900 tax liens that were sold to these investors by mistake. The home owners owed nothing, yet D.C. sold these erroneous tax liens allowing investors to foreclose on homes that owed nothing.
In one case a 64-year-old woman spent two years fighting to save her home after she was mistakenly charged $8.61 in interest. Sadly most of the people who face this nightmare simply give up. Faced with huge legal bills, and a debt that grows by the day, many of them are forced to turn over their homes because of a system that allows these investors to basically steal their homes.
The American Nightmare
Over the last couple of years we have covered story after story highlighting how home ownership has become a sham in this country. From giant corporations using eminent domain to steal people’s homes, to the federal government using the Department of Homeland Security and the EPA to muscle people off their land, it seems homeowners are under attack from every direction.
We’ve warned people debt is one of the biggest threats they face, and as we see in case after case it’s being now being used to rob people of their homes. Remember, in a majority of these cases these people are not dead beats who refuse to pay their bills. They’re average Americans who are being screwed by a system that gives them no way out.


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AI Wessex
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How many times did that happen last year? That article is meant to inflame but doesn't give enough details to understand the scope of the problem. But as I've already said, I'm sure it happens - rarely - but it happens.

But consider that the government needs revenue to operate so it can provide services to citizens, and the villains here often are ruthless capitalist investors who could care less who they hurt as they make their unearned profits:
quote:
People are losing their homes over unpaid tax bills that, in some cases, add up to just a few hundred dollars.

Outdated state laws that allow local governments to sell tax liens on delinquent properties to investors in order to more quickly collect on overdue property taxes is sparking a second "foreclosure crisis," a report from the National Consumer Law Center said Tuesday.

When homeowners don't pay property taxes or other municipal bills, like water or sewer fees, local governments have less money to maintain services like schools, police and fire departments and road maintenance. By selling tax liens, those governments can collect on what it is owed.

Investors, in return, effectively own a claim against the property until the homeowner pays the county or municipality back or until they default on the debt entirely. The investor can either collect interest on the taxes owed from the homeowner. Or, if the homeowner fails to pay up, the investor can take possession, or foreclose, on the home.

"It's a win-win for investors," said John Rao, a consumer credit and bankruptcy attorney and the author of the report. Either the investor gets their investment back with interest or they get the home -- typically, for a pretty sizable discount to what the home is worth.

The report cited a case of an 81-year-old Rhode Island woman who fell behind on a $474 sewer bill. A corporation bought the home in a tax sale for $836.39. The woman was evicted from the home she had lived in for more than 40 years and the corporation resold the place for $85,000, the report said.

Most investors, however, buy tax liens for the interest. That's because many states allow investors to charge rates of 18% or more on the outstanding debts. And, in some cases, as much as 20% to 50%, the report said.

You could prevent this horror from ever occurring by doing two simple things.

First, help create awareness of this problem in those states with these antiquated laws. It might not be easy to get them repealed, but it certainly would be worth your effort.

Second, you could eradicate those kinds of incidents by setting aside money to pay these people's delinquent pittances in taxes, which I assume you could afford to do. Think about it, for a few thousand $$ a year, you could have saved perhaps 10 homes for those destitute elderly people and kept them from greedy small-minded "investors".

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Seneca
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This has nothing to do with the free market, this has to do with unnatural crony capitalism and corruption from the government itself. Any push to repeal or reform these government regulations and statutes would no doubt be resisted by the same people in government who are taking advantage of it now. That's not to say it's impossible, just showing where the blame truly lies here and why the concept of property tax vs other kinds of taxes is ripe for abuse.
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AI Wessex
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How are people in government taking advantage?

*All* forms of human endeavor are ripe for abuse. I still would like you to explain what the actual scope of this problem is. You're using it as a sledge hammer to argue that property taxes are themselves evil or at least corrupt. So far it seems like a very small problem that certainly could be fixed, rather than complaining that there's nothing you can do about it.

In the meantime, every time you hear about something like this about to happen, you and your friends could step in and save a home for an elderly widow. It would probably feel really good, too.

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