Comment 28276

By A Smith (anonymous) | Posted January 21, 2009 at 23:56:13

Balance, tax rates do matter. In 1963, the top federal marginal income tax rate in the U.S was 91%, while overall government receipts were 26.71% of GDP. Today, the top rate is 35% and receipts come in at 29%. To be clear, governments have not only got more overall money from individuals, but also a higher percentage then they did before. Therefore, the idea that city government can't lower rates is ridiculous.

By lowering tax rates, you decrease the costs of owning property, thereby increasing the return on investment, which translates into greater demand for property. When demand for land in the city goes up, it pushes up prices, thereby offsetting the lower tax rate that the city charges property owners. Furthermore, even if the property owner ends up paying the same, or even slightly more in taxes due to increased assessment, they will more than make up for it in larger equity.

I have heard about the tax break you are referring to, but it is more of a steadily decreasing subsidy that only applies to new developments, not existing properties. If the city really wants to increase property values long term, it should permanently decrease the costs associated with owning land in the city. By doing this, the city would more than make up any revenues it thinks it would lose by giving property owners a good deal and in fact would become a magnet for investors across the country.

Permalink | Context

Events Calendar

There are no upcoming events right now.
Why not post one?

Recent Articles

Article Archives

Blog Archives

Site Tools