Giving People Things Isn’t Necessarily Help, And Property Taxes Are Evil

Extreme-Makeover-Home-Edition3

There are a lot of big government, social engineering policies predicated on the idea that giving people something they haven’t earned on their own will improve them as people and citizens. Two examples are housing policy and student loans.

The subprime mortgage market, which came tumbling down like a house of cards at the end of 2008 with dire economic consequences, was created when big government decided that it could produce a better class of citizens by giving home loans to people who weren’t qualified for them. The know-it-alls in government (Republicans and Democrats alike) noted that home owners in general tended to be law-abiding, tax-paying, self-sufficient citizens, and decided that if more people owned homes we’d have more law-abiding, tax-paying, self-sufficient citizens.

So the government created laws and incentives pushing banks to make loans to people who, previously, hadn’t been qualified. This lead to a boom in demand for homes, a spike in housing prices, and all the attendant side effects (e.g. people financing fancy vacations and lavish impulse purchases with the newly-inflated value of their homes). But – surprise! – it turns out these subprime borrowers weren’t getting loans for a reason. They couldn’t pay them, and the market collapsed (after being protracted by some creative maneuvering in the banking industry).

The same is true of student loans. Big government, seeing that college graduates in general were more prosperous than non-college graduates, set about policy that promoted more college graduates. Now student loans are an entitlement. If you want to go to college, regardless of whether or not you’re ready for college, the government will finance your tuition. And colleges, seeing an opportunity to profit (they get paid up front, after all), have lowered standards to let in all these new students and the government money attached to them.

The outcome is now generations of Americans shackled to what is sometimes a lifetime of student loan debt for a degree that has diminished in value. After all, what value is a basic college degree when it stops being something that is earned and starts being something everyone willing to give up a few years of their lives is entitled to?

Which brings me to the subject of this post. In Texas, a Houston family has lost their home which they received as a part of the popular “Extreme Home Makeover” show. It turns out that they couldn’t make the insurance and tax payments, which maybe isn’t surprising given that they could never have afforded to build or purchase the home in the first place (thus, the premise for the show):

The Beach family said they were very happy with ABC’s show but the homeowner told the paper that it’s costing about $1,500 a month just on taxes and insurance. Larry Beach, who is raising four children with his wife, said “It is costing us more to live here than it would to sell it.”

He said it has been a difficult decision. He is grateful that the community came together to put the house together, but the family has been trying to sell the house since February 2013. They even reduced the price from $700,000 to $535,000.

Can we acknowledge for a moment how evil the property tax is? How many times in our society does this scenario play out? Someone owns a home free and clear, but then is forced to sell it anyway (or see it be seized and sold off by the government) because he or she can’t afford to pay the government “rent”  (i.e. the property tax).

Property taxes are an affront to the notion of property rights.

An “Extreme Home Makeover” project in the Fargo/Moorhead area stuck the family living in it with a big property tax hike. “The Moorhead family that was given a new, much larger home last year as part of the TV show “Extreme Makeover: Home Edition” will eventually get something else – a property tax bill more than triple what the family paid before the project,” reported Dave Olson for the Fargo Forum in 2011. That didn’t happen, but according to the family’s property tax statement they did see about a $1,200/year jump in their property taxes from 2010 to 2013.

The Moorhead family still owns their homes, but a lot of the “Extreme Home Makeover” families lose them. The Wall Street Journal reported on a number of them in 2010, and if you search the web you can find more.

Which goes back to my original point: There is a difference between giving somebody something, and allowing somebody the opportunity to earn it.

That speaks to a fundamental divide in American politics. There is one faction that believes people are entitled to things – like home ownership, student loans and months and months of unemployment benefits – and should be given them whether they have earned them or not. There is another faction that believes things must be earned, lest entitlement choke the impetus for self-improvement and achievement.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

Related posts

  • Captjohn

    If you can’t afford a home and all of it’s attendant costs (maintance,insurance,taxes etc.) buy a cheaper abode or move into a rental you can afford. If the housing fiasco of the first part of this century was a giant mistake logically owning a home you can’t afford is much of the same thing.

    • http://sayanythingblog.com Rob

      You’re being awfully flippant about the situation, John.

      What if you buy your home and retire onto a fixed income only to see property taxes or special assessments soar so that you can’t afford them any more and you’re forced to sell?

      There is no planet on which that’s fair.

      • kevindf

        Social Security is COLA’d. Almost no one’s income is “fixed” these days.

        • NoDakNative

          SS is adjusted using the governments phony inflation numbers. They say it’s 2% ish, but it’s 8% when calculated using the old method. Anyone who shops can see that it’s at least 5%.

      • Captjohn

        Flippant I am not. If I lived in North Dakota I would be livid that the state was buying down production agriculture property tax on land that is producing unheard of profits for the owners. There is nothing fair about using state revenues to buy down property taxes. Does the person renting an apartment get an automatic reduction in their monthly rent? Does the landlord make more profit?
        Do those who live in rural settings because they chose to live without city service like sewer, water, full time emergency service rather then volunteers, get a 50% break, which in dollars would be much less then the city dweller who pays twice as much as the country cousin. How do you devise a plan that is fair to all?
        The state should get out of the property tax debate. Reduce the taxes it levies such as income and mostly the sales tax. Which by the way is also unfair because of the exemptions to use and sales tax.
        Where I live I see retired people give up their homes all of the time and we have a cap on the rate of increase on property tax. There are many reasons but mostly they are financial decisions. Such as the cost of ownership is to high for the value received. Medical costs change or they are no longer able to maintain or pay for the maintance of the property.
        You complain about a government that thought all should own a home. The logic escapes me. Just because you once own a home doesn’t mean you have a right to it forever. Maybe you are suggesting a new paradigm where once you can afford something you are entitled to it.

        • http://sayanythingblog.com Rob

          I don’t think anyone is entitled to a home.

          But certainly the government rent shouldn’t be a reason an of us loses a home, do you not agree?

          • Captjohn

            I pay taxes and home owners association fees. I feel both are for services I expect to be provided. Decent schools so that the young learn to be productive and value the freedom this country provides. Fire and police protection so my family can feel secure in knowing that ourselves and our property will be protected. Sewer and water infrastructure so I don’t have the worry of a well and a septic system. Streets and roads so commerce can take place efficiently and I can travel where I like comfortably. If any of the above are not handled properly I vote to remove those who are in charge.
            The HOA fees accomplish other purposes such as a guard gate at the entrance, street lights, a activity center etc. I equate those fees to taxes as they must be paid to live in this house. I also get to elect the board of the assoc. Each year. If they fail in their duties we replace them much the same as should happen in political sub divisions.
            I am fine with you calling taxes rent. I myself called college administrators and other government politicians “rent seekers” as they seemed to have a never ending thirst for tax dollars. That is why I was against increases an taxes and fees in general. I did not vote against all of them as some were necessary for the common good of the populous of our state.
            You elect a legislature to safe guard the legitimate functions of the state. They should serve to be buffer against the rent seekers. One way is to keep state revenue to a minimum so the rent seekers don’t eye the access as a pot of gold to dive into. Those of you thinking the state should be in the property tax business are also raiding a treasury that should be reduced in size.
            If you dislike property tax forego some of the services you are getting or elect people who can find a way to provide it cheaper. Don’t expect the legislature to determine who are good local managers and manipulate the distribution of the states revenue. As demographics change you might not like unintended consequences.

  • Captjohn

    Property taxes are not evil. I pay property taxes that are double that of others who live in wider geographic area because I have a nicer home and enjoy more city services then those that live in areas that have cheaper property taxes. A buyer of a home can easily check the taxes on a piece of property and can tell if they can afford to live in that neighbor hood. If Rob believes there is evil it is that the revenue that political subs get through property tax is spent poorly or extravagantly. Thus if the taxpayers don’t elect local officials who are judicious in spending tax dollars they are confronted with tax bills that are not justifiable.
    It used to be said you “could be house poor”. That was before the idiots in D.C. Got involved.
    In another column a reader makes a valid point. I don’t want my state tax dollars evening the playing field of property tax. That is socialism.

    • kevindf

      What “services” do you enjoy that others don’t?

    • http://sayanythingblog.com Rob

      Property taxes are not evil.

      Sure they are. They undermine the very concept of property rights.

      I am not the owner of my property if I must pay rent, permanently, to the government.

      • banjo kid

        Exactly right !

        • kevindf

          The majority of the property taxes goes to the sacred cow of education.

          • banjo kid

            They get a levy to build a tasmahai and then down the road a piece, we forgot we don’t have enough money to run it or they say it is a renewal levy and it won’t cost you any more but it cost you 75 bucks a half .$150 a year they are like clock work and always it is the children who will suffer if you don’t give us your last dime. Look what a good job we have done we only wasted a $billion$ this time. It never ends every two to three years it is a case of closing the schools and your kids will have to go to the school in the next county if it doesn’t pass. These little boogers deserve every dime you have and then some and retired people have nothing to give and it hurts them . Some times they even lose their home over taxes . that should never happen

      • wj

        According to this line of thinking, wouldn’t all taxes be evil, i.e., undermine the concept for property rights?

    • Lianne

      I will repeat the question. What services do you receive that another home owner doesn’t receive? Faster response from emergency crews? better schools? I am curious.

  • WOOF

    Why haven’t these people gotten an equity loan
    on their $700/500k house. Should make the $18k
    tax/insurance bearable till they can sell.

    • banjo kid

      $700,000 they should sell and buy one for 150,000, I live in one the cost $59,000 taxes were $248 a half and now it is getting close to $2 grand a year . You can only plan for so much with a limited income. It is not a case of tightening your belt the holes have run out and there is no more room to make new holes.

  • banjo kid

    I have always felt there should be a pay off time and taxes on primary places of residence is not a happy thing to see. Lets say we fund our schools a different way in Ohio the courts decided it was unconstitutional to fund schools with home taxes so we are still paying it 10 years later . I have seen some very nice schools built but are they really needed and can we build them cheaper instead we have walks made out expensive stuff. and that is not needed to teach . How about we make it where when you reach 65 there would be no tax on homes the one you live in not two or three vacation homes those should be taxed some but not high. some pay as much for taxes today as when they were making house payments in the sixties.The monthly amount would really be more .

  • JoeMN

    Even if this family were to rent, they wouldn’t necessarily escape the grip of property taxes.
    I don’t know if property taxes are necessarily evil
    In fact, in a way they perform a valuable function.
    Nowhere else do I see people get so animated than when they get hit with property tax increases.
    Nothing else hits home quite like it.
    I think this is because most suffer under the spell that state/federal taxes are always paid by the other guy

  • jimlauten

    Another question, which I don’t know the answer to, is the way in which property taxes are collected, which, as in the income tax, falls not on those using the services so much as those that can pay for such services. If property tax is used to fund police, roads, schools, fire departments, ect., would it not be more equitable to “charge” those who would use those services the most? As in the family with five kids down the street over, say, an older retired couple living alone in an expensive house? Again, just a “what if”.

    • kevindf

      This is the era where “everyone needs to have skin in the game” and “you didn’t build that!”

  • JimTown Guy

    If I read the Grommesh property tax statement correctly, their house has an estimated market value of $188,000. I wish that assessor worked where I live.

  • Drain52

    Rob answers the question I’ve long had: how do some of the recipients of the extreme makeover who have seen slim times, pay the taxes and upkeep on their new mini-mansions? They don’t, because they can’t. Excellent column.

  • yy4u2

    There are a lot of big government, social engineering policies predicated on the idea that giving people something they haven’t earned on their own will improve them as people and citizens. Two examples are housing policy and student loans.
    I would add a certain segment of the population demanding same sex marriages.

  • Lynn Bergman

    Amen to all in this piece! Well presented and completely accurate! Conservative often agree totally; this is just one of those instances.

  • borborygmi45

    Now student loans are an entitlement. Gee an entitlement that you have to pay back. That is some entitlement.

Top