New York passing sweeping new rent control rules

[Crawford]

Originally Posted by Investing In Chicago

This is absolutely insane - Investment capital is one of the most important drivers of economic growth, and capital gains are an important driver to get people to put money into critical but risky fields in the market. You are effectively taking away any incentive to invest; innovation and cures for diseases are partially possible because of capital gains.

It's apparently "insane" yet done in basically every first world country on earth but the U.S.

Capital gains in Germany are taxed at 30.5%; you really think Germany has a dearth of investment or innovation? Why would someone stop building their family wealth because the captial gains tax were raised? How does that make any sense?

[SIGSEGV]

Originally Posted by Investing In Chicago

I believe a flat tax rate is the most fair approach to taxation.

Does money have linear utility to you?

[the urban politician]

I have to wonder what Illinois’ “savior” JB Pritzker would say to Capital Gains being taxed at the same rate as income tax.

All of a sudden you would see the wheels come off the cart of his little “the rich should pay their fair share” lie.

[Crawford]

Originally Posted by the urban politician

I have to wonder what Illinois’ “savior” JB Pritzker would say to Capital Gains being taxed at the same rate as income tax.

I'd imagine that already happens. In most states capital gains are taxed the same as state income taxes.

[Investing In Chicago]

Originally Posted by Crawford

Why would someone stop building their family wealth because the captial gains tax were raised? How does that make any sense?

There is an inherent risk to investments that yield capital gains - why would I put my money into something that has a high risk for loss, if there is not tax benefit for doing so?

[the urban politician]

^ Well, he focuses on raising income taxes to match other States in the Midwest, but has never discussed raising Capital gains, unless I’m mistaken

[Pedestrian]

Originally Posted by Investing In Chicago

There is an inherent risk to investments that yield capital gains - why would I put my money into something that has a high risk for loss, if there is not tax benefit for doing so?

That's not the real reason long-term capital gains rates are lower. The real reason is that the purchasing power of capital erodes over time. My parents paid $11,500 in 1949 for the house I grew up in. It's probably worth several hundred thousand today. That's not actually nearly all "gain". The dollars you'd get by selling the house today wouldn't likely buy you more of anything than the $11,500 it cost would buy you in 1949 (a new Ford then cost less than $1500). So the lower tax rates on nominal gains are meant to make up for the fact that the gains aren't "real". A better way to do it might be to simply index gains for inflation and you'd only pay any tax at all on gains over the index-adjusted cost.

[Crawford]

Originally Posted by Investing In Chicago

There is an inherent risk to investments that yield capital gains - why would I put my money into something that has a high risk for loss, if there is not tax benefit for doing so?

Because it's the safest long-term strategy for wealth-building. I don't load up my Vanguard as much as possible based on whether I'm paying 15% or 20% on my federal form; I'm doing it because equities have the best long-term return for retaining wealth for my descendants.

[Pedestrian]

Originally Posted by Crawford

Because it's the safest long-term strategy for wealth-building. I don't load up my Vanguard as much as possible based on whether I'm paying 15% or 20% on my federal form; I'm doing it because equities have the best long-term return for retaining wealth for my descendants.

As you almost certainly know, the basis of assets is "stepped up" at your death so the capital gains tax is irrelevant to your descendants, assuming nothing changes (maybe not such a safe assumption if Bernie or Liz wins since there have been proposals to eliminate that feature of the tax code).

[Investing In Chicago]

Originally Posted by Pedestrian

That's not the real reason long-term capital gains rates are lower. The real reason is that the purchasing power of capital erodes over time. My parents paid $11,500 in 1949 for the house I grew up in. It's probably worth several hundred thousand today. That's not actually nearly all "gain". The dollars you'd get by selling the house today wouldn't likely buy you more of anything than the $11,500 it cost would buy you in 1949 (a new Ford then cost less than $1500). So the lower tax rates on nominal gains are meant to make up for the fact that the gains aren't "real". A better way to do it might be to simply index gains for inflation and you'd only pay any tax at all on gains over the index-adjusted cost.

Correct - and a very good point.

[yaletown_fella]

As a tenant I support rent control but I also think landlords should be able to evict problem tenants (dirty, hoarding, belligerent, nonpayment etc) more easily

If the supply is low and demand is high in the market, rent control is only fair to protect tenants.

[the urban politician]

^ Rent control is as fair as stealing

What you're saying is no different than saying "I'm a robber, hence I support legalizing robbery as long as Government policies are constraining resources"

Very self-centered

[mhays]

It's certainly selfish. It creates scarcity and if it applies to new buildings it discincentivizes new supply.

It sounds good before reality intervenes, basically. Typical populist formula.

[SFBruin]

Dang, there are some intense economics discussions going on here.

All I wanted to say was that, for a city as successful as New York, adding rent control is like saying, "hey, I rented in this place, and now it became super successful, and I want to reap the benefits as if I invested into it."

It's why rent control should be banned federally.

[Pedestrian]

Originally Posted by SFBruin

Dang, there are some intense economics discussions going on here.

All I wanted to say was that, for a city as successful as New York, adding rent control is like saying, "hey, I rented in this place, and now it became super successful, and I want to reap the benefits as if I invested into it."

It's why rent control should be banned federally.

Hard to make the connection with interstate commerce and thus allowing federal intervention. While the Feds could regulate large corporate landlords with properties in multiple states, I suppose, they could subdivide into subsidiaries in each state and escape such regulation I bet. There's nothing about renting a house or apartment that necessarily crosses state lines.

[LouisVanDerWright]

Originally Posted by Pedestrian

Hard to make the connection with interstate commerce and thus allowing federal intervention. While the Feds could regulate large corporate landlords with properties in multiple states, I suppose, they could subdivide into subsidiaries in each state and escape such regulation I bet. There's nothing about renting a house or apartment that necessarily crosses state lines.

It doesn't need to be interstate to be federally regulated. This is a matter of property rights which is the fundamental basis for our system. It should be banned not isn't because of the perverse incentives listed above, but also because it's terrible policy that has been proven not to have the advertised benefits.

[Pedestrian]

Originally Posted by LouisVanDerWright

It doesn't need to be interstate to be federally regulated. This is a matter of property rights which is the fundamental basis for our system. It should be banned not isn't because of the perverse incentives listed above, but also because it's terrible policy that has been proven not to have the advertised benefits.

There does have to be an interstate nexus unless there's a Constitutional question such as violation of rights.

You are, I suppose, saying that rent control is a "taking", thus violating the Constitutional provision that property may not be taken without "due process". This article agree with you:

Why Rental Control is a Regulatory Taking

as does this one:

Making Room at the Inn: Rent Control As a Regulatory Taking

But the fact that we have had rent control in certain cities for a long time demonstrates that the courts generally have not agreed. And "takings" without due process are banned, not regulated. So even if it were a taking, it wouldn't give the Federal government the power to regulate.

[SFBruin]

Originally Posted by Pedestrian

Hard to make the connection with interstate commerce and thus allowing federal intervention. While the Feds could regulate large corporate landlords with properties in multiple states, I suppose, they could subdivide into subsidiaries in each state and escape such regulation I bet. There's nothing about renting a house or apartment that necessarily crosses state lines.

Hey, funny that we live at most like 8 miles from each other and are arguing about this.

Anyhow, I would say that it is an interstate issue since potential consumers live outside the state.

I don't live in New York state, though, and don't plan on moving there, so it is not a big issue to me.

[Gantz]

Originally Posted by Crawford

It's apparently "insane" yet done in basically every first world country on earth but the U.S.

Capital gains in Germany are taxed at 30.5%; you really think Germany has a dearth of investment or innovation? Why would someone stop building their family wealth because the captial gains tax were raised? How does that make any sense?

Corporate tax rate in Germany is 15%, much lower than the US.
Corporate tax rate in Denmark is similar to the US now, after Trump decreased corporate taxes.
People with capital do not stop building their family wealth, they simply move that capital to some other locale with lower tax regime if the taxes get too onerous. If Germany taxes cap gains at 30.5%, that is still lower than a lot of Americans combined state + fed capital gains tax rate.

[Crawford]

Originally Posted by Gantz

Corporate tax rate in Germany is 15%, much lower than the US.
Corporate tax rate in Denmark is similar to the US now, after Trump decreased corporate taxes.
People with capital do not stop building their family wealth, they simply move that capital to some other locale with lower tax regime if the taxes get too onerous.

Why are you talking about corporate taxes? What does that have to do with anything? And why are you claiming something as ridiculous as "Trump decreased corporate taxes"? He had as much to do with that as Mickey Mouse.

And you're claiming that wealthy people will move their families from the U.S. if we raise capital gains taxes? Why, exactly?

And then you support 0 taxes, correct? Because plenty of places have 0 tax on capital gains, yet I'm not aware of any wealthy people fleeing. Switzerland, Cayman Islands, plenty of existing havens for deadbeats and tax cheats, yet the U.S. has, by far, the largest concentration of wealthy.