City research in Vancouver shows found 25% of residents can’t pay property taxes and a whopping 50% struggle with rent.
The story is not just about Vancouver, Canada. Rather it applies to cities globally, all facing a similar setup.
Please consider Vancouver Mayor is Worried Over Property Tax Collection.
Kennedy Stewart said Sunday the city could lose up to $500 million from its operating budget, which would be “absolutely devastating.”
“If we lost half a billion dollars in revenue, we would have to really burn through all our stand-by cash we have, all our reserves, and we may even have to sell some city lands in order to meet all our obligations, so it’s a very serious situation,” he said.
In addition to property tax concerns, sales tax and fee collections are in the gutter, everywhere.
And if people struggle to pay the rent, landlords in turn cannot pay their bills, including property taxes.
This setup is not unique to Vancouver. It’s playing out across the US and Canada.
Mike “Mish” Shedlock
All these Cities across the USA that are headed towards bankruptcy and severe financial problems….should consider reducing there payroll by eliminating enough jobs to make them stay afloat and viable. If small businesses have to do this to survive than City, State and County gov’t should do the same.
Traffic drop from stay-at-home orders imperils road funding
By DAVID A. LIEB Associated Press
Apr 12, 2020
JEFFERSON CITY, Mo. (AP) — America’s roads are a lot less congested, due to coronavirus shutdowns that have kept millions of commuters, shoppers and vacationers parked at their homes.
While that makes it easier to patch potholes, it also could spell trouble for road and bridge projects. The longer motorists remain off the roads, the harder it will be for states to afford repairs in the months and years ahead.
Ultimately, less taxes mean less government, so this is something to be optimistic about.
As economically destructive as taxes collected by the taxman are, they are still eons better than the same amount of taxes being collected by money printing.
Failure to recognize that, is the primary reason Reagan’s, and Thatcher’s, real legacies, are ultimately no less destructive than Lenin’s and Mao’s; although they both did talk, and probably even intended, a better game.
Hope your road is paved and not full of pot holes, police near by and maybe a fire station. But all take money.
“Hope your road is paved…”
I don’t believe the governments should ever have gotten involved with the paving and building of roads. Doing so destroyed many privately owned mass transit systems. The town I grew up in (Rockville, MD) had a trolley line from DC from 1900 to 1935. It went out of business shortly after Rockville Pike was paved during the early ’30s.
The IHS similarly destroyed the intercity passenger rail industry. Amtrak is a joke. It also helped ruin inner city mass transit systems (nearly every city once had profitable trolley and bus lines) as educated people bought a car or two, and headed for the ‘burbs – as did city businesses. Cities have been dysfunctional ever since.
Yeah, it’s nice to hop your car and drive across the country with a credit card. I’ve done it over 25 times. But the IHS required the eminent domain seizures of 10s of thousands of homes. I know of a couple who were booted out of their home when the Capital Beltway was built. They were so distraught, they both died with months. They were in their early 60s. The IHS also cut off the natural migration of wildlife. It was the worst domestic program ever, IMAO.
When I express these views to people, they almost invariably ask stupid questions like “how would you get to home or work if there were no paved roads”. The obvious answer to that is that I wouldn’t live or work where I do, and did, if the road wasn’t there first. I’d probably live or work near privately owned, efficient mass transit. The IHS is socialist.
Moreover, we had quite a few private ‘turnpikes’ during the 19th century. If you don’t believe it, find some some old maps.
@davebarnes
Here is an idea for local governments. Start scaling back spending! Just as individuals need to scale back when they are out of a job governments need to do the same. Get rid of extra buildings, reduce the size of the workforce, scale back on grandiose things that should have never been signed up for in the first place!
Nope. Never works that way.
Easy to say – scale back on the grandiose things. I served on many public board and you know – on the Board I served there was not a lot of fat. Of course expenses could have been trimmed. But what I found was a lot of hard working people who were really motivated by a mission to serve. If you have specific examples in your communities go to a meeting and tell them. They will listen!
I have a question, Mish, that is specific to Vancouver. It wasn’t that long ago the wealthy of China were looking for a resting nest egg and found it in Vancouver real estate. Hence the locals were so far priced out of the RE market that they couldn’t even buy property there anymore. How does this affect the tax issue the city is facing now? Do all those Chinese Nationals still own those properties? If so, are they paying the taxes? Obviously the end result will be the crushed poverty stricken population. But you’re opinion?
Goldman Sachs: The worst might be over for US stocks because of rescues by Fed and Congress https://www.cnn.com/business/live-news/dow-stock-market-today-041320/h_2c2466633ee477c5b26a8a851c39e360 HAHAHAHAHA!!
HAHAHAHAHA!
LMFAO!
The Empire is about to crumble.
Vancouver, BC can sell bubble bonds. You know, bonds that pay when the housing bubble goes higher and a crap lot sells for a few billions. There is your money, mayor.
Then you have federal employees, like my neighbors, both sitting at home making almost $40hr each because they have health issues that could be a threat combined with covid19. Both are disgustingly overweight(how they do their labor jobs i’m not sure), smoke and drink EVERYDAY. I’d imagine there are 1000’s just like them.
Don’t forget they also got a $1200-$3400 check incoming as well.
But the inflation-adjusted pension checks and free health care for life have yet to stop.
that’s not fully true. There’s been lots of layoffs in the public sector. My brother-in-law was laid off from his librarian job.
Anecdotal evidence–one job does not qualify as ‘lots.’ How many ‘public servants’ have been laid off as a % of all government employees– 5%, 0.5%, 0.05%….
Amusingly, when I called my city hall and offered to pay off my property taxes for the year, right now, they asked me to call back in June.
Come January………..oh well, umm, we already sold your house as you didn’t pay on time.
Who didn’t see this coming? Time to end the indiscriminate shutdown. People are still going to get sick.
Time to put some brains behind shutdown. For example why do golf courses need to be shutdown. That is tax revenue that could be collected.
The death rate is just now starting to drop from the lockdown that started a month ago. You would trade a return to an exponential death rate increase for more robust tax collection?
Death and taxes, indeed.
Projections from mortality in a naive population fails to take into account growing immunity to the virus, which would cause mortality to drop over time.
You can’t even be sure there is “growing immunity to the virus” …
I dont see golf course around here shutdown. And they aren’t social distancing, either.
Where I live they are shutdown. Golf is easy to social distance. I personally don’t like people crowding me on tee box.
Plus having a strong immune system helps fight virus. Why not get some exercise.
Destroy the economy by executive order -> then wonder what happens to tax revenue. NOBODY could have seen this coming.
I live in WA, tax collection is being destroyed as well… I am sure the geniuses who caused this will push for a big tax increase soon instead of spending cuts to match. And the folks here in SEA cheering for economic destruction (for the perception of safety) will cheer this on as well.
Also, Break-ins – UP, Domestic Violence – UP, Child abuse – UP
Who caused this exactly? It’s a virus that leaped from bats to humans. So, God?
In Eastern WA, a nearby county just asked its property owners to please pay both halves of the year’s property taxes now, if they could. Cash flow problems, you see. And they are an agricultural county, and barely locked down at all due to the exemptions.
And it sounds like the liberals on the courts are about to empty the prisons because the state can’t protect the inmates from the plague. And then our ninny governor will undoubtedly complain about people rushing out to buy guns.
Surely they can raise car registration tab fees.:>))
Just let the fed buy municipal bonds with 0% interest rates. Done.
Stop buying cheinse products. Stop sending them food they must pay for the disaster they manufactured
Easier said than done. We’ve had nearly 4 decades of favored nation status for China that both Dems, Repubs, and even Dr. No – Ron Paul voted positively in favor of. We let them peg the currency guaranteeing they would always be 90% cheaper. Pretty much universal political support that turned a 3rd world country of peasants into the greatest manufacturing force the world has seen (above the US mid/post WWII)). Everything from trinkets to antibiotics to rockets. Military would go naked without China. Got to ask yourself why? When those same folks seem to be divided on pretty much everything else in the world. And where does that leave us today?
Eating bats is what got this going in the first place. Starve them, and who know’s what they’ll eat next?
Zardoz that’s hilarious.
The US has a choice. If we want the dollar to remain the world’s reserve currency (and there are many reasons we want that, the main one being we can keystroke as many dollars as we need. No other country can do that), the Fed has to print to provide the world with the necessary dollars to settle trades. Sellers won’t accept T Notes, they need dollars. So, the Fed swaps dollars for Treasuries held by foreign central banks. It also swaps dollars for some foreign currencies (Euros, Pounds, etc).
We are not talking about a few billion here and there. This is going to require many Trillions just to grease the wheels of global commerce. Or would you rather see the Chinese Yuan as the global reserve currency?
What the hell currency do you think all those derivative contracts settle in?
“Or would you rather see the Chinese Yuan as the global reserve currency?”
…
A country needs to run LARGE deficits to get their currency “out there” in order for it to be considered a “reserve” by other countries.
There is no sole reserve currency. Yes, $US the biggest. But yen, euro, pound and some other minors are considered reserve.
Yes, and with the Yuan on par with the Canadian Dollar as a reserve currency it has a long way to go. Until China floats the Yuan, it’s really not an issue anyway.
the Fed & the US are separate entities. one is a group of private banks with a small number of private shareholders. the other is a nation of indebted, diverse and polarized people who are to the point of not agreeing upon anything.
those dollars you are pushing are title transfer documents…from the people’s balance sheets to the Fed’s. the creation mechanism of money by debt established in 1913 pretty much guarantee’s the Fed (and its small group of shareholders) will end up owning everything. that said…possession is 9/10th’s of the law. it will be interesting to see how this ends…
We’re the only country that can create USD, but a lot of countries can create their currency and swap it for USD.
“What the hell currency do you think all those derivative contracts settle in?”
Why the heck should anyone be dumb and indoctrinated enough to believe there is any positive gain from any of them even settling?
The reason those instruments solely for the enrichment and empowerment of abject mediocrities exist in the first place, is specifically because money printing exists solely to 1)make such rackets whole, and 2)make them profitable for members of the connected leeching classes. Every single one of whom are too incompetent to engage in anything more productive with their useless, at best half literate little lives.
World trade was at least as globalized before WW1. All settled in a proper currency. Not some theft instrument forced down productive people’s throat by run amuck taxation, solely for the benefit of an entrenched class of wastes-of-space too dumb and useless to contribute anything positive at all, in any way, ever.
Cut services. The pensions must be paid.
So say the public sector unions.
As long as the first services cut, are police protection for flush pensioners and their stuff, that just about may be a-ok.
Sounds Inflationary
Inflation requires demand…the only inflation I see is in food, TP, seeds, guns, & ammo. Everything else is less essential and thus deflating…
Deflation will be a vicious spiral.
Well said!
Agreed.
Used-vehicle auctions are for now virtually paralyzed, much like the rest of the economy. The grave concern market watchers have is that vehicles already are starting to pile up at places where buyers and sellers make and take bids on cars and trucks — and that this imbalance will last for months.
If that fear is realized and prices plummet, it will be detrimental to automakers and their in-house lending units, which likely will have to write down the value of lease contracts that had assumed vehicles would retain greater value. Rental-car companies also will get less money from selling down their fleet of vehicles, which are sitting idle amid a global pandemic that’s been catastrophic for travel.
“Six months from now, there will be huge, if not unprecedented, levels of wholesale supply in the market,” Dale Pollak, an executive vice president of Cox Automotive, which owns North America’s largest auto-auction company, wrote in an open letter to auto dealers last week. “Cars are coming in, but they aren’t selling.
…yep…gotta have demand to get inflation…
Around here that is never a problem. If people don’t pay their taxes, someone else pays it for them, and then collects 14% interest on it. If they don’t get paid back, they get the property in the end.
Where is “around here” ? that’s a damn good business now
Not sure where Carl is at, but Arizona has a similar system. The interest is simple in AZ at least.
That sucks
Florida has a similar system but you don’t get the property in the end. The County sells the property to the highest bidder and you get your tax money + interest back. You used to see rates like 14%, but the banks and hedge funds moved in and pay taxes for 3 or 4%.
That’s a much more fair system.
The “open up for competition” part, is. The “competitors offering lower rates because the Fed robs third parties to hold their funding costs and risks down”, is not.
Absent Fed, and land use “law”, theft from third parties; loans to deadbeats collateralized by outdated, depreciating shacks, is unlikely to have been made at less than 14%.
You really think 14% is a fair rate for a lender who puts up 2% of the appraised value, and if he has to do it for 3 years, and put up 6% of the value, gets ownership?
In the midst of a pandemic when cash is king; noone pays rent nor get evicted; “appraised values” run 10x replacement cost, hence economic value; the place has liens close to that “appraised value” anyway; and without any Fed to implicitly promise to rob anyone other than creditors blind, in order to ensure banksters don’t have to take a bonus cut? I can’t speak for anyone else, but I’d probably want at least that to part with my Gold.
Liens are irrelevant. If you take ownership of a property via tax lien, you take it free and clear of liens. That is why mortgage holders typically pay the taxes from an escrow account. If they rely on the property holder to pay the taxes, and he doesn’t the mortgage holder’s lien is void, and he has no more collateral.
I wonder how long the lock-down would last in Canada if public sector wages were reduced to $2000/month to match the private sector?
So far the public sector (working or not) in Canada is receiving their full salaries, meanwhile the private sector has been reduced to $2000/month assistance
Looks to me like a shortage of money.
I think the best solution is to print more.
Correct me if I am wrong but isn’t printed money free?
It’s free to print, but every dollar printed makes every dollar you have worth a little less. Print too much and prices skyrocket, leaving people in a similar situation as when we started, with some cash reallocated between parties.
Please define “print”.
QE is NOT “printing”.
QE is printing money if, as the Fed said last month, the Fed will pay money for commercial paper that’s not government backed paper which has taxpayer obligations behind it. But in general you’re right, QE is not necessarily printing money.
All true except ordinary people have no money, everything is debt, house, car, so inflation will be a problem of few rich people in US, and politicians will print more and more over time.
“I think the best solution is to print more.”
…
Helicopter money MUST come via fiscal policy.
Monetary Policy (as is) is disinflationary as it enriches the already rich and drives income / wealth inequality divide ever greater.
Yes I think the government should issue everyone their own printing press. What could go wrong with that? Everyone would have all the money they need.
What the Fed is printing is Title Transfer documents….from your balance sheet to theirs! They’ve been setting the stage for this since 1913…
There is no inflation. There already talk of deflationary pressures in auto sales. It won’t be long before it is housing and rental prices. Once that starts it only stops when people start earning money again and go out and spend it. A lot of people won’t go out even after the “all clear” because they won’t trust that we’ve really gotten things under control. They will wait for proof…which means this entire year will end up being a bust economic wise.
I think some things will go way, way down in price (real estate, copper) but we’ll probably see huge price increases in other things (food, gold).
And there were already plenty of cities struggling before this. Consumers, companies and governments are all in trouble here