Originally Posted by
CaptLouAlbano
Well a 99% tax rate would be absurd, so that is not worth considering. But let's look at the situation we are currently dealing with instead. If the Bush tax cuts expire ad return to Clinton era rates the 33% bracket goes to 36% and the 35% bracket to 39.6% - for me, I am looking at about 15,000 more per year in taxes (rough estimate from my accountant).
So, I have a choice to make. I can either make 15K less next year, or I can increase my rental prices to make up for the difference. Taxes are a cost, just like utilities and maintenance are costs. When costs go up, I can either eat the costs or raise my prices. I own 24 commercial units, 8 residential units and 6 vacation units that I rent out. If and when my taxes go up, I will sit down with my accountant and go over all the costs associated with my properties (maintenance, utilities, projected improvements, fees, taxes, etc) and I will make adjustments to the rental fees accordingly.
Now let's say hypothetically that if I raise rents in my apartment building, it prices me above the market, and I can no longer rent those properties out. What do I do? Well I can eat the loss, which would be silly. Or I can sell the building (which in this case I can get close to $1 million for the building) and put that million dollars into another property (or properties) where I can make the expected rate of return on my costs.
So at the end of the day, if the Bush tax cuts expire and my rates go up, I will still make the same amount of money at the end of the year. It doesn't effect me on bit at all. However, I am fundamentally opposed to this of course since I don't want to see rents go up for my tenants, nor do I wish to see the Federal gov't get more money to spend.