Kindness and generosity--serious crimes for which the state will fine you, you tax cheat!

[DFW]

In München (Munich), one of the most expensive cities to live in here, an apartment owner wanted to do his caretaker a favor. München is so expensive that many people who work there can never afford to live there. Just like Nantucket, Manhattan, Hawai'i, etc., prices driven up by real estate speculation and concentrated wealth looking to live in posh areas make living in the city nearly impossible for the people that make it run.

Well, an owner of several apartments decided that his "Hausmeister," sort of a superintendent/repairman/caretaker, of one of his apartment houses was doing a really good job, and so rented him one of the better apartments at a rate well below the going rate for the neighborhood. This way, the guy could live in the building he was taking care of without having to commute over an hour each way every day. It also gave him a good incentive to continue doing the good job he was doing.

Well, the local tax office found out about it, and decided it was a serious crime, so they fined the owner of the building $47,000 for renting out his apartment at a rate below what they decided the going rate should be. The owner had to either raise the rent on his caretaker, or else kick him out. Since the guy couldn't afford to pay the standard going rent, the city was essentially kicking him out, one way or the other.

I have mentioned the word "Beamten" before--Germany's unfirable uncivil "servants." This is their mentality, and this is what they do all day. My wife once met a rare one with both a brain and a heart. She was called in to the office of one of these bureaucrats because one of her charges had earned himself a few euros extra every month by collecting bottles with deposit from parks and train stations, and turning them in, collecting the deposit money. Maybe an extra $30 or $40 a week if he was lucky. The city official wanted to cut the guy's welfare because he had been found to have an undeclared supplemental income. My wife lectured the city official, saying look, the guy is doing the city a service cleaning up the place, and the extra money he earns gets put right back into the city's economy. He's not about to move to Monte Carlo because he collects an extra $30 in a week--money he'll just spend on food anyway. The city worker said, much to my wife's surprise, you know what? You're right. I never heard about this, and you didn't, either. Some jealous, damaged soul had turned the poor guy in. Who the hell does that in the first place?

No doubt, the same thing happened in München. Either the lucky caretaker mentioned his good fortune to the wrong someone, or someone paying a higher rent challenged him outright, how can someone like YOU afford to live HERE, anyway? Jealousy runs high here in Europe. Maybe the tax worker was bored and decided to look for something to chase down, I don't know. But it is apparently a crime here to give someone a break like that, and the heavy fine was no small indication that the city government would pursue such crime with heavy penalties for "offenders."

Man, if that is a criminal "offense......" My wife just left the room after venting her rage. Once a social worker, always a social worker. Nothing sets her off more than injustice, especially if it's petty, unnecessary injustice perpetrated by these can't-be-fired "Beamten," whose job it is essentially to deny things to people who need/want them.

[CaliforniaPeggy]

1. Great story, my dear DFW! It really pisses me off.

I don't even have any coherent words to express how angry this makes me.

I am, however, glad that you posted it.

[DFW]

2. You are one of the very few on DU who have met my wife

You know how pleasant and even-tempered she is. She spent her whole professional life trying to give the little guy a break. You can imagine what an injustice it had to have been to get HER raging like that!

[CaliforniaPeggy]

3. It was such a treat meeting her.....and you too!

I really CAN imagine how bad that situation was.

I'm right there with her.

[DFW]

4. I just tag along to bask in her glow

I know who the star of this show is, and who is the supporting role!

But thanks anyway!

[Effete Snob]

5. This part doesn't make sense

First off, it is a normal rule pretty much everywhere, including in the US, that various forms of compensation provided to employees is taxable.

Here, a wealthy person wants a domestic employee in a place where the domestic employee cannot afford to live. Because it would be distasteful to share quarters with them, the employee is basically given additional compensation in the form of a rent reduction on an apartment.

"It also gave him a good incentive to continue doing the good job he was doing."

Well, certainly, that is how 'company town' compensations work. Because an employee would lose much more than their income if they lost their job, they are bound to their employer by much more than a paycheck.

However, this makes no sense at all:

"The owner had to either raise the rent on his caretaker, or else kick him out. Since the guy couldn't afford to pay the standard going rent, the city was essentially kicking him out, one way or the other."

No, the owner could pay the employee a living wage under which the employee could actually afford the apartment. Since the rent would be coming back to the owner anyway, then nobody has to kick anyone out of anywhere.

But, the above-board way of doing this - simply pay an increased salary and charge normal rent - is not even a consideration in this picture.

Why?

Oh, right, because if one does it that way, then both the incoming and the rent are taxable. So, while there was a perfectly above-board way of doing this OTHER than providing unreported constructive income in the form of "reduced rent" in order to evade taxes, the employee must be thrown out of their residence because paying taxes on the income and the rent is too much to ask.

[DFW]

6. Allow me to explain

The old "pay them a living wage" slogan doesn't fly here. Most people here in Central Europe DO make a living wage. Even what passes for a "living wage" won't let you rent a nice apartment in midtown Manhattan or Georgetown or Union Square, SF. People living in upscale apartments in Schwabing (or Mayfair, or the Gamla Stan, etc.) make a LOT more than just "a living wage." Most employers here in central Europe pay "a living wage," as witnessed by the far lower number of people here scraping their pockets to get by than one will find in the average city in the USA, current inflation spike notwithstanding. Payroll taxes are higher here, just like most other taxes. The owner wanted to do his employee a favor. I guess that in some parts of America, that must be a foreign concept. He owned the building, and it's up to him to charge what the market will bear, if he so chooses. It should also be choice not to. It was his choice to let his employee rent the apartment at whatever rent he wanted to charge, even if it was under his cost of maintaining it. He pays the property taxes on it, regardless. If he picked his employee up in his car on the way to work every morning to save the guy U-Bahn fare, should he get penalized for that, too? I'm sure there must some handy slogan to trash that evil behavior, too.

You're right--charging the "normal rent" in downtown München to a building custodian was definitely not a consideration. People in that part of town don't pay a "normal rent." They pay an abnormally high rent. The owner had a better consideration--that of his employee. How dastardly of him.

[Effete Snob]

7. You don't seem to get that the same result would occur in the US

"He owned the building, and it's up to him to charge what the market will bear, if he so chooses."

No. If your employer gives you things other than money, then that is income, and it is assessed at the going market rate for those things.

The same thing would be true in the United States.

"The owner wanted to do his employee a favor. I guess that in some parts of America, that must be a foreign concept."

Things that you give employees in connection with their employment are not favors. They are compensation.

A "favor" would be giving the employee the reduced rent even if the employee quit his job and worked for someone else.

Would the owner have done that? No, you said so yourself that it was an incentive to maintain employment.

Things that you receive as a condition of your employment are not "favors", and they are not "gifts".

In America, I'm pretty sure we also still have a handle on things like "favor" and "gift", and only a certain kind of person things a "favor" is conditioned on your employment with them.

But, I guess to some, the notion of an actual "favor" - a gift free of employment obligations - is a foreign concept.

Sorry, DFW, but when I do someone a "favor" it is not because they work for me, and they don't need to work for me for a "favor".

But you ignore the obvious solution - increase the wage and collect the rent. Why can't the employer do that? He gets the same money back.

I'm going to guess full well why that is not an option. The tax office has also figured out why that is not an option, haven't they?

Because the employer is providing non-taxed effective compensation in the form of the rent reduction. It is not a "favor". It is conditioned on employment. You need to understand that things like "gifts" and "favors" are not things one gives in return for the work of an employee. A "gift" or "favor" is a thing freely given. But the idea of giving without something in return is difficult for some people to wrap their heads around.