If people want to invest in stuff, let them go for stocks, where their capital will at least be supposed to create value.
- there is such a thing as the commons;
- there is a cost to the government to protect your rights which is much higher for land than "virtual" assets and the cost to investors ought to reflect it.
Commons: I like that Singapore, for example, is taxing drivers around $90,000 per 10 years for the privilege of riding a car. The air is much cleaner and streets freer of traffic. Both of these were damaged by too many car owners. Similarly, the supply of land is limited whilst population can grow ad infinitum, creating ever upwards pressure on land prices.
Cost: in terms of individual rights, the army, police and justice defend your right to own that land free of damage, spurious lawsuits to drain your resources, land grabs by powerful men, and foreign invasion forces. This forms the basis of modern society and the implementation of your individual rights. The cost is proportional to land area but not as strongly correlated with company size in the equity case (you might have a few more problems but not proportionally to market capitalisation, and they involve court cases rather than policing, with most of the high costs - lawyers - born by private parties).
In theory, any land owners ought to be taxed, however, I make an exception for one's primary home (tax residence) considering that all citizen are naturally short housing (they need a place to live) and buying a home puts them in a housing neutral position and also has many positive effects on the commons (people are more invested in the future of their country if they own their home, less likely to move somewhere else, etc.).
Vancouver is a great example of citizen who have created ideal conditions for home ownership by participating in building a peaceful, prosperous economy which respects individual rights. Foreigners have accordingly swarmed to take advantage of the fact they were not charged for the benefits arising from ownership.
This has caused citizen - beyond the first generation of land owners - to be penalised for having built their own country up, as they end up unable to afford to live in it, burning up valuable income into paying high rents and house prices. A tax - which should offset what Canadians would pay elsewhere on productive activities, like income - is one of the best way to correct this imbalance, by charging the cost of enforcing individual rights to those who benefit from it.
To me the correct approach is to simply shift the tax burden higher onto investment properties, and expand the definition of "investment property" to include homes owned and occupied by able-bodied people who don't work for a living and never earned the kind of money that would be needed to afford such a home.
If you don't pay and never paid income tax, you don't need the tax exemptions that are given to homeowners.
That sort of means testing isn't required (and would be open to system-gaming / perverse incentive creation anyway). You just apply capital gains tax to all properties with the exception of one primary residence per person, and you could even cap the primary-residence exemption at the median value of a home in a particular area. So if you own property and rent it out rather than living there yourself, it gets taxed as an investment, period.
So that this cost isn't just passed on to renters, you should make the rental payments for your primary residence tax deductible, again perhaps capped at a median level so as not to perversely encourage higher rents.
I think you could construct a tax regime that was revenue neutral pretty easily this way.
Such an essay should show you that some level of regulation is required, or else the proposal will be easy to tear down.
Or, if I am wrong, it will become renowned for its content.
There are lots of essays about this and they claim it's realisable but the current power structures (such as state/government/central bankl) won't ever give away their power voluntarily.
I hear this argument often but in a free market the best (and not the perfectly informed) will perform best. Best here means the one making the best out of the given information which may still be very little.
Likewise, rationality helps but it's not at all a prerequisite. I wonder where people pick this up, I sincerely heard it often but I fail to see why one needs rational agents or perfect information.
I would appreciate an elaboration of your thoughts (that is, if you want to continue the discussion).
In human slaves?
Many of the same moral justifications for prohibiting the ownership of humans applies to ownership of land and it's very profitable for similar reasons.
Of course, exclusive access rights are important for production and other reasons, so they usually would argue that landowners ought to be taxed in proportion to the land rights that they claim.
Places like Hong Kong have been able to forego income taxation in favor of collecting rent from land.
[Citation needed]
There are lots of investments that are either frivolous or actively harmful to others. You can't make this claim without a bit more reasoning.
Conversely if you declare that you live in Canada whereas you're busy making a million a year in Dubai, that million ought to be taxed according to Canadian tax law as if you resided there.
There's plenty of rules already in existence to determine what is your primary tax residence as far as taxes are concerned, precisely to stop, say, a French resident from incorporating in Switzerland, getting paid into the structure, and not paying tax on his income (he can always try not to declare it, but then he becomes a criminal hoping that the rule of law is not thorough).
This allows foreign based property speculators to avoid capital gains on property.
Many people are claiming a property as their main residence whilst not staying in said property for more than a few weeks a year (main residence for these people is abroad).
The unpopular solution would be to charge capital gains on all property, irrespective of being your primary residence.
That would certainly cool a speculative market but I doubt such a measure would be supported by Canadians.
If your problem is tax evasion, the solution is enforcement. If it is a big problem, it will pay for itself when solved.
Obviously the long-term solution is to assume that people will always exploit any tax law as aggressively as they can, and that there's a basically-unlimited supply of people looking to park money in low-tax jurisdictions if they are allowed to do so. I don't think this was necessarily widely appreciated when many jurisdictions' tax laws were written.
http://www.theglobeandmail.com/news/politics/cra-launches-re...
There are cases where it'd make sense to live elsewhere though not legitimately, for example the rent-a-room scheme (can rent a room for up to 1k/month tax free) only applies in your PRR. So if you actually lived elsewhere that's a significant fraudulent tax saving if you're a one-property landlord.
San Francisco, and the Bay Area as a whole, is dealing with such issues as well. Vast restrictions on supply on a multi-decade timespan have created an anti-virtuous cycle of rising property values followed by more support for supply restrictions by incumbent property holders followed by further increases in property values and on and on.
Foreigners are an easy political target since they are usually unable to participate in the political process. "Other" bias also has strong rhetorical power unfortunately. But the real solution seems to lie somewhere in institutional reform around property rights protection(ie, use/build as of right).