How does that help in the situation of a homeowner not being able to afford their tax bill because their property increased in value?
But... does that still mean people might be taxed out of their home?
I hope it would be rare, because it is a bummer, but I am convinced that there is no sustainable system in which people wouldn't be "taxed out of their home" in some cases. However, consider that they'd still get a sizeable payout, and plenty of available options in their community.
It's the sad truth about land-- if someone is using it inefficiently (which is the case with the single-family households having trouble with property taxes), it's a market signal that the land should be developed more densely...
In both places I've lived in the Bay Area, there were vacant houses on the block. In the old town, apparently the house was owned by an old widow who is in a nursing home and who refuses to sell. In the new neighborhood, the house has fire damage. The owner apparently has several properties around the Bay, and just isn't in a hurry to do anything -- the house has been that way for five years or more.
I hear from people living in Palo Alto that their neighborhoods are dotted with vacant homes owned by overseas investors.
Meanwhile, people making $200k a year are commuting an hour each way because they can't afford to live any closer.
Market rate property taxation would provide a strong incentive for these owners to either sell or rent out their properties.
http://www.cbc.ca/news/canada/british-columbia/vancouver-vac...
Another option would be a Community Land Trust[1], which would take the responsibility of land ownership away, and allow residents to have more stability at the cost of not directly being responsible for land stewardship.
[0] http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.htm...
If the purpose of property taxes is to encourage or force efficient land use, what happens to local zoning laws? The taxes go up and the homeowner responds by trying to build, say, a 4 unit apartment where their single family dwelling was - but the city zoning does not allow it.
Now what? Where's the increased efficiency of land use?
If you cant afford the tax, you should move out and sell/rent out. This whole premise is absurd.
Sorry down voter. But this is a fact. We have property tax to discourage under utilization of scarce resources. If you can't afford the tax rate, you should you should find some way to increase your income. This is a prime example of why we don't need the 0.001% to screw over the rest of us. We the 99% are perfectly capable of screwing over ourselves!
The "community" doesn't owe long time residents or new residents anything just because they decided to buy instead of renting. Let's be rational here.
This makes zero sense to me. Someone bought the property 50 years ago and now is the sole owner, but it is reasonable to force them off their property / out of their home? I get it, other people are willing to pay more for it, but it is the owner's property.
I'm going to have to ask for a citation on that. In places where land is cheap and plentiful, and there not even remotely a problem with under utilization of scarce resources, they still tend to have property taxes. Property tax rates tend to be set at a level that correlates almost perfectly with local government funding needs. That suggests that we have property taxes to fund local government.
You own land in downtown SF? That's a very scarce resource, and you ought to be taxed on it in order to make sure it's correctly utilized. (Note: the infrastructure within SF is relatively good, which is theoretically what the land tax is paying for.)
You own land outside of a small town and you wish to build a factory? Your land is next to valueless, and the improvements you build shouldn't be discouraged through taxes. (Note: the infrastructure out here is fairly poor, which explains why the land tax is minimal.)
To jump to a theoretical conclusion, Joseph Stiglitz demonstrated through the Henry George Theorem[0] that the quantity of public goods a municipal government supplies is equal to the amount it would receive in a land value tax, given certain assumptions. In short, a land value tax would optimally fund local government.