Isn't that how income tax works too? Why should cap gains be different?
Tax is messy. I'm reminded of the quote from the 1600s "The art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing." The above problem causes hissing.
On a related note, I think we need to stop providing incentives for housing prices to go up. Municipalities could put caps on the percentage of value they'll enforce a lean on. This would reduce housing costs to the benefit of people at the bottom.
> I think we need to stop providing incentives for housing prices to go up.
While true, the main such incentive historically is inflation: housing prices have been growing at about the rate of inflation in the long run, averaged over the US.
But it would definitely be a step up from where we are now, in theory. In practice, measuring inflation is an interesting exercise; there are multiple measures that differ quite a bit once your timescale is "decades" as it can easily be for savings and housing. And yrs, I know I said "the rate of inflation" -- I forget which measure those studies used. For housing specifically, one could use whichever inflation measure best matched housing prices in the past, I guess...
So dont move or move when you can afford to pay the tax.
Why did the value of the neighbourhood increase, its because society aka the police keeping the area safe, the people who maintain all the infrastructure/roads etc, who is going to pay for all that?
>move when you can afford to pay the tax
Why could they afford to pay the tax? Their income hasn't changed.
>Why did the value of the neighbourhood increase
Usually this kind of meteoric rise in property value happens due to changes in demand, i.e. your city suddenly becomes a tech employment center, or the fashion suddenly shifts from suburban to urban.
>its because society aka the police keeping the area safe, the people who maintain all the infrastructure/roads etc,
Nope. Typically all those things were there when you bought in, so would not explain the delta between your previous and current home value. And if the quality of your local institutions got 2x better during your stay, it's likely you had a hand in building them.
>who is going to pay for all that?
Excuse me, what? No place in America has capital gains tax on primary residences; do you imagine that we don't have police or roads? We'll pay for it like we've always paid for it: a combination of property taxes, user fees, and state income taxes remitted to the municipalities.
Long commutes can be reduced if you have a good public transport which again depends on tax.
> Usually this kind of meteoric rise in property value happens due to changes in demand,
which brings us back to the same points which I raised, its because of the society the demand rises, demand is not going to increase in high crime, poor infrastructure area.
> Excuse me, what?
What part did you not understand?
The real reason capital gains taxes are a bad idea is that they discourage investment and we want more of that because it’s how we increase our productive capacity and get more of what we really want, consumption.
We should abolish income and capital gains taxes altogether and tax consumption. Encouraging investment by ceasing to tax it will lead to higher production and consumption in the long run.
but couldn't you claim that income is sale of personal time (an infinitely valuable, and non-renewable asset)?