I'll take this opportunity to bring up Land Value taxation as an alternative: https://en.wikipedia.org/wiki/Land_value_tax
Creates incentive to use land efficiently, coupled with fewer economic distortions.
Creates incentive to use land efficiently, coupled with fewer economic distortions.
For instance, if housing is already at the zoning maximum for an area, would this tax be effectively the same as a property tax, because the best land value for this property would be the same amount of housing (assuming it is not completely run down) as currently exists?
Interestingly, my area is zoned at X single family homes per acre. Lots are smaller than an acre, and recently a pair of lots was combined/split and 5 (close together) houses are being built there. Does the land value of the neighboring houses go down when the area hits peak zoned requirements? Like, they could have potentially built another house in the 'backyard' of the first one, but now they would run into zoning because of the next yard construction. So now is the land value lower (and thus lower tax?).
People also say that they like LVT because they don't get taxed on improving their home. But wouldn't the LVT already factor in an improved home value (if the standard for the area was larger/improved homes)? Thus you're effectively penalized for not improving your home (ex: "The best value for this property is a 3000sqft home here, not a 1500sqft home"). I know the land value is supposed to 'avoid' improvements, but if we're taxing on what someone would pay for the land (if it was devoid of improvements), we would have to factor in what they would then build on it, which might be a much nicer, larger home than what currently exists. (Someone might value a piece of empty land highly if they expect to get a big payout by putting a large house on the property).
> Thus you're effectively penalized for not improving your home.
This is good. If the area you own land in becomes valuable you should be incentivised to make the best possible use of your land.
But, of course, using that model to then derive policy is obviously flawed since your model doesn't accurately capture the essential features of the objects being modeled.
If we let economists design furniture, every chair would be a miserably unpleasant cube whose dimensions match the median posterior.
Land value tax does have a lot going for it, but it overlooks one critical component:
Humans have a fundamental desire for stability, especially in where they live. I do not want my home to be a rectangle of maximum market efficiency. I want it to be a place where it's worth the effort to garden because I know I'll get to watch those plants grow over the coming years. I want it to be a calm respite, a sanctuary that I can rely on in the face of the chaos of the larger world. And, as I get older and my ability to generate revenue natural declines, I want some confidence that hard work I did when I was younger will enable me to live out the rest of my years with some degree of stability.
Of course, our desire for stability needs to be weighed against the desires of the larger community. But you do that by balancing those desires, not by completely ignoring one half of the equation.
I'm not sure what an ideal solution for housing is, but I'm certain it's not based on a slavish devotion to market efficiency.
Why should society have to slow down just to help you and your little old house? You can just move somewhere else with a garden. Everybody else is also trying to work and live their lives. This isn’t little house on the prairie, it’s quite selfish to buy a house in a city (an inherently dynamic landscape) and then expect the rest of the world to freeze in time
Simultaneously we are collectively complaining that people don't communicate or form bonds as they used to and how community died yadda yadda and people are lonely, especially men and how sad it all is yadda.
Guess what, this attitude kills any kind of in-person bonds or willingness to invest into them way more then much maligned social networks.
My original point is that if you want to own land forever without “the neighborhood changing”, don’t buy a plot in a city or suburban area. You have no right to enjoy the benefits of living in a city while forcing everyone else to respect your rights of a homesteader on a ranch in unincorporated land. People had to deal with rising property prices and change to make the city a desirable place to live, but as soon as you get property all you can think of is keeping everything just the way it is. That’s why it’s selfish.
You have zero right to demand that neighborhood dont change - nearby land owners should be free to do as they please.
Rising property prices is what incentivizes current people to sell to new people. Or maybe build higher building so that they sell to more people. That is dealing with it. Not raising taxes for existing people so that we can push them out while keeping total amount of people in area the same.
All you want is to change who lives there - not to add new people or build higher houses.
America has tons of space. Businesses could move had they wanted to, houses could be build had people did not seen urban living as oh-my-god-end-of-world.
This would be the ethically fair system. Of course in the present world the landowner class successfully lobbied that the fees are subsidized by other people from their income and similar taxes. There you have an explanation of the perpetual housing boom, because it is highly subsidized investment and there is only so much of it.
This doesn't apply just for land but for anything life necessary which can't be easily created anew. If someone poisoned 90% of water on earth you'd have the same thing.
And you still did not made place for more people. Just changed who is living there. They dont matter, you do.
Rent control and other price controls favor one subset of consumers over everyone else. If we don't use prices to allocate housing and land, what makes one system better than another? Why not hold an essay writing contest or dance-off to determine who gets to live in a house or apartment?
Home ownership is implicitly subsidized by the government. 30 year mortgages for the masses are only possible through government guarantees. Highways to enable urban sprawl are government built.
It was mooted in the UK last year and some of the newspapers (owned by wealthy landowners) went ballistic:
http://www.dailymail.co.uk/news/article-4575382/How-Labour-g...
https://www.telegraph.co.uk/news/2017/06/03/labours-garden-t...
The stock market would likely take a dive if this was implemented too, since a lot of company profits are predicated upon parasitic land value extraction (Trump's businesses are a good example). Politicians are usually wary of policies that might cause the stock market to take a dive because of the optics.
Or are you saying that he would be even more likely to default on loans and the banks would feel it hard?
Especially local politics.
People here end up living in cardboard boxes just to avoid paying high taxes.