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Comment by lsiebert | Hacker News Reader

No, they shouldn't. There are externalities that effect others, and the free market.

For example, you don't want people doing things that poison groundwater for the neighbors, right?

Anyway, letting property sit idle benefits the landowner but causes issues for neighbors, local government and the free market. It means businesses in those locations get less customers, and local governments less sales tax. If the property is not cared for, there can be additional issues that lower the value of other's homes.

It causes rental prices and home prices for buyers to inflate because of the market distortion, leading to boom bust real estate problems.

Boom and bust effects homesellers and homebuyers, but also, given how often property tax plays a role in government budgets, dramatically affects local and state revenue, (and federal revenue in countries with a federal property tax).

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Normally people talk about externalities of activity, as opposed to externalities of inactivity. I suppose this is just two sides of the same coin. People living in a place does have positive knock on effects. However it feels a little different to me to say, “because you didn’t use your property a certain way, therefore there wasn’t this good secondary effect, therefore you have created a negative externality.” No, I just have declined to create a positive one. If I use my property in a way that is good but not creating the maximum amount of positive externalities, have I still created a negative externality? I don’t think so.

Terminological issues aside, tax is not about fairness. At least not for any one person’s particular definition of fairness, and certainly not mine. Tax, in this case, is about a behavior we want changed, and a means readily to hand by which to change it. Doesn’t really matter if it’s fair.

"letting property sit idle benefits the landowner"

Can you help me understand this? I've never understood why any property sits idle -- the property would need to increase in value fast enough to counteract property taxes, just for the owner to break even. And that's ignoring the opportunity cost of not filling the property with tenants.

To me, it seems that it would always make more financial sense to try and hit 100% occupancy, even if that means steeply discounting the rent. Wouldn't an empty property be hemorrhaging cash?

For some people cost of owning – property tax, various services is not a big deal. Also, in some places property rises in prices just by itself (like in San Francisco), you just have to wait.

Sometimes people lose money, but at the end of the day they can sign a good deal on it (let's say couple of years), and it will compensate their losses extensively. But they will have this "ready immediately" sign all this time.

In here are two reasons[1].

Another is this: a building nearly full rented has an easily calculable valuable based on its income. A building with a higher price but not trying to rent can, incredibly, claim to have a higher value. Especially if there are several building nearby claiming the same value.

If there is a debt associated with the building, it is especially in the owner's interest to keeping the supposed value of the building high even if they are loosing revenue at the moment.

If a few organizations own a large number of units they can strongly influence a market both of rental rates and building values by doing this. Undoubtedly to a net profit or they wouldn't be doing it.

[1]https://news.ycombinator.com/item?id=19427243

Property tax increases are regularly gamed using empty properties as examples.

https://www.citylab.com/equity/2018/11/property-tax-dark-sto...

Problem is, every “tweak” of the market causes ramifications, often unintended.

A great example is rent control. Sure it helps current tenants, but it distorts the rental market such that it disincentivizes putting new homes on the market, and the exact opposite of what you want - higher rents.

Higher rents and cheaper houses because they are being sold to the people who want to live in them rather than to someone who already has 5 houses.

Or you know, you could just build more housing.

The people hoarding empty houses will do anything they can to block this because it drops the value of their houses which they only own to sell at a higher price later

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