L.A. council members propose taxing landlords who leave homes vacant
latimes.com
latimes.com
People seem to forget that it was intended to prevent forcing people to move because the had capital appreciation but no income growth, and this disproportionately affected low and fixed income families.
“Jarvis was a lobbyist for the Los Angeles Apartment Owners Association—a group that stood to benefit hugely from decreased property taxes.”
https://la.curbed.com/2016/10/17/13304912/history-propositio...
Oh?
> but with exemptions for all residential property
Oh... So, nothing that applies to residential property (which is what the parent comment was talking about). Taxing some businesses is going to increase tax revenue but it won't fix the housing issue that's crushing most of us renters.
For those who want to see the initiative: https://ballotpedia.org/California_Tax_on_Commercial_and_Ind...
Short version. Had you chosen to rent out your house to someone else instead of living there yourself, you would have made a profit". You have to pay taxes on that value.
"But, hey stop wait a minute", you might say. "I am not renting out my house. I am actually living there all by myself."
Well sorry, that is irrelevant. You still have to pay taxes of that imaginary profit regardless if you live there or not.
The tax rule (in Danish) https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm
WTF? Yes, WTF but true.
What's the rationale?
At first blush, this sort of tax would seem to disincentivize home ownership but all countries listed on the article apart from Switzerland have higher rates than the UK/US.
Curiously, article doesn't mention Denmark, which does have slightly lower rates than UK/US.
https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
The real problem with homelessness in LA is that the street camping isn't being rolled back now that the terms of the 2007 settlement with the ACLU have been fulfilled. Instead the slums are being normalized. Shelters aren't even full. It makes homelessness an increasing lifestyle choice at a time when unemployment is reaching multi-decade lows.
We need to put a permanent hard ban on street camping and work backwards from that to handle the humanitarian needs of the population.
https://www.kqed.org/news/11668623/why-do-thousands-of-l-a-s...
I think this is a very optimistic view of what would happen.
Zoning laws are not perfect but without them there would be a race to the bottom and the public left to pay for the externalities.
edit:
I might be wrong on this but I think that Victorian England kind of points towards what would happen
I know it's not 100% applicable but ...
http://blog.urbanleasing.com/five-ways-houstons-lack-of-zoni...
Given the size of LA, it’s not unlikely that 100k homes is the result of the normal dynamic equilibrium of the city, in other words, these 100k homes are not the same as two months ago, even if the number is quite stable.
My feeling is that these taxes will achieve nothing, and might even raise the cost of rentals, pricing out even more people.
1- https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-sei...
War on poverty? Just give them a house and food. War on drugs? Just let a doctor administer a safe dose that doesn't make them high. War on Terrorism? Fund their education system and foster good relationships with those countries instead of bombing them.
There are obvious reasons why those solutions haven't been implemented: the population is happy with the way things are going.
Related: http://cityobservatory.org/housing-cant-be-affordable_and_be...
The need for city services (which property taxes fund) tends to scale more with population size, than with land area.
The same applies to landowners who leave land vacant or underdeveloped when they could develop it into an apartment that alleviates the housing crisis.
It also makes sense to tax landlords who charge market rents. While tenants suffer from the shortage, it is landlords who reap unearned windfalls. While vacant property owners waste value every month that could benefit society, landlords capture that value for themselves, so the city should take a cut.
And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords.
If we combine these 4 taxes, we would have a pretty good system for encouraging vacant landowners to use their land efficiently while also raising revenue from the landlords who benefit from the crisis. But then we would realize that the simpler solution is a higher, fairer property tax to begin with (by repealing Proposition 13).
Never understood that part. Why would we want to "remove the inequality between owner-occupiers and landlords"? What inequality anyway, since landlords often already are owner-occupiers themselves, with extra properties they rent out?
In US income taxes, the inequality exists to this day. Owner-occupiers get to keep their rental income without paying taxes that landlords would have to pay (though landlords get to deduct maintenance), in effect taxing poorer renters at a higher rate than wealthier homeowners. When someone buys a house instead of renting, he gets an implicit tax deduction on the imputed rent that renters+landlords aren’t allowed to take.
So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
[1]: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation
[2]: Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008
> if he and his neighbor decided to rent their house to each other (with zero net change in income after rent), then he would pay the tax as a landlord
If I sold something to you only to immediately buy it back, we'd both pay a tax on the transaction. But this kind of transaction makes no sense anyway, why would anyone want to do it?
The Vox article gives an example of a cross-city house rent, but that's essentially tax evasion scenario. Is it worth trying to fight it by just making everyone obligated to pay the tax?
> If you own a home in the United States, it really pays to live in it rather than to use it as an income-generating asset that helps you afford to rent to live somewhere else.
This may be the core philosophical difference, and I may be wrong about this, but: isn't this situation good? Shouldn't people be encouraged to own a home and actually live in it?
> In my capacity as landlord, I allow myself to live rent-free in my own home rather than explicitly charging myself rent that would be taxed as income.
I've heard this line of thinking before, and it always sounded to me like ridiculous mental gymnastics. Should I pay tax on my phone, or dishwasher, or clothes, or every other thing I own, just because I'm theoretically renting it to myself for free?
> So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
> Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
Yes, my point in this thread was that individual taxes on vacant, rental, and imputed rental property are more complicated than a tax on the land value (except that Proposition 13 prevents us from increasing property value taxes).
California needs to revamp zoning laws and fix the mess that those laws created.
Just ask the utility companies how much electricity and water are being used. No spying required.
I'm sure there would be people that would try to work around the system, same as with every other law.
FYI - your pitch is equivalent to spying on call metadata vs content, which has been proven to be dangerous enough
How will this be difficult to fake? Just run timers on some appliances, or buy up cheap cryptomining gear that mines at negative ROI and run it.
Next up: captchas to turn on the stove. "We need to make sure you're a human that wants to prepare food and not just a weird property owner that wants to pretend that somebody lives here".
Very easy, but it'd be tax evasion which is a serious crime.
Most taxes are pretty trivial to evade if you put some thought in to it. Very few people bother because the reward doesn't outweigh the risk. Saving a few tens of thousands of dollars a year isn't worthwhile if the penalty for being found out is losing everything you saved and years in prison. It's actually one of the few places in criminal law where the penalty actually works as a deterrent.
See bidgely.com for one example.
On that measure, they calculated something like 16% of investment properties were vacant.
https://www.afr.com/real-estate/residential/vic/investors-ke...
"""Land tax applies to residential properties that are not used as principal places of residence, including all residential properties owned by a trust or corporation. Land tax does not apply to commercial properties."""
I bet Melbourne already has entrepreneurs selling the installation of this "water surveillance solution" at value pricing: a fraction of the saved occupancy tax!
Of course some people would still infringe law (#Balkany) but most would not.
I the special case of France: such a law would be really easy to apply, at or least it would without Macron's changes: as everybody living somewhere was paying the «taxe d'habitation», every house without anyone paying for inhabiting it is an empty house. And in practice, with the suppression of the «taxe d'habitation», cities could just raise the level for the «taxe foncière» and it would have the same effect as a taxe on empty houses, without any special work to do.
Prop 13 essentially broke the concept of property tax in California.
Prop 13 incentivizes not moving, and it only gets better the longer you dont move
Are you referring to the almost comically small property tax reduction for primary residences? Or to the mortgage interest deduction?
Well, if they catch you, depends on the fine, you'll pay them all at once. They don't have to catch all, just make example of a few.
Or you can check if it was anyone's primary (and thus, tax) residence at any point in the year prior. Or check the utility consumption. Etc.
1. Remove the property's Prop 13 protection, ratcheting the assessed value of the home up to its actual market value.
2. Double the resulting property tax.
3. Remove the owner's ability to deduct any mortgage interest on that property from their income taxes.
Attempting to would introduce an unnecessary loophole, as the stated aim would seem to include speculators with empty houses.
If you are correct, then the thief is not the private owner. It is the government that refuses to make it easier to build more houses.
I'm obviously not a Constitutional Scholar but how does this a) deprive people of property (it's just taxing empty ones) and b) not come under 'due process of law' (will be voted on by the public)?
Also can't see how it falls under "eminent domain" since the Government isn't seizing these properties - you can still have an empty property, you just can't do it consequence-free.
There might be numerous reasons for the vacancy, but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference. Everything else is the government imposing what one does with their private property, which is overstepping it's jurisdiction, especially when the property's use is fully compliant with decades old law
to you.
> Everything else is the government imposing what one does with their private property
But they already do that with "decades old law" - e.g. you (probably) can't run a brothel from your private property in LA. Why is this such a different restriction?
I'm a little confused why this question would arise. Use of property, private or otherwise, for illegal use is, well, illegal. Your example cleanly falls under the illegal classification.
I would like to note that the city council is penalizing private property owners under the assumption of malice, and not in good faith. They've unburdened themselves from proving malice, which is a sneaky encroachment of jurisdiction that they aren't entitled to.
The myopic view that it's all about the owner is wrong to the point of narcissism.
It's never just about the owner. It's about the web of relationships in which these transactions and claims happen, and the effects they have on the rest of the web.
This isn't true from the perspective of the legal system and isn't true from the natural law framework on which US common law is based.
That's not the case for this proposal: they simply have different tax rates for different situations.
There are many other ways today in which tax treatment depends on property was used or based on assumptions by the IRS that the tax payer must prove when challenged.
For example: if you sell a house today, you can get favorable tax treatment if during the last 5 years before the sale, you've used it as your primary residence for at least 2 years.
If you didn't, no problem, no malice, you just don't get to benefit from that tax benefit.