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Comment by scarface74 | Hacker News Reader

Does a person who owns a $1 million dollar home "consume" more resources than a person who owns a $200K home? What if the homes are the same but in different parts of the city?

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This is not a good argument. It would be the equivalent of me asking: Does the trash pickup service, repairing potholes or patrolling the street cost more if the home owner just moved in than if has own the house for 30 years?

Well, that does argue for my previous stated idea of charging every property owner the same fee for the same service.

Trash pickup is actually a great example. Where I live it’s not part of your property taxes. It’s a separate bill and everyone pays the same amount.

The city council can set budgets for the different departments and set taxes based on the budget. Neighborhoods already do something similar via homeowner’s association fees and condo fees.

Yes.

How so?

Some land is more valuable than other land. Living on top of more valuable land consumes a more valuable resource.

You could make that argument about any property (e.g. art). I guess your definition of "consumption" is "having something someone else doesn't"? But that isn't what most people mean, I think.

Edit: I think a tax on imputed rent could maybe be considered a consumption tax, and it would indeed make sense for it to be higher or lower depending on the location of the property. But a tax on the value of the whole property is not, because it also captures the value of the property as an asset. So that's why I think your argument is too broad.

Imputed rent is (roughly) proportional the the value of the property, So a tax on one is the same as a tax on the other.

Yes, there's a consumption component and a non-consumption component. Of course when either component goes up the total goes up. But the tax is on the total value and therefore it's not a consumption tax.

Let's say that imputed rent is, on average, 10% of the total value of the property.

That makes a 10% tax on imputed rent the exact same thing as a 1% tax on the value of the property.

So your point is really just an argument about the rate, not an argument about the fundamentals of what is being taxed.

Note that property taxes tend to be a fraction of sales taxes for exactly this reason.

Yes, I understand this point but the ratio between rents and property values varies wildly. So yes you can compute an average ratio and say it is "equivalent" to a tax on imputed rent if you adjust by that ratio, just as you could average out the number of bathrooms in each house and say it is "equivalent" to a bathroom tax. But it's not a very compelling argument!

ratio between rents and property values varies wildly

Does it vary all that much within a specific property tax jurisdiction?

Sure! Here are some things that could cause the rent/value ratio to be significantly different for a single property:

- There is no usable building on your property.

- There are plans to build a highway through your neighborhood in five years.

- Amazon has announced plans to build an office in your neighborhood two years from now.

- There are harvestable (with further development) natural resources on your property.

Many of these have impacts on hypothetical future consumption, but hopefully you agree that a tax on anticipated future consumption indefinitely into the future is not a consumption tax.

I don't have data as to precisely how strong the correlation is, but I think it's pretty clear that it is not 1, and furthermore if we really wanted to tax imputed rent directly we could presumably do so (we'd have to guess what it is but the same challenge applies to valuations of properties that haven't sold recently). So I just don't think "consumption tax" is a good way to look at a tax that clearly captures, and is designed to capture, other things.

I don't have data as to precisely how strong the correlation is

I'm actually pretty curious now, and might be go looking for data. It's surely not precisely 1, but I bet it's not all that far off. Especially if you limit the sample to residences.

Your list of outliers is a good one (I particularly like the natural resources one), but I think they're probably mostly exceptions to the rule.

In the end though sure, property taxes aren't precisely consumption taxes. But they clearly aren't wealth taxes either. They're something in between and, I think, much closer to consumption that wealth.

I've really enjoyed thinking about the points you brought up. Thank you for doing that.

Thanks, I enjoyed the exchange as well. I am also curious about the correlation coefficient but could not find any details in the amount of time I had to put into it. I did get the feeling that there is substantial research in the area of what drives housing prices, though.

The land isn’t more valuable because of some inherent virtue of the land.

It’s only more valuable because tech bro’s want it.

You could say the same thing for almost all goods and services which are subject to consumption taxes.

The cost of police, fire fighters, schools, roads, etc. don’t go up with the value of the home. There is no reason that you couldn’t charge a flat rate to every property owner - including businesses.

The cost of all of these things do increase with the value of the home, because the labor required to do it gets more expensive. The individual house price doesn't contribute to this but overall housing costs do.

SF has had an explosion in property values and thus struggles to find teachers, firefighters and police officers at the salaries it's willing to pay.

Again why should those taxes be based solely on housing instead of or in addition to other types of wealth?

We could do that, but then it would be more like a poll tax or a head tax instead of a consumption tax.

How so, taxes are meant to fund the government and services they provide. Everyone who lives in a jurisdiction either consumes those government resources or we as a society have decided that it was in the common good to provide those services (ie education).

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