> The point is that everything is always implicitly on the market at all times.
I understand that point; but that's not what GGP said. He explicitly laid out:
1. Government benefiting from "overpricing". But there's no "overpricing" if the tax is set assuming you're going to add a large multiple to the declared value. If the institution setting the pricing assumes that a $100k house is going to be priced at $200k (or $500k), then they can set the tax rate appropriately.
2. Investors performing arbitrage: i.e., someone sets the declared tax value at $100k, market value of house goes up to $110k, investor buys house for $100k and "flips" for a quick 10% profit. But if it's expected that a $100k house is going to be listed for $200k (or $500k), then that problem goes away -- nobody is going to buy a $200k house that hey can only sell for $130k. And nobody's property is going to go up 5x in a single year.
Or alternately, you have people declare it at the market rate of $100k, but then write into law that anyone can sell it for 5x. The math works the same, but people feel less cheated for having to "overvalue" their house. (And people have less sympathy for those who write down a "declared tax value" of $25k on their $100k house.)
What happens if your house goes up 5x in market value, to the point where you either have to sell or can't afford the taxes? Well that already happens, and it's not great, but there's an argument that this is an inefficient allocation of resources. I understand why a 90-yer-old lady wants to live alone in her 4-bedroom family home a few block from downtown, but is that really better for society as a whole?
And if, as a society, we really want to protect that situation, we could always make an exception for a single house that you're currently occupying (as is already done for lots of things -- treating second+ properties different than first properties).
> When you're talking about people's home then obviously this would not be a practical system for many, many reasons
So taking into account the "sell for 5x" factor, other than the "you're forced to sell if you really can't afford it", what makes it not a practical system?
I'm genuinely interested -- this idea has been kicking around my head for some time, and the main thing I like about it is that it makes taxation symmetric. The problem I have with taxation in general is that I recognize that it's necessary, but the way it's normally done, by taxing money moving around (i.e., sales, income, and estate taxes) always seemed kind of arbitrary to me. Since property is depriving society of some potentially shared resource, and taxation is paying society for shared resources, having those be symmetric has a satisfying property to me.