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Tax hikes aren't a way to lower housing costs. You don't make something cheaper by taxing it.

by dkopi 10y ago

benzofuran 10y ago
If the tax disincentivizes boomers from buying real estate at asinine prices and then seeking rents to pay the resulting mortgages as an alternative to the stock market, then that should make property cheaper as it reduces the demand.
- dkopi 10y ago
  In a market with limited supply, taxing homes for rent will raise rents to cover the additional taxes. You don't solve a supply problem by adding taxes. If anything, that will reduce the supply even more.
  - Grishnakh 10y ago
    No, you need to massively jack up taxes to increase supply, and it will work. But you don't jack up taxes on homes for rent, you jack them up on the homes that aren't for rent: houses which are just sitting unoccupied. The taxes will encourage the owners to either rent them out or simply sell them off to someone who will (or who will at least live there). That increases supply.
Johnny555 10y ago
Yeah, I didn't get his logic, landlords don't pay property taxes, tenants do (though the tax benefit goes to the landlord). Raising the cost to landlords in an sellers market like SF is just going to drive up rents - and Landlords will certainly be able to pass through their higher costs even to rent controlled tenants.
Grishnakh 10y ago
In some cases, you can. One apparent problem in SanFran (and I've heard of it in NYC too) is unoccupied properties, which could be used for housing but aren't because their owners prefer to just sit on it and not use it at all (maybe it's a vacation residence or they're speculating its value will rise). If you stick a massive tax on that, that deters that kind of behavior, and forces them to either rent out the property, or sell to someone who will either live in it or rent it out. This will increase the housing supply, which would then decrease the cost of housing overall by providing more supply and more competition. This wouldn't be a tax that people would actually pay, unless they're stupid; they would take steps to avoid paying the tax altogether. Taxes don't make stuff more expensive: they deter behavior. The simple rule is: if you want less of something, tax it. Now, this isn't always true, but to an extent it usually is, especially for consumption. (It's not really true of income taxes usually; everyone usually wants more income, and needs some amount of income, so a tax on that income doesn't discourage that, unless the tax is so high or so wacky that it discourages working for additional income.) Here, we want people to stop leaving properties unoccupied, so we slap a giant tax on that so they'll stop doing it.

Tax hikes aren't a way to lower housing costs. You don't make something cheaper by taxing it.

by dkopi 10y ago

Tax hikes aren't a way to lower housing costs. You don't make something cheaper by taxing it.

If the tax disincentivizes boomers from buying real estate at asinine prices and then seeking rents to pay the resulting mortgages as an alternative to the stock market, then that should make property cheaper as it reduces the demand.

dkopi 10y ago
In a market with limited supply, taxing homes for rent will raise rents to cover the additional taxes. You don't solve a supply problem by adding taxes. If anything, that will reduce the supply even more.
- Grishnakh 10y ago
  No, you need to massively jack up taxes to increase supply, and it will work. But you don't jack up taxes on homes for rent, you jack them up on the homes that aren't for rent: houses which are just sitting unoccupied. The taxes will encourage the owners to either rent them out or simply sell them off to someone who will (or who will at least live there). That increases supply.

Johnny555 10y ago

Yeah, I didn't get his logic, landlords don't pay property taxes, tenants do (though the tax benefit goes to the landlord). Raising the cost to landlords in an sellers market like SF is just going to drive up rents - and Landlords will certainly be able to pass through their higher costs even to rent controlled tenants.

Grishnakh 10y ago

In some cases, you can. One apparent problem in SanFran (and I've heard of it in NYC too) is unoccupied properties, which could be used for housing but aren't because their owners prefer to just sit on it and not use it at all (maybe it's a vacation residence or they're speculating its value will rise). If you stick a massive tax on that, that deters that kind of behavior, and forces them to either rent out the property, or sell to someone who will either live in it or rent it out. This will increase the housing supply, which would then decrease the cost of housing overall by providing more supply and more competition. This wouldn't be a tax that people would actually pay, unless they're stupid; they would take steps to avoid paying the tax altogether. Taxes don't make stuff more expensive: they deter behavior. The simple rule is: if you want less of something, tax it. Now, this isn't always true, but to an extent it usually is, especially for consumption. (It's not really true of income taxes usually; everyone usually wants more income, and needs some amount of income, so a tax on that income doesn't discourage that, unless the tax is so high or so wacky that it discourages working for additional income.) Here, we want people to stop leaving properties unoccupied, so we slap a giant tax on that so they'll stop doing it.