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> you also imposed a slow-start exponential-growth land-value tax based on how long you've held a given piece of real estate Since the growth is exponential, i

> you also imposed a slow-start exponential-growth land-value tax based on how long you've held a given piece of real estate Since the growth is exponential, if the pain becomes too great after N years, then everyone is forced to sell after N years. Looks suspiciously like a fixed-term lease, no? So instead of price controls on real estate, now we've gotten rid of real estate altogether and just have price controls on rental rates. This is one reason why mixing a command economy with markets is tricky, btw. Once you start down the rabbit hole of using coercion instead of price signals to get people to do things, you'll find you need to use more and more coercion (whether strange taxes or more draconian measures) to make things work.

bufordsharkley 10y ago
> Since the growth is exponential, if the pain becomes too great after N years, then everyone is forced to sell after N years. This is why a real land-value tax wouldn't simply grow, but would rather reflect the current market value of the land.
derefr 10y ago
I do agree with everything you're saying here. It just seems to me that "people holding onto things that are serving them no use, making a market illiquid" is exactly the sort of thing a government would want to disincentivize, and taxes are how governments disincentivize things. (Sometimes without thinking about that consequence, like with income tax, but I digress.) The interesting thing here, to me, is that the government wouldn't want to control allocation as in a command economy; instead, they merely want to punish people for making the market inefficient. They want the market to clear, so that they don't have to figure out how to centrally allocate anything. We already have a lot of government regulations with this explicit goal. I'd be shocked if we couldn't work one out for real estate.
- smallnamespace 10y ago
  I think it's wise to distinguish between efficiency and fairness. The SF real estate market right now is quite efficient; houses and condos sell quickly at the going market rate, but you might find the effect on the allocation of housing to be very unfair in that some people have much easier access to housing than others. Price controls favor fairness over efficiency; e.g. selling bread below market price means everyone waits in line, which is by definition inefficient. It is fair, however, in that both rich and poor wait equally. > They want the market to clear That's what I mean by compulsion begetting compulsion -- the market clears just fine right now, but price and/or rent controls will probably make it not clear, at which point you need to add other taxes to force it to clear again.

bufordsharkley 10y ago

> Since the growth is exponential, if the pain becomes too great after N years, then everyone is forced to sell after N years. This is why a real land-value tax wouldn't simply grow, but would rather reflect the current market value of the land.

derefr 10y ago

I do agree with everything you're saying here. It just seems to me that "people holding onto things that are serving them no use, making a market illiquid" is exactly the sort of thing a government would want to disincentivize, and taxes are how governments disincentivize things. (Sometimes without thinking about that consequence, like with income tax, but I digress.) The interesting thing here, to me, is that the government wouldn't want to control allocation as in a command economy; instead, they merely want to punish people for making the market inefficient. They want the market to clear, so that they don't have to figure out how to centrally allocate anything. We already have a lot of government regulations with this explicit goal. I'd be shocked if we couldn't work one out for real estate.

smallnamespace 10y ago
I think it's wise to distinguish between efficiency and fairness. The SF real estate market right now is quite efficient; houses and condos sell quickly at the going market rate, but you might find the effect on the allocation of housing to be very unfair in that some people have much easier access to housing than others. Price controls favor fairness over efficiency; e.g. selling bread below market price means everyone waits in line, which is by definition inefficient. It is fair, however, in that both rich and poor wait equally. > They want the market to clear That's what I mean by compulsion begetting compulsion -- the market clears just fine right now, but price and/or rent controls will probably make it not clear, at which point you need to add other taxes to force it to clear again.