6 ms·

The behaviour of the politicians is not a baffling as the Reason authors make it seem. Money-making industries can be troublesome for their locales. When I li

The behaviour of the politicians is not a baffling as the Reason authors make it seem. Money-making industries can be troublesome for their locales. When I lived in London I thought it was a great city but felt there was "too much money" in it. I.e. finance people could drive up prices for the rest of us. But then again, it was that very money that made the place great. So while zero-sum leftism is silly, it is still in the interest of San Fransicans to try and grab some of the IT bonanza through taxes. A vindictive one-indsutry only tax is ugly, but property-value taxes would get right to the heart of the problem.

spectrum1234 10y ago
This doesn't support or explain the lack of supply which is the core problem.
- irq11 10y ago
  unless you take the other, equally valid perspective, where the huge demand bubble is the problem. that's the nice thing about the "law" of supply and demand: there are two ways to promote balance.
  - weberc2 10y ago
    It's not equally valid, there's a possible win-win scenario--increasing supply; instead SF opted for a zero-sum game.
    - bsimpson 10y ago
      It's in there interests of the people who bought housing under the current regime to block new supply. Otherwise, when prices come back to reasonable, they lose a gigantic amount of home equity.
      - irq11 10y ago
        It's in the interest of anyone who lives in the city, doesn't work in tech, and doesn't make enough money to compete with those who do. That covers most renters. Tech workers have this Napoleon complex going on where they react as if they're still in the high school cafeteria, being pushed around by the folks at the top of the social hierarchy. Times have changed. It isn't "NIMBYs" or politicians or rich landowners or anyone else who caused the SF housing crisis: it is, quite objectively, the fault of way too many wealthy workers, crammed into a tiny space, in a few years' time. There's an easy demand-side fix for that problem, but yeah, it isn't going to please people who work in tech.
        Decade 10y ago
        These high prices are definitely not in tech’s interest. The way I see it, tech is the only way I can live here independently. Lucky that my brothers and I have the inclination for it. But even we have difficulty finding housing in this market. We look around, and it is the entrenched interests, the old money, that are holding us back, preventing new housing from being built. Despite appearances, techies are actually a small minority, especially in the voting population, and that’s how we still get pushed around. The market problem is that housing and transit have been growing very slowly, nowhere near what is needed, and not matching the growth in jobs and office space. The problem goes back decades, really taking off when Howard Jarvis passed Proposition 13, followed by Mayor, now Senator, Feinstein passing the rent control ordinance. The problems continue, as every significant housing development requires endless studies and community input before it gets built; in the meanwhile the market has risen again. When I was growing up, San Francisco was actually very anti-tech. Startups were always fleeing to the Valley when they became successful. Still, housing prices were high and rising; housing was ridiculously difficult to build. I remember the case of somebody buying an empty lot, just a normal-house-size rectangle in a normal-size block. It took many years of studies and litigation and multiple architectural plans before it could get built, and I don’t know if the owner ever succeeded. It’s hard to find the article again when the Google results are packed full of plenty of other, bigger, projects that are facing unfair difficulties. Likewise, there’s now a lovely new library building at North Beach, but Aaron Peskin (one of the politicians implicated in the Reason piece) used eminent domain to prevent that land from being turned into affordable housing, with the excuse that it should be a park. It lay fallow until he was term-limited out of the way and later supervisors at least built a library there. And then the old North Beach library is still sitting there, retroactively declared to be a historic landmark, so that is a suboptimal use of space. Tech only sped up an existing, broken process. If even the Huffington Post is posting about the multi-decade housing problem, then maybe, just maybe, it’s not the techies’ fault. http://www.huffingtonpost.com/entry/san-francisco-housing-crisis_us_5750a95ee4b0eb20fa0d682e http://www.huffingtonpost.com/entry/san-francisco-housing-cr...
  - friendlygrammar 10y ago
    Only a San Francisco politician would consider demand a problem.
  - deleted 10y ago
    [deleted]
electic 10y ago
I believe Prop 13 forbids the property-value taxes you are suggesting. This is the main reason why cities are not incentivized to build housing. The rather build office buildings, malls, etc. There is just more money in it.
- adrianratnapala 10y ago
  I don't know anything about Californian law except what I read in comment threads on the interweb. But I have heard that Prop 13 capped the absolute amount paid. So a new home or a new resident in an old one could pay a tax proportional to the high land value when the transaction happened. Wouldn't that create an incentive to encourage such transactions?
  - electic 10y ago
    The Environment Prior to Proposition 13 Prior to Proposition 13, the property tax rate throughout California averaged a little less than 3% of market value. Additionally, there were no limits on increases for the tax rate or on individual ad valorem charges. (“Ad valorem” refers to taxes based on the assessed value of property. ) Some properties were reassessed 50% to 100% in just one year and their owners’ property tax bills increased accordingly. Proposition 13 Tax Reform Under Proposition 13 tax reform, property tax value was rolled back and frozen at the 1976 assessed value level. Property tax increases on any given property were limited to no more than 2% per year as long as the property was not sold. Once sold, the property was reassessed at 1% of the sale price, and the 2% yearly cap became applicable to future years. This allowed property owners to finally be able to estimate the amount of future property taxes, and determine the maximum amount taxes could increase as long as he or she owned the property.
    - njloof 10y ago
      Exactly. I don't think you can talk about rent control in California without acknowledging property tax control. In the long term, this reduces landlords' expenses, which is a savings they ought to be able to pass on to their renters.
mahyarm 10y ago
London also has another problem, non-domiciled residents who only have to pay a flat fee income tax on global income and a non-existent property tax scheme. The combo leads to an explosion of real estate as bank account and very wealthy people moving into the key city of London, making it impossible for even the upper middle class salaried briton to buy property. You might as well call the entire UK rainy Monaco. On top of that, the finance types have been there for quite a while, but it's only in the recent few decades that have made london extra crazy. Other regions of the USA have had economic booms, but it hasn't ended up with hyper growth in property prices because they have less supply restrictions in development.
- 0max 10y ago
  I literally just saw a Russell Brand documentary on this. To be fair it was more galvanizing than factual.
  - mahyarm 10y ago
    As long as the non-dom resident income tax rule is real, that is enough to attract the non-british super rich to the UK in droves. And we know the lack of property tax rule is real.
larsiusprime 10y ago
Property-value taxes discourage people from building anything valuable on land and instead encourages them to hoard it hoping the value will go up, or to sprawl development outwards. Land-value taxes (tax on the unimproved value of the land, ignoring whatever's built on it) help to capture the ground rent -- the value that's gone up because of what everyone around it is doing (ie, the positive externalities generated by the community rather than the landowner) -- without discouraging the land owner from building densely on it, which is precisely what we should be encouraging people to do if we want to solve the housing crisis.
- adrianratnapala 10y ago
  Good point. As a technical matter. Once a property is built on, how do you distinguish between land value and the building value-add without some arbitrary valuation?
  - smallnamespace 10y ago
    Hopefully there are still unoccupied lots that are comparable. Otherwise it's pretty much whatever number the tax man decides. Note that in many jurisdictions property tax values are only assessed periodically.
  - clairity 10y ago
    my opinion is that valuation is always subjective, but there's a whole industry and a whole field of economics dedicated to answering that question. conceptually, land value is just market price of the property minus building cost. building cost is a little more objective to estimate than market price but it's not an exact science either (i formerly product managed the cost estimator used by most US taxing jurisdictions and many international ones).

spectrum1234 10y ago

This doesn't support or explain the lack of supply which is the core problem.

irq11 10y ago
unless you take the other, equally valid perspective, where the huge demand bubble is the problem. that's the nice thing about the "law" of supply and demand: there are two ways to promote balance.
- weberc2 10y ago
  It's not equally valid, there's a possible win-win scenario--increasing supply; instead SF opted for a zero-sum game.
  - bsimpson 10y ago
    It's in there interests of the people who bought housing under the current regime to block new supply. Otherwise, when prices come back to reasonable, they lose a gigantic amount of home equity.
    - irq11 10y ago
      It's in the interest of anyone who lives in the city, doesn't work in tech, and doesn't make enough money to compete with those who do. That covers most renters. Tech workers have this Napoleon complex going on where they react as if they're still in the high school cafeteria, being pushed around by the folks at the top of the social hierarchy. Times have changed. It isn't "NIMBYs" or politicians or rich landowners or anyone else who caused the SF housing crisis: it is, quite objectively, the fault of way too many wealthy workers, crammed into a tiny space, in a few years' time. There's an easy demand-side fix for that problem, but yeah, it isn't going to please people who work in tech.
      - Decade 10y ago
        These high prices are definitely not in tech’s interest. The way I see it, tech is the only way I can live here independently. Lucky that my brothers and I have the inclination for it. But even we have difficulty finding housing in this market. We look around, and it is the entrenched interests, the old money, that are holding us back, preventing new housing from being built. Despite appearances, techies are actually a small minority, especially in the voting population, and that’s how we still get pushed around. The market problem is that housing and transit have been growing very slowly, nowhere near what is needed, and not matching the growth in jobs and office space. The problem goes back decades, really taking off when Howard Jarvis passed Proposition 13, followed by Mayor, now Senator, Feinstein passing the rent control ordinance. The problems continue, as every significant housing development requires endless studies and community input before it gets built; in the meanwhile the market has risen again. When I was growing up, San Francisco was actually very anti-tech. Startups were always fleeing to the Valley when they became successful. Still, housing prices were high and rising; housing was ridiculously difficult to build. I remember the case of somebody buying an empty lot, just a normal-house-size rectangle in a normal-size block. It took many years of studies and litigation and multiple architectural plans before it could get built, and I don’t know if the owner ever succeeded. It’s hard to find the article again when the Google results are packed full of plenty of other, bigger, projects that are facing unfair difficulties. Likewise, there’s now a lovely new library building at North Beach, but Aaron Peskin (one of the politicians implicated in the Reason piece) used eminent domain to prevent that land from being turned into affordable housing, with the excuse that it should be a park. It lay fallow until he was term-limited out of the way and later supervisors at least built a library there. And then the old North Beach library is still sitting there, retroactively declared to be a historic landmark, so that is a suboptimal use of space. Tech only sped up an existing, broken process. If even the Huffington Post is posting about the multi-decade housing problem, then maybe, just maybe, it’s not the techies’ fault. http://www.huffingtonpost.com/entry/san-francisco-housing-crisis_us_5750a95ee4b0eb20fa0d682e http://www.huffingtonpost.com/entry/san-francisco-housing-cr...
- friendlygrammar 10y ago
  Only a San Francisco politician would consider demand a problem.
- deleted 10y ago
  [deleted]

electic 10y ago

I believe Prop 13 forbids the property-value taxes you are suggesting. This is the main reason why cities are not incentivized to build housing. The rather build office buildings, malls, etc. There is just more money in it.

adrianratnapala 10y ago
I don't know anything about Californian law except what I read in comment threads on the interweb. But I have heard that Prop 13 capped the absolute amount paid. So a new home or a new resident in an old one could pay a tax proportional to the high land value when the transaction happened. Wouldn't that create an incentive to encourage such transactions?
- electic 10y ago
  The Environment Prior to Proposition 13 Prior to Proposition 13, the property tax rate throughout California averaged a little less than 3% of market value. Additionally, there were no limits on increases for the tax rate or on individual ad valorem charges. (“Ad valorem” refers to taxes based on the assessed value of property. ) Some properties were reassessed 50% to 100% in just one year and their owners’ property tax bills increased accordingly. Proposition 13 Tax Reform Under Proposition 13 tax reform, property tax value was rolled back and frozen at the 1976 assessed value level. Property tax increases on any given property were limited to no more than 2% per year as long as the property was not sold. Once sold, the property was reassessed at 1% of the sale price, and the 2% yearly cap became applicable to future years. This allowed property owners to finally be able to estimate the amount of future property taxes, and determine the maximum amount taxes could increase as long as he or she owned the property.
  - njloof 10y ago
    Exactly. I don't think you can talk about rent control in California without acknowledging property tax control. In the long term, this reduces landlords' expenses, which is a savings they ought to be able to pass on to their renters.

mahyarm 10y ago

London also has another problem, non-domiciled residents who only have to pay a flat fee income tax on global income and a non-existent property tax scheme. The combo leads to an explosion of real estate as bank account and very wealthy people moving into the key city of London, making it impossible for even the upper middle class salaried briton to buy property. You might as well call the entire UK rainy Monaco. On top of that, the finance types have been there for quite a while, but it's only in the recent few decades that have made london extra crazy. Other regions of the USA have had economic booms, but it hasn't ended up with hyper growth in property prices because they have less supply restrictions in development.

0max 10y ago
I literally just saw a Russell Brand documentary on this. To be fair it was more galvanizing than factual.
- mahyarm 10y ago
  As long as the non-dom resident income tax rule is real, that is enough to attract the non-british super rich to the UK in droves. And we know the lack of property tax rule is real.

larsiusprime 10y ago

Property-value taxes discourage people from building anything valuable on land and instead encourages them to hoard it hoping the value will go up, or to sprawl development outwards. Land-value taxes (tax on the unimproved value of the land, ignoring whatever's built on it) help to capture the ground rent -- the value that's gone up because of what everyone around it is doing (ie, the positive externalities generated by the community rather than the landowner) -- without discouraging the land owner from building densely on it, which is precisely what we should be encouraging people to do if we want to solve the housing crisis.

adrianratnapala 10y ago
Good point. As a technical matter. Once a property is built on, how do you distinguish between land value and the building value-add without some arbitrary valuation?
- smallnamespace 10y ago
  Hopefully there are still unoccupied lots that are comparable. Otherwise it's pretty much whatever number the tax man decides. Note that in many jurisdictions property tax values are only assessed periodically.
- clairity 10y ago
  my opinion is that valuation is always subjective, but there's a whole industry and a whole field of economics dedicated to answering that question. conceptually, land value is just market price of the property minus building cost. building cost is a little more objective to estimate than market price but it's not an exact science either (i formerly product managed the cost estimator used by most US taxing jurisdictions and many international ones).