4 ms·

A fair approach is the Swiss one. Every property is taxed as if it is rented out at market rates, no matter whether it is rented, owner-occupied, or vacant. On

A fair approach is the Swiss one. Every property is taxed as if it is rented out at market rates, no matter whether it is rented, owner-occupied, or vacant. On the other hand there are (almost) no taxes on the value of the property. This removes most distortions in the rental market.

dajohnson89 10y ago
How is market rate determined without one party feeling slighted?
- cjlars 10y ago
  They do fairly comprehensive land value + structure value assessments for property tax in many US states. Basically they collect data on every property like square footage of building, size of plot, age of structure, etc and do a regression based on comparables in the area where the real price is known. It's not perfect for every property, but is a fairly straightforward analysis. Individuals can challenge the model's output if it's too far off. The same method could easily be adjusted for rental rates.
firethief 10y ago
That's not fair if rental availability is a positive externality, though Switzerland may not have the absentee investor problem that makes the difference matter there.
- pzone 10y ago
  Rental availability is no more a positive externality than the availability of frozen spinach at the grocery store is.
pzone 10y ago
That's a beautiful solution. Why is it so hard to get intelligent legislation like this passed in the USA?
- pjc50 10y ago
  Switzerland has much more of a sense of unity than the US, which is perpetually at war with itself. It's also surprisingly egalitarian, or at least against conspicuous inequality; you can accumulate a fortune in a Swiss bank, but you can't build a mansion that annoys your neighbors.
  - kgwgk 10y ago
    Switzerland also has less population than New Jersey and it's less than twice as large.
    - dopamean 10y ago
      Being in a smaller country seems great sometimes.
      - harryh 10y ago
        The original vision for the US had relatively powerful small states and a relatively less powerful federal government. There are a lot of reasons to think this is still a pretty good idea.
harryh 10y ago
This is called https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent if anyone is curious to learn more.
spangry 10y ago
This would be great tax policy. Unfortunately the 'conventional wisdom' among the leadership caste in my country (Australia) is that this would be political suicide. Pretty much every Prime Minister for the last 15 years has repeated the same mantra like it's some sort of compulsive nervous twitch: 'we would never place a tax on the family home'. Bunch of jelly-backs. One nit to pick: even with imputed rent, without a land rent tax the property market would continue to distort incentives and mis-allocate capital. Meaning we will continue to see 'investors' chasing capital gains instead of yields (the literal definition of 'speculating'), funded almost exclusively with bank debt. Unless our political leaders grow a spine (and, in many cases, a brain), we'll continue to lurch from one financial crisis to the next as a consequence... The next one is shaping up to be epic. Like, "it's time for WWIII" epic...
- SilasX 10y ago
  For me, it doesn't seem logical to tax imputed rent but not any other capital good that saves you money from renting the equivalent good. If you own a car, why not tax the imputed income (net of purchase costs) from not having to rent a car? If you own sports equipment, should you be taxed on the imputed income you could have gotten from renting it out? If you're married ...

dajohnson89 10y ago

How is market rate determined without one party feeling slighted?

cjlars 10y ago
They do fairly comprehensive land value + structure value assessments for property tax in many US states. Basically they collect data on every property like square footage of building, size of plot, age of structure, etc and do a regression based on comparables in the area where the real price is known. It's not perfect for every property, but is a fairly straightforward analysis. Individuals can challenge the model's output if it's too far off. The same method could easily be adjusted for rental rates.

firethief 10y ago

That's not fair if rental availability is a positive externality, though Switzerland may not have the absentee investor problem that makes the difference matter there.

pzone 10y ago
Rental availability is no more a positive externality than the availability of frozen spinach at the grocery store is.

pzone 10y ago

That's a beautiful solution. Why is it so hard to get intelligent legislation like this passed in the USA?

pjc50 10y ago
Switzerland has much more of a sense of unity than the US, which is perpetually at war with itself. It's also surprisingly egalitarian, or at least against conspicuous inequality; you can accumulate a fortune in a Swiss bank, but you can't build a mansion that annoys your neighbors.
- kgwgk 10y ago
  Switzerland also has less population than New Jersey and it's less than twice as large.
  - dopamean 10y ago
    Being in a smaller country seems great sometimes.
    - harryh 10y ago
      The original vision for the US had relatively powerful small states and a relatively less powerful federal government. There are a lot of reasons to think this is still a pretty good idea.

harryh 10y ago

This is called https://en.wikipedia.org/wiki/Imputed_rent https://en.wikipedia.org/wiki/Imputed_rent if anyone is curious to learn more.

spangry 10y ago

This would be great tax policy. Unfortunately the 'conventional wisdom' among the leadership caste in my country (Australia) is that this would be political suicide. Pretty much every Prime Minister for the last 15 years has repeated the same mantra like it's some sort of compulsive nervous twitch: 'we would never place a tax on the family home'. Bunch of jelly-backs. One nit to pick: even with imputed rent, without a land rent tax the property market would continue to distort incentives and mis-allocate capital. Meaning we will continue to see 'investors' chasing capital gains instead of yields (the literal definition of 'speculating'), funded almost exclusively with bank debt. Unless our political leaders grow a spine (and, in many cases, a brain), we'll continue to lurch from one financial crisis to the next as a consequence... The next one is shaping up to be epic. Like, "it's time for WWIII" epic...

SilasX 10y ago
For me, it doesn't seem logical to tax imputed rent but not any other capital good that saves you money from renting the equivalent good. If you own a car, why not tax the imputed income (net of purchase costs) from not having to rent a car? If you own sports equipment, should you be taxed on the imputed income you could have gotten from renting it out? If you're married ...