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COST model popularized by Glen Weyl and Eric Posner would be perfect tax for these kind of assets. COST is a form of Harberger Tax that ensures that the t prope

COST model popularized by Glen Weyl and Eric Posner would be perfect tax for these kind of assets. COST is a form of Harberger Tax that ensures that the t property is more productively utilized by the society. This is how COST works: 1. The owner can determine what the value of the asset is. They can over or underestimate the value as much as they want. 2. The owner pays some percentage of that valuation as tax. If they value the asset very low, they pay very little taxes. 3. The catch. Anyone can buy the property at any time at the owner determined valuation. If you don't want anyone to buy your assets, you must value it more than other people and and pay taxes for the value. EDIT: It seems that many people think that COST type private property tax would extend to personal property or could be applied without modification to housing for poor people etc. Personal possessions are not taxed in any place of the world and tax deduction make sure that small personal properties can be owned without paying tax. The system requires some adjustments, for example property taxation might be somewhat different. Vitalik Buterin discusses these issues in his review of the book: https://vitalik.ca/general/2018/04/20/radical_markets.html https://vitalik.ca/general/2018/04/20/radical_markets.html

chii 7y ago
> Anyone can buy [it] i think that can open up some issues with people's assets that also have sentimental value. I think instead of "anyone", it should be just the govt. If your appraisal seems too low, then the gov't reserves the right to purchase the asset instead of charging you the owed tax.
- RepAgent 7y ago
  Is there a reason why sentimental value should not be taxed? I mean, you would not extend the taxation to personal holdings with little value or moderate value (automatic tax deduction of $2,000 per person from COST would probably be enough) but if someone wants to keep something very valuable for sentimental reasons, why the feeling should not have a value put on it?
  - barrkel 7y ago
    Because it gives wealthy people power to take things that poor people love.
    - RepAgent 7y ago
      As I said, there is no reason to extend tax to personal property. If poor people owns something valuable, they stop being poor when wealthy people take it. The distinction between personal property or personal possessions and private property is important to make and the line must be drawn.
      - yardstick 7y ago
        “If poor people owns something valuable, they stop being poor when wealthy people take it” Only if you accept the money given makes up for the loss. Money does not make someone rich. It may put bread on the table but that poor person is still poor because they lost what was important to them. Also the rich don’t get rich by paying more than they have to, which may not be what the property is worth to the original owner.
      - chii 7y ago
        > If poor people owns something valuable, they stop being poor when wealthy people take it. if you owned some land which could've been mined/fracked upon, then it might make economic sense for said company to purchase your land. You'd have to either pay an above average tax rate to justify holding on to the land, or be forced to sell it. On the one hand, it does make economic utilitarian sense. On the other hand, it prevents people from being able to control their own property. Esp. if they have no funds to fight or defend themselves.
        IG_Semmelweiss 7y ago
        You foeget eminent domain. The stack is already against the homeowner who lacks lobbyists to fight back This achieves more of a level playing field.
      - 7y ago
- Nition 7y ago
  Not just things with sentimental value but just anything you're still using as well. It sounds like you'd be living in fear any time you invited someone over that they'd start saying they'll buy your frying pan and your second couch or something. And you'd have to let them buy it. Then you have to go to the shops and buy new stuff... or just go over to their house the next day and buy it all back at the same price. Maybe see if they've got any other good stuff that isn't worth much while you're there. Or you could just buy it back immediately when they buy it from you, stuck in an infinite While loop of ownership.
  - ljf 7y ago
    Why would they want to buy your frying pan? Is the value you've given it very low, making it cheaper to buy yours than another one? Is there a shortage of frying pans, increasing the value of yours?
    - Nition 7y ago
      They see you have a good pan and want one that's the same. Buying yours is less effort than going to the shops and faster than ordering one. Obviously social decorum would usually prevent this scenario, but the fear of possibility remains.
    - puszczyk 7y ago
      Maybe that firing pan is owned by a rockstar ?
    - oconnor663 7y ago
      People are often angry with each other and eager to hurt each other in any legal way available. (Ask your friendly neighborhood divorce lawyer for their stories.) This sort "anyone can take your stuff if they're irrational enough" would be very easy to exploit to make someone's life miserable. And the problem only gets worse if you imagine a normal person making a very rich person angry.
      - deleted 7y ago
        [deleted]
- yardstick 7y ago
  I wouldn’t even trust the government with this ability. Also what will the government do with these assets? Hoard them forever? Or eventually sell them back into the market. I can imagine govt employees receiving kick backs for seizing assets this way and selling them to their friend.
  - lmm 7y ago
    > Also what will the government do with these assets? Hoard them forever? Or eventually sell them back into the market. I can imagine govt employees receiving kick backs for seizing assets this way and selling them to their friend. Presumably the government would auction them (as is done with seized proceeds of crime etc.). So there is no way to hand them off to a friend for a below-market price, and no way to profitably kickback.
    - sukilot 7y ago
      Auctions are already used today as a way for government and unethical entities to steal from the public. This is an epidemic in civil forfeiture for alleged crimes, and in property tax seizures for cash poor-homeowners.
      - lmm 7y ago
        The problem in those scenarios isn't the auction, it's the seizure without compensation.
- dragonwriter 7y ago
  Sentimental value is value and is factored in when declaring value; you are taxing the value to the owner. > I think instead of "anyone", it should be just the govt. If your appraisal seems too low, then the gov't reserves the right to purchase the asset instead of charging you the owed tax. For intellectual property (only), I've suggested in the past a version of this where anyone can buy it at the declared value, but it can only be bought into the public domain, which is sort of a hybrid of the anybody can buy and only the government can buy ideas. In the more general case, an alternative is “anyone can offer to buy with a bid at or above the declared value, but unless it is the government exercising eminent domain you can refuse by increasing the declared value above the bid, posting back taxes as if the declared value for the current tax year were the new value, and for prior years as if the value had increased on some legally defined schedule over a set window of years (say, 5) or since you acquired the item, whichever is shorter, including a time-based penalty for all the ubderpayments.”
- deleted 7y ago
  [deleted]
kolinko 7y ago
Sounds like a great idea. I have a noisy neighbor - this would allow me to finally get rid of him. Also, there is an old lady living in one apt since WW2, but she's short on cash. I guess I could grab her place too. She took a good care of it over the years, but made a mistake of not investing in crypto, so I can easily outbid her now.
- RepAgent 7y ago
  Almost all laws have exceptions for personal property and housing that is occupied. Automatic tax deduction takes car of the rest.
- sukilot 7y ago
  She can pay the tax via a lien on her property (payable at sale or death) or a reverse mortgage. This already happens today.
boomlinde 7y ago
That reminds me of the rules of Swedish folkrace (a sort of amateur rally). You can put as much value as you want into your car, but after the races anyone can buy it off you for 8000 SEK. That way the bar of entry is kept low and the odds are evened out.
- whenchamenia 7y ago
  Thats the standard 'claim' rule in many amatuer and professional motorsports. It used to be more popular.
- zepolen 7y ago
  I don't get it, can't you get a friend to buy it off you.
  - jzwinck 7y ago
    Not every game or sport has to devolve to angling for loopholes. Sure, get a friend to buy it, never be invited to compete again. Congratulations, you cheated to win a race almost nobody knows or cares about (if people did care so much about winning this race, they wouldn't think twice about "losing" a million bucks by openly over-spending).
    - dsfyu404ed 7y ago
      Angling for loopholes is a highly ingrained part of the sport of racing.
  - LanceH 7y ago
    Typically if more than one person puts in a claim on a winning car, there is a drawing.
  - boomlinde 7y ago
    Not just anyone, but everyone can file a claim to the car. In case several claims are made for the same car, the claimant that gets to purchase the car is picked at random.
michaelt 7y ago
So this database of everyone's valuables and how much they're appraised at - is it publicly available? I can't avoid getting bids by keeping it secret what I own? Do potential buyers have the right to inspect the thing they'd be buying?
dragonwriter 7y ago
> It seems that many people think that COST type private property tax would extend to personal property You just literally recommended it for an item of tangible personal property, so from your recommendation that's not an extension at all. > Personal possessions are not taxed in any place of the world Yes, ad valorem property taxes on items of personal property do exist in some jurisdictions in the world, including many in the United States. (E.g., California's Vehicle License Fee is an ad valorem tax on automobiles which are items of tangible personal property.) > and tax deduction make sure that small personal properties can be owned without paying tax. That doesn't make sense with the preceding claim: of personal property wasn't taxed, you wouldn't need any kind of deduction to allow owning it without paying tax. Also, deductions which allow this aren't in place where they would be needed (i.e., where certain items of personal property are taxed) to allow ownership without taxation.
- RepAgent 7y ago
  >You just literally recommended it for an item of tangible personal property, Yes. We all write somewhat inaccurately and carelessly in discussion groups. Instead of nitpicking each other, we should try to read each other favorably. What I mean is that there is classes of tangibles from pots and pans that one commentators was worried about into paintings worth of millions. It's concealable that at some valuations artifacts worth of millions are considered different asset classes.
  - dragonwriter 7y ago
    It seems to me that if you want to recommend this to be applied to some particular subset of tangible real property rather than the whole class, than rather than mocking the idea that your recommendation would extend to the existing category as a whole, you ought to actually define the subset to which you would propose applying it so that your actual proposal can be evaluated.
magicalhippo 7y ago
Say I bought a computer, which I use to do my work on. Then I have a dry spell with little work so I get poor and can't afford to buy a new computer. But it's ok cause I use the one I got. I still valuate the computer at or above market rates, because I need it. But what's preventing someone with more money than me from threatening to buy it from me unless I do X for them, or just to be a jerk? Without the computer I lose my ability to do my job, further driving me into poverty. Am I missing something here? edit: basically what I wonder is, what prevents this scheme from getting weaponized, and how does it deal with wealth asymmetry?
- RcouF1uZ4gsC 7y ago
  If you value it at or above market rates, then, by definition, whoever bought it from you would pay you enough money to buy another at market rate.
  - magicalhippo 7y ago
    Point taken. However that still leaves the possibility that I no longer am able to pay taxes according to current market rates. edit: Basically it assumes the object is available on the market, and it's available for the price I can afford to valuate it at. How does one prevent this tax scheme from being weaponized when one of those two assumptions are not valid?
AnthonyMouse 7y ago
In addition to the problems everyone else is pointing out, this also fails to account for labor, transaction costs and the variability of value based on relative ownership. Suppose I'm a wildlife photographer and I have a camera that unarguably has a market value of no more than $300 (it's what the manufacturer still sells it for). But I've positioned it deep in the Alaskan wilderness at the cost of 50 hours of labor and $15,000 in travel costs. Someone who wants to troll me demands to buy it for $300, requiring payment of those same costs again to retrieve it, and then does the same thing twelve more times, one month apart, for my twelve other cameras. Or I have a diamond as part of a laser. The diamond costs $100 but then it costs $10,000 to calibrate the laser, so someone who takes the diamond requires me to buy another for $100 and then pay another $10,000 to calibrate the laser again. Or you have a custom component which can't be manufactured in less than ten years, because it requires a slow chemical reaction, but is a small yet blocking component of a large million dollar operation. Notwithstanding that, it's cheap to make it, because you just start the reaction and come back in ten years. But now someone who wants to shut down your operation just buys that component from you (along with your five spares) for the $10 market value and your million dollar operation is shut down for ten years. For that matter, it can be used to monopolize the market for various commodities by offering the current market price for everything at once and then turning around to resell them for the monopoly price. Or members of your family own shares that total 60% ownership in a company, and I own the other 40%. You personally own 12%, which I demand to buy for the market price, even though I should be paying the higher price for a controlling interest. Or you've got a shelf full of equipment you use for your business operations, which your company manufactured itself and could quickly and inexpensively make more, but having access to any one of them would disclose millions of dollars worth of trade secrets to your competitors. Market value is a fiction that only really applies to high volume commodities.
chadash 7y ago
Say my name is John Smith and I inherit a Ferrari whose auction value is well established at $1 million. The first thing I do is claim the Ferrari for $800,000, taking it $200k under market. Immediately after that, I have John Smith engraved on some of the car components. Now, the car is in fact worth less than when I inherited it, because no one would be willing to pay as much for a John Smith engraved Ferrari. Maybe I didn't plan to sell it anyway, but it seems like I'm dodging the the taxes on the $200k difference here.
deleted 7y ago
[deleted]
gamblor956 7y ago
I'm not sure where you're getting your definition of personal property from, but for tax and legal purposes generally all tangible goods that aren't permanently fixed in place are considered "personal property." So basically everything physical except for buildings and fixtures. So as described in your comment, COST would apply to personal property. Also, personal property owned by a business is taxed in California (under the business property tax) and generally in some European countries, some South American countries, and India. That doesn't include the countries that impose wealth taxes, which includes items that would be considered personal property.

chii 7y ago

> Anyone can buy [it] i think that can open up some issues with people's assets that also have sentimental value. I think instead of "anyone", it should be just the govt. If your appraisal seems too low, then the gov't reserves the right to purchase the asset instead of charging you the owed tax.

RepAgent 7y ago
Is there a reason why sentimental value should not be taxed? I mean, you would not extend the taxation to personal holdings with little value or moderate value (automatic tax deduction of $2,000 per person from COST would probably be enough) but if someone wants to keep something very valuable for sentimental reasons, why the feeling should not have a value put on it?
- barrkel 7y ago
  Because it gives wealthy people power to take things that poor people love.
  - RepAgent 7y ago
    As I said, there is no reason to extend tax to personal property. If poor people owns something valuable, they stop being poor when wealthy people take it. The distinction between personal property or personal possessions and private property is important to make and the line must be drawn.
    - yardstick 7y ago
      “If poor people owns something valuable, they stop being poor when wealthy people take it” Only if you accept the money given makes up for the loss. Money does not make someone rich. It may put bread on the table but that poor person is still poor because they lost what was important to them. Also the rich don’t get rich by paying more than they have to, which may not be what the property is worth to the original owner.
    - chii 7y ago
      > If poor people owns something valuable, they stop being poor when wealthy people take it. if you owned some land which could've been mined/fracked upon, then it might make economic sense for said company to purchase your land. You'd have to either pay an above average tax rate to justify holding on to the land, or be forced to sell it. On the one hand, it does make economic utilitarian sense. On the other hand, it prevents people from being able to control their own property. Esp. if they have no funds to fight or defend themselves.
      - IG_Semmelweiss 7y ago
        You foeget eminent domain. The stack is already against the homeowner who lacks lobbyists to fight back This achieves more of a level playing field.
    - 7y ago
Nition 7y ago
Not just things with sentimental value but just anything you're still using as well. It sounds like you'd be living in fear any time you invited someone over that they'd start saying they'll buy your frying pan and your second couch or something. And you'd have to let them buy it. Then you have to go to the shops and buy new stuff... or just go over to their house the next day and buy it all back at the same price. Maybe see if they've got any other good stuff that isn't worth much while you're there. Or you could just buy it back immediately when they buy it from you, stuck in an infinite While loop of ownership.
- ljf 7y ago
  Why would they want to buy your frying pan? Is the value you've given it very low, making it cheaper to buy yours than another one? Is there a shortage of frying pans, increasing the value of yours?
  - Nition 7y ago
    They see you have a good pan and want one that's the same. Buying yours is less effort than going to the shops and faster than ordering one. Obviously social decorum would usually prevent this scenario, but the fear of possibility remains.
  - puszczyk 7y ago
    Maybe that firing pan is owned by a rockstar ?
  - oconnor663 7y ago
    People are often angry with each other and eager to hurt each other in any legal way available. (Ask your friendly neighborhood divorce lawyer for their stories.) This sort "anyone can take your stuff if they're irrational enough" would be very easy to exploit to make someone's life miserable. And the problem only gets worse if you imagine a normal person making a very rich person angry.
    - deleted 7y ago
      [deleted]
yardstick 7y ago
I wouldn’t even trust the government with this ability. Also what will the government do with these assets? Hoard them forever? Or eventually sell them back into the market. I can imagine govt employees receiving kick backs for seizing assets this way and selling them to their friend.
- lmm 7y ago
  > Also what will the government do with these assets? Hoard them forever? Or eventually sell them back into the market. I can imagine govt employees receiving kick backs for seizing assets this way and selling them to their friend. Presumably the government would auction them (as is done with seized proceeds of crime etc.). So there is no way to hand them off to a friend for a below-market price, and no way to profitably kickback.
  - sukilot 7y ago
    Auctions are already used today as a way for government and unethical entities to steal from the public. This is an epidemic in civil forfeiture for alleged crimes, and in property tax seizures for cash poor-homeowners.
    - lmm 7y ago
      The problem in those scenarios isn't the auction, it's the seizure without compensation.
dragonwriter 7y ago
Sentimental value is value and is factored in when declaring value; you are taxing the value to the owner. > I think instead of "anyone", it should be just the govt. If your appraisal seems too low, then the gov't reserves the right to purchase the asset instead of charging you the owed tax. For intellectual property (only), I've suggested in the past a version of this where anyone can buy it at the declared value, but it can only be bought into the public domain, which is sort of a hybrid of the anybody can buy and only the government can buy ideas. In the more general case, an alternative is “anyone can offer to buy with a bid at or above the declared value, but unless it is the government exercising eminent domain you can refuse by increasing the declared value above the bid, posting back taxes as if the declared value for the current tax year were the new value, and for prior years as if the value had increased on some legally defined schedule over a set window of years (say, 5) or since you acquired the item, whichever is shorter, including a time-based penalty for all the ubderpayments.”
deleted 7y ago
[deleted]

kolinko 7y ago

Sounds like a great idea. I have a noisy neighbor - this would allow me to finally get rid of him. Also, there is an old lady living in one apt since WW2, but she's short on cash. I guess I could grab her place too. She took a good care of it over the years, but made a mistake of not investing in crypto, so I can easily outbid her now.

RepAgent 7y ago
Almost all laws have exceptions for personal property and housing that is occupied. Automatic tax deduction takes car of the rest.
sukilot 7y ago
She can pay the tax via a lien on her property (payable at sale or death) or a reverse mortgage. This already happens today.

boomlinde 7y ago

That reminds me of the rules of Swedish folkrace (a sort of amateur rally). You can put as much value as you want into your car, but after the races anyone can buy it off you for 8000 SEK. That way the bar of entry is kept low and the odds are evened out.

whenchamenia 7y ago
Thats the standard 'claim' rule in many amatuer and professional motorsports. It used to be more popular.
zepolen 7y ago
I don't get it, can't you get a friend to buy it off you.
- jzwinck 7y ago
  Not every game or sport has to devolve to angling for loopholes. Sure, get a friend to buy it, never be invited to compete again. Congratulations, you cheated to win a race almost nobody knows or cares about (if people did care so much about winning this race, they wouldn't think twice about "losing" a million bucks by openly over-spending).
  - dsfyu404ed 7y ago
    Angling for loopholes is a highly ingrained part of the sport of racing.
- LanceH 7y ago
  Typically if more than one person puts in a claim on a winning car, there is a drawing.
- boomlinde 7y ago
  Not just anyone, but everyone can file a claim to the car. In case several claims are made for the same car, the claimant that gets to purchase the car is picked at random.

michaelt 7y ago

So this database of everyone's valuables and how much they're appraised at - is it publicly available? I can't avoid getting bids by keeping it secret what I own? Do potential buyers have the right to inspect the thing they'd be buying?

dragonwriter 7y ago

> It seems that many people think that COST type private property tax would extend to personal property You just literally recommended it for an item of tangible personal property, so from your recommendation that's not an extension at all. > Personal possessions are not taxed in any place of the world Yes, ad valorem property taxes on items of personal property do exist in some jurisdictions in the world, including many in the United States. (E.g., California's Vehicle License Fee is an ad valorem tax on automobiles which are items of tangible personal property.) > and tax deduction make sure that small personal properties can be owned without paying tax. That doesn't make sense with the preceding claim: of personal property wasn't taxed, you wouldn't need any kind of deduction to allow owning it without paying tax. Also, deductions which allow this aren't in place where they would be needed (i.e., where certain items of personal property are taxed) to allow ownership without taxation.

RepAgent 7y ago
>You just literally recommended it for an item of tangible personal property, Yes. We all write somewhat inaccurately and carelessly in discussion groups. Instead of nitpicking each other, we should try to read each other favorably. What I mean is that there is classes of tangibles from pots and pans that one commentators was worried about into paintings worth of millions. It's concealable that at some valuations artifacts worth of millions are considered different asset classes.
- dragonwriter 7y ago
  It seems to me that if you want to recommend this to be applied to some particular subset of tangible real property rather than the whole class, than rather than mocking the idea that your recommendation would extend to the existing category as a whole, you ought to actually define the subset to which you would propose applying it so that your actual proposal can be evaluated.

magicalhippo 7y ago

Say I bought a computer, which I use to do my work on. Then I have a dry spell with little work so I get poor and can't afford to buy a new computer. But it's ok cause I use the one I got. I still valuate the computer at or above market rates, because I need it. But what's preventing someone with more money than me from threatening to buy it from me unless I do X for them, or just to be a jerk? Without the computer I lose my ability to do my job, further driving me into poverty. Am I missing something here? edit: basically what I wonder is, what prevents this scheme from getting weaponized, and how does it deal with wealth asymmetry?

RcouF1uZ4gsC 7y ago
If you value it at or above market rates, then, by definition, whoever bought it from you would pay you enough money to buy another at market rate.
- magicalhippo 7y ago
  Point taken. However that still leaves the possibility that I no longer am able to pay taxes according to current market rates. edit: Basically it assumes the object is available on the market, and it's available for the price I can afford to valuate it at. How does one prevent this tax scheme from being weaponized when one of those two assumptions are not valid?

AnthonyMouse 7y ago

In addition to the problems everyone else is pointing out, this also fails to account for labor, transaction costs and the variability of value based on relative ownership. Suppose I'm a wildlife photographer and I have a camera that unarguably has a market value of no more than $300 (it's what the manufacturer still sells it for). But I've positioned it deep in the Alaskan wilderness at the cost of 50 hours of labor and $15,000 in travel costs. Someone who wants to troll me demands to buy it for $300, requiring payment of those same costs again to retrieve it, and then does the same thing twelve more times, one month apart, for my twelve other cameras. Or I have a diamond as part of a laser. The diamond costs $100 but then it costs $10,000 to calibrate the laser, so someone who takes the diamond requires me to buy another for $100 and then pay another $10,000 to calibrate the laser again. Or you have a custom component which can't be manufactured in less than ten years, because it requires a slow chemical reaction, but is a small yet blocking component of a large million dollar operation. Notwithstanding that, it's cheap to make it, because you just start the reaction and come back in ten years. But now someone who wants to shut down your operation just buys that component from you (along with your five spares) for the $10 market value and your million dollar operation is shut down for ten years. For that matter, it can be used to monopolize the market for various commodities by offering the current market price for everything at once and then turning around to resell them for the monopoly price. Or members of your family own shares that total 60% ownership in a company, and I own the other 40%. You personally own 12%, which I demand to buy for the market price, even though I should be paying the higher price for a controlling interest. Or you've got a shelf full of equipment you use for your business operations, which your company manufactured itself and could quickly and inexpensively make more, but having access to any one of them would disclose millions of dollars worth of trade secrets to your competitors. Market value is a fiction that only really applies to high volume commodities.

chadash 7y ago

Say my name is John Smith and I inherit a Ferrari whose auction value is well established at $1 million. The first thing I do is claim the Ferrari for $800,000, taking it $200k under market. Immediately after that, I have John Smith engraved on some of the car components. Now, the car is in fact worth less than when I inherited it, because no one would be willing to pay as much for a John Smith engraved Ferrari. Maybe I didn't plan to sell it anyway, but it seems like I'm dodging the the taxes on the $200k difference here.

deleted 7y ago

[deleted]

gamblor956 7y ago

I'm not sure where you're getting your definition of personal property from, but for tax and legal purposes generally all tangible goods that aren't permanently fixed in place are considered "personal property." So basically everything physical except for buildings and fixtures. So as described in your comment, COST would apply to personal property. Also, personal property owned by a business is taxed in California (under the business property tax) and generally in some European countries, some South American countries, and India. That doesn't include the countries that impose wealth taxes, which includes items that would be considered personal property.