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> OK, but in this context how does reductio ad absurdum help us? It helps us at least establish that property taxes effect supply. If there is an additional c
by stale2002 6y ago
> OK, but in this context how does reductio ad absurdum help us?
It helps us at least establish that property taxes effect supply.
If there is an additional cost for holding a certain supply, then this will discourage people from holding it.
For other examples, you can think about how it would discourage people from building new supply because that supply is less valuable, due to the additional costs of holding it.
> These properties have the same rents as any other
It is not about the effect on existing properties. Instead, this is about the effect that at tax has on the supply of housing.
Higher costs and higher taxes disincentives the ownership of, or creation of new supply.
> We can say with good empirical basis that halving and doubling the property tax rate has no effect on rents.
No. Because you are ignoring the effect that costs have on supply of housing. The higher that costs are, for both building housing, holding housing, or any other cost at all, means that owning that property is less valuable, and it means that less future housing is produced, due to higher costs.
- jeffbee 6y agoI'm not ignoring it. It seems like you must be making this argument from some far-away place. There is no developer today who is waiting on the sidelines for lower property taxes. Property tax rate has no bearing whatsoever on supply of housing. What does control the supply of housing is that it is forbidden by statute to build housing in 90% of San Francisco and a large portion of the surrounding area, too. You could repeal the entire property tax regime and it would have no effect on rents.
- stale2002 6y agoAh, ok, I got caught too much into the hypotheticals. If you are going to say that additional costs to holding housing, do not effect supply in San Francisco, because the bottleneck is actually a supply cap, which makes it illegal to build more, then I can agree with that. But, in general, if there are not laws that put a maximum on housing supply in the area, THEN property taxes would effect supply, as the bottleneck to new housing is costs and profitability, and not laws.