6 ms·

I've been intrigued by property taxes since reading a book by Heinlein that sat on the shelf for 40 years before being published last year, "The Pursuit of the

I've been intrigued by property taxes since reading a book by Heinlein that sat on the shelf for 40 years before being published last year, "The Pursuit of the Pankera". In this otherwise forgettable story, the family settles on an Earth in a parallel universe where most of the taxes are property taxes. The rate is set by the government, but each parcel is self-assessed by the owner. The catch is that anyone, including the government can purchase the property at the assessed value at any time. It sounds like a good idea, that would encourage fairness, but I wonder if there are unforeseen consequences I am overlooking.

aidenn0 6y ago
I heard that idea attributed to Heinlein many years ago from a friend who read everything he wrote. A few downsides I thought of 1. It makes it easier for rich people to do mean things to poor people (it's not like there aren't already lots of ways, but something to think about) 2. In rapidly changing conditions, people who neglect to file their paperwork will get screwed -- either significantly overpay or get kicked out of their houses for below-market values. The people who are neglectful in paperwork are probably disproportionately those that we typically aim to protect with government interventions 3. Eminent domain changes a bit; people would naturally price their houses for above-market values, because being forced to move unexpectedly is a hassle, so you would assess your value at a premium to avoid that hassle. This means the government would likely have to pay more for property than the "fair market value" that courts require. Depending on where you fall on the political spectrum, that may be okay. 4. Holdouts[1] tend to be popular. Making it financially untenable to be a holdout thus might be too unpopular a law to pass. 4: https://en.wikipedia.org/wiki/Holdout_(real_estate) https://en.wikipedia.org/wiki/Holdout_(real_estate)
brewdad 6y ago
That sounds like a recipe for the Billionaires of the world to get their hands on a lot of otherwise unavailable property. Jeff Bezos will have no problem valuing his property at or even above market value, what's an extra million dollars in taxes to him compared to the shame of having it bought out from under him. Would be a great way to get back at your enemies when you find out they've been undervaluing their assets though.
- jandrese 6y ago
  The potential for harassment is endless if you have the money. Even if you're fairly accessing the value of your house (and good luck doing this as a normal person), a rich person can buy it anyway and force you to move. They can do this over and over if they want. Actually, it would be a good deal for landlords. They buy the house then offer to let the people rent it back. No need to deal with flaky tenants, these would be people in their family home. Would be a good place to park money from overseas that you're trying to hide too, solves the problem of the empty downtown condos because people hiding money don't really want to be landlords. This is one of those systems economists think up that would be perfectly efficient so long as nobody is an asshole or irrational. About as useful as a horse race modeled as a set of identical spheres in perfect harmonic motion.
  - aidenn0 6y ago
    The idea is most people will assess the value of their house at a premium, and tax rates are commensurately lowered. If the best way a rich person could mess with me is to buy my house for twice what it's worth, I would personally laugh all the way to the bank. There is a bit of regressiveness to this though, as it will be worth it for people with a lot of property to pay someone to regularly update their assessed value to keep pace with the market, while those with less property will probably just set a large premium and update infrequently. This is a problem with pretty much any tax though; the more you are being taxed, the more you can afford to pay to figure out how not to be taxed. I posted potential problems in my sibling comment earlier, but as far as this goes, the ugliest thing would be e.g. an 80 year old who forgot to update their assessed value in a hot market being kicked out by someone who bought their property to flip it for 2x the assessed value. In theory, they are a tax-cheat who got what they deserved... I suppose the free-market solution would be services that assess your home for a fee; they could provide insurance against undervaluation as well to incentivize them to do the right thing. This monetarily works out to be roughly equivalent to the government paying private companies to fairly assess people's home-values, but with financial incentives for doing it properly.
  - jandrese 6y ago
    > The idea is most people will assess the value of their house at a premium This seems a bit unlikely to me since you're directly raising your taxes by doing this. I'd expect the opposite, most people undervaluing their house on the assumption that "it won't happen to me". Also, if I bought for $200k 10 years ago then it can't possibly access for $450k today right? People don't have a good grasp on how fast a market can inflate given the conditions. I would expect a lot more anti-tax guys who access their property at $1 and if someone comes up to take it they pull out their shotgun. For this to work at all the government would have to provide a minimum and possibly maximum based on traditional assessments. Basically the system we have now except that you can say that you've done some work to spruce up your house so it's worth more and you like paying more taxes. But it also has the "feature" where you can be evicted by a person with money at any time. Can you imagine this in Silicon Valley? Old people being kicked out of their home by tech-bros would be a daily story.
skybrian 6y ago
There are apparently-serious papers by economists about self-assessment taxes. (Well, somewhat serious; it seems to be a theoretical discussion.) For example: https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=12668&context=journal_articles https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?arti... Apparently this is sometimes called a "Harberger tax" after the economist who proposed it in 1965. Maybe that's where Heinlein got it? I first saw this in a blog post by Robert Hanson, back when I still read him.
njharman 6y ago
Something like that would only be fair if first, wealth was fairly (re)distributed. As of now there are enough people, corporations, and governments with enough money to buy property for other than its value or use. Petty revenge, fucking with critics, buying the blacks, Jews, hippies, cripples, etc out of your neighborhood. You have COVID, find a new place to live mother fucker.

aidenn0 6y ago

I heard that idea attributed to Heinlein many years ago from a friend who read everything he wrote. A few downsides I thought of 1. It makes it easier for rich people to do mean things to poor people (it's not like there aren't already lots of ways, but something to think about) 2. In rapidly changing conditions, people who neglect to file their paperwork will get screwed -- either significantly overpay or get kicked out of their houses for below-market values. The people who are neglectful in paperwork are probably disproportionately those that we typically aim to protect with government interventions 3. Eminent domain changes a bit; people would naturally price their houses for above-market values, because being forced to move unexpectedly is a hassle, so you would assess your value at a premium to avoid that hassle. This means the government would likely have to pay more for property than the "fair market value" that courts require. Depending on where you fall on the political spectrum, that may be okay. 4. Holdouts[1] tend to be popular. Making it financially untenable to be a holdout thus might be too unpopular a law to pass. 4: https://en.wikipedia.org/wiki/Holdout_(real_estate) https://en.wikipedia.org/wiki/Holdout_(real_estate)

brewdad 6y ago

That sounds like a recipe for the Billionaires of the world to get their hands on a lot of otherwise unavailable property. Jeff Bezos will have no problem valuing his property at or even above market value, what's an extra million dollars in taxes to him compared to the shame of having it bought out from under him. Would be a great way to get back at your enemies when you find out they've been undervaluing their assets though.

jandrese 6y ago
The potential for harassment is endless if you have the money. Even if you're fairly accessing the value of your house (and good luck doing this as a normal person), a rich person can buy it anyway and force you to move. They can do this over and over if they want. Actually, it would be a good deal for landlords. They buy the house then offer to let the people rent it back. No need to deal with flaky tenants, these would be people in their family home. Would be a good place to park money from overseas that you're trying to hide too, solves the problem of the empty downtown condos because people hiding money don't really want to be landlords. This is one of those systems economists think up that would be perfectly efficient so long as nobody is an asshole or irrational. About as useful as a horse race modeled as a set of identical spheres in perfect harmonic motion.
- aidenn0 6y ago
  The idea is most people will assess the value of their house at a premium, and tax rates are commensurately lowered. If the best way a rich person could mess with me is to buy my house for twice what it's worth, I would personally laugh all the way to the bank. There is a bit of regressiveness to this though, as it will be worth it for people with a lot of property to pay someone to regularly update their assessed value to keep pace with the market, while those with less property will probably just set a large premium and update infrequently. This is a problem with pretty much any tax though; the more you are being taxed, the more you can afford to pay to figure out how not to be taxed. I posted potential problems in my sibling comment earlier, but as far as this goes, the ugliest thing would be e.g. an 80 year old who forgot to update their assessed value in a hot market being kicked out by someone who bought their property to flip it for 2x the assessed value. In theory, they are a tax-cheat who got what they deserved... I suppose the free-market solution would be services that assess your home for a fee; they could provide insurance against undervaluation as well to incentivize them to do the right thing. This monetarily works out to be roughly equivalent to the government paying private companies to fairly assess people's home-values, but with financial incentives for doing it properly.
- jandrese 6y ago
  > The idea is most people will assess the value of their house at a premium This seems a bit unlikely to me since you're directly raising your taxes by doing this. I'd expect the opposite, most people undervaluing their house on the assumption that "it won't happen to me". Also, if I bought for $200k 10 years ago then it can't possibly access for $450k today right? People don't have a good grasp on how fast a market can inflate given the conditions. I would expect a lot more anti-tax guys who access their property at $1 and if someone comes up to take it they pull out their shotgun. For this to work at all the government would have to provide a minimum and possibly maximum based on traditional assessments. Basically the system we have now except that you can say that you've done some work to spruce up your house so it's worth more and you like paying more taxes. But it also has the "feature" where you can be evicted by a person with money at any time. Can you imagine this in Silicon Valley? Old people being kicked out of their home by tech-bros would be a daily story.

skybrian 6y ago

There are apparently-serious papers by economists about self-assessment taxes. (Well, somewhat serious; it seems to be a theoretical discussion.) For example: https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=12668&context=journal_articles https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?arti... Apparently this is sometimes called a "Harberger tax" after the economist who proposed it in 1965. Maybe that's where Heinlein got it? I first saw this in a blog post by Robert Hanson, back when I still read him.

njharman 6y ago

Something like that would only be fair if first, wealth was fairly (re)distributed. As of now there are enough people, corporations, and governments with enough money to buy property for other than its value or use. Petty revenge, fucking with critics, buying the blacks, Jews, hippies, cripples, etc out of your neighborhood. You have COVID, find a new place to live mother fucker.