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Imagine: 1) I'm the owner of a single family home 2) My income drops to roughly zero because of AI 3) My property values go through the roof 4) I now owe 2.5% o

Imagine: 1) I'm the owner of a single family home 2) My income drops to roughly zero because of AI 3) My property values go through the roof 4) I now owe 2.5% of these sky-rocketing property values every year, to be paid from my non-existent income Doesn't this scenario lead to me either selling my "gifted" shares to pay property taxes, or ending up a renter at best and homeless at worst? I can imagine this proposal leading to greater concentrations of wealth rather than spreading it around.

zz865 6y ago
I think if most people are in 2) then 3) isn't going to happen.
- tvanantwerp 6y ago
  I include 3 because Altman assumes it. Even if property values stay the same—or even drop—I think it would not be a fun situation for home owners.
elmomle 6y ago
A variant of this is responsible for the rise of oligarchy during de-Sovietization in Russia. Citizens were given shares of state companies, but people's basic needs weren't met. This resulted in most shares being sold to whomever would buy them for any amount of money or basic resources. This, along with the general power vacuum, led to the rapid consolidation of massive amounts of power in the hands of whoever managed to wield local power for their benefit at the time--those who became the oligarchs. Bill Browder writes a bit about it in his book, Red Notice. The book is also a great cautionary tale that the whole narrative that we can spread democratic ideals by making business deals with with corrupt/despotism regimes is smoke. It leads to more corruption, less moral authority, and further empowered despots.
- shmageggy 6y ago
  Shocking that an article with no references or citations might miss some important history!
notahacker 6y ago
Even without the hypothetical AI effect on income, this is a proposal which will tax you 100% of the value of your property over a 40 year period whilst over the same period YC's LPs and founders will have paid just 2.5% of the [much higher] value of their companies. Now there are efficiency arguments in favour of taxing land to encourage its use and not taxing productive enterprises or their investors too heavily, but this is pretty extreme...
- larsiusprime 6y ago
  > which will tax you 100% of the value of your property If it's a property tax, yes. If it's a land tax, no. Under land tax you tax the "ground rent" value of the land, not what's built on it. "Ground rent" is what it costs to rent out your land if it was an empty lot with nothing on it. Property tax and land tax are very different things with very different effects.
  - tvanantwerp 6y ago
    In high-demand cities, the land is the expensive part—not the house on top of it.
    - larsiusprime 6y ago
      Right you are, and the land tax is specifically designed to destroy the speculative activity that causes it to increase forever.
      - chordalkeyboard 6y ago
        How are we determining that the land value increased because of speculation, and not because the land continues to become exponentially more valuable do to its location in a popular area?
    - goesnowhere 6y ago
      Yeah thats kinda the point.
Aunche 6y ago
Property values generally rise because an area has a very attractive jobs market. Overall, it's a benefit to society to incentivize people with no income to move out an area with a lower cost of living. This incentivizes more people move there and do productive work, which can be taxed and distributed.
- tvanantwerp 6y ago
  I just find something very cold and socially undesirable in the idea that somebody can spend a lifetime putting in the work to get the home they want, only to be forced out because "society" decides they are no longer productive. I'm no NIMBY—those people shouldn't have the right to stop others from developing their own properties—but I'm not sure I like the idea of economic incentives kicking the least productive to the curb because it's "efficient".
  - Aunche 6y ago
    If being taxed 2.5% a year counts as being "forced out," then staying in a highly productive area of land indefinitely is "forcing" people who can otherwise move to your house to stay poor. Never mind that it's the wealthy are the ones who benefit from elimination of property taxes. It's society that makes the property valuable in the first place, so it makes sense to pay society back. The firefighters, schools, and social workers in your area need to get paid extra to account for the cost of living increases. That money should come from the people benefit the most from their services, the property owners.
    - chordalkeyboard 6y ago
      > If being taxed 2.5% a year counts as being "forced out," then staying in a highly productive area of land indefinitely is "forcing" people who can otherwise move to your house to stay poor. “Otherwise” is doing a lot of work here. The people can’t “otherwise” move there because the person isn’t selling, that’s the idea. Taxing people so they are forced to sell is forcing them out. Not taxing people so they are not forced to sell is letting them stay there. You’ve yet to explain why the people who do live there have less of a claim to the house than the wealthier people who would buy it from them. > Never mind that it's the wealthy are the ones who benefit from elimination of property taxes. Yes nevermind that since its not even true. > It's society that makes the property valuable in the first place, so it makes sense to pay society back. This reifies “society” as a thing-in-itself rather than properly considering society as consisting of the people who own the properties and make them valuable by their ownership, maintenance, and use. Then it equivocates “society” with the actual government that collects the taxes and decides how they are spent (typically routing them to their friends who sell goods and services to the government). > The firefighters, schools, and social workers in your area need to get paid extra to account for the cost of living increases. Cost of living increases like land value tax? Like how landlords pass increased taxes and maintenance onto their tenants? > That money should come from the people benefit the most from their services, the property owners. Its not at all clear that property owners benefit disproportionately from social services, and they also pay for those services through taxes. I think most of this recent fascination with Georgism is a result of California tax policy and doesn’t withstand a cursory economic analysis.
dane-pgp 6y ago
> I now owe 2.5% of these sky-rocketing property values every year Just as a UBI gives people an income floor, I think that a land tax should come with a personal allowance below which you are exempt. To do some rough calculations, the US state with the highest population density is New Jersey, at 1,210.1 people per square mile, which equates to 23,038 square feet per person. The average American house size is apparently 2,687 square feet, which is typically shared by multiple people, so the allowance could be comfortably set to maybe 10,000 square feet per person.
- neilparikh 6y ago
  The key thing about a land value tax is that it's based on land value, and not land area, so the allowance should also be based on value and not area, for it to work right. 10,000 sq ft in Manhattan is much more valuable than 10,000 sq ft in a rural area, and so it doesn't make sense that both should be treated equally.
goesnowhere 6y ago
A land value tax taxes the value of the land not the things built on it. It hurts speculators/landlords and benefits people who build/improve. It works very differently than a propery tax. https://www.youtube.com/watch?v=ok2uR3btMrE https://www.youtube.com/watch?v=ok2uR3btMrE
mdorazio 6y ago
If your property value doubles and you lose your job, why wouldn't you sell your property for a massive gain, take that money and buy a new house somewhere cheaper, thereby avoiding the tax issue entirely? Seems like a situation where you want to have your cake and eat it, too.
- yifanl 6y ago
  A property's value doubling isn't a one-off event, it'd be widespread and continuous. That cheaper place's value will rise proportionally, and now they've the same problem, except with an overall lower quality of life now that they're living in a worse property.
  - mdorazio 6y ago
    This is demonstrably false if you look at property price trends across the US rather than just at the top cities.
- mikewarot 6y ago
  My property has doubled due to an incoming commuter rail line... which means my taxes will go up. I used to have the cheapest house in town, which means if I have to move, I have to find a smaller house in a less desirable neighborhood, or end up renting, then homeless as the rents rise. The rich will get richer, and the rest of us will get poorer.
throwawayffffas 6y ago
As I understand it, the fund would also pay cash. You would get a share of the 2.5% of taxed equities and a share of the 2.5% property taxes. Owners of property with a value over the average would be essentially paying everyone else.

zz865 6y ago

I think if most people are in 2) then 3) isn't going to happen.

tvanantwerp 6y ago
I include 3 because Altman assumes it. Even if property values stay the same—or even drop—I think it would not be a fun situation for home owners.

elmomle 6y ago

A variant of this is responsible for the rise of oligarchy during de-Sovietization in Russia. Citizens were given shares of state companies, but people's basic needs weren't met. This resulted in most shares being sold to whomever would buy them for any amount of money or basic resources. This, along with the general power vacuum, led to the rapid consolidation of massive amounts of power in the hands of whoever managed to wield local power for their benefit at the time--those who became the oligarchs. Bill Browder writes a bit about it in his book, Red Notice. The book is also a great cautionary tale that the whole narrative that we can spread democratic ideals by making business deals with with corrupt/despotism regimes is smoke. It leads to more corruption, less moral authority, and further empowered despots.

shmageggy 6y ago
Shocking that an article with no references or citations might miss some important history!

notahacker 6y ago

Even without the hypothetical AI effect on income, this is a proposal which will tax you 100% of the value of your property over a 40 year period whilst over the same period YC's LPs and founders will have paid just 2.5% of the [much higher] value of their companies. Now there are efficiency arguments in favour of taxing land to encourage its use and not taxing productive enterprises or their investors too heavily, but this is pretty extreme...

larsiusprime 6y ago
> which will tax you 100% of the value of your property If it's a property tax, yes. If it's a land tax, no. Under land tax you tax the "ground rent" value of the land, not what's built on it. "Ground rent" is what it costs to rent out your land if it was an empty lot with nothing on it. Property tax and land tax are very different things with very different effects.
- tvanantwerp 6y ago
  In high-demand cities, the land is the expensive part—not the house on top of it.
  - larsiusprime 6y ago
    Right you are, and the land tax is specifically designed to destroy the speculative activity that causes it to increase forever.
    - chordalkeyboard 6y ago
      How are we determining that the land value increased because of speculation, and not because the land continues to become exponentially more valuable do to its location in a popular area?
  - goesnowhere 6y ago
    Yeah thats kinda the point.

Aunche 6y ago

Property values generally rise because an area has a very attractive jobs market. Overall, it's a benefit to society to incentivize people with no income to move out an area with a lower cost of living. This incentivizes more people move there and do productive work, which can be taxed and distributed.

tvanantwerp 6y ago
I just find something very cold and socially undesirable in the idea that somebody can spend a lifetime putting in the work to get the home they want, only to be forced out because "society" decides they are no longer productive. I'm no NIMBY—those people shouldn't have the right to stop others from developing their own properties—but I'm not sure I like the idea of economic incentives kicking the least productive to the curb because it's "efficient".
- Aunche 6y ago
  If being taxed 2.5% a year counts as being "forced out," then staying in a highly productive area of land indefinitely is "forcing" people who can otherwise move to your house to stay poor. Never mind that it's the wealthy are the ones who benefit from elimination of property taxes. It's society that makes the property valuable in the first place, so it makes sense to pay society back. The firefighters, schools, and social workers in your area need to get paid extra to account for the cost of living increases. That money should come from the people benefit the most from their services, the property owners.
  - chordalkeyboard 6y ago
    > If being taxed 2.5% a year counts as being "forced out," then staying in a highly productive area of land indefinitely is "forcing" people who can otherwise move to your house to stay poor. “Otherwise” is doing a lot of work here. The people can’t “otherwise” move there because the person isn’t selling, that’s the idea. Taxing people so they are forced to sell is forcing them out. Not taxing people so they are not forced to sell is letting them stay there. You’ve yet to explain why the people who do live there have less of a claim to the house than the wealthier people who would buy it from them. > Never mind that it's the wealthy are the ones who benefit from elimination of property taxes. Yes nevermind that since its not even true. > It's society that makes the property valuable in the first place, so it makes sense to pay society back. This reifies “society” as a thing-in-itself rather than properly considering society as consisting of the people who own the properties and make them valuable by their ownership, maintenance, and use. Then it equivocates “society” with the actual government that collects the taxes and decides how they are spent (typically routing them to their friends who sell goods and services to the government). > The firefighters, schools, and social workers in your area need to get paid extra to account for the cost of living increases. Cost of living increases like land value tax? Like how landlords pass increased taxes and maintenance onto their tenants? > That money should come from the people benefit the most from their services, the property owners. Its not at all clear that property owners benefit disproportionately from social services, and they also pay for those services through taxes. I think most of this recent fascination with Georgism is a result of California tax policy and doesn’t withstand a cursory economic analysis.

dane-pgp 6y ago

> I now owe 2.5% of these sky-rocketing property values every year Just as a UBI gives people an income floor, I think that a land tax should come with a personal allowance below which you are exempt. To do some rough calculations, the US state with the highest population density is New Jersey, at 1,210.1 people per square mile, which equates to 23,038 square feet per person. The average American house size is apparently 2,687 square feet, which is typically shared by multiple people, so the allowance could be comfortably set to maybe 10,000 square feet per person.

neilparikh 6y ago
The key thing about a land value tax is that it's based on land value, and not land area, so the allowance should also be based on value and not area, for it to work right. 10,000 sq ft in Manhattan is much more valuable than 10,000 sq ft in a rural area, and so it doesn't make sense that both should be treated equally.

goesnowhere 6y ago

A land value tax taxes the value of the land not the things built on it. It hurts speculators/landlords and benefits people who build/improve. It works very differently than a propery tax. https://www.youtube.com/watch?v=ok2uR3btMrE https://www.youtube.com/watch?v=ok2uR3btMrE

mdorazio 6y ago

If your property value doubles and you lose your job, why wouldn't you sell your property for a massive gain, take that money and buy a new house somewhere cheaper, thereby avoiding the tax issue entirely? Seems like a situation where you want to have your cake and eat it, too.

yifanl 6y ago
A property's value doubling isn't a one-off event, it'd be widespread and continuous. That cheaper place's value will rise proportionally, and now they've the same problem, except with an overall lower quality of life now that they're living in a worse property.
- mdorazio 6y ago
  This is demonstrably false if you look at property price trends across the US rather than just at the top cities.
mikewarot 6y ago
My property has doubled due to an incoming commuter rail line... which means my taxes will go up. I used to have the cheapest house in town, which means if I have to move, I have to find a smaller house in a less desirable neighborhood, or end up renting, then homeless as the rents rise. The rich will get richer, and the rest of us will get poorer.

throwawayffffas 6y ago

As I understand it, the fund would also pay cash. You would get a share of the 2.5% of taxed equities and a share of the 2.5% property taxes. Owners of property with a value over the average would be essentially paying everyone else.