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"We could do something called the American Equity Fund. The American Equity Fund would be capitalized by taxing companies above a certain valuation 2.5% of thei

"We could do something called the American Equity Fund. The American Equity Fund would be capitalized by taxing companies above a certain valuation 2.5% of their market value each year, payable in shares transferred to the fund, and by taxing 2.5% of the value of all privately-held land, payable in dollars." He is talking about taxing unrealized gains, which is quite unfair. If the share price of a company doubles, it doesn't mean the company has extra cash to buy back shares for redistribution. Same with land. I feel property taxes today, as a percentage of market value, are insidious precisely for that reason. Increased demand for housing in my area doesn't mean I have more cash to pay taxes. Not until I sell the house and realize that gain.

webmaven 6y ago
> Increased demand for housing in my area doesn't mean I have more cash to pay taxes. Not until I sell the house and realize that gain. Right. As I understand it, that's part of the point (for economists, anyway): It incentivizes the allocation of scarce resources to those who value it more highly (and thus, presumably, to those who can make more productive use of it). Now, I don't want to give the impression that I am on board with this argument, since it implicitly incentivizes the concentration of property ownership into the hands of those who will rent it out, rather than those who will use it. Landlords who are faced with a growing tax bill don't have to sell the property to realize their gains, they can just raise rents (not to mention using it as collateral for a loan to purchase more property). In order to make the incentives align correctly for more participants, you would also have to establish a pretty robust system of rent control to keep spiraling property values from pricing existing homeowners out of the market, and incentivizing redevelopment: if you can't raise rents arbitrarily to cover your property taxes, you have to build more units to rent (but not so many that a glut of available units depresses rental income).
tome 6y ago
The article mentions the solution as regards companies: they pay in stock and can do so via a fresh issue. The situation regarding property is less easy to resolve. Most likely some sort of reverse mortgage product would work.

webmaven 6y ago

> Increased demand for housing in my area doesn't mean I have more cash to pay taxes. Not until I sell the house and realize that gain. Right. As I understand it, that's part of the point (for economists, anyway): It incentivizes the allocation of scarce resources to those who value it more highly (and thus, presumably, to those who can make more productive use of it). Now, I don't want to give the impression that I am on board with this argument, since it implicitly incentivizes the concentration of property ownership into the hands of those who will rent it out, rather than those who will use it. Landlords who are faced with a growing tax bill don't have to sell the property to realize their gains, they can just raise rents (not to mention using it as collateral for a loan to purchase more property). In order to make the incentives align correctly for more participants, you would also have to establish a pretty robust system of rent control to keep spiraling property values from pricing existing homeowners out of the market, and incentivizing redevelopment: if you can't raise rents arbitrarily to cover your property taxes, you have to build more units to rent (but not so many that a glut of available units depresses rental income).

tome 6y ago

The article mentions the solution as regards companies: they pay in stock and can do so via a fresh issue. The situation regarding property is less easy to resolve. Most likely some sort of reverse mortgage product would work.