13 ms·

If only so many people didn't treat land and houses like investments, there wouldn't be such a disastrous hoarding problem. Henry George's Land Value Tax [1][2]

If only so many people didn't treat land and houses like investments, there wouldn't be such a disastrous hoarding problem. Henry George's Land Value Tax [1][2] seems like an obvious economic fix that would require a large fraction of the population to change how they think about land and natural resources, but most of them are invested in such a way (i.e. owning multiple houses on multiple parcels of land, often without renting anything out) that it is in their economic self-interest to block any such proposals. Although, I suppose this situation isn't unique. The world has long been doomed by coordination problems. [1] https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... [2] https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax

snikeris 5y ago
I already pay a Land Value Tax to my town.
- Retric 5y ago
  Land value taxes ignore the value of buildings constructed on the land. It’s very different from current property taxes because it incentivizes density.
- Smaug123 5y ago
  The usual advocacy point is to reduce most of the other taxes and send the LVT way up. "We should have a land value tax" is usually meant to mean "most tax should be on land".
  - tengbretson 5y ago
    Wouldn't this accelerate the displacement of less wealthy home owners in neighborhoods that are being gentrified?
    - shiftpgdn 5y ago
      Many counties in Texas have solved this by setting a 10% maximum year over year increase in property/land tax for people LIVING in their homes. There are also locks and exemptions carved out for those over 65 and disabled veterans.
      - krferriter 5y ago
        Yeah there should be exemptions (i.e. standard deductions) to help low-income people (retirees with low savings, such as those dependent on social security or disabled, etc) and for people's primary residence. What we don't want is a 50 year old who fully owns a $2 mil house and has $15 mil in the stock market and $1 mil in cash to be exempted from most property tax, but a 30 year old with $200k total assets to be on the hook for the full property tax rate. That doesn't make sense.
    - fshbbdssbbgdd 5y ago
      It will incentivize construction of dense housing, which distributes the same amount of land tax over a larger number of residents. People get displaced by gentrification because current policy encourages landlords to hoard old structures instead of building as much as possible.
- jlmorton 5y ago
  I'm not aware of any locality in the US that has a pure Land Value Tax. There are a few localities in Pennsylvania that have a split value tax, with separate rates for land and structures.
  - jdmichal 5y ago
    There are definitely counties here in Florida that value land and improvements separately. But there's often no separation as far as how they're taxed. It's just all added together. Here's the listing for Tropicana Field, which is owned by the county and therefore qualified as "municipal" use: https://www.pcpao.org/?pg=https://www.pcpao.org/general.php?strap=163124863810020010 https://www.pcpao.org/?pg=https://www.pcpao.org/general.php?... Just/Market Value: $108,535,551 Land Adjusted Value: $46,160,000
- ljhsiung 5y ago
  Only partially true. You pay a *property* tax, which does sometimes have a land component to it, but mostly is a tax on the purchase price of your home. A Georgist-style land tax proposes a tax on solely the land, so a 2000sq-ft lot is the same regardless of a $10mil home or not. This would require an appraiser that regularly re-evaluates the value of the land-- but we already do that! But with homes. Furthermore, a property tax still leaves open lots of tax-shenanigans. "Look, my home is actually worth half the appraised price, thus I should be taxed half." It's harder to do so with land, since you can't easily "hide"/play tricks with its value from a regulator.
  - shiftpgdn 5y ago
    Texas (what the original article in the original post revolves around) has the 5th highest property tax in the country and the urban areas have some of the outright highest property taxes in the country on a per city or county basis. This is both a land value tax and property tax.
    - deleted 5y ago
      [deleted]
- wyldfire 5y ago
  There's a distinction in [1]: > Common property taxes include land value, which usually has a separate assessment. Thus, land value taxation already exists in many jurisdictions. Some jurisdictions have attempted to rely more heavily on it. In Pennsylvania certain cities raised the tax on land value while reducing the tax on improvement/building/structure values. [1] https://en.wikipedia.org/wiki/Land_value_tax#United_States https://en.wikipedia.org/wiki/Land_value_tax#United_States
- fighterpilot 5y ago
  It's a Property Tax which is significantly worse than a Land Value Tax. Firstly it encourages urban sprawl, which is bad for the environment and bad for cost of living and housing access. Secondly it penalizes productive value add. Build something beautiful and you're punished for doing so. Thirdly it doesn't have the same logical justification as the Land Value Tax, which is to tax ownership of scarce, zero sum, excludable, naturally occurring resources that aren't the product of labor.
  - camel_Snake 5y ago
    You don't know that. There are places on the East Coast, namely Pennsylvania and Delaware that I can think of, that have implemented LVT. Normally they are hybrid approaches though.
matthoiland 5y ago
> Everybody works but the vacant lot. I paid $3600 for this lot and will hold 'till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it. for the remedy read Henry George. - Billboard posted in an empty lot, Rockford Illinois, 1914
- alexgmcm 5y ago
  It's a bit discouraging that over a century later the same problem still remains.
  - selectodude 5y ago
    Pretty sure a plot of land in Rockford, IL is still worth about $3600 though :)
- FredPret 5y ago
  That's a common meme - that asset appreciation is unearned wealth. But it's not. That investor could've spent the 3600 on hookers and blackjack. Investors freezing their money in communities in the form of real estate or other investment is a key part of those communites becoming richer and more complex. There's a real risk of losing your money - there's no worse financial nightmare than holding real estate that you're trying to sell for years... but no-one is buying
  - wolverine876 5y ago
    How did the investor in that empty lot make the community richer?
    - ahmedalsudani 5y ago
      It was used for blackjack and hookers.
    - FredPret 5y ago
      Speculative investment without asset improvements like that is the worst kind, but it still serves to stabilize prices for other investors. At worst, the speculator loses their shirt and a more capable capital allocator gets to work with the money.
tachyonbeam 5y ago
I agree that we need to stop treating houses as investments, because they're a basic fundamental need everyone has. IMO, the problem could be fixed by having stricter laws prohibiting people who aren't residents from owning homes in another country. The requirement to become a resident is only to live in a country for over 6 months out of the year. Before that, you can just rent. We could also do things like limit the number of houses a person can own, and tax every house sale based on capital gains (even primary residences). However, another problem we have is that interest rates are too low, and there isn't enough construction. Those are harder problems to solve. I really think we should build more, but we'd need denser construction as well. What do you do if you need land to build and there's already a house there, or someone already owns the land? Maybe it's kind of silly to have this idea that a person can "own" a piece of this planet we all live on, but we probably don't want to live in a communist country where the government owns every home and everyone is renting either. As for interest rates, this is driven by our current economic policy and money printing. Maybe there's a way to somehow detach the interest rate used for mortgages from that in other areas. Surely, the government could print stimulus money and direct it where it's needed without interest rates being artificially controlled? The main problem with these near-zero interest rates is that they completely kill the free market. We keep zombie companies alive and we allow people to speculate on home prices endlessly. That's not natural. In a "true" free market, there's a natural equilibrium between offer and demand, both home prices and rents will fluctuate but they will balance out. My ex's parents bought a home in the 1970s, they only had high school education and were both making minimum wage. Said home is now worth over a million and out of reach of anyone not making 200K+ household income.
- whoisburbansky 5y ago
  Something like this would effectively bar any person born in India who tried to immigrate to the U.S. in the last ~5 years from ever buying a house, unless they got married to a citizen. Broad strokes, I agree that residency requirements might help with reducing speculative investment, but maybe phrased in terms of how long you're in the country, not literally permanent residency as a legal threshold.
  - 5y ago
seafoam 5y ago
Do not miss the bigger thing. A generation ago : trade policy => offshoring of shippable jobs This generation : monetary policy => institutional ownership of the common home
_greim_ 5y ago
I recently went down the Geoist/LVT rabbit-hole myself. It strikes me as uniquely appealing across the political spectrum, since it reduces tax on wealth-creation AND redistributes wealth from the rich to the poor. Sadly, this very fact provokes enough superficial resistance to keep it out of the Overton window. Whenever it comes up, shouters on either side have plenty of ammo to blast it, saying things to the effect of "how could you propose giving the other side what they want!?!"
- pydry 5y ago
  It is kept out of the Overton window because the rich guard nothing more jealously than their unearned income. It's not like you or I get to decide what goes in the window.
- notahacker 5y ago
  It's less to do with appeal to people on the other side of economic divides, and more to do with the impossibility of selling "the great thing is that it incentivises your next door neighbour to build a high rise" and "sure, your parents will have to downsize because their pension won't cover the tax burden of the house they spent their lifetime saving for, but on the other hand it's great how many investors and companies don't have to pay any tax at all" to the average voter, who cares a lot more about such concrete matters than handwavy claims about efficiency or equity.
  - _greim_ 5y ago
    > the great thing is that it incentivises your next door neighbour to build a high rise This is more about NIMBY attitudes and zoning laws, which are separate issues. > their pension won't cover the tax burden of the house they spent their lifetime saving for An LVT won't tax the house, only the value of the land. If the plot itself is hyper-valuable, that's not a bad place to be, financially speaking. Beyond that, "won't someone think of the poor landowners?" doesn't strike me as a very compelling argument in this day and age.
    - notahacker 5y ago
seanp2k2 5y ago
I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move. Two people can be living in houses next to each other valued around 1.5m, and one of them will be paying 1/10th the tax. If anyone wants to buy a house, they have to first be able to afford the property, so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago. It’s not even residential that’s the most disturbing though. One of the biggest beneficiaries of this tax break is Disney: https://www.ocregister.com/2010/06/03/disneyland-businesses-enjoy-prop-13-loopholes-study-says/ https://www.ocregister.com/2010/06/03/disneyland-businesses-...
- foogazi 5y ago
  Prop 13 biggest beneficiaries are corporations. > so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago. 40 years ago it was still expensive to buy otherwise everyone would have bought, including the investment funds
  - deleted 5y ago
    [deleted]
  - jeffbee 5y ago
    40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x. Buyers in 1981 benefitted enormously from high interest rates. I know they whine about it now, but objectively it was a massive windfall for buyers.
    - foogazi 5y ago
      > 40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x. Interest rated have fallen 10x > Buyers in 1981 benefitted enormously from high interest rates. They didn’t benefit from paying more for a money loan. They benefited from being able to refinance on always lower rates, and the corresponding rise in asset price
    - 5y ago
fighterpilot 5y ago
If it's marketed as a revenue neutral tax, where all the savings are passed on to middle-income earners through income-tax cuts, you might have some success.
debacle 5y ago
If the population is increasing, then land and, to a lesser extent, housing are investments.
- flyingfences 5y ago
  If the population is increasing and population density is prevented from increasing then housing is a good investment.
  - debacle 5y ago
    Americans want to live in 2500+ sqft homes with long driveways, no sidewalks, etc. Like it or not, that's the modern American dream.
js2 5y ago
The Economist is a fan: https://duckduckgo.com/?q=site%3Aeconomist.com+land+value+tax https://duckduckgo.com/?q=site%3Aeconomist.com+land+value+ta...
gnopgnip 5y ago
The biggest thing preventing widespread adoption of a land value tax is the implementation. Someone still needs to decide what the land is worth, there isn't an objectively fair way to separate out the value of the land from the improvements. Or put another way, many of the same tactics can be used to distort/contest appraisals "dark stores" and deed restrictions that prevent other uses, but without an objective way to combat them
deevolution 5y ago
Part of why I like bitcoin is because the artifical digital scarcity should in theory reduce pressure from the housing market by attracting speculators to a much more liquid, low maintenance, and secure asset. Just anecdotally, I feel more inclined to invest my money into bitcoin than real estate. I wonder if there are others like me?
c7DJTLrn 5y ago
My theory is that bank loans are to blame. When we say someone has "bought" a home, it's rare that they've actually bought it, rather they've just signed a contract promising that they'll pay back a huge sum of money they don't have over a long period of time. This creates a market of buying and selling of -- in the words of Mark in The Wolf of Wall Street -- fairy dust. Big numbers like £500k, £600k are thrown around that nobody actually has. The ability to loan large amounts of money like this detaches people from the actual buying power of their money and the price of the property they're buying. Two grand in the bank is a nice amount of money. A two grand price increase on a property amortised over 20 years is considered to be nothing because the repayments are almost the same. The solution to bring prices back down to ground level in my view is to end mortgages. Require the money up front and therefore force prices to drop until an equilibrium of affordability is reached. Needless to say this will never happen because the people who have the power to push for this are the ones benefiting from the status quo. NB: I am not an economist.
- patrickthebold 5y ago
  Strong disagree. If that were the case only the wealthy would own homes. Available financing certainly pushes the prices up a bit as more people can buy homes, but homes really are often worth 500-600k, if you simply do a comparison to renting, and probably even more so if you factor in inflation risk, interest rate risk, and the equity gained in the house.
Aunche 5y ago
I'm pro-LVT, but I wish that people would stop conflating it with Georgism. The controversial part about Georgism is that only land should be taxed. This might have been a reasonable position 100 years ago, but not in the digital age.
andrepd 5y ago
Georgism in general, that is not only LVT but also analogous concepts for anything which ought to be commons (natural resources, pollution, etc) would go a long way into solving a significant amount of issues.

snikeris 5y ago

I already pay a Land Value Tax to my town.

Retric 5y ago
Land value taxes ignore the value of buildings constructed on the land. It’s very different from current property taxes because it incentivizes density.
Smaug123 5y ago
The usual advocacy point is to reduce most of the other taxes and send the LVT way up. "We should have a land value tax" is usually meant to mean "most tax should be on land".
- tengbretson 5y ago
  Wouldn't this accelerate the displacement of less wealthy home owners in neighborhoods that are being gentrified?
  - shiftpgdn 5y ago
    Many counties in Texas have solved this by setting a 10% maximum year over year increase in property/land tax for people LIVING in their homes. There are also locks and exemptions carved out for those over 65 and disabled veterans.
    - krferriter 5y ago
      Yeah there should be exemptions (i.e. standard deductions) to help low-income people (retirees with low savings, such as those dependent on social security or disabled, etc) and for people's primary residence. What we don't want is a 50 year old who fully owns a $2 mil house and has $15 mil in the stock market and $1 mil in cash to be exempted from most property tax, but a 30 year old with $200k total assets to be on the hook for the full property tax rate. That doesn't make sense.
  - fshbbdssbbgdd 5y ago
    It will incentivize construction of dense housing, which distributes the same amount of land tax over a larger number of residents. People get displaced by gentrification because current policy encourages landlords to hoard old structures instead of building as much as possible.
jlmorton 5y ago
I'm not aware of any locality in the US that has a pure Land Value Tax. There are a few localities in Pennsylvania that have a split value tax, with separate rates for land and structures.
- jdmichal 5y ago
  There are definitely counties here in Florida that value land and improvements separately. But there's often no separation as far as how they're taxed. It's just all added together. Here's the listing for Tropicana Field, which is owned by the county and therefore qualified as "municipal" use: https://www.pcpao.org/?pg=https://www.pcpao.org/general.php?strap=163124863810020010 https://www.pcpao.org/?pg=https://www.pcpao.org/general.php?... Just/Market Value: $108,535,551 Land Adjusted Value: $46,160,000
ljhsiung 5y ago
Only partially true. You pay a *property* tax, which does sometimes have a land component to it, but mostly is a tax on the purchase price of your home. A Georgist-style land tax proposes a tax on solely the land, so a 2000sq-ft lot is the same regardless of a $10mil home or not. This would require an appraiser that regularly re-evaluates the value of the land-- but we already do that! But with homes. Furthermore, a property tax still leaves open lots of tax-shenanigans. "Look, my home is actually worth half the appraised price, thus I should be taxed half." It's harder to do so with land, since you can't easily "hide"/play tricks with its value from a regulator.
- shiftpgdn 5y ago
  Texas (what the original article in the original post revolves around) has the 5th highest property tax in the country and the urban areas have some of the outright highest property taxes in the country on a per city or county basis. This is both a land value tax and property tax.
  - deleted 5y ago
    [deleted]
wyldfire 5y ago
There's a distinction in [1]: > Common property taxes include land value, which usually has a separate assessment. Thus, land value taxation already exists in many jurisdictions. Some jurisdictions have attempted to rely more heavily on it. In Pennsylvania certain cities raised the tax on land value while reducing the tax on improvement/building/structure values. [1] https://en.wikipedia.org/wiki/Land_value_tax#United_States https://en.wikipedia.org/wiki/Land_value_tax#United_States
fighterpilot 5y ago
It's a Property Tax which is significantly worse than a Land Value Tax. Firstly it encourages urban sprawl, which is bad for the environment and bad for cost of living and housing access. Secondly it penalizes productive value add. Build something beautiful and you're punished for doing so. Thirdly it doesn't have the same logical justification as the Land Value Tax, which is to tax ownership of scarce, zero sum, excludable, naturally occurring resources that aren't the product of labor.
- camel_Snake 5y ago
  You don't know that. There are places on the East Coast, namely Pennsylvania and Delaware that I can think of, that have implemented LVT. Normally they are hybrid approaches though.

matthoiland 5y ago

> Everybody works but the vacant lot. I paid $3600 for this lot and will hold 'till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it. for the remedy read Henry George. - Billboard posted in an empty lot, Rockford Illinois, 1914

alexgmcm 5y ago
It's a bit discouraging that over a century later the same problem still remains.
- selectodude 5y ago
  Pretty sure a plot of land in Rockford, IL is still worth about $3600 though :)
FredPret 5y ago
That's a common meme - that asset appreciation is unearned wealth. But it's not. That investor could've spent the 3600 on hookers and blackjack. Investors freezing their money in communities in the form of real estate or other investment is a key part of those communites becoming richer and more complex. There's a real risk of losing your money - there's no worse financial nightmare than holding real estate that you're trying to sell for years... but no-one is buying
- wolverine876 5y ago
  How did the investor in that empty lot make the community richer?
  - ahmedalsudani 5y ago
    It was used for blackjack and hookers.
  - FredPret 5y ago
    Speculative investment without asset improvements like that is the worst kind, but it still serves to stabilize prices for other investors. At worst, the speculator loses their shirt and a more capable capital allocator gets to work with the money.

tachyonbeam 5y ago

I agree that we need to stop treating houses as investments, because they're a basic fundamental need everyone has. IMO, the problem could be fixed by having stricter laws prohibiting people who aren't residents from owning homes in another country. The requirement to become a resident is only to live in a country for over 6 months out of the year. Before that, you can just rent. We could also do things like limit the number of houses a person can own, and tax every house sale based on capital gains (even primary residences). However, another problem we have is that interest rates are too low, and there isn't enough construction. Those are harder problems to solve. I really think we should build more, but we'd need denser construction as well. What do you do if you need land to build and there's already a house there, or someone already owns the land? Maybe it's kind of silly to have this idea that a person can "own" a piece of this planet we all live on, but we probably don't want to live in a communist country where the government owns every home and everyone is renting either. As for interest rates, this is driven by our current economic policy and money printing. Maybe there's a way to somehow detach the interest rate used for mortgages from that in other areas. Surely, the government could print stimulus money and direct it where it's needed without interest rates being artificially controlled? The main problem with these near-zero interest rates is that they completely kill the free market. We keep zombie companies alive and we allow people to speculate on home prices endlessly. That's not natural. In a "true" free market, there's a natural equilibrium between offer and demand, both home prices and rents will fluctuate but they will balance out. My ex's parents bought a home in the 1970s, they only had high school education and were both making minimum wage. Said home is now worth over a million and out of reach of anyone not making 200K+ household income.

whoisburbansky 5y ago
Something like this would effectively bar any person born in India who tried to immigrate to the U.S. in the last ~5 years from ever buying a house, unless they got married to a citizen. Broad strokes, I agree that residency requirements might help with reducing speculative investment, but maybe phrased in terms of how long you're in the country, not literally permanent residency as a legal threshold.
- 5y ago

seafoam 5y ago

Do not miss the bigger thing. A generation ago : trade policy => offshoring of shippable jobs This generation : monetary policy => institutional ownership of the common home

_greim_ 5y ago

I recently went down the Geoist/LVT rabbit-hole myself. It strikes me as uniquely appealing across the political spectrum, since it reduces tax on wealth-creation AND redistributes wealth from the rich to the poor. Sadly, this very fact provokes enough superficial resistance to keep it out of the Overton window. Whenever it comes up, shouters on either side have plenty of ammo to blast it, saying things to the effect of "how could you propose giving the other side what they want!?!"

pydry 5y ago
It is kept out of the Overton window because the rich guard nothing more jealously than their unearned income. It's not like you or I get to decide what goes in the window.
notahacker 5y ago
It's less to do with appeal to people on the other side of economic divides, and more to do with the impossibility of selling "the great thing is that it incentivises your next door neighbour to build a high rise" and "sure, your parents will have to downsize because their pension won't cover the tax burden of the house they spent their lifetime saving for, but on the other hand it's great how many investors and companies don't have to pay any tax at all" to the average voter, who cares a lot more about such concrete matters than handwavy claims about efficiency or equity.
- _greim_ 5y ago
  > the great thing is that it incentivises your next door neighbour to build a high rise This is more about NIMBY attitudes and zoning laws, which are separate issues. > their pension won't cover the tax burden of the house they spent their lifetime saving for An LVT won't tax the house, only the value of the land. If the plot itself is hyper-valuable, that's not a bad place to be, financially speaking. Beyond that, "won't someone think of the poor landowners?" doesn't strike me as a very compelling argument in this day and age.
  - notahacker 5y ago

seanp2k2 5y ago

I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move. Two people can be living in houses next to each other valued around 1.5m, and one of them will be paying 1/10th the tax. If anyone wants to buy a house, they have to first be able to afford the property, so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago. It’s not even residential that’s the most disturbing though. One of the biggest beneficiaries of this tax break is Disney: https://www.ocregister.com/2010/06/03/disneyland-businesses-enjoy-prop-13-loopholes-study-says/ https://www.ocregister.com/2010/06/03/disneyland-businesses-...

foogazi 5y ago
Prop 13 biggest beneficiaries are corporations. > so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago. 40 years ago it was still expensive to buy otherwise everyone would have bought, including the investment funds
- deleted 5y ago
  [deleted]
- jeffbee 5y ago
  40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x. Buyers in 1981 benefitted enormously from high interest rates. I know they whine about it now, but objectively it was a massive windfall for buyers.
  - foogazi 5y ago
    > 40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x. Interest rated have fallen 10x > Buyers in 1981 benefitted enormously from high interest rates. They didn’t benefit from paying more for a money loan. They benefited from being able to refinance on always lower rates, and the corresponding rise in asset price
  - 5y ago

fighterpilot 5y ago

If it's marketed as a revenue neutral tax, where all the savings are passed on to middle-income earners through income-tax cuts, you might have some success.

debacle 5y ago

If the population is increasing, then land and, to a lesser extent, housing are investments.

flyingfences 5y ago
If the population is increasing and population density is prevented from increasing then housing is a good investment.
- debacle 5y ago
  Americans want to live in 2500+ sqft homes with long driveways, no sidewalks, etc. Like it or not, that's the modern American dream.

js2 5y ago

The Economist is a fan: https://duckduckgo.com/?q=site%3Aeconomist.com+land+value+tax https://duckduckgo.com/?q=site%3Aeconomist.com+land+value+ta...

gnopgnip 5y ago

The biggest thing preventing widespread adoption of a land value tax is the implementation. Someone still needs to decide what the land is worth, there isn't an objectively fair way to separate out the value of the land from the improvements. Or put another way, many of the same tactics can be used to distort/contest appraisals "dark stores" and deed restrictions that prevent other uses, but without an objective way to combat them

deevolution 5y ago

Part of why I like bitcoin is because the artifical digital scarcity should in theory reduce pressure from the housing market by attracting speculators to a much more liquid, low maintenance, and secure asset. Just anecdotally, I feel more inclined to invest my money into bitcoin than real estate. I wonder if there are others like me?

c7DJTLrn 5y ago

My theory is that bank loans are to blame. When we say someone has "bought" a home, it's rare that they've actually bought it, rather they've just signed a contract promising that they'll pay back a huge sum of money they don't have over a long period of time. This creates a market of buying and selling of -- in the words of Mark in The Wolf of Wall Street -- fairy dust. Big numbers like £500k, £600k are thrown around that nobody actually has. The ability to loan large amounts of money like this detaches people from the actual buying power of their money and the price of the property they're buying. Two grand in the bank is a nice amount of money. A two grand price increase on a property amortised over 20 years is considered to be nothing because the repayments are almost the same. The solution to bring prices back down to ground level in my view is to end mortgages. Require the money up front and therefore force prices to drop until an equilibrium of affordability is reached. Needless to say this will never happen because the people who have the power to push for this are the ones benefiting from the status quo. NB: I am not an economist.

patrickthebold 5y ago
Strong disagree. If that were the case only the wealthy would own homes. Available financing certainly pushes the prices up a bit as more people can buy homes, but homes really are often worth 500-600k, if you simply do a comparison to renting, and probably even more so if you factor in inflation risk, interest rate risk, and the equity gained in the house.

Aunche 5y ago

I'm pro-LVT, but I wish that people would stop conflating it with Georgism. The controversial part about Georgism is that only land should be taxed. This might have been a reasonable position 100 years ago, but not in the digital age.

andrepd 5y ago

Georgism in general, that is not only LVT but also analogous concepts for anything which ought to be commons (natural resources, pollution, etc) would go a long way into solving a significant amount of issues.