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I mean, it’s an easily fixable problem. Punitively heavy land taxes on non-primary dwellings solves this overnight. It also raises a lot of capital that can be

I mean, it’s an easily fixable problem. Punitively heavy land taxes on non-primary dwellings solves this overnight. It also raises a lot of capital that can be used to provide services in the area.

taffronaut 5y ago
Unfortunately the wealthy tend not to want to be taxed and they're not averse to fighting back. They've learned that they need to lobby even small local tax-raising authorities to obstruct these kinds of actions. In Wales, local authorities are allowed to raise a local tax premium of up to 100% on holiday homes [1], but few, if any, charge a premium of more than 50%, even in affected areas considered to be in crisis. There's also a loophole that a second home can be declared as a holiday rental property business, without any real intention of letting it out. Welsh authorities work hard to police this by asking to review evidence of lettings (I know this as I own a legit holiday rental property in an affected area) but the enforcers need extra funding to police the tax dodgers. I don't dispute your underlying point that punitive taxes are a big part of the solution, but I take issue that it's an easy or overnight fix unfortunately because of the interests aligned against imposing them. [1] https://gov.wales/welsh-government-announces-three-pronged-approach-address-second-homes-crisis https://gov.wales/welsh-government-announces-three-pronged-a...
- imtringued 5y ago
  The fundamental problem isn't that investors vote against land value taxes. The problem is that the small homeowner doesn't want to pay them either so he will vote for the benefit of the investors.
  - 6510 5y ago
    Use the money for a basic income.
mrjin 5y ago
Yes and no. Yes, your proposal can solve the problem for sure. No, you just can hardly implement it anytime soon. I'm in Australia and Labor lost last election just because they were swearing to remove so called NG(Negative-Gearing, which allows the property investors to offset their income with losses from investment property) before the ballot day, despite NG itself is actually a bizarre idea: why would tax payers cover the asses of the property investors and what's more, in fair amount of NG claims, the so claimed losses were not actually rendered but rather losses in accounting term. If you opt to a different accounting method, they were actually making a profit. So your proposal will for sure hurt those vested interests, and I would expect it be very hard to pass the parliament. It's great to see Dutch cities actually made that far, I'll keep my eyes wide open to see what's next for them.
- chii 5y ago
  You made negative gearing sound so bizarre, but it's really just business investment deductions, which applies to every type of investment, not just real estate. If your business made a loss, you get to deduct that loss from your revenue, before getting taxed. This is the exact same concept, but applied to investment properties. As for the "dodgy" accounting methods - it's not really dodgy, but merely depreciation of the property at play. Depreciation is real. After all, a house doesn't last forever, so why shouldn't depreciation be allowed for investment properties when it is allowed for all other business capital expenditure? People like to argue that by taking away negative gearing for property (i.e., treat it differently), that it would increase affordability. It won't make a big difference.

I mean, it’s an easily fixable problem. Punitively heavy land taxes on non-primary dwellings solves this overnight. It also raises a lot of capital that can be used to provide services in the area.

taffronaut 5y ago

Unfortunately the wealthy tend not to want to be taxed and they're not averse to fighting back. They've learned that they need to lobby even small local tax-raising authorities to obstruct these kinds of actions. In Wales, local authorities are allowed to raise a local tax premium of up to 100% on holiday homes [1], but few, if any, charge a premium of more than 50%, even in affected areas considered to be in crisis. There's also a loophole that a second home can be declared as a holiday rental property business, without any real intention of letting it out. Welsh authorities work hard to police this by asking to review evidence of lettings (I know this as I own a legit holiday rental property in an affected area) but the enforcers need extra funding to police the tax dodgers. I don't dispute your underlying point that punitive taxes are a big part of the solution, but I take issue that it's an easy or overnight fix unfortunately because of the interests aligned against imposing them. [1] https://gov.wales/welsh-government-announces-three-pronged-approach-address-second-homes-crisis https://gov.wales/welsh-government-announces-three-pronged-a...

imtringued 5y ago
The fundamental problem isn't that investors vote against land value taxes. The problem is that the small homeowner doesn't want to pay them either so he will vote for the benefit of the investors.
- 6510 5y ago
  Use the money for a basic income.

mrjin 5y ago

Yes and no. Yes, your proposal can solve the problem for sure. No, you just can hardly implement it anytime soon. I'm in Australia and Labor lost last election just because they were swearing to remove so called NG(Negative-Gearing, which allows the property investors to offset their income with losses from investment property) before the ballot day, despite NG itself is actually a bizarre idea: why would tax payers cover the asses of the property investors and what's more, in fair amount of NG claims, the so claimed losses were not actually rendered but rather losses in accounting term. If you opt to a different accounting method, they were actually making a profit. So your proposal will for sure hurt those vested interests, and I would expect it be very hard to pass the parliament. It's great to see Dutch cities actually made that far, I'll keep my eyes wide open to see what's next for them.

chii 5y ago
You made negative gearing sound so bizarre, but it's really just business investment deductions, which applies to every type of investment, not just real estate. If your business made a loss, you get to deduct that loss from your revenue, before getting taxed. This is the exact same concept, but applied to investment properties. As for the "dodgy" accounting methods - it's not really dodgy, but merely depreciation of the property at play. Depreciation is real. After all, a house doesn't last forever, so why shouldn't depreciation be allowed for investment properties when it is allowed for all other business capital expenditure? People like to argue that by taking away negative gearing for property (i.e., treat it differently), that it would increase affordability. It won't make a big difference.