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You don't need to make it so that homeowners are prevented from making the permitting process more difficult, you need to change the incentives so that homeowne
by ItsMonkk 5y ago
You don't need to make it so that homeowners are prevented from making the permitting process more difficult, you need to change the incentives so that homeowners do not gain from doing so. I can assure you, if you don't address the disease a new symptom will pop up.
The problem is that whenever you build a new park, a new store, provide jobs, you have a positive externality in your neighborhood that is not captured solely by yourself. When someone who owns a parking lot and does nothing to earn that value gets richer, he goes out and buys more parking lots. He's taking your positive externalities.
We've already figured out the fundamental solution. Henry George worked all of this out 100 years ago.
If property taxes were raised to 100% annually of the cost of the home, the price of the house would instantly drop to somewhere near the annual rent cost. "Buying" the house would end up being close to a security deposit. It goes without saying though, that 100% annually is not a good number. It would disincentivize building, which is something we really need right now.
The right number is a Land Value Tax such that the cost of the property equals the cost of the building. So if you have two properties, one in downtown SF, and one in the middle of Montana, and each are the exact same house, but the Montana house sells for $200k and the SF house sells for $1M, really it's the land in SF selling for $800k. So that SF market price should move to $200k. To do so we need to tax the property at increasing rates(per sqft of land) until they match. When we tax enough, the new price will reach its improvement value.
In the short term this will have devastating effects on the Net Worth of individuals who took out loans or otherwise bet their income on owning a home, so I advocate for a one time tax credit(that for exceptional cases like the elderly would be transferable for straight cash upon sale of the property) equivalent to the drop in market value of the home. So in the SF case, they would get a $800k tax credit.
Once this system is in place being a NIMBY will no longer be a profitable stance, and will instead cost that area money in taxes. As it will no longer be a perverse incentive, the population will mostly switch to becoming YIMBY's, and advocate for better Zoning rules and to ease up on silly restrictions. The tax money can be spent on high value improvements to the area that will boost everyone's quality of life, and if none are found, can be simply given back equally to all.
Once this system in place and the tax credits have been used up, we can even go further and get rid of income taxes, sales taxes, corporate taxes, and capital gains taxes. The value of the land tax will be enough to replace all of them(by removing them, the land values will rise, which means the land taxes will rise). All from a tax that because land is at a fixed supply, is completely non-distortionary and results in no dead weight loss.
Housing can either be an investment or affordable long-term, it can not be both.