6 ms·

>People want to live in specific locations, or have to in order to find work. This drives land values up as demand increases. This ignores the world's giant po

by pydry 5y ago

>People want to live in specific locations, or have to in order to find work. This drives land values up as demand increases. This ignores the world's giant pool of floating capital ravenous for returns that jumps on trends and amplifies demand by buying up what it thinks will have good resale or rental value. I saw this happen in the area I grew up in recently. Some people I know who were struggling to gather a deposit saw their dreams of homeownership go up in smoke as they got consistently outbid on a series of properties by investors. This would be a pretty harmless outlet of an for a glut of capital if A) land werent finite or B) land had not been slowly untaxed for decades. Of the two, B is a more prudent way of making property prices sane again.

bumby 5y ago
How do you implement B) without causing a disproportionately negative impact on existing homeowners? For example, would you just tax "new" purchases more heavily? Or scale it into existing homes? Give caveats for fixed-income (elderly and disabled)? Politically, this seems like a tough road, even if it's the best choice. You have to essentially convince people to vote against their own economic self-interest. I think current tax policy around homes is curious because it's one of the few areas that there is a rather clear consensus around economists that it's bad policy that incentivizes the wrong actions, yet we can't seem to change them.
- pydry 5y ago
  Land value tax. It could be made palatable to regular people by making a high tax free threshold. Most homeowners could be left unaffected. That leaves 50% of land owned by the 1%. A fair chunk. Additionally the money could be funneled initially into pensions for the impoverished elderly. Capital/billionaires would fight back by arguing that it would hit the elderly the hardest just as the howard jarvis taxpayers foundation did with prop 13 but if it was very obvious how many elderly people were helped, crying about grandmothers having to sell multimillion dollar mansions would probably backfire. They would throw immense resources at trying to discredit and kill this, though. They would use every character assassination trick in the book to stop those pushing it. Some would probably also resort to violence if that failed. It would be an uphill battle the whole way.
  - giantg2 5y ago
    "That leaves 50% of land owned by the 1%." Is a lot of that farm land, like with Gates? I thought a lot of the investors are involved with apartments, which don't take up much land?
    - bumby 5y ago
      Maybe somebody can clarify, but wouldn't that land also be much less taxable per acre because the value is lower?
      - giantg2 5y ago
        That's part of what I'm missing here. How is that value calculated?
    - lurgburg 5y ago
      LVT is generally conceptualised as proportional to the value of the land, not it's area.
      - giantg2 5y ago
        And how do you set that if excluding the type of property that's on it?
        ClumsyPilot 5y ago
        I fail to see the relevance, land is zoned for farming or reaidential, that sets it value You could reform zoning, but its not a requirement
        mrep 5y ago
        Without reforming zoning, it is largely useless. Sure it might cause some improvements in places underutilizing their land but I think most places are using their land for the highest value thing it is zoned for. If I have a SFH zoned for SFH in the heart of manhattan next to skyscrapers, the value of the land isn't based on the skyscrapers, it is based on what you can put on it and you can prove that by selling it for which nobody is going to pay as if you could put a skyscraper there.
- anonAndOn 5y ago
  Homestead exemption. If it's your primary residence you get a tax exemption on the first $[geographically_appropriate_median_goes_here].
  - giantg2 5y ago
    They did that with the casino money in PA. It's a joke, like a couple hundred bucks, if that.
- paulryanrogers 5y ago
  Homestead exemptions for older folks already exist. Perhaps a higher tax rate for those not living in a property?
  - giantg2 5y ago
    I would love to see no tax on primary home property at all. Just for commercial/investment properties. Unfortunately, a lot of that would be passed on to renters unless income taxes were assessed differently. But that would also mean drastically changing school funding, which could be a good opportunity but would likely turn this into every more of an impossible shitshow.
    - bumby 5y ago
      I think one argument is this incentivizes in the wrong way regarding home buying. It seems similar to the mortgage interest rate deduction argument: it incentivizes larger homes, it's regressive because it benefits those with more wealth in property than those with less, increases the likelihood of defaults due to people being incentivized towards more expensive homes, and potentially distorts housing prices, related to excessive borrowing.
      - giantg2 5y ago
        Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). This should reduce the burden on people who are on a fixed income while keeping houses a similar size. Maybe even smaller since the tax is taken off the top rather than perpetually taken off the back end - people tend to notice a smaller paycheck more.
        bumby 5y ago
        This is an interesting perspective, thanks for clarifying. I think it would also be interesting if it leads to a more equitable method of funding schools.
giantg2 5y ago
I was including that under "or simply buying because they can afford it now". "Of the two, B is a more prudent way of making property prices sane again." Maybe if you taxed unused land. Otherwise that tax will end up increasing a resident's rent/mortgage substantially (as it's a perpetual annual expense). So really, you'd have to tax way above what a normal person can afford (average US household about $75k, so $7500 is 10% gross), and that still wouldn't be much of a disincentive to the wealthy (ignoring the fact the the market would collapse because normal people can't afford to buy it from them nor pay the rent). Now if we did tax unused land, then we are reducing conservation and incentivize development. This is a major concern for some areas, especially around loss of agriculture land, riparian buffers for water quality, etc. If we had work that was more distributed, like remote is for IT, then it's possible the effects of all the capital flooding a handful of markets would be diluted by spreading it across numerous others. A generation or two ago we had many small cities with industrial or manufacturing jobs. Now it seems many of those cities have shrunk while the national population has grown, mostly concentrating in specific metro areas.
- ehnto 5y ago
  > ignoring the fact the the market would collapse I think that is the point. The market doesn't make sense already for people who actually use the homes because of the investors. If there were property policies that targeted investors and forced their money elsewhere, prices would drop dramatically, making housing affordable again.
  - giantg2 5y ago
    "The market doesn't make sense already for people who actually use the homes because of the investors." I think that depends on the area. A true crash, if it were to happen, would affect all though. You'd have people underwater on their mortgages, unable to move by selling or renting out the home and instead being foreclosed. People in some sectors my lose their job because people have less discretionary money (if they'd be smart and save more for retirement to offset the loss on their property). If anything, I would think more people would be looking for cheaper apartments to rent because they were foreclosed, leading them to rent from the rich who have a large share of that type of housing.
pjc50 5y ago
Indeed. Someone recently discovered that fifteen landlords own about 10% of Edinburgh: https://www.thenational.scot/news/19926004.edinburghs-housing-crisis-fifteen-super-landlords-dominating-citys-rental-market/ https://www.thenational.scot/news/19926004.edinburghs-housin...

by pydry 5y ago

bumby 5y ago

How do you implement B) without causing a disproportionately negative impact on existing homeowners? For example, would you just tax "new" purchases more heavily? Or scale it into existing homes? Give caveats for fixed-income (elderly and disabled)? Politically, this seems like a tough road, even if it's the best choice. You have to essentially convince people to vote against their own economic self-interest. I think current tax policy around homes is curious because it's one of the few areas that there is a rather clear consensus around economists that it's bad policy that incentivizes the wrong actions, yet we can't seem to change them.

pydry 5y ago
Land value tax. It could be made palatable to regular people by making a high tax free threshold. Most homeowners could be left unaffected. That leaves 50% of land owned by the 1%. A fair chunk. Additionally the money could be funneled initially into pensions for the impoverished elderly. Capital/billionaires would fight back by arguing that it would hit the elderly the hardest just as the howard jarvis taxpayers foundation did with prop 13 but if it was very obvious how many elderly people were helped, crying about grandmothers having to sell multimillion dollar mansions would probably backfire. They would throw immense resources at trying to discredit and kill this, though. They would use every character assassination trick in the book to stop those pushing it. Some would probably also resort to violence if that failed. It would be an uphill battle the whole way.
- giantg2 5y ago
  "That leaves 50% of land owned by the 1%." Is a lot of that farm land, like with Gates? I thought a lot of the investors are involved with apartments, which don't take up much land?
  - bumby 5y ago
    Maybe somebody can clarify, but wouldn't that land also be much less taxable per acre because the value is lower?
    - giantg2 5y ago
      That's part of what I'm missing here. How is that value calculated?
  - lurgburg 5y ago
    LVT is generally conceptualised as proportional to the value of the land, not it's area.
    - giantg2 5y ago
      And how do you set that if excluding the type of property that's on it?
      - ClumsyPilot 5y ago
        I fail to see the relevance, land is zoned for farming or reaidential, that sets it value You could reform zoning, but its not a requirement
        mrep 5y ago
        Without reforming zoning, it is largely useless. Sure it might cause some improvements in places underutilizing their land but I think most places are using their land for the highest value thing it is zoned for. If I have a SFH zoned for SFH in the heart of manhattan next to skyscrapers, the value of the land isn't based on the skyscrapers, it is based on what you can put on it and you can prove that by selling it for which nobody is going to pay as if you could put a skyscraper there.
anonAndOn 5y ago
Homestead exemption. If it's your primary residence you get a tax exemption on the first $[geographically_appropriate_median_goes_here].
- giantg2 5y ago
  They did that with the casino money in PA. It's a joke, like a couple hundred bucks, if that.
paulryanrogers 5y ago
Homestead exemptions for older folks already exist. Perhaps a higher tax rate for those not living in a property?
- giantg2 5y ago
  I would love to see no tax on primary home property at all. Just for commercial/investment properties. Unfortunately, a lot of that would be passed on to renters unless income taxes were assessed differently. But that would also mean drastically changing school funding, which could be a good opportunity but would likely turn this into every more of an impossible shitshow.
  - bumby 5y ago
    I think one argument is this incentivizes in the wrong way regarding home buying. It seems similar to the mortgage interest rate deduction argument: it incentivizes larger homes, it's regressive because it benefits those with more wealth in property than those with less, increases the likelihood of defaults due to people being incentivized towards more expensive homes, and potentially distorts housing prices, related to excessive borrowing.
    - giantg2 5y ago
      Maybe. My idea is to shift property tax to income/capital gains tax. In theory (depending on the structure) that should provide less net income because the number of working years should be lower than the number of years living in any property, and it should impact the higher earners more. This lower net income should lower the amount one is approved for (and hopefully stay the same towards the lower income range). This should reduce the burden on people who are on a fixed income while keeping houses a similar size. Maybe even smaller since the tax is taken off the top rather than perpetually taken off the back end - people tend to notice a smaller paycheck more.
      - bumby 5y ago
        This is an interesting perspective, thanks for clarifying. I think it would also be interesting if it leads to a more equitable method of funding schools.

giantg2 5y ago

I was including that under "or simply buying because they can afford it now". "Of the two, B is a more prudent way of making property prices sane again." Maybe if you taxed unused land. Otherwise that tax will end up increasing a resident's rent/mortgage substantially (as it's a perpetual annual expense). So really, you'd have to tax way above what a normal person can afford (average US household about $75k, so $7500 is 10% gross), and that still wouldn't be much of a disincentive to the wealthy (ignoring the fact the the market would collapse because normal people can't afford to buy it from them nor pay the rent). Now if we did tax unused land, then we are reducing conservation and incentivize development. This is a major concern for some areas, especially around loss of agriculture land, riparian buffers for water quality, etc. If we had work that was more distributed, like remote is for IT, then it's possible the effects of all the capital flooding a handful of markets would be diluted by spreading it across numerous others. A generation or two ago we had many small cities with industrial or manufacturing jobs. Now it seems many of those cities have shrunk while the national population has grown, mostly concentrating in specific metro areas.

ehnto 5y ago
> ignoring the fact the the market would collapse I think that is the point. The market doesn't make sense already for people who actually use the homes because of the investors. If there were property policies that targeted investors and forced their money elsewhere, prices would drop dramatically, making housing affordable again.
- giantg2 5y ago
  "The market doesn't make sense already for people who actually use the homes because of the investors." I think that depends on the area. A true crash, if it were to happen, would affect all though. You'd have people underwater on their mortgages, unable to move by selling or renting out the home and instead being foreclosed. People in some sectors my lose their job because people have less discretionary money (if they'd be smart and save more for retirement to offset the loss on their property). If anything, I would think more people would be looking for cheaper apartments to rent because they were foreclosed, leading them to rent from the rich who have a large share of that type of housing.

pjc50 5y ago

Indeed. Someone recently discovered that fifteen landlords own about 10% of Edinburgh: https://www.thenational.scot/news/19926004.edinburghs-housing-crisis-fifteen-super-landlords-dominating-citys-rental-market/ https://www.thenational.scot/news/19926004.edinburghs-housin...