6 ms·

High mortgage rates mean that is only more expensive for “poor” people, while the wealthy will continue on their merry way. The US desperately needs a land-valu

High mortgage rates mean that is only more expensive for “poor” people, while the wealthy will continue on their merry way. The US desperately needs a land-value tax as a step towards making home ownership costly and depreciating, removing the home-as-investment angle. Who wants a nest egg that means giving up your dwelling in the case of actually needing to liquidate it anyway? (Oops, got expensive medical bills? Now you’re sick _and_ homeless!) Actions like this will unfortunately destroy a lot of older middle-class wealth in the short-term, but longer term it would hurt the upper-classes the most (and even short-term it’s not like the upper classes haven’t been winning every transaction anyway). And the longer we let this problem fester, the more lives we disrupt of the younger generations who have seen countless ladders pulled up in front of them.

hellisothers 5y ago
How is it only more expensive for poor people but not wealthy people? Did you mean less accessible?
- sauwan 5y ago
  Not OP, but guessing he means wealthy people have more opportunities to buy without financing when the cost of financing seems to overtake other opportunities.
- goalieca 5y ago
  How many rich people take out a mortgage?
  - xboxnolifes 5y ago
    Most of them
  - hellisothers 5y ago
    Yea, even if you pay with cash you’re probably financing it after you own the property.
  - alexanderdmitri 5y ago
    Here's an article on mortgage/financing options for the ultra-wealthy: https://www.ft.com/content/ebf761ea-fcc8-4fd4-a636-87561398da3e https://www.ft.com/content/ebf761ea-fcc8-4fd4-a636-87561398d...
  - iso1210 5y ago
    A better question is probably how many rich people need to take out a mortgage to fund their housing needs. Using equity for cheap money to buy more equity makes perfect sense.
frumper 5y ago
States have property taxes. You can argue how they're implemented, every state is different, but to completely dismiss that they exist doesn't help. If your solution is to unfortunately destroy a large group of people than maybe you don't have the best solution.
- merrywhether 5y ago
  The easiest argument against current property taxes is that they have completely failed to prevent the current situation. They do not properly incentive the efficient use of land, so mini-kings get to sit in their mini-castles and argue against densification while looking down on the new-comer peasants. And the current situation is already “destroying” peoples lives as their courses into “normal” adulthood are interrupted and delayed, so it’s somewhat a question of who feels the effects. The difference with devaluing homes is that people may lose some wealth, but they still have a home! Investments are supposed to risky, that’s why you make money off of them sometimes; so let’s make it that way for houses.
  - frumper 5y ago
    I fail to see how to tax land at a rate that would hurt rich cash loaded people/corporations and still make homes affordable. If your plan works to the point people can afford the taxes on the cheap homes then the rich people can also afford to have neighborhoods of rentals. Please present your idea though, maybe I'm not understanding.
    - jrs235 5y ago
      It's not about hurting rich people. Where is this class warfare idea coming from?! It's about making the best use of the land. A land tax encourages building denser housing and therefore increasing the number of homes available to people, putting downward pressure on housing (and rent) prices. A land tax does not go up if the dwelling on it go up in value/price. It encourages replacing single family homes with denser dwellings.
  - silicon2401 5y ago
jackcviers3 5y ago
Why? Who would this system benefit? You destroy the housing market to replace it with rich landlords owning apartment buildings and charging increasing amounts of rent to more poorer people who accumulate no equity. In your get sick scenario, you are still homeless but owe massive medical bills. After paying off the medical bills with appreciating uome ownership, your credit is still good, and you can eventually buy another house. All your land-value tax does is punish wealth accumulation. What is the reform you wish to create? How does this help anyone?
- iso1210 5y ago
  Landlords already charge the maximum rent they can do. LVT doesn't punish wealth accumulation, it punishes monopolies
Justin_K 5y ago
Let's tax the rich more! That will solve all our problems! I'm sure the gov won't burn through the extra revenue and come back asking for more!
- beeboop 5y ago
  It's an entirely legitimate use of tax to disincentivize behavior that is a social net negative. That it's overwhelmingly the upper class that would be hit by it only means that they're the ones benefiting tremendously from everyone else's suffering.
queuebert 5y ago
Part of the reason people like Trump have very fancy residences is because they are exempt under bankruptcy laws. So he can store his wealth as gold plating on his toilet, file for bankruptcy, get out of all the loans he can't pay, then continue on with his lackluster investing. I bet even a tax on the value won't remove that very lucrative use of it. What a principal residence as an investment does for most middle to upper-middle class Americans is force them to save some money so that they have some amount of wealth when they retire. I don't know if that is important or not, since it's not very liquid and has dire consequences if you lose it.
- MR4D 5y ago
  Owning a residence gives you two important things in retirement: 1 - it lowers your monthly costs (no house payment/rent to pay) 2 - it provides some protection against inflation so even in bad inflation, your housing cost won’t change.
- leereeves 5y ago
  > Part of the reason people like Trump have very fancy residences is because they are exempt under bankruptcy laws. So he can store his wealth as gold plating on his toilet, file for bankruptcy, get out of all the loans he can't pay, then continue on with his lackluster investing A real issue, but a bad example. Trump has never declared personal bankruptcy. A few of his 500 businesses have gone bankrupt, but all that happens when an LLC goes bankrupt is that the owners lose their investments and creditors take over the company.
  - beeboop 5y ago
    i wish people would stop falling over themselves to post any random factoid about trump they read on facebook 7 years ago, it's very often missing context or just flat out wrong and really diminishes the quality of conversation that can be had
- rswskg 5y ago
  How is property exempt from bankruptcy? That's the first thing that goes usually?
IanDrake 5y ago
Property taxes are regressive, so I'm not sure how that would help. You know what really killed the rich? SALT deduction limits in the Trump tax plan. That policy actually caused the rich to pay more in taxes. That's why CA tried to work around it by trying to classify property taxes as a charitable donation. Wait and see, the Dems will pass a new sweeping tax plan that won't include the SALT deduction limit and they'll claim that it taxes the rich more.
- harambae 4y ago
  I'm not sure why you're being downvoted so heavily. It's true, SALT deduction limits did hit the rich and now that may be undone [0] (regardless of what you think of Trump and regardless of whether Trump did it to punish blue states) [0] https://www.washingtonpost.com/outlook/2021/11/05/salt-tax-deduction-cap-wealthy-regressive/ https://www.washingtonpost.com/outlook/2021/11/05/salt-tax-d...
dano 5y ago
Any serious conversation about changing the equation needs to start from the perspective of capacity utilization. We certainly need to increase the number of housing units, however, if the utilization rate remains the same or drops, you've really not created any new housing. In southern California we see new projects being built that are $3,600 / month for a 600 sqft 1br/1ba apartment in mediocre neighborhoods or next to freeways. From a bay area perspective, this may seem cheap, but wages are lower here and IPO opportunities are not as rich. Looking at public documents for the REIT that owns one of these aforementioned luxury properties showed a 40% occupancy rate, which wasn't a surprise given the price. So until municipalities want to really study the overall capacity and exactly how it is being used, changing tax policies will be unlikely to address whatever the real issue happens to be. Our problem is not simply "supply and demand", it's more subtle than that. If I were still in the multi-family residential marketplace I'd be buying and converting to short-term rentals in cute neighborhoods. It would be the highest and best use of capital deployment under current legal structures. Wouldn't a SANKEY diagram showing incoming units and utilization of such units be a nice way of seeing the problem and making adjustments? Having such data would be fascinating.

hellisothers 5y ago

How is it only more expensive for poor people but not wealthy people? Did you mean less accessible?

sauwan 5y ago
Not OP, but guessing he means wealthy people have more opportunities to buy without financing when the cost of financing seems to overtake other opportunities.
goalieca 5y ago
How many rich people take out a mortgage?
- xboxnolifes 5y ago
  Most of them
- hellisothers 5y ago
  Yea, even if you pay with cash you’re probably financing it after you own the property.
- alexanderdmitri 5y ago
  Here's an article on mortgage/financing options for the ultra-wealthy: https://www.ft.com/content/ebf761ea-fcc8-4fd4-a636-87561398da3e https://www.ft.com/content/ebf761ea-fcc8-4fd4-a636-87561398d...
- iso1210 5y ago
  A better question is probably how many rich people need to take out a mortgage to fund their housing needs. Using equity for cheap money to buy more equity makes perfect sense.

frumper 5y ago

States have property taxes. You can argue how they're implemented, every state is different, but to completely dismiss that they exist doesn't help. If your solution is to unfortunately destroy a large group of people than maybe you don't have the best solution.

merrywhether 5y ago
The easiest argument against current property taxes is that they have completely failed to prevent the current situation. They do not properly incentive the efficient use of land, so mini-kings get to sit in their mini-castles and argue against densification while looking down on the new-comer peasants. And the current situation is already “destroying” peoples lives as their courses into “normal” adulthood are interrupted and delayed, so it’s somewhat a question of who feels the effects. The difference with devaluing homes is that people may lose some wealth, but they still have a home! Investments are supposed to risky, that’s why you make money off of them sometimes; so let’s make it that way for houses.
- frumper 5y ago
  I fail to see how to tax land at a rate that would hurt rich cash loaded people/corporations and still make homes affordable. If your plan works to the point people can afford the taxes on the cheap homes then the rich people can also afford to have neighborhoods of rentals. Please present your idea though, maybe I'm not understanding.
  - jrs235 5y ago
    It's not about hurting rich people. Where is this class warfare idea coming from?! It's about making the best use of the land. A land tax encourages building denser housing and therefore increasing the number of homes available to people, putting downward pressure on housing (and rent) prices. A land tax does not go up if the dwelling on it go up in value/price. It encourages replacing single family homes with denser dwellings.
- silicon2401 5y ago

jackcviers3 5y ago

Why? Who would this system benefit? You destroy the housing market to replace it with rich landlords owning apartment buildings and charging increasing amounts of rent to more poorer people who accumulate no equity. In your get sick scenario, you are still homeless but owe massive medical bills. After paying off the medical bills with appreciating uome ownership, your credit is still good, and you can eventually buy another house. All your land-value tax does is punish wealth accumulation. What is the reform you wish to create? How does this help anyone?

iso1210 5y ago
Landlords already charge the maximum rent they can do. LVT doesn't punish wealth accumulation, it punishes monopolies

Justin_K 5y ago

Let's tax the rich more! That will solve all our problems! I'm sure the gov won't burn through the extra revenue and come back asking for more!

beeboop 5y ago
It's an entirely legitimate use of tax to disincentivize behavior that is a social net negative. That it's overwhelmingly the upper class that would be hit by it only means that they're the ones benefiting tremendously from everyone else's suffering.

queuebert 5y ago

Part of the reason people like Trump have very fancy residences is because they are exempt under bankruptcy laws. So he can store his wealth as gold plating on his toilet, file for bankruptcy, get out of all the loans he can't pay, then continue on with his lackluster investing. I bet even a tax on the value won't remove that very lucrative use of it. What a principal residence as an investment does for most middle to upper-middle class Americans is force them to save some money so that they have some amount of wealth when they retire. I don't know if that is important or not, since it's not very liquid and has dire consequences if you lose it.

MR4D 5y ago
Owning a residence gives you two important things in retirement: 1 - it lowers your monthly costs (no house payment/rent to pay) 2 - it provides some protection against inflation so even in bad inflation, your housing cost won’t change.
leereeves 5y ago
> Part of the reason people like Trump have very fancy residences is because they are exempt under bankruptcy laws. So he can store his wealth as gold plating on his toilet, file for bankruptcy, get out of all the loans he can't pay, then continue on with his lackluster investing A real issue, but a bad example. Trump has never declared personal bankruptcy. A few of his 500 businesses have gone bankrupt, but all that happens when an LLC goes bankrupt is that the owners lose their investments and creditors take over the company.
- beeboop 5y ago
  i wish people would stop falling over themselves to post any random factoid about trump they read on facebook 7 years ago, it's very often missing context or just flat out wrong and really diminishes the quality of conversation that can be had
rswskg 5y ago
How is property exempt from bankruptcy? That's the first thing that goes usually?

IanDrake 5y ago

Property taxes are regressive, so I'm not sure how that would help. You know what really killed the rich? SALT deduction limits in the Trump tax plan. That policy actually caused the rich to pay more in taxes. That's why CA tried to work around it by trying to classify property taxes as a charitable donation. Wait and see, the Dems will pass a new sweeping tax plan that won't include the SALT deduction limit and they'll claim that it taxes the rich more.

harambae 4y ago
I'm not sure why you're being downvoted so heavily. It's true, SALT deduction limits did hit the rich and now that may be undone [0] (regardless of what you think of Trump and regardless of whether Trump did it to punish blue states) [0] https://www.washingtonpost.com/outlook/2021/11/05/salt-tax-deduction-cap-wealthy-regressive/ https://www.washingtonpost.com/outlook/2021/11/05/salt-tax-d...

dano 5y ago

Any serious conversation about changing the equation needs to start from the perspective of capacity utilization. We certainly need to increase the number of housing units, however, if the utilization rate remains the same or drops, you've really not created any new housing. In southern California we see new projects being built that are $3,600 / month for a 600 sqft 1br/1ba apartment in mediocre neighborhoods or next to freeways. From a bay area perspective, this may seem cheap, but wages are lower here and IPO opportunities are not as rich. Looking at public documents for the REIT that owns one of these aforementioned luxury properties showed a 40% occupancy rate, which wasn't a surprise given the price. So until municipalities want to really study the overall capacity and exactly how it is being used, changing tax policies will be unlikely to address whatever the real issue happens to be. Our problem is not simply "supply and demand", it's more subtle than that. If I were still in the multi-family residential marketplace I'd be buying and converting to short-term rentals in cute neighborhoods. It would be the highest and best use of capital deployment under current legal structures. Wouldn't a SANKEY diagram showing incoming units and utilization of such units be a nice way of seeing the problem and making adjustments? Having such data would be fascinating.