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> Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) Landlords will figure out how to setup wash sal

> Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).

hardwaresofton 4y ago
> Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Ah thanks for this criticism, the amount of loop holes would be pretty staggering/annoying. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes). LGTM, ship it.
- ItsMonkk 4y ago
  The economist in the podcast was explicitly asked why doing things like "heavily tax all non-primary residence homes" wouldn't work. Do you have any argument as to why she was wrong? The many changes that you are proposing, and the tax evasion that will occur, and the modifications to stop those evasions, and the changed behaviors to those modifications are where the complexity lies. A Land Value Tax isn't a complicated thing. In fact, in a single land tax + carbon tax world, many things would be drastically simpler. The beautiful thing about a Land Value Tax is that it is incredibly hard to evade. You own the land, you pay the tax. You don't want to pay the tax? Sell the land. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. This disincentives building, and would harm rent prices over the long run. The land value tax does not have this downside.
  - hardwaresofton 4y ago
    > The economist in the podcast was explicitly asked why doing things like "heavily tax all non-primary residence homes" wouldn't work. Do you have any argument as to why she was wrong? Can you point out the timestamp, I don't see it in the transcript and I just listened and I don't hear any discussion of speicfically heavily taxing non-primary residences. I listened to this same economist making the rounds (another really good indication they're talking their book) on Odd Lots[0][1]. Just as on Odd Lots, the entire conversation was tilted -- they jumped right past the simple solutions and right to the hard-to-understand, change-the-paradigm solution. Of course Redfin wants this solution -- they don't care about the land tax (and they don't have to pay it), but they do want more units to broker. They bang on NIMBYism and zoning problems that could open up space for new housing, and that's great, but this is a different problem right under our noses -- and that's rampant speculation and rent-seeking activity in the housing market. I don't want to be unduly critical here, but the odd lots interview was slightly better. There is so much nuance being lost (a throw away allegory to stopping littering with PR, when the real problem was companies not being taxed for the externality that is plastic/styrofoam packaging). > The many changes that you are proposing, and the tax evasion that will occur, and the modifications to stop those evasions, and the changed behaviors to those modifications are where the complexity lies. A Land Value Tax isn't a complicated thing. In fact, in a single land tax + carbon tax world, many things would be drastically simpler. My initial proposal was a bad one -- someone pointed this out and made a better suggestion, an even more direct tax, right on the capital gains. That's a much better proposal. A land value tax is more complicated than simply increasing capital gains tax (or even my previous suggestion) on rental property. We do not need to create new tax machinery (which is what a land value tax would require) for this, and in the end a land value tax is a proxy for what we really want. What we want is to disincentivize speculative and profit-via-rent-seeking purchasing of homes. The easiest, most straight forward way to do that is to tax that specific activity. Fairweather did this as well -- I don't think it's a good idea to mix in carbon taxes, equity & equality, and other things with this issue. Just stick to the one issue. In practice those issues are related, but that doesn't mean we must solve them all at once. > The beautiful thing about a Land Value Tax is that it is incredibly hard to evade. You own the land, you pay the tax. You don't want to pay the tax? Sell the land. This is stated simply, but implementation will not be simple, vary from state to state, and likely contain lots of the tax evasions/loopholes as well. The refinement on my original suggestion (increasing capital gains on rent-seeking activity) is simpler. > This disincentives building, and would harm rent prices over the long run. The land value tax does not have this downside. It's a market -- building will be disincentivized until supply is constrained enough to raise prices. It will balance out, and this time the speculative turbulent forces will be gone, meaning housing will be easier to predict and plan out. The land value tax is a way for the same circus we have to keep going, and the government to collect more taxes from the circus, but the circus is the problem. It's better to attack the problem directly than indirectly. The land value tax encourages building bigger structures to juice the ROI on a single plot of land. That is not what I want, at least right now, and it is an indirect way of reducing demand. Remove the 2nd, 3rd, 4th, 100th home buyers from the market, and demand will plunge. Maybe our goals are different, but I mean what I said -- I want to disincentivize rent-seeking behavior. In fact, the land value tax is probably actually harmful to my stated goals -- making land more expensive without reducing property tax much would actually make land ownership less affordable for the common homebuyer, and a cost of doing business for professionals who can pass along land ownership taxes to the 1st level tenants (with renters becoming the 2nd level tenants). [0]: https://www.bloomberg.com/news/articles/2022-06-13/transcript-daryl-fairweather-on-the-tax-that-could-fix-housing https://www.bloomberg.com/news/articles/2022-06-13/transcrip... [1]: https://podcasts.google.com/feed/aHR0cHM6Ly93d3cub21ueWNvbnRlbnQuY29tL2QvcGxheWxpc3QvZTczYzk5OGUtNmU2MC00MzJmLTg2MTAtYWUyMTAxNDBjNWIxLzhhOTQ0NDJlLTVhNzQtNGZhMi04YjhkLWFlMjcwMDNhOGQ2Yi85ODJmNTA3MS03NjVjLTQwM2QtOTY5ZC1hZTI3MDAzYThkODMvcG9kY2FzdC5yc3M?sa=X&ved=0CAMQ4aUDahcKEwig87P5qK74AhUAAAAAHQAAAAAQFg https://podcasts.google.com/feed/aHR0cHM6Ly93d3cub21ueWNvbnR...
jjav 4y ago
> slap a 100% capital gains tax on any property that is not owner-occupied This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell? Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option.
- InefficientRed 4y ago
  > This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell? Good point, thanks for the criticism. There are many ways to solve this problem. > Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option. No. First, that incentivizes treating property as an appreciating asset. Second, fuck low taxes on capital gains, period. The tax rate on any capital gain should not be lower than the highest rate on labor. Ever.
  - jjav 4y ago
    > First, that incentivizes treating property as an appreciating asset. The capital gain tax can't be both very high and very low and you seem to have agreed that very high is the wrong incentive. So what remains? A low capital gain has the benefit of making it easy to sell so more people will sell. Not perfect, perhaps, but an incentive to keep unused/unwanted properties on the market is better than pushing people to hold on to them forever which a high capital gain tax will do.
  - dragonwriter 4y ago
    The tax on income should be consistent irrespective of the source. The best argument for favorable LTCG taxes is that naive taxation of long-term capital gains as current-year income in a progressive tax system overtaxes income that takes an extended period to generate and isn't repeatable, but allowances for advance recognition and/or deferral of recognition of income for tax purposes solve that and are also usable for non-capital income that is concentrated over a shorter time than the work to generate it (as is often the case for creative work.) If you want to encourage sales of idle assets of a particular class, tax the asset, don't lower the capital gains tax.

hardwaresofton 4y ago

> Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Ah thanks for this criticism, the amount of loop holes would be pretty staggering/annoying. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes). LGTM, ship it.

ItsMonkk 4y ago
The economist in the podcast was explicitly asked why doing things like "heavily tax all non-primary residence homes" wouldn't work. Do you have any argument as to why she was wrong? The many changes that you are proposing, and the tax evasion that will occur, and the modifications to stop those evasions, and the changed behaviors to those modifications are where the complexity lies. A Land Value Tax isn't a complicated thing. In fact, in a single land tax + carbon tax world, many things would be drastically simpler. The beautiful thing about a Land Value Tax is that it is incredibly hard to evade. You own the land, you pay the tax. You don't want to pay the tax? Sell the land. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. This disincentives building, and would harm rent prices over the long run. The land value tax does not have this downside.
- hardwaresofton 4y ago
  > The economist in the podcast was explicitly asked why doing things like "heavily tax all non-primary residence homes" wouldn't work. Do you have any argument as to why she was wrong? Can you point out the timestamp, I don't see it in the transcript and I just listened and I don't hear any discussion of speicfically heavily taxing non-primary residences. I listened to this same economist making the rounds (another really good indication they're talking their book) on Odd Lots[0][1]. Just as on Odd Lots, the entire conversation was tilted -- they jumped right past the simple solutions and right to the hard-to-understand, change-the-paradigm solution. Of course Redfin wants this solution -- they don't care about the land tax (and they don't have to pay it), but they do want more units to broker. They bang on NIMBYism and zoning problems that could open up space for new housing, and that's great, but this is a different problem right under our noses -- and that's rampant speculation and rent-seeking activity in the housing market. I don't want to be unduly critical here, but the odd lots interview was slightly better. There is so much nuance being lost (a throw away allegory to stopping littering with PR, when the real problem was companies not being taxed for the externality that is plastic/styrofoam packaging). > The many changes that you are proposing, and the tax evasion that will occur, and the modifications to stop those evasions, and the changed behaviors to those modifications are where the complexity lies. A Land Value Tax isn't a complicated thing. In fact, in a single land tax + carbon tax world, many things would be drastically simpler. My initial proposal was a bad one -- someone pointed this out and made a better suggestion, an even more direct tax, right on the capital gains. That's a much better proposal. A land value tax is more complicated than simply increasing capital gains tax (or even my previous suggestion) on rental property. We do not need to create new tax machinery (which is what a land value tax would require) for this, and in the end a land value tax is a proxy for what we really want. What we want is to disincentivize speculative and profit-via-rent-seeking purchasing of homes. The easiest, most straight forward way to do that is to tax that specific activity. Fairweather did this as well -- I don't think it's a good idea to mix in carbon taxes, equity & equality, and other things with this issue. Just stick to the one issue. In practice those issues are related, but that doesn't mean we must solve them all at once. > The beautiful thing about a Land Value Tax is that it is incredibly hard to evade. You own the land, you pay the tax. You don't want to pay the tax? Sell the land. This is stated simply, but implementation will not be simple, vary from state to state, and likely contain lots of the tax evasions/loopholes as well. The refinement on my original suggestion (increasing capital gains on rent-seeking activity) is simpler. > This disincentives building, and would harm rent prices over the long run. The land value tax does not have this downside. It's a market -- building will be disincentivized until supply is constrained enough to raise prices. It will balance out, and this time the speculative turbulent forces will be gone, meaning housing will be easier to predict and plan out. The land value tax is a way for the same circus we have to keep going, and the government to collect more taxes from the circus, but the circus is the problem. It's better to attack the problem directly than indirectly. The land value tax encourages building bigger structures to juice the ROI on a single plot of land. That is not what I want, at least right now, and it is an indirect way of reducing demand. Remove the 2nd, 3rd, 4th, 100th home buyers from the market, and demand will plunge. Maybe our goals are different, but I mean what I said -- I want to disincentivize rent-seeking behavior. In fact, the land value tax is probably actually harmful to my stated goals -- making land more expensive without reducing property tax much would actually make land ownership less affordable for the common homebuyer, and a cost of doing business for professionals who can pass along land ownership taxes to the 1st level tenants (with renters becoming the 2nd level tenants). [0]: https://www.bloomberg.com/news/articles/2022-06-13/transcript-daryl-fairweather-on-the-tax-that-could-fix-housing https://www.bloomberg.com/news/articles/2022-06-13/transcrip... [1]: https://podcasts.google.com/feed/aHR0cHM6Ly93d3cub21ueWNvbnRlbnQuY29tL2QvcGxheWxpc3QvZTczYzk5OGUtNmU2MC00MzJmLTg2MTAtYWUyMTAxNDBjNWIxLzhhOTQ0NDJlLTVhNzQtNGZhMi04YjhkLWFlMjcwMDNhOGQ2Yi85ODJmNTA3MS03NjVjLTQwM2QtOTY5ZC1hZTI3MDAzYThkODMvcG9kY2FzdC5yc3M?sa=X&ved=0CAMQ4aUDahcKEwig87P5qK74AhUAAAAAHQAAAAAQFg https://podcasts.google.com/feed/aHR0cHM6Ly93d3cub21ueWNvbnR...

jjav 4y ago

> slap a 100% capital gains tax on any property that is not owner-occupied This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell? Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option.

InefficientRed 4y ago
> This is backwards. Such a tax will be a strong incentive to never ever sell since the seller would hand off all gains to the tax man. Who would want to sell? Good point, thanks for the criticism. There are many ways to solve this problem. > Instead, you'd want to actually incentivize selling if you're not living on the property. Make the capital gain tax very low, that makes selling it off the most attractive option. No. First, that incentivizes treating property as an appreciating asset. Second, fuck low taxes on capital gains, period. The tax rate on any capital gain should not be lower than the highest rate on labor. Ever.
- jjav 4y ago
  > First, that incentivizes treating property as an appreciating asset. The capital gain tax can't be both very high and very low and you seem to have agreed that very high is the wrong incentive. So what remains? A low capital gain has the benefit of making it easy to sell so more people will sell. Not perfect, perhaps, but an incentive to keep unused/unwanted properties on the market is better than pushing people to hold on to them forever which a high capital gain tax will do.
- dragonwriter 4y ago
  The tax on income should be consistent irrespective of the source. The best argument for favorable LTCG taxes is that naive taxation of long-term capital gains as current-year income in a progressive tax system overtaxes income that takes an extended period to generate and isn't repeatable, but allowances for advance recognition and/or deferral of recognition of income for tax purposes solve that and are also usable for non-capital income that is concentrated over a shorter time than the work to generate it (as is often the case for creative work.) If you want to encourage sales of idle assets of a particular class, tax the asset, don't lower the capital gains tax.