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The easiest policy decision to fix this would be to stop making housing such a guaranteed (literally, in many cases) investment. Big firms will chase their yiel

The easiest policy decision to fix this would be to stop making housing such a guaranteed (literally, in many cases) investment. Big firms will chase their yields elsewhere if home prices were allowed to go down or even be stagnant for a long time. And while we're at it, let's implement a Georgist land value tax, so that gains in the value of the land itself, which nobody affects directly in a vacuum, does not inure to the landowner, be it BlackRock, The Rock, or your average Joe. But a third of all Americans own homes[0], and I guess by now everyone is used to having the full faith and credit of the United States government be a tailwind to their own labor-free enrichment. [0]: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N

potamic 3y ago
Wouldn't landlords simply pass on any tax on the land to their tenants?
- gottorf 3y ago
  Yes, but that's true of any kind of tax, including traditional property taxes. Landlords are already charging the most the market will bear (including passing on any and all taxes), and similarly tenants are already offering the least amount of rent the market will bear. More importantly for a Georgist LVT scheme vs. regular property taxes is that with the former, you're only taxed on the unimproved value of the land, vs. the value of the lot plus the improvement (i.e. housing) on it. It's arguably the most economically efficient as well as the most socially just form of taxation, as that which is taxed is the thing that nobody created or made valuable.
- ItsMonkk 3y ago
  No. Tenants always pay for the land value. If a new train station opens up and the costs of an apartment have not changed, you better believe the landlord will raise prices given the raised demand from the new value associated from the train station. The monthly payment that a tenant pays has nothing to do with costs. The effect whereby taxes are passed on happen because when you tax something you get less of it, and with less of it it moves along the supply and demand curve and so prices rise. Since the supply of land is fixed, this does not happen with land taxes. The question then becomes do you pay the value to the landlord, or do you pay it to the community?
  - gottorf 3y ago
    > The question then becomes do you pay the value to the landlord, or do you pay it to the community? This is the precise point, and thank you for elucidating it. With an LVT, the value of a highly-desirable piece of land inures to the community as a whole, and not whoever holds the title to that land. If the landowner wishes to come out ahead of this taxation, they are forced to improve it, whether in the form of tilling the soil, mining the minerals, or (most relevantly to our discussion) building a house or apartments on it. As a side effect, it prevents the absurdities you see in many North American cities where there's a huge surface parking lot smack dab in the middle of a dense downtown area.

potamic 3y ago

Wouldn't landlords simply pass on any tax on the land to their tenants?

gottorf 3y ago
Yes, but that's true of any kind of tax, including traditional property taxes. Landlords are already charging the most the market will bear (including passing on any and all taxes), and similarly tenants are already offering the least amount of rent the market will bear. More importantly for a Georgist LVT scheme vs. regular property taxes is that with the former, you're only taxed on the unimproved value of the land, vs. the value of the lot plus the improvement (i.e. housing) on it. It's arguably the most economically efficient as well as the most socially just form of taxation, as that which is taxed is the thing that nobody created or made valuable.
ItsMonkk 3y ago
No. Tenants always pay for the land value. If a new train station opens up and the costs of an apartment have not changed, you better believe the landlord will raise prices given the raised demand from the new value associated from the train station. The monthly payment that a tenant pays has nothing to do with costs. The effect whereby taxes are passed on happen because when you tax something you get less of it, and with less of it it moves along the supply and demand curve and so prices rise. Since the supply of land is fixed, this does not happen with land taxes. The question then becomes do you pay the value to the landlord, or do you pay it to the community?
- gottorf 3y ago
  > The question then becomes do you pay the value to the landlord, or do you pay it to the community? This is the precise point, and thank you for elucidating it. With an LVT, the value of a highly-desirable piece of land inures to the community as a whole, and not whoever holds the title to that land. If the landowner wishes to come out ahead of this taxation, they are forced to improve it, whether in the form of tilling the soil, mining the minerals, or (most relevantly to our discussion) building a house or apartments on it. As a side effect, it prevents the absurdities you see in many North American cities where there's a huge surface parking lot smack dab in the middle of a dense downtown area.