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Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense

Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense of a vacancy? It's the same problem, just with different clothes: a blighted building in the middle of an expensive city rather than a vacant field in the middle of an expensive suburb. I can't speak to Austin, but I would expect to see the same thing in the form of low-value land use. It happens whenever appreciation competes with or outstrips productive activity. Which is extremely common. Investors should pay the collective for exclusive use of a scarce resource, they should not get paid for holding exclusive access to a scarce resource. That's bad and backwards. Unless you're an investor, of course ;)

JumpCrisscross 3y ago
> Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense of a vacancy? Yes, but that's due to financing restrictions. Unless one is planning on putting a tax burden on every piece of real estate analogous to full leverage, the cost of financing an empty unit providing unsufficient motivation to fill it seems to imply a similarly-scaled LVT wouldn't either.
- smallmancontrov 3y ago
  These loans are typically fixed rate and long term. The cost of leverage is nothing next to what appreciation has been, and it's the latter that LVT seeks to neutralize. So it would increase the incentive to actually use the land rather than simply hold a deed to the land. Again, I think that calculating LVT is highly problematic. If you ask me to defend it, I simply won't. Rolling leases are the way.
  - pydry 3y ago
    >Again, I think that calculating LVT is highly problematic. It isn't possible to calculate the tax with 100% accuracy, but that doesn't mean it is problematic to calculate with a close enough approximation. The process of multivariate analysis is relatively simple, relies upon public data, can be open sourced and is self correcting over time (with the addition of new data via sales). It's also absolutely impossible to avoid. $0 needs to be spent on enforcement. You can't cart land off to a tax haven. If you don't pay you forfeit the land and property - simple. You don't need legions of forensic tax accountants to uncover a trail of transactions like you would for income taxes. You don't need arbitrary rules about where somebody's main residence is. You don't need elaborate machine learning models to detect VAT carousel fraud. You need a bunch of publicly available data and a very simple model.

JumpCrisscross 3y ago

> Isn't NY notorious for having a "paradoxically" huge vacancy rate due to the strong incentive to never show a decrease in rent, even if it comes at the expense of a vacancy? Yes, but that's due to financing restrictions. Unless one is planning on putting a tax burden on every piece of real estate analogous to full leverage, the cost of financing an empty unit providing unsufficient motivation to fill it seems to imply a similarly-scaled LVT wouldn't either.

smallmancontrov 3y ago
These loans are typically fixed rate and long term. The cost of leverage is nothing next to what appreciation has been, and it's the latter that LVT seeks to neutralize. So it would increase the incentive to actually use the land rather than simply hold a deed to the land. Again, I think that calculating LVT is highly problematic. If you ask me to defend it, I simply won't. Rolling leases are the way.
- pydry 3y ago
  >Again, I think that calculating LVT is highly problematic. It isn't possible to calculate the tax with 100% accuracy, but that doesn't mean it is problematic to calculate with a close enough approximation. The process of multivariate analysis is relatively simple, relies upon public data, can be open sourced and is self correcting over time (with the addition of new data via sales). It's also absolutely impossible to avoid. $0 needs to be spent on enforcement. You can't cart land off to a tax haven. If you don't pay you forfeit the land and property - simple. You don't need legions of forensic tax accountants to uncover a trail of transactions like you would for income taxes. You don't need arbitrary rules about where somebody's main residence is. You don't need elaborate machine learning models to detect VAT carousel fraud. You need a bunch of publicly available data and a very simple model.