3 ms·
> this encourages the property owners to "shit or get off the pot" in terms of utilizing the property: And why is that good? Imagine that someone has good re
by tjic 14y ago
> this encourages the property owners to "shit or get off the pot" in terms of utilizing the property:
And why is that good?
Imagine that someone has good reason to believe that item X will be worth $1,000 in three years, which means that in a 3% interest rate regime it has a NPV (Net Present Value) of $915.
Right now he's got an offer on the table for $800, but if he accepts that and the resource gets used up, he (and society) lose out on $115 of value.
Slap a 10% annual tax on the asset, and he WILL sell it, right now.
...and, congratulations, you've destroyed value.
- crazygringo 14y agoWhat about the value that someone else could created by using that property productively over those three years? And the likelihood that, three years from now, item X turns out not to be worth $1,000 at all? Then that value has been destroyed in your scenario. This is why property tax can be a good thing: set properly, it creates an incentive for conserving property for future productive uses when those seem likely enough, but also incentivizes people not to waste current possible productivity.