Affordable housing (and rent) is an issue, but this isn't a well thought out solution for the same.
The assumption of malice on the home owner for leaving a home vacant is unfair. If the state wants to impose such a tax, proving malice should be the state's burden. Otherwise, it's a breach of the right to property enshrined in the Constitution.
I understand the knee jerk reaction of HN to downvote, but a counterpoint, especially one explaining the Constitutionality of this proposal would be helpful
'a person may not be deprived of property by the government without “due process of law,” or fair procedures'
I'm obviously not a Constitutional Scholar but how does this a) deprive people of property (it's just taxing empty ones) and b) not come under 'due process of law' (will be voted on by the public)?
Also can't see how it falls under "eminent domain" since the Government isn't seizing these properties - you can still have an empty property, you just can't do it consequence-free.
This proposal is the equivalent of "there's x% unemployment, and 100,000 open jobs. If you insist on not filling those jobs, we'll tax you"
There might be numerous reasons for the vacancy, but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference. Everything else is the government imposing what one does with their private property, which is overstepping it's jurisdiction, especially when the property's use is fully compliant with decades old law
> but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference.
to you.
> Everything else is the government imposing what one does with their private property
But they already do that with "decades old law" - e.g. you (probably) can't run a brothel from your private property in LA. Why is this such a different restriction?
I'm a little confused why this question would arise. Use of property, private or otherwise, for illegal use is, well, illegal. Your example cleanly falls under the illegal classification.
I would like to note that the city council is penalizing private property owners under the assumption of malice, and not in good faith. They've unburdened themselves from proving malice, which is a sneaky encroachment of jurisdiction that they aren't entitled to.
Ownership is a collective phenomenon. There is no such thing as private property. No matter what it's called or how it works, ownership is always embedded in a network of relationships and social and political transactions.
The myopic view that it's all about the owner is wrong to the point of narcissism.
It's never just about the owner. It's about the web of relationships in which these transactions and claims happen, and the effects they have on the rest of the web.
This might be a "philosophical, rhetorical" take on ownership, but by US law, it means something VERY specific, and grants very specific rights to owners, and prohibits those rights to non-owners.
Malice assumes that somebody is doing something wrong/illegal.
That's not the case for this proposal: they simply have different tax rates for different situations.
There are many other ways today in which tax treatment depends on property was used or based on assumptions by the IRS that the tax payer must prove when challenged.
For example: if you sell a house today, you can get favorable tax treatment if during the last 5 years before the sale, you've used it as your primary residence for at least 2 years.
If you didn't, no problem, no malice, you just don't get to benefit from that tax benefit.
This is the simplest solution while still keeping the benefits of prop 13.
People seem to forget that it was intended to prevent forcing people to move because the had capital appreciation but no income growth, and this disproportionately affected low and fixed income families.
Prop 13 was actually intended to make Howard Jarvis and his friends at the Apartment Owners Association even wealthier. He did a great job of selling a tax scam to the public. A property tax law designed to benefit low income families would only have lowered property taxes for primary residences, not for places like the Los Angeles Country Club that pays $200k a year in property taxes on 313 acres of prime land.
There is a version of this that will be on the ballot next year, but with exemptions for all residential property, all agricultural, and for commercial property valued under 2 million.
> There is a version of this that will be on the ballot next year
Oh?
> but with exemptions for all residential property
Oh... So, nothing that applies to residential property (which is what the parent comment was talking about). Taxing some businesses is going to increase tax revenue but it won't fix the housing issue that's crushing most of us renters.
Excellent. But this should not just be for "landlords." It should also be for anyone who buys a property and then just holds on to it vacant, waiting for it to appreciate as if it's a bar of gold. Every vacant home is essentially a theft from someone else who has no home or is priced out of the market. I say for any home that is unoccupied 180 days or more per year :
1. Remove the property's Prop 13 protection, ratcheting the assessed value of the home up to its actual market value.
2. Double the resulting property tax.
3. Remove the owner's ability to deduct any mortgage interest on that property from their income taxes.
I'm specifically saying don't distinguish. The public should strongly incentivize against leaving houses vacant, whether you're a landlord without a tenant, a speculator with an empty house, or some rich dude with 50 houses he visits for a week per year.
Greater Los Angeles has a lower population density than Germany or the UK. It's densely populated for a country, not so much for a city. The County of Los Angeles is somewhat denser at about twice the population density of England. Los Angeles itself is fairly densely populated, at slightly below the population density of London, or 1/4th that of Paris (a city known for resisting skyscrapers).
Ah, the logic of progressivism. These "vacant" homes are already taxed at whatever millage rate is set in Los Angeles...I'm presuming it's more than zero. Furthermore, investment homes do not get tax exemptions, so they're already taxed at higher rates than primary homes. Finally, this is unenforceable without weekly spying to determine if a home is occupied or not. In other words it will cost more to enforce, is potentially a violation of the 4th amendment, and will do nothing to fix homelessness.
California needs to revamp zoning laws and fix the mess that those laws created.
In this country (UK), stamp duty land (the tax you pay when you buy a new house) is higher if you are buying a house that won't be your main residence, so taxing vacant homes is, in principle, a workable tax policy.
I'm sure there would be people that would try to work around the system, same as with every other law.
There's nothing criminal about owning a second house and using electricity. Maybe there's staff members keeping it clean. Maybe there's a pool pump that needs to run. You completely ignore the spectrum of utility consumption for completely vacant, minimally occupied, half occupied, etc. homes that exist on the market.
Investigating and prosecuting would be more expensive than either. Plus proving intent over “oh I forgot to check all my taps before I went out, whoops” is difficult.
To get the perfect fake, just hire somebody to live in your vacant house!
Next up: captchas to turn on the stove. "We need to make sure you're a human that wants to prepare food and not just a weird property owner that wants to pretend that somebody lives here".
Very easy, but it'd be tax evasion which is a serious crime.
Most taxes are pretty trivial to evade if you put some thought in to it. Very few people bother because the reward doesn't outweigh the risk. Saving a few tens of thousands of dollars a year isn't worthwhile if the penalty for being found out is losing everything you saved and years in prison. It's actually one of the few places in criminal law where the penalty actually works as a deterrent.
Indeed, it's worth noting that there's algorithms that can look at the waveforms of your smart meter and decide what appliances you have, often down to the make/model. It's called "disaggregation" in the industry.
The ability of cities in California to require landlords to report rents and vacancies is already well-established. For example in Berkeley landlords must report vacancies within 15 days of tenants quitting.
These are vacant houses, so they're not landlords. But good luck telling the difference between a house that's used 6 months a year and a house that's never occupied.
In Melbourne, Australia, we have a 'vacant landlord' tax and part of what initiated this law was a survey was done of the water consumption of properties in Melbourne - ie little or no water consumption = no one living there.
On that measure, they calculated something like 16% of investment properties were vacant.
In the ACT we have Land Tax. Doesn't matter if there are tenants or not.
"""Land tax applies to residential properties that are not used as principal places of residence, including all residential properties owned by a trust or corporation. Land tax does not apply to commercial properties."""
Given human nature, the ways laws and regulations are made, and the actual price of tap water in a developed country, I don't see this evolving into anything other than landlord figuring a way for their non rented places to consume enough water to pass the test. I'm happy for you guys if it's working, and maybe I'm too jaded, but I know this wouldn't work here in France, only make things worse.
One of the widely available $20 garden watering timers that flushes water down the toilet.
I bet Melbourne already has entrepreneurs selling the installation of this "water surveillance solution" at value pricing: a fraction of the saved occupancy tax!
When designing the law, you just need to consider this possibility as a fraud, and then if you do this you are facing a huge fine or a prison sentence. That's how all taxes work.
Of course some people would still infringe law (#Balkany) but most would not.
I the special case of France: such a law would be really easy to apply, at or least it would without Macron's changes: as everybody living somewhere was paying the «taxe d'habitation», every house without anyone paying for inhabiting it is an empty house. And in practice, with the suppression of the «taxe d'habitation», cities could just raise the level for the «taxe foncière» and it would have the same effect as a taxe on empty houses, without any special work to do.
For people who need money in something besides a bank, but don’t want the hassle of being a landlord. So not really profit, but something they feel will appreciate in value.
I do think Prop 13 should only apply to a primary residence. FL has a homestead exemption, for example, that lowers the assessment and there's a cap on yearly increases.
I was referring to how other states do things (where primary residences get reduction in taxable value), unknowing that Prop 13 applied to all real estate in CA.
That's true, but many of them aren't in any way rational criminals. If you're a drug addict and your body tells you in no unclear terms that you need your fix no matter what you'll have to do to get it, you're not pondering the risk/reward. If you're a multi-million investor that is calculating whether tax evasion is a lucrative opportunity, you usually are: how much is there to be gained, how likely are you to get caught, and how harsh will the punishment be. If they can make an extra 10%, will get caught with a 50% chance and the punishment is having to pay back that 10%, many will do it. If the punishment is having to pay back that extra 10% + 100 times that, very few will.
This kind of tax exactly addresses the problem that Vancouver faced, that enough absent rich people bought houses that there were not homes for regular people and neighborhood businesses struggled or failed because few people lived there.
Not really, but I guess sort of... I think it’d be fine. Maybe it’s because my family moved every 2-3 years my whole childhood, but I don’t think it’s your right to live somewhere forever just because you live there now. If there were no zoning laws, people could always move if they don’t like how the free market is changing their neighborhood. And housing would always be “affordable”.
> If there were no zoning laws, people could always move if they don’t like how the free market is changing their neighborhood. And housing would always be “affordable”.
I think this is a very optimistic view of what would happen.
Zoning laws are not perfect but without them there would be a race to the bottom and the public left to pay for the externalities.
edit:
I might be wrong on this but I think that Victorian England kind of points towards what would happen
How would you like to have bought a house, and then have the two houses next to you bought, torn down, and turned into a gas station? That’s going to kill both your immediate quality of life and your property value. Because that’s what no zoning laws get you — just take a look at Houston TX where this already happens.
Seems lazy for the author of the article to fail to mention any hard numbers for the actual vacancy rate. Without that context it's hard to judge whether this is meaningless grandstanding by the city council or determined problem-solving.
The real problem with homelessness in LA is that the street camping isn't being rolled back now that the terms of the 2007 settlement with the ACLU have been fulfilled. Instead the slums are being normalized. Shelters aren't even full. It makes homelessness an increasing lifestyle choice at a time when unemployment is reaching multi-decade lows.
We need to put a permanent hard ban on street camping and work backwards from that to handle the humanitarian needs of the population.
Shelters in LA have waiting lists, and Section 8 housing has 37,000 families on waiting lists. Sounds like it’s not a “lifestyle choice” for a lot of people.
> Reviews conducted at 60 shelters funded by LAHSA last year found more than half -- 33 -- were not filling all of their beds. Overall, LAHSA-funded shelters had a 78 percent utilization rate, well below the 90 percent required in their contracts.
There’s an important point missing not only in this article but on most conversations on this topic (we had similar proposals in Barcelona), and it’s how long is the mean vacant time.
Given the size of LA, it’s not unlikely that 100k homes is the result of the normal dynamic equilibrium of the city, in other words, these 100k homes are not the same as two months ago, even if the number is quite stable.
My feeling is that these taxes will achieve nothing, and might even raise the cost of rentals, pricing out even more people.
LA towes away homeless people's tiny homes(1). Maybe after another several trillion spent on the war on poverty, drugs and terrorism we will wake up to what's happening here.
Those "wars" aren't meant to be solutions. They are just a way to embezzle money in a way that is politically acceptable and a way to remove poor and mentally ill people from the public instead of helping them.
War on poverty? Just give them a house and food. War on drugs? Just let a doctor administer a safe dose that doesn't make them high. War on Terrorism? Fund their education system and foster good relationships with those countries instead of bombing them.
There are obvious reasons why those solutions haven't been implemented: the population is happy with the way things are going.
Taxing empty property feels like a treatment for symptom rather than the cause. Maybe it would be better if the tax on the land value would be high enough so that it does not make economical sense to keep properties vacant?
But at the same time you don't want to squeeze people who have lived in a particular location for a long time simply because the neighborhood is gentrifying. One proposal that I liked more than the LA proposal is to simply tax additionally properties that are not someone's primary residences (checked against address on the California tax, for example).
If only the land were taxed then people can simply move from overpriced single family homes into denser construction to amortize the land tax over multiple units.
If only land were taxed, single family homes would probably not even exist. They'd all eventually be torn down and replaced with apartment buildings as dense as the law allowed. Not a great consequence either.
The need for city services (which property taxes fund) tends to scale more with population size, than with land area.
I Denmark there are so many difference taxes. The most unfair of them all is "lejeværdi af egen bolig" which directly translates to "Rental value of your own house".
Short version. Had you chosen to rent out your house to someone else instead of living there yourself, you would have made a profit". You have to pay taxes on that value.
"But, hey stop wait a minute", you might say. "I am not renting out my house. I am actually living there all by myself."
Well sorry, that is irrelevant. You still have to pay taxes of that imaginary profit regardless if you live there or not.
Landlords have to pay income tax on the rent. If owner-occupiers didn’t pay tax on the imputed rent, then the owner-occupier would pay a lower income tax than the landlord+renter. In effect, the implicit tax deduction that owner-occupiers get on imputed rent in US Income Taxes is a regressive tax on the renter+landlord. See also this explanation: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation
At first blush, this sort of tax would seem to disincentivize home ownership but all countries listed on the article apart from Switzerland have higher rates than the UK/US.
Curiously, article doesn't mention Denmark, which does have slightly lower rates than UK/US.
It makes sense to tax homeowners who leave their units vacant, since their decision to keep scarce property off the market is a waste that exacerbates the housing crisis.
The same applies to landowners who leave land vacant or underdeveloped when they could develop it into an apartment that alleviates the housing crisis.
It also makes sense to tax landlords who charge market rents. While tenants suffer from the shortage, it is landlords who reap unearned windfalls. While vacant property owners waste value every month that could benefit society, landlords capture that value for themselves, so the city should take a cut.
And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords.
If we combine these 4 taxes, we would have a pretty good system for encouraging vacant landowners to use their land efficiently while also raising revenue from the landlords who benefit from the crisis. But then we would realize that the simpler solution is a higher, fairer property tax to begin with (by repealing Proposition 13).
> And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords.
Never understood that part. Why would we want to "remove the inequality between owner-occupiers and landlords"? What inequality anyway, since landlords often already are owner-occupiers themselves, with extra properties they rent out?
As this Vox article explains[1], if rent is taxed but imputed rent is not, then a homeowner would pay no tax, but if he and his neighbor decided to rent their house to each other (with zero net change in income after rent), then he would pay the tax as a landlord. The decision to exclude imputed rent in US Income Taxes was apparently a decision of the Treasury in designing the first Form 1040 for 1913 despite economists’ arguments for including it in the tax[2].
In US income taxes, the inequality exists to this day. Owner-occupiers get to keep their rental income without paying taxes that landlords would have to pay (though landlords get to deduct maintenance), in effect taxing poorer renters at a higher rate than wealthier homeowners. When someone buys a house instead of renting, he gets an implicit tax deduction on the imputed rent that renters+landlords aren’t allowed to take.
So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
I'm going to read the references you linked more carefully, but after skimming, I already have questions:
> if he and his neighbor decided to rent their house to each other (with zero net change in income after rent), then he would pay the tax as a landlord
If I sold something to you only to immediately buy it back, we'd both pay a tax on the transaction. But this kind of transaction makes no sense anyway, why would anyone want to do it?
The Vox article gives an example of a cross-city house rent, but that's essentially tax evasion scenario. Is it worth trying to fight it by just making everyone obligated to pay the tax?
> If you own a home in the United States, it really pays to live in it rather than to use it as an income-generating asset that helps you afford to rent to live somewhere else.
This may be the core philosophical difference, and I may be wrong about this, but: isn't this situation good? Shouldn't people be encouraged to own a home and actually live in it?
> In my capacity as landlord, I allow myself to live rent-free in my own home rather than explicitly charging myself rent that would be taxed as income.
I've heard this line of thinking before, and it always sounded to me like ridiculous mental gymnastics. Should I pay tax on my phone, or dishwasher, or clothes, or every other thing I own, just because I'm theoretically renting it to myself for free?
> So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
I think the differences are that 1) Equipment can be produced competitively, driving down the profit on an equipment rental business, whereas in certain cities the housing is not allowed to be produced in great numbers, and 2) For a business, the depreciable capital expenses are tax deductible, while land is never depreciated or amortized (since land lasts forever). These factors reduce the profit and income tax for an equipment rental business. On the other hand, where housing is expensive, a large fraction of the rent is payment for the land, which the business cannot deduct.
> Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
Yes, my point in this thread was that individual taxes on vacant, rental, and imputed rental property are more complicated than a tax on the land value (except that Proposition 13 prevents us from increasing property value taxes).
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[ 4.8 ms ] story [ 202 ms ] threadRelated: http://cityobservatory.org/housing-cant-be-affordable_and_be...
I'm obviously not a Constitutional Scholar but how does this a) deprive people of property (it's just taxing empty ones) and b) not come under 'due process of law' (will be voted on by the public)?
Also can't see how it falls under "eminent domain" since the Government isn't seizing these properties - you can still have an empty property, you just can't do it consequence-free.
There might be numerous reasons for the vacancy, but malice, where homeowners are possibly price gouging the rental market for greed, is pretty much the only reason that justifies government interference. Everything else is the government imposing what one does with their private property, which is overstepping it's jurisdiction, especially when the property's use is fully compliant with decades old law
to you.
> Everything else is the government imposing what one does with their private property
But they already do that with "decades old law" - e.g. you (probably) can't run a brothel from your private property in LA. Why is this such a different restriction?
I'm a little confused why this question would arise. Use of property, private or otherwise, for illegal use is, well, illegal. Your example cleanly falls under the illegal classification.
I would like to note that the city council is penalizing private property owners under the assumption of malice, and not in good faith. They've unburdened themselves from proving malice, which is a sneaky encroachment of jurisdiction that they aren't entitled to.
The myopic view that it's all about the owner is wrong to the point of narcissism.
It's never just about the owner. It's about the web of relationships in which these transactions and claims happen, and the effects they have on the rest of the web.
This isn't true from the perspective of the legal system and isn't true from the natural law framework on which US common law is based.
That's not the case for this proposal: they simply have different tax rates for different situations.
There are many other ways today in which tax treatment depends on property was used or based on assumptions by the IRS that the tax payer must prove when challenged.
For example: if you sell a house today, you can get favorable tax treatment if during the last 5 years before the sale, you've used it as your primary residence for at least 2 years.
If you didn't, no problem, no malice, you just don't get to benefit from that tax benefit.
People seem to forget that it was intended to prevent forcing people to move because the had capital appreciation but no income growth, and this disproportionately affected low and fixed income families.
“Jarvis was a lobbyist for the Los Angeles Apartment Owners Association—a group that stood to benefit hugely from decreased property taxes.”
https://la.curbed.com/2016/10/17/13304912/history-propositio...
Oh?
> but with exemptions for all residential property
Oh... So, nothing that applies to residential property (which is what the parent comment was talking about). Taxing some businesses is going to increase tax revenue but it won't fix the housing issue that's crushing most of us renters.
For those who want to see the initiative: https://ballotpedia.org/California_Tax_on_Commercial_and_Ind...
1. Remove the property's Prop 13 protection, ratcheting the assessed value of the home up to its actual market value.
2. Double the resulting property tax.
3. Remove the owner's ability to deduct any mortgage interest on that property from their income taxes.
Attempting to would introduce an unnecessary loophole, as the stated aim would seem to include speculators with empty houses.
If you are correct, then the thief is not the private owner. It is the government that refuses to make it easier to build more houses.
California needs to revamp zoning laws and fix the mess that those laws created.
Just ask the utility companies how much electricity and water are being used. No spying required.
I'm sure there would be people that would try to work around the system, same as with every other law.
FYI - your pitch is equivalent to spying on call metadata vs content, which has been proven to be dangerous enough
How will this be difficult to fake? Just run timers on some appliances, or buy up cheap cryptomining gear that mines at negative ROI and run it.
Next up: captchas to turn on the stove. "We need to make sure you're a human that wants to prepare food and not just a weird property owner that wants to pretend that somebody lives here".
Very easy, but it'd be tax evasion which is a serious crime.
Most taxes are pretty trivial to evade if you put some thought in to it. Very few people bother because the reward doesn't outweigh the risk. Saving a few tens of thousands of dollars a year isn't worthwhile if the penalty for being found out is losing everything you saved and years in prison. It's actually one of the few places in criminal law where the penalty actually works as a deterrent.
See bidgely.com for one example.
On that measure, they calculated something like 16% of investment properties were vacant.
https://www.afr.com/real-estate/residential/vic/investors-ke...
"""Land tax applies to residential properties that are not used as principal places of residence, including all residential properties owned by a trust or corporation. Land tax does not apply to commercial properties."""
I bet Melbourne already has entrepreneurs selling the installation of this "water surveillance solution" at value pricing: a fraction of the saved occupancy tax!
Of course some people would still infringe law (#Balkany) but most would not.
I the special case of France: such a law would be really easy to apply, at or least it would without Macron's changes: as everybody living somewhere was paying the «taxe d'habitation», every house without anyone paying for inhabiting it is an empty house. And in practice, with the suppression of the «taxe d'habitation», cities could just raise the level for the «taxe foncière» and it would have the same effect as a taxe on empty houses, without any special work to do.
Prop 13 essentially broke the concept of property tax in California.
Prop 13 incentivizes not moving, and it only gets better the longer you dont move
Are you referring to the almost comically small property tax reduction for primary residences? Or to the mortgage interest deduction?
Well, if they catch you, depends on the fine, you'll pay them all at once. They don't have to catch all, just make example of a few.
Or you can check if it was anyone's primary (and thus, tax) residence at any point in the year prior. Or check the utility consumption. Etc.
I think this is a very optimistic view of what would happen.
Zoning laws are not perfect but without them there would be a race to the bottom and the public left to pay for the externalities.
edit:
I might be wrong on this but I think that Victorian England kind of points towards what would happen
I know it's not 100% applicable but ...
http://blog.urbanleasing.com/five-ways-houstons-lack-of-zoni...
The real problem with homelessness in LA is that the street camping isn't being rolled back now that the terms of the 2007 settlement with the ACLU have been fulfilled. Instead the slums are being normalized. Shelters aren't even full. It makes homelessness an increasing lifestyle choice at a time when unemployment is reaching multi-decade lows.
We need to put a permanent hard ban on street camping and work backwards from that to handle the humanitarian needs of the population.
https://www.kqed.org/news/11668623/why-do-thousands-of-l-a-s...
I hope this time it's the real and true socialism, not the bad kind of socialism that fails every time the minute you run out other people's money.
Given the size of LA, it’s not unlikely that 100k homes is the result of the normal dynamic equilibrium of the city, in other words, these 100k homes are not the same as two months ago, even if the number is quite stable.
My feeling is that these taxes will achieve nothing, and might even raise the cost of rentals, pricing out even more people.
1- https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-sei...
War on poverty? Just give them a house and food. War on drugs? Just let a doctor administer a safe dose that doesn't make them high. War on Terrorism? Fund their education system and foster good relationships with those countries instead of bombing them.
There are obvious reasons why those solutions haven't been implemented: the population is happy with the way things are going.
The need for city services (which property taxes fund) tends to scale more with population size, than with land area.
Short version. Had you chosen to rent out your house to someone else instead of living there yourself, you would have made a profit". You have to pay taxes on that value.
"But, hey stop wait a minute", you might say. "I am not renting out my house. I am actually living there all by myself."
Well sorry, that is irrelevant. You still have to pay taxes of that imaginary profit regardless if you live there or not.
The tax rule (in Danish) https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm
WTF? Yes, WTF but true.
What's the rationale?
In fact, every other "rationale" for taxes is B.S.
At first blush, this sort of tax would seem to disincentivize home ownership but all countries listed on the article apart from Switzerland have higher rates than the UK/US.
Curiously, article doesn't mention Denmark, which does have slightly lower rates than UK/US.
https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
The same applies to landowners who leave land vacant or underdeveloped when they could develop it into an apartment that alleviates the housing crisis.
It also makes sense to tax landlords who charge market rents. While tenants suffer from the shortage, it is landlords who reap unearned windfalls. While vacant property owners waste value every month that could benefit society, landlords capture that value for themselves, so the city should take a cut.
And if we charge landlords a tax for the high rents they collect, then we should also charge homeowners for the imputed rent they would have collected, to remove the inequity between owner-occupiers and landlords.
If we combine these 4 taxes, we would have a pretty good system for encouraging vacant landowners to use their land efficiently while also raising revenue from the landlords who benefit from the crisis. But then we would realize that the simpler solution is a higher, fairer property tax to begin with (by repealing Proposition 13).
Never understood that part. Why would we want to "remove the inequality between owner-occupiers and landlords"? What inequality anyway, since landlords often already are owner-occupiers themselves, with extra properties they rent out?
In US income taxes, the inequality exists to this day. Owner-occupiers get to keep their rental income without paying taxes that landlords would have to pay (though landlords get to deduct maintenance), in effect taxing poorer renters at a higher rate than wealthier homeowners. When someone buys a house instead of renting, he gets an implicit tax deduction on the imputed rent that renters+landlords aren’t allowed to take.
So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
[1]: https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation
[2]: Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008
> if he and his neighbor decided to rent their house to each other (with zero net change in income after rent), then he would pay the tax as a landlord
If I sold something to you only to immediately buy it back, we'd both pay a tax on the transaction. But this kind of transaction makes no sense anyway, why would anyone want to do it?
The Vox article gives an example of a cross-city house rent, but that's essentially tax evasion scenario. Is it worth trying to fight it by just making everyone obligated to pay the tax?
> If you own a home in the United States, it really pays to live in it rather than to use it as an income-generating asset that helps you afford to rent to live somewhere else.
This may be the core philosophical difference, and I may be wrong about this, but: isn't this situation good? Shouldn't people be encouraged to own a home and actually live in it?
> In my capacity as landlord, I allow myself to live rent-free in my own home rather than explicitly charging myself rent that would be taxed as income.
I've heard this line of thinking before, and it always sounded to me like ridiculous mental gymnastics. Should I pay tax on my phone, or dishwasher, or clothes, or every other thing I own, just because I'm theoretically renting it to myself for free?
> So if we were to design a tax on hoarding scarce land, logically we would want to avoid the mistake that the US Treasury made in 1914, and include vacant landowners, rentiers, and homeowners in the same bucket. A normal property tax according to value gets this right by treating them all the same.
Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
> Again, this probably just betrays how little I know on the topic, but: couldn't we just tax land and housing separately?
Yes, my point in this thread was that individual taxes on vacant, rental, and imputed rental property are more complicated than a tax on the land value (except that Proposition 13 prevents us from increasing property value taxes).