If you're participating in a conversation between adults in the 21st century, yeah. We've got a word for it, even if it's like garlic to the private equity vampires on this website.
I think the point of the article is correct; the issue with CA is everyone wants to live there, including rich people. If we try and tax them then they'll leave just long enough to not pay state income tax, if we tax property values then the state actually gets the tax and doesn't miss out on job creation or future revenue.
Red states have implemented low income tax with heavy property taxes (think Texas) with great results. and although I'm sure California would just manage to mess it up it's a great idea.
I would not frame Texas as having great results. If anything places should get as little like Texas as they possibly can. I mean they send you to jail for an abortion or a gram of weed. It's living under Shari-yall law.
There’s nothing California can learn from Texas, but if you want to live like Texas or Oklahoma, you can just move to Bakersfield, California hint: that part of California sucks.
Yeah, that's unlikely. There are certain classes of renters it can't be passed on to during their rental term, but I'm guessing it can and likely would in general.
People can also sell their land/homes and move. It's less liquid than other assets, but less doesn't mean people won't sell/leave.
In Massachusetts it’s legal to pass on real property tax increases during the term of a residential lease, provided the lease contains specific clauses. (Most leases do, as a result.) And most commercial leases are triple-net, meaning the tenant is also on the hook for increases.
I would be surprised if most land consumption taxes (whether structured as property or land) would not get directly passed through to the beneficial consumers of that land quite quickly, or for their privilege to consume that land to be terminated/non-renewed at the expiration.
One of the benefits of a land value tax is that it has zero dead weight loss: because there's a fixed supply of land, the tax won't cause less of it to be around, and you don't lose out on the beneficial transactions that property tax can prevent.
There are several key benefits. My primary concern is that there are generally no market comparables for undeveloped land in developed areas.
If I believe it’s over-stated, I can appeal my property tax assessment by using comparables for nearby developed property. There is no equivalent market-based process for land values alone.
This is a reasonable and common concern, and one I shared until I looked into it in fine detail. Turns out it's far easier to estimate the value of land that things sit on than the entire property value, and most of the country actually operates on continually updated estimates of total property value rather than just land.
There's several anchoring sales nearby, you can regress out from all sales, etc. etc. And it's smoothly varying for nearby parcels, with very little change!
I hope we agree that we need more taxes, it doesn't matter if they are taxes on billionaires, taxes on property, taxes on sales, taxes on crypto, or taxes on the poor. Without taxes we can't have a civilized society.
I think we should start with changing taxes on corporations/companies, specifically being able to indefinitely write off expenses against income regardless of size/etc...
Most companies take profit eventually, but if it's possible for a company to decide to never take profit and grow/acquire perpetually without paying any taxes on gross income, that's a problem.
That'd be like individuals being able to deduct living expenses and having uncapped pre-tax 401k contributions.
The ratio of the economy that gets collected as taxes has only gone up over time. Do you have an idea for how much should be collected as some ideal ratio? At what point do the effects of taxation become counterproductive?
Well, the general economic consensus is that for income taxes, the revenue-maximizing peak of the Laffer curve is around 65-70% [1]. Revenue maximization isn't necessarily the right primary goal, though.
Same back at you. Clearly you think they’re too high. So what is the correct ratio?
The straightforward answer is there is no correct ratio. The best tax regime is the one that allows for sufficient funding of necessary and desired services and long-term economic investment while also balancing wealth creation with wealth inequality. That number isn’t fixed and it’s clear that it shouldn’t be evenly borne by the population as a whole.
I made no such claim. I simply asked someone who said that we can all agree taxes must go up to what level they were referring to and how they chose the number. If there is no fixed ratio such as you say, then their claim is clearly false.
Sorry, but this is bullshit. You’re not fooling anyone. If you think the GP needs to provide an ideal tax ratio, so do you. You don’t get to opt out and pretend you’re above it all.
Old voters like the house they brought 20 years ago for 100k being worth 1.5 million today. They also like not paying taxes on that 1.4m in wealth accumulation.
Whats wild is the commercial side didn’t get closed. I understand the argument for individuals or households (I don’t love it - I’m on the wrong side of it, but at least it’s somewhat defensible), but if you’re running a business and your income isn’t keeping up with inflation, that’s called failing.
If the SEIU healthcare workers union is going to amend the state constitution, they should chip away at Proposition 13 instead of amending the constitution to make a bad tax that encourages capital flight.
It drives me crazy that California voters will wave through every single regressive sales tax hike that is placed in front of them, yet they will crawl through broken glass to vote against a property tax hike on corporations.
Acting like a jerk is not the best way to deal with bad content. Our software autokills generated comments and we downweight slop posts multiple times daily – when we know about it. Maybe the way to deal with junk content is not to create more junk content? You can just email us.
Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes. If "net worth is not real" neither is equity in real estate.
People absolutely make that argument about property taxes. That's where deferrals or abatements for e.g. elderly or low-income homeowners, or caps on property tax increases come from. Someone may own a home that property taxes price them out of, forcing them to leave their community because they can't actually conjure money from a higher priced home.
I think a lot of tax authorities also don't reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.
This is all conceding the argument already. Many of us would happily accept these sorts of limitations on a wealth tax if it means there is a wealth tax.
> It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes.
I don't like property taxes either, and at minimum would rather they were called something else, and preferably replaced with per-service charges where possible.
But either way they exist to pay for things, and not to just degrade the value of your property simply because you worked to own it.
It's interesting to see the level of discourse change across time as these same points are brought up again and again.
It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.
Narrative control and algorithm driven propaganda is evident - Most people scrolling any kind of algorithmic feed would be shocked at the intimate detail the algorithm knows their mind, proclivities, aversions.
Another evident thing is that people will start retreating from internet as this gets worse (With LLMs accelerating the trend).
It's the opposite. You've been drip-fed "billionaires cause all the problems" for a few years, and now, as you say, you feel all sorts of things about them, which can rationalise all sorts of bad ideas.
Wealth inequality is worse than any other time in human history. What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.
> Wealth inequality is worse than any other time in human history
This is circular. Wealth inequality:
1. Isn't real. It's a paper value that would not survive contact with reality.
2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.
3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.
> What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
Absolutely real when Musk can tilt elections in America and fund far right parties in other countries. Your whole “paper wealth” argument holds no weight.
He didn't have to tilt anything in America. The Democrats ran the worst platform in living memory for the 2024 election, and the sooner they stop blaming billionaires for everything and start looking at themselves to improve the sooner they will get back the popular vote.
So did many other people. Any popular podcast will do that. Any media organisation has editorial bias, either in story presentation or even in selection. I don't see why Elon Musk would be singled out there, other than he's an ex-Democrat, and thus like all the ex-Democrats is a target of constant negative mentioning in a lot of one side's media.
> Wealth inequality is worse than any other time in human history
And humans are wealthier than any time in history. They have access to robot slaves that can wash dishes and clothes for them. They can access fruits grown over 1000 miles away for 69c. They have potions that can cure cancer. They have the database of all human intelligence in their pocket, accessible from anywhere on the globe. They have individualized transportation that can travel over 2 miles a minute. They have super intelligent thinking machines for cents.
A big proportion of Americans are struggling to make ends meet on a fulltime wage. No amount of luxuries make up for a lack of necessities. Your argument might have had a smidge of credibility 15 years ago.
That's just the consequence of various other policies that a lot of them probably voted for (or didn't vote against hard enough). If you transform a country a certain way, promising more and more from the government for some people, then everyone else has to pay more. If you pay for it with ZIRP, then you're going to need to pay it back.
The last thing you should do at that point is vote for more policies that will destroy economic activity in the name of "fairness". That's how you got here.
Absolutely ridiculous statement, it's not an accurate measure but it's definitely a good measure of money.
If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.
If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.
Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?
If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.
I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.
Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.
I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....
even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.
> even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
This is utter madness. What will happen is businesses will move en masse to places with economic systems not overrun by those driven clinically insane by years of listening to their favourite pundit blame billionaires for everything.
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"
But you don't need to be taxed in actual dollar value you can be taxed in percentage of your share ownership.
It might not work with real estate but with stock this is trivial
On the contrary - it's trivial for controlling shareholders to direct the company to issue more stock to them and thus dilute the shares that were taxed. What do you propose, that companies can no longer issue stock after some of the stock has been taxed?
And what about non-divisible assets like real estate? There's nothing that prevents the government from forcing real estate to be held by LLCs instead of individuals, then shares in the LLC could slowly be taxed by the government. So what happens in 20 years when the government owns 50.1% of all the LLC shares that comprise the ownership of the $100 million Hollywood mansion? You're going to let a bureaucrat kick out the A-lister who lives there and put it up for auction? Attempt to sell it to someone who knows full well the same would happen to him?
It's very, very hard to design a wealth tax that doesn't end up being an assault on private ownership in all forms.
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
No. It will be higher. Say you spend your money on shares advertised at ramping prices like this:
400000 shares at $500 $200,000,000
400000 shares at $750 $300,000,000
200000 shares at $1000 $200,000,000
100000 shares at $1250 $125,000,000
116666 shares at $1500 $175,000,000
Total number of shares: 1216666
Net worth (1216666*$1500): $1,824,999,000
Your "net worth" is 80% higher than the money you just spent.
You can do it today. Start a company, issue ten billion and one shares to yourself and convince someone to buy one of them for a dollar. Now enjoy your net worth-based tax bill.
You are ignoring the most common approach, borrow against the asset. In that case the sufficient assets turn into essentially unlimited untaxed cashflow. Especially with how the market has been lately, the gains erase any burden of the loan. Sounds like a broken tax system to me.
What evidence do you have that people borrow against assets as some tax avoidance strategy? What are the details of this brilliant, often repeated plan? In particular, where do you get interest rates that are low enough to make it worth it to avoid capital gains even with an asset that's grown 100x over its cost basis?
The framing was slightly glib, and you're correct that current rates impacts the equation, but there has been real damage caused by how extremely attractive this strategy has been over the past decade. We sitting on an unprecedented peace time deficit due to a failure to properly tax an economy that has been massively prosperous during this same period. This strategy is small part of it, but it is a real part.
It wasn't extremely attractive if you actually think it through. e.g. if rates are lower and you're willing to carry investments with leverage (that's the idea, right? Your investments will grow faster than interest?), why aren't you already leveraged up to your risk tolerance? I don't think there's actually a world where this plan works. It's a reddit meme for people who have never actually considered a margin loan.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the borrower keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
And even so, you could say it all settles out in the end, but that ignores the fact that there have constant constant efforts (and successes) in eroding away the ~~estate tax~~ "death tax" during this same period.
However, the bank is happy to extend the loan infinitely for people with enough assets. It's questionable that whether such loans are cash flow neutral.
>However, the bank is happy to extend the loan infinitely for people with enough assets.
Long maturity products still have to be repaid. There are no "infinite" maturity loan products for retail customers.
>It's questionable that whether such loans are cash flow neutral.
There's zero question: loans are cash flow negative (for customers) with interest. Banks are not going to offer products that are not cash flow positive for the bank.
Try this - go to a bank and say “I’d like to borrow money using my 401k/Roth IRA as collateral. If I fall behind in payments you can liquidate the entire thing, including penalties, and make yourself whole.”
You’d think they’d jump over each other to lend money against such a stable, secure asset right?
Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”
Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.
Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.
Your 401k/Roth IRA (subtracting early withdrawal penalty) amortized over the loan period literally do count when considering qualifying income for a conventional mortgage. This is not a taxable event. You do not actually have to make distributions. It's just standard procedure that it counts when determining whether you can pay the loan.
> Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth.
Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.
But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).
But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.
... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.
wealth taxes solve the problem that the ultra-wealthy will find a way to make their income untaxable, and focusing on these loans is a red herring. its how theyre doing it now, but not how theyll do it an hour after you add this tax. That the ultra-wealthy propose this as the solution means theyve already planned the next work around.
they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.
it is a proper solution to the overall problem which is extreme wealth concentration.
the obvious alternative is nationalization of all assets worth more than 100M.
DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government
I can't tell if you're accusing the state of waste and bribes no matter who is at the helm. You did specifically call out socialists, but the anti-socialists aren't improving that situation either.
> buying votes with tax dollars
This was more convincing of an attack on "Socialist politicians" before Sept. 9, when Trump did it more openly than they ever have. I guess you could believe his claims it won't come from tax dollars. But if the government has $1 trillion lying around for this and chooses not to unconditionally lower taxes for everybody, is it any different?
The head of the anti-socialist, anti-wasteful-spending party is spending billions on a more impressive Air Force One, golf days, family vacations, vanity renovations, DHS ads starring a POTUS wannabe, DOGE effectively paying people not to work, etc.
Everyone is guilty of it, just generally in their own form-- partisan nonsense is largely a distraction to get people mad at the other team and not notice their allies also picking your pocket. Though sure there are some particular ways different parties divide us and pilfer, bad in their own way.
Another thing with taxing unrealized gains is that no one in the government is willing to return any money if the unrealized losses happened. Somehow it's all hunky-dory when someone loses 1M in stock value, but as soon as someone's stock went up 1M they all want to tax it right away.
That’s just a decision we made about what is taxable.
Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.
Article I, Section 9, Clause 4 of the U.S. Constitution would like a word (assuming you’re contemplating a federal wealth tax; states could do it, at the risk expressed in the headline of the article we’re discussing).
Maybe. If my complaint was "tomorrow is Saturday, you can't pass it on a Saturday, duh...", then yeah, I'd absolutely be reading "tomorrow" and "suddenly" too literally.
When you meant "shortly before Memorial Day of 2030", it's not clear that 51% of the misunderstanding is on the reader.
The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
It's only a loan on paper, not in reality. In reality the shares now belong to the other party, and you've avoided capital gains tax by not "selling" the shares and income tax by only being "loaned" the money. There are no interest payments.
It's funny that their case study ignores how much wealth you lose from the interest on the loans. If you pay $140k of interest you can avoid $62k of taxes.
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug.
> Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Yes, businesses are allowed to buy and sell things without being taxed on the sales. If you want to change that rule, you are going to change a giant number of things purely to get at the billionaires you've spent the last few years being trained to hate.
> Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
It's missing the planetwide jungle for the trees if you think giving politicians the ability to reach into ownership percentages of businesses and deciding how much they want to charge you for owning a business is a check on power.
If you have $2bn worth of the same listed stock and go sell half of those, now you have a net worth of $1400m because your gargantuan order drained the order depth, tanked the stock value and triggered a panicked selloff at the stock market which further drove down that stock's price.
You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.
Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.
Net worth is usually not fully realizable unless it is in the form of cash. The larger the net worth, the smaller the realizable fraction usually is. In some cases, including some highly visible billionaires, the realizable fraction is likely tiny.
most people have very little illiquid wealth, and its generally in the form of a house.
billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry
There is a lot of literature on this. In the US, 2/3 of wealth is non-liquid so any attempt to price it is fiction. Of the 1/3 that is liquid, most is not realizable. Tax policy is effectively restricted to the liquid, realizable fraction, which is such a small percentage of the total that even modest-sounding percentages are a large percentage of what is practically taxable. Governments know this.
An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.
>Tax policy is effectively restricted to the liquid, realizable fraction
no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated.
it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (more so than a wealth tax) to collect but we still do it.
>An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it
even if it were true, it's not a good reason not to tax him.
in fact, it might even help bring some sanity to the capital markets if he were forced to price his assets for tax purposes.
> He couldn’t convert it into cash even if he wanted to.
Elon musk has been converting his assets into cash recently and he has had no problem doing it.
Yeah you did. You wrote "he couldnt turn it [his illiquid assets] into cash even if he wanted to".
>The problem is in the calculation of "net worth".
That is not a problem.
Let them value their own assets. If they value their ming vase at $10k then the government reserves the right to buy it for...$10k. They might get away with avoiding paying taxes. Or the government might get a bargain. The incentive, though, is to be scrupulously honest and accurate.
Some people obviously wouldn't like being put in such a position.
> And, more importantly, the difference is that people choosing to put their money into something is not the same as enabling it to be taken by force.
Im not 100% sure but I think this falls under the category of just saying "wealth taxes not fair!"
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
> Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
They play a clever little game where they borrow against those shares to live on. Since there’s no realized gain, there’s no income (and the interest is deductible against any incidental gains that might happen along the line). Then when they die, the sale of shares to pay off the loan is a non-taxable event and the estate value is reduced so the heirs won’t pay as much (or any) estate tax.
> They play a clever little game where they borrow against those shares to live on
Yes, everyone in the US can play the same clever little game by taking out a loan against a property and deducting the interest against their income.
> and the estate value is reduced so the heirs won’t pay as much (or any) estate tax
This is just madness. The estate value is reduced so their heirs won't get as much. You still pay inheritance tax on what you get. Anyone can avoid inheritance tax by just not passing anything on.
that net worth is still power, which is even more valuable than money.
if you are claiming the high net worth, almost certainly you have raised significant actual money on things you own. a wealth tax means that if you dont actually think your business is worth a billion, you cant raise money as if it was.
thays a net good thing.
if peter theil is lying about being rich and he only has a couple hundred thousand bucks to his name, the publiv overall deserves to know, and it should cost him quite a lot to raise or borrow money.
these people are commiting fraud and should be forced into texas prisons without AC because theyre lying to banks about the value of their assets, and the bankers too beed to go to those same prisons because theyre defrauding their depositors.
this is only a good thing for routing how whos lying about their worth
> There is nothing to tax until they sell some shares.
That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.
Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.
Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.
Why? What are they going to do with the money instead? If you charge, say, 5% on unrealised gains, possibly discountable against CGT on sale, say, then do you think rich people are really going to go "well, now I'm only getting 9.5% return instead of 10% return, so I'm going to sell all my shares and build a Scrooge McDuck style swimming pool full of money, instead"?
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
> There is nothing to tax until they sell some shares.
Why can't they pay tax in shares?* If net worth isn't real it shouldn't really matter...right?
*Please no pedantry about how the IRS doesn't currently accept shares as payment for taxes. If laws can be written to add wealth taxes on stocks and bonds, they can easily have a clause to allow payment in kind. Address the question I'm actually asking.
Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?
Why does it matter how much the shares of his company are worth? They just represent ownership of a company. It's not like their existence is somehow holding back wealth from the market or from other people. And if he wants to sell the shares to make some cash, then he's going to have to pay taxes on that, which is good for everyone else. And he wouldn't do that unless he planned to spend or invest the cash receives, which is also good for everyone else. I fail to see the harm.
That, exactly, is the problem. It's not even about money and tax evasion but power. Why should one person have more say over the company they work for than 10,000 other employees? Or even worse they don't even work there anymore and just control it from outside?
Even if they are a perfectly good and business smart person who never makes bad decisions or abuses their workers. They will eventually die or sell their share, and in either case it will end up with people who care less about the company's long term health than the founder did. Profit maximizers with no ethics and no feeling of responsibility.
I think the concept of shareholders is the problem. Layoffs, cartels and price inflation happen when the people who make decisions get all the benefits but none of the downsides. If it was up to me I would ban stocks and replace them with time limited shares that give you a right to part of the profits for 1 or 5 or 10 years, but zero control over the company. Leave power to workers and returns to investors but never bind the two together.
> Why should one person have more say over the company they work for than 10,000 other employees?
Why shouldn't they?
That's how pretty much every organization works. Every military, every government, every sports team, every space mission, every classroom, etc., they all have some person or small group up people with more more decision-making power, or "more say," as you put it.
I fail to see the problem with that. In fact, there's a very real benefit in that it's generally more effective. For example, today people are completely free to create organizations that work differently, and they rarely choose to, and when they do, they rarely out-compete the alternative. So the proof is in the pudding that there's something less effective about it.
If I had to wager a guess: decision-making isn't something that scales well. Bodies might have dozens of organs, but they only really need one brain to control them all.
> They will eventually die or sell their share, and in either case it will end up with people who care less about the company's long term health than the founder did. Profit maximizers with no ethics and no feeling of responsibility.
1. There are plenty of counterexamples where the leader of a company ensures its long-term success after their tenure ends.
2. Even if this were somehow a downside of owner-led companies, you always have to ask the question, "...compared to what?" It's not like the alternative doesn't have its own slew of downsides, as evidenced by the dearth of competitive coops. In other words, organizations are always going to have issues and errors and flaws, no matter how you set up decision-making.
People trying to apply the principles of democracy to corporations are misguided. And therefore, corporations function most efficiently, essentially, as autocracies with fascist features. It is not difficult to compare the corporate style with fascism in many elements: certainly more similarities there than a socialist nation, or a liberal democracy, where we've often said that politicians shouldn't be businessman, at least insofar as you cannot/shoudn't run a state like a business.
After all, businessmen often use strategies like aiming to be acquired/purchased by a much larger company, merging with their competitors or partners, or anticipating bankruptcy by draining every viable resource and asset they can reach.
At the same time, observers such as JB Crawford have also pointed out that very large corporations function like a religion. For example, telecommunications. https://computer.rip/2024-09-08-private-lines.html
Of course I mean this metaphor internally, as if we were regarding each corporation as a sovereign microstate, which they aren't... hopefully...
If the ideal CEO has psychopathic qualities, and the ideal capitalist corporation is comparable simultaneously to a new religious movement and fascist organ, and the corporations are the primary unit of American culture, then where does that leave us?
Yes perhaps there should be wealth caps. Did Larry Page really do 5% of all that labor that made google as big as it is? And should a single company get so big and have so much power? Yes, I get that they took risks and invested early, and we shouldn't take away that type of incentive, but perhaps it should have caps, or an S curve tax schedule.
Google doesn't have much power. It can't arrest you or pass laws or vote. It just happens to produce a lot of profits for its shareholders (who are, overwhelmingly, average people with 401Ks) and a lot of profits means a big market cap.
If we need revenue to fund useful government programs, great, let's tax Larry. But I don't understand what problem is solved by expropriation qua expropriation.
it does have monopoly power and anticompetitive power all over the place though.
google bans are quite intrusive, but google could pretty easily with their graph knowledge apply secondary or tertiary sanctions, at which point you would not be able to do much of anything, same as if the US government sanctioned you
> Companies should get kneecapped if their market cap gets too high?
Yes. They should be broken up because competition is good for consumers and society. If we had functional anti-trust enforcement Google would not have a near-monopoly on search ads where they own both the ad inventory and the marketplace where you have to buy those placements.
The part where he has access to essentially unlimited untaxed cashflow by borrowing against that asset. Especially with how the market has been lately, the gains erase any burden of the loan. Something has be done about this, at least. Otherwise broken sounds about right.
Well, why does something have to be done about this, exactly? Who is getting hurt here? It's not like borrowing is increasing his net worth. Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.
> Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the holder keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
> Well, why does something have to be done about this, exactly?
The something here is what's required to have a functional tax system. Without addressing this situation I do see an argument that we have one. How important that is to one is another question.
the people getting hurt is anyone who would have bought something but was outbit by larry page's free money glitch.
he doesnt necessarily have to pay it back either. he could just take out another loan against his same now higher valued assets to pay off the old loan
Okay, but now he just has even more debt to pay back, what's your point? At some point he does have to pay, and that requires real income to be realized, and that means it will be taxed.
And this is not just theoretical. Larry Page has already sold and paid taxes on tons of stock in reality.
like, if a company's market cap gets too big, the law should stop applying to them? they should be allowed to start their own militaries and enforce martial law a la east india company?
how does a founder keep a single digit of their company after theyve been dead for a thousand years?
These arent nearly as absolute as you are making them to be.
a founder can keep their percent by paying their taxes with other money they have, or by decreasing the worth of their company. theyre a founder, they have control. Maybe founders wont be so keen to enshittify their products if theres a downside to continued growth forever. considering google dropped "dont be evil" in exchange for making larry page's 1% grow for the sake of growing, how's society at large benefiting from continuing to subsidize it?
If you taxed him half of that wealth he'd still have single digit percentage of the company.
The broken tax system is that I get taxed about 50% on my marginal income dollar --- the system doesn't wait for me to spend it first --- but when his stock portfolio appreciates by a dollar, he's not taxed! Not until he sells in order to spend. Why are we taxing labor so much more than capital?
And no, I don't think that inventing pagerank really entitles two people to $200B. Although in their case I don't think they've done as much harm with it as some other billionaires.
When your job pays you a dollar, you get an actual dollar. Your job never claws that money back. Unrealized capital gains are not money, and they routinely get clawed back. Unrealized capital gains just means someone in New York traded GOOG/GOOGL at a higher price than they did yesterday.
And, sure, super-rich people can in theory use the appreciated stock as collateral for loans and not pay taxes, but in practice Larry and most other centi-billionaires actually sell loads of stock and pay a lot in capital gains taxes because having your status as super rich dude who owns a huge yacht be totally dependent on Google's stock price is a dumb risk to take on, and it's worth paying some taxes to eliminate that risk.
> When your job pays you a dollar, you get an actual dollar.
No.. many cents of it are withheld, by law.
Elon uses his vast wealth to influence, intimidate, and generally get away with lawlessness. He effectively took huge loans from banks to buy a giant bullhorn in Twitter. Those loans are collaterized by unrealized capital gains. And more generally, billionaires have the ear of politicians because of what they could do with their money. So you don't need to realize gains (gains which are taxed at a more or less flat rate!) to make use of your wealth.
Though like I said, Larry is not really a bad guy in the world of billionaires. I would only support taxing him more than I would support levying additional taxes on w2 income assuming CA actually had a provable need for more money. (Right now I think they waste most of the budget.)
He has single digit percentage of the company but double digits percentage of voting stock. My understanding is that he and Brin are holding together barely above 50% of the latter and understandably do not want to lose the control.
If the $100B+ was created through ownership of a company and is unrealized wealth, how would you have taxed it if not through a wealth tax? Nobody is getting to $100B by way of income.
I would care more about the broken tax system if the politicians didn't waste our tax money. Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
$24 B unaccounted for and lost that was supposed to be for homelessness.
$12 B already spent on high speed rail and they want $120 B more.
$50 B in EDD unemployment fraud during the pandemic.
This is just in California in the last year or two.
How much more fraud and corruption and incompetence is there that we just don't know about?
There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.
>Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
Zero taxes is the only right answer. Any talk of taxation means that you have already given in to being exploited, because it's a slippery slope. Let's be realistic - corruption will never end. The only way to reduce it is to starve the beast.
We're in a situation where it's already "too late". We can't go back 100 years. How do you propose we fix it, assuming time machines won't get invented soon?
> If you let someone get to hundreds of billions in net worth
"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.
Additionally, the state gets to tax you on what they say you’re worth based on the markets. That’s a pretty weird way to assign dollar value to someone instead of, say, looking at how many dollars they have.
While stock markets provide useful liquidity for investors entering and exiting positions, they are also rampant with finbro kids doing nothing more than jumped-up gambling. We don’t know which market trades fall into the serious wheels-of-capitalism bucket, and which are gambling, because we don’t have to know. The real world works in dollars so, to date, the state taxes people on the realised capital gain in dollars.
If a bunch of kids are selling handfuls of leaves to each other for a nickel each, is the state now valuing my unkempt forest at $99bn? The state is welcome to pull up a chair and watch me try to sell 5 kilotons of leaves to every kindergarten playground in the country. If I succeed then it will take its cut of the capital gain. If I fail, it will not.
When the state starts looking inside the market black box and guesses, based on little Johnny and Becky’s recent playground trades, that I might be able to get at least $300 a tonne for my damp, rotting leaves, then the state is doing something at best weird and at worst unfair, and tates doing unfair things is really bad.
Norway, Spain, and Switzerland have wealth (net worth) taxes. Why don't we see the same outrage from rich people living there? Also, most billionaires get rich with equity in a business that they built. How else can we tax that net worth?
Not only that but they are actively moving into these countries, because, like everybody, they like a functioning government that provides infrastructure, housing and health care for their citizens. This makes for much more livable cities and a happy society.
Actually, in Norway there is some outrage. Many people with (a lot of) money move to Switzerland. There is also the issue that startups are being taxed on "paper money" — the value of the firm on paper based on expected future income — even though they have not yet started earning money.
From what I can find, the top wealth tax rate in Norway is about 1.1%. That seems pretty dumb to leave your home country to avoid paying 1.1% tax per year. For entrepreneurs that now have enormous equity (100s of millions of Euros), my sympathy is low. They can easy sell a tiny fraction of their equity to investors to pay the wealth tax.
1. If wealth was only motivated by taxes and was going to leave, it would've left already. Fact is, billionaires don't want to live in Tennessee;
2. Nobody is doing the right thing to tackle any of this, including California.
The article mentions California has land and that's the key point. Unfortunately, California homeowners have been coopted into voting against their own interests to raise property values. If the house you bought in SF in 1975 for $80,000 is now worth $3M, you still only own 1 housing unit's worth of wealth. And that housing cost is an input into everything you need to buy because all the workers required for those things have to be paid high enough to pay those exorbitant rents.
Let me repeat that: high housing costs are an input into everything that you buy.
So what needs to happen? We need to stop treating housing as a speculative asset. It's simply stealing from the next generation. Worse, it's diverting investment capital from productive output because land has become the asset with the best tax treatment, highest returns and most government protections. So what does this look like?
1. Some form of land value tax. The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable;
2. Punitively tax land hoarding including second homes. We could give discounted rates to primary residences of state residents. Nobody else should get a discount. This would mean repealing Prop 13 and that's never going to happen. As an example of this, I'll bring up Prop 19. In CA you can inherit a preferential property tax rate. Prop 19 proposed to limit this to only one property could inherit this preferential rate and it barely passed (51% IIRC). Do we think that 49% of California voters have multiple properties that have property tax rates set 40+ years ago? Of course they don't. It's an example of how people vote against their own interests;
3. Part of what sold Prop 13 originally was the idea of pushing seniors out of their homes with property taxes. Well, that gave Disneyland a tax rate that was set in the 1960s. California should do what Texas does: you can defer your property taxes until you die if you're a senior but there's no capped property tax rates like incumbent SF residents have and no inherited preferential property tax rates;
4. Wind back the preferential collateralization of property for mortgage debt over time. Residential property lending now dominates bank lending and earnings. It's significantly harder to get finance for any form of productive output;
5. Wind back over time preferential tax treatment for home ownership.
Do I think any of this will happen? No.
Oh, one of the worst things to do is transaction taxes, often called stamp duty. This is where you pay a percentage of the value on purchase. This really hurts mobility. I guess it's fine if it's only on the luxury end of the market (CA's is at $5M+?) but it's not a good idea regardless.
The other part of this is to provide social housing like Vienna. The government should be a significant supplier of affordable quality housing.
> We need to stop treating housing as a speculative asset.
Something I've been yelling from the rooftops.
Housing can either be affordable, or it can be an investment that's bought, rented, and sold for the sole purpose of profit. It's not possible for it to be both.
People expect their house to appreciate faster than inflation, but all that does is rob the next generation of home ownership.
And now, when mom and dad downsize after the kids move out, rather than selling the house or pass it to one of their children, they rent it out.
Alternatively, they keep the house, but get either a reverse mortgage or a cash out refi to survive until they die, at which point their kids can't afford to buy it from the bank.
Ditch or reform/restrict the 30-year fixed-rate mortgage. Remove barriers to building more housing. Other stuff, but you can do a web search, I'm sure.
Increase taxes on rental income on single-family homes and double the property tax on vacant homes to discourage hoarding.
Encourage building upwards to increase housing supply. This can be done via tax breaks or subsidies. Especially encourage multi-use buildings to make cities walkable. Stores/restaurants at the street level with apartments above.
> We need to stop treating housing as a speculative asset.
This kind of assumes the only reason a house appreciates in value is because people are "treating it as an asset" rather than "the house I bought 30 years ago in the middle of nowhere is now smack dab in the middle of a very desirable area." At that point it's simple supply and demand, not some homeowner being greedy.
> The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable
This makes the fatal assumption that just because a house is worth dramatically more than what you paid for it many years ago that your income must have risen just as dramatically. "Oh well, too bad, sell your house and deal with it." Maybe people kind of like living where they've put down roots and don't want to be punished for something outside of their control? Any proposal that boils down to "pay more or fuck off" is not going to go over very well.
If the tax is calculated based on residency at the time it was earned or granted rather than when it vested or was sold then it doesn’t matter if they leave.
I agree the proposed wealth tax is a bad idea, but raising property taxes is probably not viable. They are incredibly unfavorable to voters. No one who owns a home wants to pay rent, that's why you buy in the first place.
Personally, this is why I am fine with higher income or sales taxes.
Sales Taxes are the worst ones. Burden on seller, burden on buyer, regressive. Income is more fair but easy to mask-out for the wealthy. Property is meh, Wealth tax is the best one. Assuming all were well designed.
Sales tax and the gasoline tax are use taxes. They are about as fair (democratic) as you’re gonna get because it’s based upon use most the other taxes whether they’re high or low, you can’t escape from particularly if you are the average person in the middle, and once again, if you benefit from capital gains, that is a huge life-changing benefit, which most working people don’t have. Vote yes. on proposition 40 if you are in California the less than .001 and even the 1% will easily survive.
They just want continually delivered services from the city funded by taking out increasing amounts of debt or selling off new land in a ponzi scheme to fund existing obligations.
The numbers on wealth distribution are shocking, to say the least. I think wealth taxes without loopholes are a really good idea in the current circumstances, infact I believe it may not go far enough. And I think there has to be a global concerted effort to tax wealth.
The working class are starting to choke and drown in financial stress, and this will only get worse. Capital naturally accretes and we've never had this level of capital concentration in human history.
Which is why the majority of people in California who work for a living shouldn’t be carrying any water for billionaires or hundred millionaires, you could even extend that down to someone who’s worth 10 million, until you get to that level, you don’t realize how many people over that level have it very easy.
In comparison to the majority of the population, you know the other 99%. That’s right, you heard it right. 99% of the population does not have $10 million free and clear without debt. In other words, if you are still paying off your house you are not in that upper bracket.
the rich are an astounding amount of wealthy such that they dont show up and still make a good poor wage in the first couple hours/days of a year by their assets increasing in value
you are poor, even if you are doing plenty well for yourself
I co-wrote the article. Neither Greg nor I are single taxers. We think LVT is better than a poorly designed wealth tax, but we are not single tax maximalists.
> The land value tax can’t be dodged by leaving nor can it be passed on to renters.
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
That cost will, of course, be passed on to renters unless the rental prices cannot be raised at all.
If they can't be raised, and the costs end up being ruinous to the landlords, they will find other solutions like mass arson. That isn't hyperbole; this was a serious problem in the 1970s:
https://en.wikipedia.org/wiki/1970s_South_Bronx_building_fir...
That was obviously not acceptable... but it was predictable.
All legal proposals should be viewed like a chess move. Presume others will respond, and make sure you're ok with that response.
It is quite disingenuous to attribute the South Bronx fires as a result of landlords unable to raise rental prices. I mean that is technically true, but your comment makes it sound like it was a result of a particular legal proposal. It was not. It was a period of urban decay in NYC and many cities in the United States. It was the continuation of white flight into suburbs that started in earlier decades. It was a large demographic change with complex causes.
>If they can't be raised, and the costs end up being ruinous to the landlords, they will find other solutions like mass arson
Landlords who have their entitlements ripped away from them would almost assuredly endorse the use of violence.
Land redistribution (of which this is a form) from the propertied to the propertyless has historically resulted in brutal violence in order to protect the privilege of the propertied.
LVT is incoherent, it pretty much only benefits people who are cash rich and land poor. Which is why it gets so much oxygen from tech elites with lots of cash and an inability to buy a house somewhere like mill valley, or wherever.
Essentially taken to the logical conclusion, there will be people competing for more cash to pay their increasing taxes on the same land, it doesn't fundamentally solve the problem. It's such a joke.
Rents are already as high as renters can bear. If a tax is introduced, you'd expect landlord competition to drive down the landlord margins, not increase rents.
I don't think this is why it won't get passed on. In theory the lowest income could leave the state and higher income renters would come in.
But in reality a land value tax incentivizes higher density housing. A single house and an apartment complex pay the exact same amount of tax, while the apartment building can split it up over many occupants. Land value taxes are a very natural hands off way of encouraging the right use of land, empty lots and car parks become unaffordable in highly desirable areas while apartments become relatively very cheap.
This is the problem with governments who think they can synthesize value. They think all businesses can too.
If these communists succeed, they will use the very fact that a landlord cannot synthesize money to prove the landlord passed the cost to the tenant and seize the land.
the rent is already priced to the maximum of purchasing power of the local renters ability.
if landlords were able to raise rent, they would have done that already as its pure profit for them. The fact that they can't, means they will have to eat any marginal tax imposed on them
Landlords are competing with each other, and renters can take their next best alternative. If everything gets strictly more expensive, the next best alternative is not necessarily any cheaper...
if everyone raises rents by a certain percentage trying to recoup taxes, this will be equivalent of Supply line shifting up by the amount of tax in Economics 101 terms.
From economics we know that increase in cost is split between Landlords/Renters in accordance to their elasticities. Whoever is more elastic - will eat the tax.
the cost increase is shared between renters/landlords in the ratio of their elasticities. Whoever is more inelastic, will eat the cost.
Inealstic renters will pay up increased rent (like techbros in SF are eating up all rent increases).
Elastic renters will get up and move to Texas, if renter swill hike rent.
Elastic landlords will lever down and decrease number of low margin properties like rent-controlled properties, or unprofitable properties.
Inelastic landlords will eat the taxes and take a hit to profitability.
some tenants who are on the margin of profitability will decide to close shop/relocate to Texas, which will free up rental space and drive down the prices
The author probably has a very superficial understanding of economics. It's economics 101, like VAT, the cost will be passed to BOTH the renter and the landlord. The portion of each is dependent on market dynamics and hard to calculate.
>In the instance of perfect elasticity of the demand or perfect inelasticity of the supply, the price will remain the same and the entire tax burden is on producers. An example of perfect inelastic supply curve is unimproved land (the supply of improved land is elastic because more or less could be created by investment in improvements) or crude oil. Thus, the whole tax burden is on landowners and owners of the oil.
if there are apartments on the margin of profitability, the cash outlay of LVT will have impact in either landlords quitting the market or deferring/stopping maintenance and such
Which economic system are you critiquing? I would tend to agree, since I think wealth taxes amount to a breaking of the 8th and 10th commandments. But I also think some would argue that the consumerism (envy) that often drives capitalism is a form of covetousness. I think the counter argument is that capitalism does not require consumerism, and that consumerism (envy) can appear in any economic system.
not good believer in christ would ever participate, when jesus made it clear you are supposed to freely give away everything you own to the poorest among us
It's covetous to expect someone else to give you a part of something they worked for and you contributed nothing to. One of the basic 10 commandments is not to covet your neighbour's property; envy is a sin.
But, you're right, when someone suggests that we poor are just envious of the ultra-rich and that is why we want to tax them, I assume that they think we ought to look elsewhere than the wealthy for taxes. Which kind of suggests tilting toward a more regressive, less progressive tax system.
Introduce a ballot measure that removes the allowances of Prop 13 on retail real-estate and I suspect you'll find it's not political suicide at all.
Exactly $0 of high speed rail infrastructure was funded by sales taxes. State dollars came from prop 1a and cap and trade funds. About 12B over a decade and a half for heavy engineering, land acquisition etc. if that money was not spent it would have a negligible impact on your taxes.
Everything the California government does has a negligible impact on my taxes. However, the sum of it is not negligible. I'd rather them not waste money because it's "negligible".
California spends an insane amount on combating homelessness with nothing to show for it. This is a difficult problem to solve for sure; I'm not an expert in this field and would be speaking out of turn were I to suggest preferable alternatives. Suffice it to say that billions of dollars are being flushed down the toilet doing whatever is being done right now.
No california has an NGO homeless industry, which gets paid on the amount of homelessness. They are incentivised on increasing homelessness, thus this is what they do.
Land, as apposed to the property on it, is raw nature. If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it, balances with the common interest in it.
Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, and increased development.
So many things align for higher growth in ways that more evenly benefit everyone. But our relationship with land is over-complicated, and that is both the reason for change, but the reason change is so hard.
Small attempts have failed, but then, for the rich who can hold land and reap growth in value that outpaces the taxes they pay on it, that remains another tilted economic success.
If you exclude others from a rectangle of land, you are imposing that exclusion on others and the others are due consideration. The rest of the property stack is good -- binding investment to returns to backpropagate incentives for good skin-in-the-game decision making and stewardship is a great idea -- it's "just" the foundation that is problematic.
Georgists want to tackle this with a Land Value Tax, I tend to think it would be difficult to make this robust against highly motivated attack and the better approach is long-term leases with similar duration to building depreciation schedules. Capital appreciation of the dirt goes to public coffers, improvement value goes to the people who made the improvements. That's fair.
Of course, there's also the question of how to get there from here, and one way to do it without guillotines would be to tie the extraordinary tax treatment of property to conversion into a 99 year lease (and then, after 99 years, new issuance could target the ~30 year range). "Sure, you can have your 1031 capital gains tax exemption, but only if you sign up to eventually be part of the solution rather than part of the problem."
> If you exclude others from a rectangle of land, you are imposing that exclusion on others and the others are due consideration.
I don't think this is a reasonable deformation of the notion of ownership nor externalities.
Use of owned assets, within legal boundaries, allows exclusive of use.
If you're complaint is about the current asset allocation, that's wildly different than either Georgism/LVT or externalities. There is a philosophical there-there, but I really don't grok a feasible defense of your claim; your supporting points are reasonable under a Rawlsian veil defense.
It is the notion of land ownership as a fundamental right that is the deformation.
If you make the legitimacy of property rights over land foundational to your philosophy, then of course they can't be challenged within that framework, but that's tautological and uninteresting -- I simply challenge your framework instead. Why should I accept it? In centuries past, a structurally identical framework -- ownership over human beings -- was used to rationalize and administer the institution of slavery, so unless you want to defend slavery then you must accept that the legitimacy of property rights is contingent on their specifics.
Eh, I get where you are coming from. However, you should accept it because the people with the social authority to coerce through guns or imprisonment require you to do so, instead of operating in a vacuum. Plus, land ownership makes for a much clearer system of institutions (which economists of all stripes agree are fundamental to prosperity).
Further, relaxing land ownership doesn't make current occupation an externality, which was the original claim. It's a categorical error to mix externalities with morals.
Really? Argument from authority? If (actual) communists had the guns, would might make them right about property? For someone who wants to throw categorical stones, you sure seem to have a loose grip on the is/ought distinction.
Thanks for trying to explain how owning land imposes an externality on others. I still don't see a clear case made, so I'm moving on. Have a good evening.
The hard part is that we've structured life such that you are on a fixed income at the end of your life in no position really to deal with inflation. At least when you are still working, in theory at least your wages will go up with inflation. This is really why prop 13 happened to pass at all: the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
> the idea of being displaced at the end of your life out of the home
I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.
Why would I fix up my house to look nice, if I’ll be displaced? Why would I invest in my child’s local school system, if we could be displaced? Why would I do any community outreach or support, or get involved in local politics? How can banks underwrite loans if the affordability can fluctuate wildly? Look at the life of people who live in mobile homes and trailer parks - they essentially rent the land, and it’s oppressive because they can’t afford to move but their cost to stay is unpredictable.
The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity of the people living there and renters hoping to finally do the displacing for their own affordability.
> The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity
Most states in the US do not have Prop-13-like laws and get by just fine. For the few states that do, they are less restrictive taxation-wise than California's.
Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)
We of course shouldn't just abolish Prop 13 overnight, or lots of people will get displaced, also overnight. But we should absolutely reform it and phase it out over time, while building more housing, as fast as we can (something that will be a little bit easier to do as all the NIMBYs realize that if they keep shooting down housing projects, their property taxes are gonna go up a ton).
Prop 13 is a bit of a nothingburger anyhow when you consider median homeownership period in CA is only like 2 years longer than national average, rather than the myth that seems to be perpetuated of every home being a 40+ year hold paying a couple dollars in property taxes. And when that home is sold the tax assessment of course goes right back to market rate, and boy that is substantial when you have what would be a 450k home outside of Boston go for 2.1m with a 1% tax. 21 thousand a year off a single 50ft wide lot is no slouch in terms of tax revenue.
> And when that home is sold the tax assessment of course goes right back to market rate, and boy that is substantial when you have what would be a 450k home outside of Boston go for 2.1m with a 1% tax. 21 thousand a year off a single 50ft wide lot is no slouch in terms of tax revenue.
The problem is all the tax revenue being lost at the municipality level for decades. National tenure average is ~12 years. Los Angeles is 20 years, SF is 16.5 and SJC is in between. It clearly has a meaningful effect, it's just harder to buy into the market and keep the home over a long period of time.
San Francisco receives over $3,000 per capita in property tax revenue alone. Dallas receives about $1,200 per capita. NYC is less than $1,000, though I gather NYC has their own property tax issues.
And California has an income tax, whereas Texas doesn't.
Prop 13 has it's problems, but I don't think they're as significant as the rhetoric claims. It makes for a great excuse, though.
I don’t think the housing affordability crisis ends and I don’t think that’s the right way to model it. SF has one of, if not the highest, $/sq ft in the US. And prop 13 is suppressing it - estimates indicate that property taxes revenues would double meaning that 2.5k/person would become 5k.
And remember that that 2.5k/person is only for residential properties. commercial properties still fall under prop 13 and that’s about 50-60 of the other tax. So a full repeal would make it closer to 10k/person instead of the current 5k.
I agree the story on rents and home prices would be unclear because ultimately the people might move and just rent out their homes with property taxes baling into the new rental price.
I remember when Prop 13 was on the ballot. The newspaper reported that if it passed, it would eviscerate the police and fire budgets. It passed, and nothing happened to the budgets.
It's not reset of you inherit, or a bunch of other bullshit exemptions.
We live in a gerontacracy. Every advantage and tax break and handout is given to the elderly and the ladder has fully been pulled up for the new generations.
Most states also rely on sales taxes and various fees, and assign limited property taxes. A Georgist land value tax would have much greater effects than the current tax regimes.
Prop 13 isn't for seniors, though, it's for all ages. And the heirs inherit the tax base. A senior-only prop 13 would reset at death, so at least it's limited in duration.
A common one I've seen is that for the elderly, property taxes are deferred until they die and are then deducted from their estate (including a sale of the house).
IMO this is a much more fair system than just saying "lol no taxes on the elderly."
> Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)
I have heard this assertion with no proof or backing data a lot. There is an assumption but no explanation how kicking long time residents out of their homes due to tax pressure is a benefit to the community, or real estate market prices. Real estate agents and other service companies might benefit from more transactions.
There is also usually no mention that the main problem of Prop 13 is that it applies to commercial and industrial properties, not just individual primary residences. Individuals have a limited impact scoped to their life, but tax implications applied to long term corporations is what has an outsized effect.
The nonexistence of Prop 13 in other states should be pretty clear evidence that there are more options besides Prop 13 or kicking out lifelong residents.
Florida also doesn't have swarms of homeless people like CA does.
I find that forcing the elderly out of multimillion dollar homes and into apartments or even smaller homes is infinitely preferable to the human catastrophe plainly obvious on the streets of LA and SF.
You shouldn't strawman the other side. Us "people who fancy" actually understand that there are real negative side effects. But the money has to come from somewhere.
If not from land taxes, where? Would you like to double sales tax? Or increase income taxes? Every solution costs something, what does yours cost?
The negative side effects of taxes on labor are enormous, and have distorted humanity probably more than any other factor.
Any consideration of the consequences of taxes also has to consider the consequences of the current taxation.
But taxes have and will always be a transfer of wealth from the working poor to the rich and powerful. People talking about tax reform or more effective and just systems tend to forget this. It's like the lamb having an opinion on how the wolves should share it.
Stating truisms ahead of straw manning me avoids the actual discussion. "Everything has real negative consequences." "Land is not cheap to repurpose." I never said otherwise.
You're right about my estimate being off though and it was a disservice to the discussion. An equivalent revenue from sales tax would require ~2.1%. In SF, that would move the total sales tax from 8.6% to 10.7%; in Oakland, 13.8%. A large increase would likely bend some consumer behavior (chasing sales that have feet, aka move to the informal/grey market).
> Again, the optimal answer from an economist is not necessarily desirable from an emotional perspective of the people being governed.
This is the real difference between us imo. I believe the optimal answer is based on realistic projections on revenue collected and what prevents bankruptcy. The compromise answer is what passes a vote and in fact, the bankrupt answer.
I would prefer we didn't raise taxes and instead reduce spending. But given the complexity of reducing spending and the scale of our deficit, we will have to do both. On the side of raising revenue, a land tax offers a way of taxing a wealth that cannot flee.
> Land is not cheap to repurpose. The Georgism dream that land can be optimally used is a farce. There is significant costs to repurposing land - to make those costs worth it because of the taxes would heavily distort current society, and I think the assumption that this would be desirable compared to the status quo is unproven.
Your friction is real - and already exists.
So the bar for improvement is not no friction.
The bar is less friction, and higher productive use of land, which benefits everyone. Lowering the costs of both housing and business space, while increasing economic output.
That is was economic alignment does, it doesn't just improve one thing, or improve on a one-time or fixed percentage basis.
And less passive, underutilizing, economically-parasitic investments from the rich. (Rich passive investment in land, uses land like Bitcoin for its deflationary nature, which compounds land prices while suppressing its full productive use.
Not raises. Compounds. The more the rich passively invest in land, the more profitable land becomes to passively invest in.
1. There are many states such as New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states.
2. States that freeze property taxes have more volatility and boom/bust cycles. You are trading being shielded from tax volatility for increasing economy-wide volatilty and asset price volatility, so the gains are not as high as you think, and seniors are exposed to this volatility indirectly.
3. There are more targeted relief mechanisms available, such as deferring the tax liability until the owner dies for senior owners.
As someone from NJ...you think seniors and young people don't have affordability problems, especially wrt housing here, in the 5th most expensive state to buy a house? (California, Hawaii, Massachusetts, Washington, New Jersey, in that order, according to redfin, if you're going by house cost to income ratio, NJ is 6th)
> you think seniors and young people don't have affordability problems?
Of course I don't think that, which is why I didn't say it. That would be a silly thing to write. What is the advantage for you in mischaracterizing what someone wrote and then expending effort to "correct the record" for a statement no one made?
You created a strawman and then knocked it down.
What I actually said: "New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states."
Both of these statements are demonstrably true. Let's look at the data.
* NJ price to income ratio for housing: 5.5
* mortgage cost burden: 31% of mortgage owners spend more than 30% of their income on housing.
* renter cost burden: 52% of renters spend more than 30% on rent
* CA price to income ratio for housing: 8.0
* mortgage cost burden: 38% of mortgage owners spend more than 30% on housing
* renter cost burden: 58% of renters spend more than 30% on rent
So housing in NJ is more affordable than in CA.
Now, let's look specifically at seniors.
In California:
* 68% of senior renters are cost burdened
* 35% of senior homeowners are cost burdened
In New Jersey:
* 59% of senior renters are cost burdened
* 35% of senior homeowners are cost burdened
So we see that across the board, seniors in NJ are not cost burdened more than in California, and that in fact they are cost burdened a bit less.
Therefore if your solution is to look to Prop 13 style fixes to address cost burdens for either seniors or the general population, then you are not making a data based argument, and in fact the data goes against you, because there is no excess cost burden in states without these property tax freezes.
Your exact words were "housing is much more affordable for younger people in those states", which, even by the numbers you have cited, is not correct. More affordable? Sure, we are number 5 or 6, not number 1. Much more affordable? Come on now.
And no, I don't think prop 13 style laws would be helpful, it would just create more problems, as it has in California.
I don't know if it changes the result significantly, but remember the NJ has very high property taxes, more than double of California. So mortgage cost alone does not paint the full picture.
This is more significant for seniors, who likely have a paid-off home so their main expense is property tax. So being a fixed-income senior with a home is likely more affordable in California than in NJ. The worst thing after retirement is cost increases when you no longer have a salary that goes up with inflation.
HOA are forclosing more than banks in some regions, it's not just trailer parks these days getting hard lessons in being the "fake owner" of your property
> I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.
Every tax is unpopular and undesireable.
Why would I work if government is taxing my income? Why would I invest? Why would I drive the car, blah blah.
Land tax is easy to collect, fast to pay, hard to avoid or game.
And this cuddling of boomers who've benefited by piling up gigantic government debts and expect to be paid back (typically holding gov bond) is literally going to destroy the financial system. Part of the benefit of this tax is that if you can't pay for fair value of the land you're preventing others from using, you have to sell and get out, so e.g. a productive family can use it instead of your unproductive self. Just because you're retired doesn't mean "your done with your duties to the rest of society and you can just expect free shit and do nothing".
Most of the other states have not seen the rise in population growth and real estate values seen in CA. There are still places where homes are like 250k or less. There is also way more value drop off outside the metros in most other states with high cost cities such as MA or NY. You could be 30 mins drive from boston in a great 400k home. Try and find that 30 mins out from SF or LA. There just isn't really that fall off in california that you might expect from real estate markets elsewhere. It is like the rising tide has lifted all boats.
This is what people in about five cities in the US think.
I live in San Antonio, a metro of 2M people (city itself is one of the 10 most populous in the US). That's pretty sizable. Median home is between 260K and 310K. That is, of course, with the larger homes you'll find here vs SF/Chicago/LA/etc.
San Antonio is in the middle of the state with 360 degrees of growth and relatively flat. California’s land growth has half of that with hills and mountains near the desirable areas.
It all comes down to zoning. The demand requires capacity and the only way to add it given the geographical constraints are through infill development. Still, cities are getting dragged kicking and screaming to these conclusions, hence the opposition of SB79, as well as the entire concept of SB79 of differential upzoning vs simply widely upzoning. Even just reverting to pre 1960 zoning plans would see LA's zoned capacity rise from the present day 4.5 million (it is in the 90s% as far as population to zoned capacity) or so to something north of 10 million. If you adjust it to the ratio of that pre 1970s zoning plan, when LA had about 2.5 million people in it, the city would be zoned for 20 million with today's population.
In fact that is all that really needs to be done to ameliorate the housing crisis in California: pass a single law that repeals every single zoning adjustment from after say 1960. Or pass a law that mandates a 4:1 ratio of zoned capacity to population. The ship will right itself if it is allowed to.
> Without Prop 13, a big chunk of the NIMBYs who are currently against more housing would likely change their tune if they had to choose between no new housing or much higher property taxe
I mean, the way you make housing units more affordable is to make more of them, but for existing homeowners of SFH, building condo buildings in their neighborhood will increase their property value because the competition for the remaining lots increase. Given we build close to zero family friendly multi family in this country (ie, appartments buildings have zero family oriented amnenities), there isn’t much in there for nimbys. It’s the right thing to do but you can’t except nimbys to join in on a purely monetary basis.
>appartments buildings have zero family oriented amnenities
This isn't always true. I've seen apartment buildings that have a playground and little astroturf field and some small goals. The kids also are using the pool pretty heavily in every apartment I've lived with one. Some have other facilities like basketball or tennis as well that kids could take up (or use the smooth surface for skating or something).
> Retirees are not on fixed income and haven't been for decades. Social Security gets adjusted for inflation.
Tell me you're not a retiree on social security (or know any) without telling me...
Social security gets adjusted up a very tiny percentage of actual inflation. Watching my elder parent go through this while managing their finances, I'm very aware.
So the way we fix it is by pulling more tax from net contributors and pushing it via social security so it can be pulled as property taxes. What a disaster.
Empirically, according to Doucet, a land value tax would only raise average tax rates if you're living on a parking lot, or vacant lot. Aging homeowners would mostly see a slight decline in their property taxes ( California excluded ).
And owners pay taxes on (some of the) assets they have, land being a big one. Hoarding mentality may have been fine for frontier wild west but ain't much compatible with modern societies which are chock full of humans in all the sweet spots. Expectation that this comes with 0 cost is a bit naive
>A land tax means that you don't own property but rent it.
A few comments:
1) we already have property taxes so I don't understand the objection; a land value tax is just a property tax with a different way of assessing value.
2) I don't think this idea of "not owning property, only renting it" is actually that crazy if you take a long term view over it. Land is a finite, shared resource. We already acknowledge that you don't have absolute rights over land that you own in the same way you do over, say, a toaster. We place all kinds of restrictions on what you can do with it, we tax its ownership, we have eminent domain laws, etc.
The idea of treating land as a pure asset has had a lot of negative social effects and ultimately will lead to a kind of neo-feudalism where the megarich own everything and the underclasses are perpetual renters.
>The idea of treating land as a pure asset has had a lot of negative social effects and ultimately will lead to a kind of neo-feudalism where the megarich own everything and the underclasses are perpetual renters.
The idea that land is not a pure asset leads to regular feudalism.
> The idea that land is not a pure asset leads to regular feudalism.
Yup. And despite the claims made that it's a solution for the common folk, the people who "own" and can make decisions about the land will be the megarich, so it will be feudalism, with rent due on the land you own.
No, some resources aren't shared (for example, human capital: things that I know how to do aren't shared, since nobody can 'borrow' my knowledge) or are effectively infinite (for instance, you can travel arbitrarily far into outer space and not run out of space).
> Everything is a finite shared resource.
> That's the point of ownership.
I think the point is that (up to a limit that we're a long way from reaching) we can make more toasters to satisfy any additional demand that arises for toasters. But we can't make more land to satisfy any additional demand that arises for land. So we have to share the land in a way that we don't have to share toasters.
You are mistaken on several grounds, but the most glaring issue is that you do not properly understand the concept of property/ownership.
For all practical purposes property/ownership is a service provided by society, not a static "attribute" of stuff (the only exception is when you live entirely without any sort of contact with other people, in which case, however, the concept of property becomes void, at least practically). And any service carries a cost with it.
For instance, in our kind of societies, the institution of property requires, at the very least: (1) legislature that defines what property is and all the related rules, (2) the administrative part that handles property transfers and other issues, and keeps the record of who own what, (3) the judiciary system that interprets the legislation and resolves disagreements and other issues related to property, (4) the police or some other body that enforces and protects the whole system within the society, (5) the army that protect the property of the society against the claims of external groups. In our societies many of these institutions carry also other functions, but enabling the system of ownership is an important part of their job. And this service is very expensive --- so not paying any taxes on property means that those costs must be covered by some other sources (e.g. selling natural resources, income taxes, ...) and, usually, lead to a transfer of wealth within the society.
So the idea that you just "own" something (your house for instance) and any kind costs of that imposed on you by the society/government are unjust is completely and patently misguided. If anything, the opposite it true.
(That does not mean that the tax system must be necessarily constructed to reflect that, as there is no single and obvious correct way to design a tax system, and other important considerations enter that issue.)
This is a solved problem in other jurisdictions. Effectively you can just allow seniors to defer their property taxes at low interest rates and it becomes a liability on the house when it is transferred on death.
This is how the government countered the people demanding the end of debtor’s prison. And it’s not “transferred on death” it’s whenever the house is sold whether the owner is alive or not.
> fixed income at the end of your life in no position really to deal with inflation.
This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?
Most people are on social security, which is inflation adjusted.
Others with more wealth have retirement savings, which are likely mostly in bonds and stocks, which weather inflation not too shabbily. Interest rates go up, and banks start actually yielding interest!
Prop 13 passed mostly as a populist revolt against taxes, but in reality it does a lot more for people in their prime of earning and a toooon more for commercial property tax cuts than it does for retirees.
Every other state has better tax deferral mechanisms, and given the tiny fraction of Prop 14 effect that goes to retirees, I don't really buy this back formation of what was going on. If people really voted for such a lie, it wouldn't be the first time with propositions but from the media I've seen from the time I really don't think people were that duped and probably knew the broad effects of Prop 13.
And not in small part because Prop 13 disconnects property from housing costs, which leads to political incentives where beneficiaries of Prop 13 embrace policy that causes housing prices to rise precipitously.
Prop 13 or not most people historically resisted zoning changes and pretty much all cities in the country, even in Manhattan, were downzoned dramatically from what was possible as far as infill development the pre war zoning plans. Even today, the trend is never to recognize the housing crisis for what it is and widely upzone, but to just nudge a little more capacity in some containment zone of the city at good arms length from the best of the single family home neighborhoods, in the form of say transit oriented development of certain specific constraining factors, rather than just opening up the floodgates and allowing for market to actually establish prices freely.
I was alive at the time prop 13 passed. I was a little kid in Ohio. Even I remember the stories that were being circulated on the national news about old people being priced out of their homes in LA. It was a big campaign.
"Big campaign" sounds right. These sort of tax revolt campaigns tend to spread wide, with the hope of passing similar things elsewhere shortly after.
Fortunately, this one did not spread which is very good news, because the long term effects have been absolutely horrific for housing prices in California. However, I hear of other states right now proposing adoption of California's housing crisis via similar tax measures... Hopefully they don't pass and learn the lessons of what has happened here.
Vancouver used to have a land value tax, which was widely credited with the its prosperity up to the ~1960s. However eventually enough homeowners and landowners got sick of paying their fair share and overturned it, which has resulted in Vancouver's housing situation which is possibly even worse than the SF Bay Area's...
> This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?
It seems an astonishingly large number of people, including on here, talk as if that were the case despite their actual living and retirement finances. People really hate inflation.
Something about the lizard brain wants the exchange rate between shiny object and edible object to be fixed and gets extremely upset if it changes.
(Or, as is becoming increasingly relevant, the exchange rate between shiny object and flammable fluids)
The exchange rate between shiny objects and edible objects has nothing to do with inflation though; they're both physical objects. Unless people start trading glittery balloons it is quite difficult for shiny objects to inflate and the fluctuations from increasing supply are generally not a problem.
The inflation complaints are people who prefer not to be taxed on for saving currency and earning money in fiat. As far as it is a lizard brain thing it's more about principles of fairness in who should be paying taxes and the aversion people have to things taken away from them.
So either your parents were getting $115 from social security, or you are trying to report increase of a year with essentially 0% inflation as if it were the year with 9% inflation.
For what it's worth, the way Israel deals with this is that property tax is levied on the property resident, not the property owner. In other words, when you rent a house, the person who is legally responsible for paying the tax is the renter.
This makes it exceedingly easy to ensure that old people are not affected by property taxes: if you are elderly resident, you simply get a discount. If you are an elderly landlord who owns multiple properties, your younger tenants don't get a property tax discount, and you pay income taxes (not discounted for age) on the rental income. If you are elderly and want to downsize, your property tax discount follows you into the smaller apartment.
The system has its challenges, but it is far superior to Prop 13 and achieves the same goal.
Why should the typical old person or couple have a large home all to themselves?
I think (in a semi ideal world) individuals and couples should be entitled to small apartments or tiny houses, which would be cheap enough for an old person on retirement benefits. An average American home is for a family: as the parents age, some of their kids start financing the home, while other kids may move living spaces, or everyone splits up and the house goes to a new family (presumably a couple moving from a small apartment).
Elderly retired people living in large houses close to where the work is has caused massive social, economic, political, and cultural harm. Young people can no longer afford to buy homes close to work, so they're forced to commute long distances. Their taxes then go in part to pay for the elderly person who lives in a million dollar house with multiple rooms, who receives many tax breaks. The young person cannot afford to start a family, cannot afford to buy a home, loses a lot of time each day on commuting, spends a fortune on commuting, has less time for family, and causes enormous inefficiencies in the job market. This is nothing short of a concerted redistribution of wealth from the young to the old. It's a travesty which the elderly today would not have accepted.
I do not feel sorry for the elderly person sitting on a large and expensive property who demands to spend their final decades squatting on land which could house a family and allow parents to get to work within a reasonable amount of time. They have options the young person does not. They can get a reverse mortgage, for example. They get social security, and draw down on whatever pensions and investments they've accrued over their lives. Their costs are much lower - they don't have children to support. Or they can move, and I'm sorry, but it's not impossible for a retired person to move. Millions of them do it every year all over the country. Often to really nice elderly communities full of activities and specialised care.
I say all of this as someone who leans more libertarian than collectivist. Society is interconnected and interdependent. We cannot function if he keep young people under our boots. Asking the elderly to move is a *very* small price to pay if we expect the young to shoulder the enormous tax and debt burdens said elderly have imposed upon them.
“Beat it, grandma!” “But I’ve lived here all my life, my husband has passed, and all my friends live here!” “Not for long; we’re kicking them out, too!”
That line of thinking sounds insanely unpopular to me and while it might be more efficient in some ways, I think its unpopularity makes it unlikely in a democracy.
Exactly. And I am appalled by the level of injustice and stupidity (I will explain both) demonstrated by so many comments here.
Injustice, because they refuse to see the other side of the coin, or the full picture, and a decision ignoring the full picture can be just only by accident (at least in common moral systems).
Stupidity, because it betrays a lack of touch with reality. In this regard I am reminded of a recent thread here, where an article about artificial meat was being discussed. An author of the article expressed their uncomfortable feeling when eating the artificial meat, caused by their thought about the unnatural, "lab" origin of that substance. If that article was sincere, that person have probably never visited a slaughterhouse, or killed an animal by their own hands in order to eat it. This kind of cessation of contact with underlying reality behind our everyday experience is quite common in our modern societies.
In order to be succinct, let me just say that historically it was common for elderly people to live in multigenerational households, sharing their space with a younger family and helping (as long as they could) with chores and taking care of children. While that is not the only viable way, and I am in no way against the modern pension system in general (although its current implementations in most if not all western societies have their problems; and also make many people to lose "touch with reality" in the way I alluded to above), it was quite a natural way of handling the issue of old age that reflected constraints under which a human society existed (and still continues to exist today).
Since I feel that the dominant sentiment of the commenters here is based on emotions and "morality" in a way that I believe is inherently evil, I will close this comment with a refrain from emotions and morality, and state a cold-hearted truth: A society that discards its old people might be a bad one to live in but might be able to survive. A society that discards its young people is destined to die. [To avoid misunderstanding: I do not argue that we should discard old people.]
> being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense
Whether it makes economic sense or not, it is extremely inhumane and that matters (or should matter) far more.
This idea that it is ok to kick out (via taxes) someone who spent 40 or 50 years contributing to society just so someone else can make more profit on their home is very sad.
You handle that the same way income taxes do: the first X amount is exempt, like a standard deduction, applied to the land under someone's primary residence. Pair it with a rolling multi-year average for assessment so value spikes phase in gradually instead of hitting all at once. Keeps the incentive against passive land-holding everywhere else intact, without the blanket caps that also protect speculators. Instead of using one tool to fix it all, you use multiple tools that work together to make efficient systems
> the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
Once you are old enough it makes a whole lot more sense to move to places designed to care for the elderly. Living alone in a huge house isn't good for your mental health and it isn't for your physical health, either, once you no longer have the energy to maintain it.
> Once you are old enough it makes a whole lot more sense to move to places designed to care for the elderly. Living alone in a huge house isn't good for your mental health and it isn't for your physical health, either, once you no longer have the energy to maintain it.
This betrays some things. Not everyone is in a "huge house", and having this bias is going to lead you to bad conclusion. Most people don't have a huge house.
And, more importantly, tax should not be used to force people into one way of living in their latter years. They might be self-sufficient into their early 90s, and the last people who should be determining where they live are people who want to do it.
I could use a much smaller house than I have now and a much larger garage for tools, workshops, art studio, etc. But for me, the value of a larger property is that I get to go out of the house and spend time in the garden. Sometimes something as simple as pulling up weeds is a considerable boost to my mental health. Kneeling on a garden bench in the sun in the weather and pulling weeds is not something that's “enjoyable," but it is rejuvenating.
My 92-year-old mom has been the same way. Until one of her daughters moved in, she lived by herself in her house and garden. Just being able to go outside and experience the green space she planned and planted has kept her alive and healthy. If she were in some senior living place, she'd be dead by now. She would have withdrawn into her room and waited for her time.
displaced because the land has become so valuable you can no longer pay the tax on it and have to sell for a massive profit?
boo hoo? My generation has never even had access to affordable housing. Sorry you have to take your millions and live on a smaller property for your last few years.
It's such an amazing psy op that every opportunity to discuss wealth disparity and distribution becomes a Georgism ad. No, abolishing all tax except land value tax won't fix it.
Cool, but just bringing up Georgism doesn't mean the commenter wants to go all-in full Georgist. People can agree with part of a philosophy and not all of it. But we don't know, so we should assume good faith, read the comment charitably (per HN guidelines), and argue against what the commenter actually said, not what we might assume they believe.
I would challenge you to point out exactly where in OP's comment that he advocates abolishing all taxes except land taxes. I see only a comparison to taxing land vs property.
Lars here. I run the Center for Land Economics with Greg. We are not maximalist single taxers.
Henry George was obviously a Single Taxer, but "Georgism" has a generally broader meaning than that. Some Georgists are single taxers, but not all, including Greg and I.
When we talk to elected officials, we don't even talk about Henry George all that much (I did in the ACX article series because it all started with the progress and poverty book review). We mostly speak of "Land value return" and our focus is mostly on pragmatic revenue neutral tax shifts to LVT.
I don't mind land value tax! Like you, I think it's one of many valid kinds of tax that a government can put on its citizens to achieve various social goals. Hence, I am not a Georgeist.
I like Georgism, but I don't think it should be limited to just LVT. I think ownership of all natural resources (especially scarce ones) should be taxed at an aggressively progressive rate. Own one oil well? Cool. Own enough oil wells to supply the entirety of the Allied Forces throughout the duration of the European Theater in World War 2? Meh.
What if your only relationship with land is that you rent an apartment, but from that apartment you build a $10M/year revenue social network? How should that be taxed? Should it at all?
Why care about wealth disparity at all as long as everyone is better off? If I offered you to double your real wealth but sissy Bezo's real wealth, would you reject that offer just because wealth disparity went up?
Because obscene levels of wealth disparity makes everyone worse off. Power is a zero sum game.
If I were offered to double your real wealth but also double Bezos's real wealth, of course I would take that deal! I would benefit from it. But if you offered to double the real wealth of everyone, what would that even mean?
You are confusing money and wealth. We can all be richer. The vast majority today has riches that a medieval king could have never dreamed of. Exotic fruits year around. Magic devices. Healthcare that goes beyond anything medieval people could have imagined.
Yes, unlike economics, politics is zero-sum. The solution to that is to fix the political system, not to destroy the things that are working great.
Some political power is probably unavoidable, no matter the system and no matter the wealth distribution. We can do lots of things though to weaken that effect. Obvious options range from a simple campaign finance reform to more impactful things like sortition or election by jury.
>If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it
This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free. Individuals can then rent out their land for others to use as needed. Forests/rivers/conservation lands etc. can be seen as truly a common inheritance of mankind and should generally have the least of commercial activity.
p.s - a govt will never agree to such an arrangement because it will not favor them.
Raise X in land tax and then you spend it evenly a mmkng the population. Anyone using less than their fair share gets a bonus, anyone uses more gas to pay.
If you just allow using X value tax free then those who use less don’t get rewarded.
> p.s - a govt will never agree to such an arrangement because it will not favor them.
IDK, governments tend to align with what results in the most economic activity being created / moved into their country ("growth"). If you were able to convince that overall economic growth would be multiple times higher over a few decades with the system, it might just become appealing.
A problem I see with implementation in the US, though, is that local municipalities are who tax land and property value, so entire rural counties and cities would have their funding stunted. And asking the government to buy into that while subsidizing low-growth areas for a long time (decades / forever, if a rural area never develops) is a really hard sell.
> A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free
I like the thought, but the challenge in most places is that the poor are already paying massive "negative tax" in the form of various social subsidies.
So if you add tax exemptions on top of it, it becomes increasingly impractical to raise enough taxes.
And no, it can't be done simply by taxing the rich more. That should be done too, in my view! But the math is simply such that we need a pretty broad tax base to support our spending.
If you don't want to pay the taxes, thanks to Disneyland you can now sell your land for a nice fat gain, buy cheaper land elsewhere, and pocket the difference. And whoever bought your land will likely use it for the social good (maybe build a hotel or something).
I would imagine that if Disneyland were built next door, that might be in the cards regardless of the tax situation...
It's just a reality of life that not every homeowner can possibly be entitled to fully control what gets done with the land around them, and that's going to cause some friction.
It's a difficult job to navigate who gets to decide what, while still enabling necessary development. LVT is just one of the more elegant ways to do this.
I'm not a big LVT fan - pushing for maximally productive use of land is going to result in displacing people, displacing small businesses, displacing artistic/cultural/environmental spaces, etc.
I would much rather see an overall assets tax that scales with the value of the assets. That would incentivize more smaller businesses, long-term thinking, and wealth distribution. It would hit big corporations in the same way a LVT would, forcing them to be more and more productive with their assets the more they have, without pricing out smaller entities.
If only this were true, we wouldn't have homeowners constantly fighting against new development or construction. Many homeowners treat their primary residence as an investment.
> If only this were true, we wouldn't have homeowners constantly fighting against new development or construction. Many homeowners treat their primary residence as an investment.
You'll be very hard pressed to find any home owner who actually thinks in this cartoonish way.
When people oppose changing the character of their home neighborhood it has nothing to do with "treating their primary residence as an investment". It is because they selected a place to live, to call home, based on some criteria that they liked. Everyone does. A home is a big commitment, so you spend a lot of time researching exactly where you want to settle down for the next many decades. You pick an area you like, a neighborhood you enjoy.
For some people that might be quite rural, for some people distant suburban, for others near-city suburban, for others inner-city center. Whichever type of area you select, it is because that's the kind of area you personally enjoy the most. Somehow this obvious truth is controversial on HN for reasons I don't understand, but it is the truth. People select what makes them happy, no surprise.
So, when people oppose seeing their suburban area torn down to build highrises, it has absolutely nothing to do with home values or investments.
People oppose it because they very intentionally chose to live in a suburb far away from highrises and now they see those imposed on them. Of course they're unhappy. Basic human nature, nothing to do with investments.
If someone feels this is not so, I'd appreciate an explanation of your viewpoint.
In my experience the vast majority of NIMBYs do not care about how much their property is worth. They just really don’t want the area they live in to change, because they think all change is bad.
I think that there's something about LVT, but your dismissal is very shallow and why it's not been implemented so far.
I don't _want_ $1M, I want to live in my house that I bought and lived in for years. Getting money I don't need and having to live in a place I don't want to live in is _not_ a positive situation.
I don't think some extra taxes on expensive land is the red line you appear to believe it is. People who own expensive land have many options the rest of the world could only dream of, including reverse mortgages. Meaning no one is actually forcing anyone off their land. They're just being asked to pay some extra taxes. If you believe tax is theft, I can see why this is agitating, but I do not share that view.
I do not share that "taxation is theft" view either. And I agree that owning expensive land is a privileged position. But the concern of being pushed out of one's home because of an increase in tax is real, "just sell it" is not a viable solution, houses and locations are not fungible.
Maybe reverse mortgages are the answer, I'm not sure, I'll admit I'm not very knowledgable about this.
Why do you believe that you should be allowed to preserve your present lifestyle in amber at a (very minor incremental) cost to economic prosperity for all of society?
Obviously. If you live in a single family home next door to Disneyland you’re ducking over all the people who want to stay in a hotel there. You should have to pay for that privilege.
I wouldn't say it's coordinated. This is an old article, published in June. A lot of people came to the land economics blog from the ACX article that ran today, someone likely saw this one and then posted it to HN.
> Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
That sounds like a terrible idea to me. Efficiency isn't everything. Small stripes owned by many people or by many smaller companies it's less efficient than one hedgefond owning everything and yet it has disadvantages.
A forest is much less efficient than a mall and yet, the forest might still be more important.
There's also no way for a government to effectively determine the potential value of land. Asking them to do it means inviting disaster and corruption.
The main problem with this view is that land value is laggard to the economy. You will end up taxing people more than what the land is actually worth during downturns, instigating a vicious feedback loop to cause further problems. The logical path is to tax money where there is money - income.
What gives the taxman a right to the fruits of a persons labor? There is of course no other argument for this than "or we kill you". Tax on income is another form of slavery and serfdom. Especially when you consider that a large proportion of slaves through history were free to roam and had to find their own source of income to pay a weekly or monthly fee to their owner.
All other forms of taxation at least have arguments to ethically justify them, including land taxation.
I'd like to hear how you think land tax is ethically better. You mention serfdom, which is most similarly linked to land tax as the serfs would have to pay the lord for existing on that place. Likewise, your mention of roaming slaves forgets that they had to pay some value every period and were not allowed to simply not work, which is more similar to property tax where you must pay regardless of income or ability or pay.
I mention it right there in the very same sentence, you must have stopped halfway.
> I'd like to hear how you think land tax is ethically better.
First things first - "better" is a bit strong of a word since there has never been any argument made in favour for taxing labour except for "might is right" or "the end justifies the means". If you have an argument except for those to why it is ethically right by itself to tax somebody for working, then I'd like to hear it.
Now for the argument in favor of land tax:
Nobody has any inherent right to "own" land. The concept of "owning" is an invention and is also completely absurd once you think deeply and clearly about it. God created all land and it has been there for millions of years before anybody set foot upon it and claimed ownership. Claiming to own the land - and what more claiming to have a right to transfer that ownership to anybody but your children - is something of an abomination.
Compared to owning your labour and the fruits of your labour. Which is an extension of owning your own body. Or owning something you've purchased and can bring with you wherever you go.
The government itself is an extension of the concept of land ownership. So it is natural that they would levy taxes on their vassals - people claiming ownership of any land. The government vouches for your unjustifiable claim on this land and you pay them for the privilege. It also fits very well with the concept of governments being limited geographically in extension.
I don't claim that there aren't very good arguments against taxing land, but there are at least ethical and logical arguments for it, while taxation of labour have no such arguments in favor.
You can also argue ethically in favour of taxation on foreign trade - tariffs. Because in such, the government doesn't interfere in what people do within their country.
> You mention serfdom, which is most similarly linked to land tax as the serfs would have to pay the lord for existing on that place.
You forget that the serfs are given no right to sell the land, which is why they are serfs and not lords. That's the most important factor. The lord certainly did pay a land tax to the king.
The argument is not "pay taxes or we kill you", it's "pay taxes or get out of our town". No one is a slave, if the government asks for too much and provides too little, people will move.
I live in a town with non-trivial taxes. It was my personal decision to move there, no one said "move there or we kill you". When choosing a place to live, I could have moved to some other city/state/country with lower taxes, but I've decided not to. I like that we have working utilities, parks, roads, schools, law enforcement, stores. The town had a vote to increase town tax to raise money for schools and libraries, more than 70% approved.
I don't care about your ethical reasoning about tax types, if you want to live in my town, you contribute to the town's well-being. If you refuse to, on any grounds... well, maybe some other place will be a better fit for you.
Roads, libraries etc. Why is it better that those are paid from income taxes rather than property taxes? Or sales taxes or tariffs etc?
You're arguing "end justifies the means" and "might is right". "My town" and all as you argue.
Unless you truly believe that people choose where and how they will be born, which of course might be the case. And then they only have themselves to blame, as you say.
This is just begging the question. The "cooperative will of people" is nothing but a catchphrase invented to justify government power. You are just saying that a government owns whatever it claims, and then moralizing about "the town's well-being".
"I don't care about your ethical reasoning" is a good summary of your reply.
The first time I heard about a Land Value Tax it sounded great. You can then go read where it's been tried and find that it's extremely hard to implement.
As just one example, if I place becomes popular then suddenly the taxes rise and people have to move out. Lots of people hate that idea and so vote it away. And then LVT no longer works.
You can't tax "the land". You tax the owner. The money doesn't come from the land but whatever source of income the owner has. That's what you are really taxing.
To actually tax the land, the owner needs to sell it, but who is going to buy taxed land? You are forced to sell it to pay the tax.
So taxed land, in the end, loses value, because it's sold more and bought less, and the source of income goes away, because he was forced to sell the land.
So a data center pays the same taxes as a homeowner, foot for foot? It seems unfair at first, but then it occurs to me that data centers would not be so desirable if they were not paying higher taxes. If land value tax helped to pop the data center bubble it would make the more off-putting aspects (organic farming is a less efficient use of land than factory farms) more palatable. Why not have a hybrid approach, where the local community can decide to apply different types of tax systems to different types of land and land uses?
wonderful -- now take the modern case where the most fertile land, covered with farming, is converted to cement and home sales due to 100x immediate cash returns. The price? pavement is forever
If an island produces 2 burgers a day and has 3 inhabitants: one is rich, another is the poorest worker who can afford a burger, and the third is indigent, the rich person buys his burger, the poorest worker buys the second burger, and the indigent buys nothing, because there are only 2 burgers.
So a socialist sees this and claims he will tax the rich to give a burger to the indigent.
He taxes the rich as much as necessary to ensure that the indigent gets the burger.
As the worker tries to pay more for his burger, the price rises, so the socialist raises the tax as much as necessary to ensure that the indigent still gets the burger.
So the next day, the rich person buys his burger, the indigent buys another burger, and the poorest worker goes hungry, because there are only 2 burgers.
The result is the same if the socialist taxes the rich, prints money, or takes on debt. He always takes the burger from the poorest worker.
So taxes and public spending are always paid by the poorest workers. It does not matter where the socialist gets the money from: he always taxes the poorest workers.
The effectiveness of other taxes aside, the argument that billionaires will leave if taxed at a higher rate isn't compelling.
Billionaires are not struggling to meet their expenses. If you raise their taxes, they aren't suddenly unable to afford things. They don't need to change their behavior just to get by. A carbon tax forces average people to drive less, but doesn't affect billionaires at all.
Billionaires live where they want to because they can afford to. They're not going to let themselves be chased from jurisdiction to jurisdiction because of numbers that have zero impact on their daily lives. That's what happens to poor people. If California raises taxes on billionaires, very few will actually leave. They're where they want to be and they can afford to stay there. What's the point of having a really big number in your bank account if you have to move to the middle of nowhere in Alabama to keep it from falling just a little?
It may not be logical, but money effectively turns into a scoreboard at a certain point. The ultra-wealthy care whether they show up to the yacht club in a 100m or 150m yacht.
That individuals won’t optimize their wealth beyond $100m, $1b, or really any number just doesn’t square with observable behavior.
Starting a business self-selects for people that desire money (over other benefits).
The purpose of a business is money (otherwise you start a hobby or charity or something non-businessey).
Being very successful at business is a selection bias for people that are highly competitive at chasing money.
There's a bunch of traits in very wealthy self-made people due to the filter they have run through.
Tax too much, and we kill the golden geese of the economy. Examples abound around the world of crappy economies that can't afford good socialist stuff because they've demotivated the rain makers.
> the argument that billionaires will leave if taxed at a higher rate isn't compelling
I agree with this. California’s climate and culture will keep many a billionaire within tax nexus reach of the state. Of course, this isn’t a strategy every locale can pursue, but I don’t see a reason for California not to exploit its advantages.
The article claims that 6 individually named billionaires already left (presumably recently), and another is likely to leave if he loses his court challenge.
This is a strange argument coming from the side of the argument that usually talks about billionaires being greedy and doing anything to make the numbers go up even though they can't feel the difference.
They can certainly afford it but they obviously like their money to stay theirs and like getting more of it, not less.
If you are rich, you want to be in places where you can enjoy and show off and well be rich. Living in some third world or second world hell hole or some deep red state with no mountains or beaches where you can’t drive and enjoy your fancy car just would not be fun it’s basically the reason why you wouldn’t want to be rich from America and live in Mexico or further south.
Not to mention your businesses need to be in relatively affluent areas where most people can afford your products and from an educational standpoint, most of the better schools are on the west coast or are in the upper east coast.
Worry. about the other 99% maybe more precise, the other lower 90% of American Society.
The greatest feat that Mao achieved was to take the land that had been tightly gripped by generations upon generations of owners and to shake up the distribution of it so that the land could produce again. People naturally want to work the land, but you end up with suboptimal inertia because owners just end up letting it sit fallow if it doesn't immediately return. It's how you turn a billion serfs into a billion entrepreneurs.
We're already way past the point where a creative cocktail of 10 different progressive taxation schemes could feasibly fix the root of the problem, and you feel this especially if you were born after the year 2000. You're more likely to see results if you pick up a red scarf than if you pass a higher wealth tax, sales tax, land tax, consumption tax, estate tax...
The famine is unrelated to the land distribution but also the farm land distribution didn't last. They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
My understanding is the famine was essentially the middle managers of these collectives over stating yields and being too afraid to admit their lies. To maintain the lie, they shipped off food while the farmers starved.
> They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
Painting it as if Mao era collectives are the same as the state quotas that exist today is highly misleading. The HRS was 1979:
"The household responsibility system replaced collective farming." [1]
Broadly speaking, the collectives can and should be blamed for the famine, just as in the Ukraine. Getting into the weeds on the specific mechanisms is fine, but using it to undermine the broader lesson is apologetics.
those who advocate for land value tax are usually advocating for single/minimal types of taxes (and, in fact, against sales and income taxes) rather than a cocktail of them. "Single Tax" predominantly refers to a single land value tax. https://en.wikipedia.org/wiki/Single_tax
> A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous."
> To put it bluntly, it is necessary to create terror for a while in every rural area."
Let's not glamourize the Mao's land reforms. It required the killing of 1-2 million people. Even then, the collectivization was a massive failure - not only did the peasantry not get to enjoy the benefits of land reform, a further 15 million people would die from the resulting famine.
The deep irony is that Taiwan was actually able to do the same reform but with much better outcomes, with much less loss of life or political violence.
Taiwan did not have anywhere near the land distribution occur under CKS/CCK, nor the same veracity of landlord clique ownership. And, you're further wrong in that a big part of white terror was specifically due to 外省人 owners of factories and farms. The white terror wasn't by any means less violent and senseless than cultural revolution.
I don’t have experience elsewhere but in Santa Clara county, the county assessor calculates a very much incorrect split between land value and value of the improvements (buildings) when they assess the property tax. Sometimes they just divide the total value by two and call it value of the land; in other cases the value seems to match reality more. How would a land value tax accurately compute the land value?
Not all assessors do this accurately, especially in California, but there are many that do. This article includes a section on land valuation which summarizes and links out to various other articles about various approaches
> In its ideal form, this tax would capture and redistribute the annual rental value of land; that is, the recurring value of the land excluding the value of any buildings or other improvements on top of it.
> but you see the same basic patterns everywhere. Land in the city center is worth much, much more than outlying areas.
The calculation of the "unimproved value" always perplexed me.. it seems like you're not taxed for the things you build on your land, but instead for the things other people built around your land. After all, why would property in a city be valuable if not for all the high rises, subways, and office buildings?
It, in effect, turns out not really to be a land value tax at all. It turns out to be a tax on the most valuable thing that _could_ be built there because that's what gives land it's value.
So you're completely correct, the value of the land changes with what's around it because it opens up new options for what someone might build there.
this is the idea - if theres a lot of value around you, you should build to make sure you are meeting the bar of whats around you in terms of economic activity.
if you build even more and get more out of the land than whats around you, you essentially get a lower tax rate until your neighbors catch up.
if you lag behind, you pay a premium in taxes to not develop
There is a very weird but real phenomenon where it costs more to build/remodel in an upscale part of town. Roof repair: same roof, same company, two jobs 10 miles apart with wildly different invoices.
But I think the purpose of a wealth tax is precisely to get rid of greedy billionaires.
So if they vote with their feet and leave, then that's an even better outcome. Now they can't manipulate the government anymore. They can go manipulate and continue extracting wealth from some other place.
Yeah because they got billions by extracting it like mosquitos. It came mostly from your billions I assume. Without that it would have been all yours. Clearly you have zero concept of how an economy works.
You know the extraction is more like 10000-to-1 than 1-to-1.
But in essence I do believe I could have had $100k more net worth if they hadn't monopolized all user-acquisition channels and if they hadn't helped bring about the many laws and regulations which made this possible.
I have no ill feelings towards them but I just don't want them in my state competing against me for limited resources using money which they acquired through an unjust scheme which I was coercively made a part of but which I never agreed to and have been protesting for almost a decade (on deaf ears).
It's not personal or even saying anything negative about their character or abilities. From my perspective it's just pure self-preservation. They either need to contribute more tax to make up for the injustice or they leave.
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[ 0.24 ms ] story [ 136 ms ] threadI didn’t mention gentrification in the above sentence. Does that mean I’m ignoring the problem?
Red states have implemented low income tax with heavy property taxes (think Texas) with great results. and although I'm sure California would just manage to mess it up it's a great idea.
I live in Texas. I don't like the restrictive laws. Texas could learn a lot for California, just not in the areas of taxation
Made me laugh while drinking; messy, but worth it for the smiles I'll have every time I remember it! Outstanding job, internet stranger.
ROFL what? I'd bet the author a lot of money that costs WILL roll downhill, the source matters not.
People can also sell their land/homes and move. It's less liquid than other assets, but less doesn't mean people won't sell/leave.
I would be surprised if most land consumption taxes (whether structured as property or land) would not get directly passed through to the beneficial consumers of that land quite quickly, or for their privilege to consume that land to be terminated/non-renewed at the expiration.
If I believe it’s over-stated, I can appeal my property tax assessment by using comparables for nearby developed property. There is no equivalent market-based process for land values alone.
There's several anchoring sales nearby, you can regress out from all sales, etc. etc. And it's smoothly varying for nearby parcels, with very little change!
A much better explanation than what I can write can be found in the "Estimating" section here https://landeconomics.org/reports/california-billionaire-wea...
Most companies take profit eventually, but if it's possible for a company to decide to never take profit and grow/acquire perpetually without paying any taxes on gross income, that's a problem.
That'd be like individuals being able to deduct living expenses and having uncapped pre-tax 401k contributions.
[1] https://en.wikipedia.org/wiki/Laffer_curve#Income_tax_rate_a...
The straightforward answer is there is no correct ratio. The best tax regime is the one that allows for sufficient funding of necessary and desired services and long-term economic investment while also balancing wealth creation with wealth inequality. That number isn’t fixed and it’s clear that it shouldn’t be evenly borne by the population as a whole.
The idiom is "film at 11."
Old voters like the house they brought 20 years ago for 100k being worth 1.5 million today. They also like not paying taxes on that 1.4m in wealth accumulation.
Snark is one of the last ways to deal with the death of the internet.
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
I think a lot of tax authorities also don't reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.
I don't like property taxes either, and at minimum would rather they were called something else, and preferably replaced with per-service charges where possible.
But either way they exist to pay for things, and not to just degrade the value of your property simply because you worked to own it.
It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.
Another evident thing is that people will start retreating from internet as this gets worse (With LLMs accelerating the trend).
I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.
This is circular. Wealth inequality:
1. Isn't real. It's a paper value that would not survive contact with reality.
2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.
3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.
> What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
This is just your media consumption showing.
And humans are wealthier than any time in history. They have access to robot slaves that can wash dishes and clothes for them. They can access fruits grown over 1000 miles away for 69c. They have potions that can cure cancer. They have the database of all human intelligence in their pocket, accessible from anywhere on the globe. They have individualized transportation that can travel over 2 miles a minute. They have super intelligent thinking machines for cents.
Life has never been better for mankind.
The last thing you should do at that point is vote for more policies that will destroy economic activity in the name of "fairness". That's how you got here.
If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.
If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.
Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?
If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.
I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.
Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.
I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....
if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.
its still not that hard
This is utter madness. What will happen is businesses will move en masse to places with economic systems not overrun by those driven clinically insane by years of listening to their favourite pundit blame billionaires for everything.
Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"
On the contrary - it's trivial for controlling shareholders to direct the company to issue more stock to them and thus dilute the shares that were taxed. What do you propose, that companies can no longer issue stock after some of the stock has been taxed?
And what about non-divisible assets like real estate? There's nothing that prevents the government from forcing real estate to be held by LLCs instead of individuals, then shares in the LLC could slowly be taxed by the government. So what happens in 20 years when the government owns 50.1% of all the LLC shares that comprise the ownership of the $100 million Hollywood mansion? You're going to let a bureaucrat kick out the A-lister who lives there and put it up for auction? Attempt to sell it to someone who knows full well the same would happen to him?
It's very, very hard to design a wealth tax that doesn't end up being an assault on private ownership in all forms.
No. It will be higher. Say you spend your money on shares advertised at ramping prices like this:
Your "net worth" is 80% higher than the money you just spent.That's why net worth is stupid to reason about.
Would you rather have 1M dollars in cash or 10B in stock that you can't sell?
Loans must be paid back. Loans are cash flow neutral over the maturity. That's why loans are not counted as income.
When the market grows it makes the collateral worth more, which lets the borrower keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
And even so, you could say it all settles out in the end, but that ignores the fact that there have constant constant efforts (and successes) in eroding away the ~~estate tax~~ "death tax" during this same period.
Long maturity products still have to be repaid. There are no "infinite" maturity loan products for retail customers.
>It's questionable that whether such loans are cash flow neutral.
There's zero question: loans are cash flow negative (for customers) with interest. Banks are not going to offer products that are not cash flow positive for the bank.
> Especially with how the market has been lately, the gains erase any burden of the loan.
And when the market goes down, you get a margin call and get wiped out.
You’d think they’d jump over each other to lend money against such a stable, secure asset right?
Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”
Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.
Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.
Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.
But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).
But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.
... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.
they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.
it is a proper solution to the overall problem which is extreme wealth concentration.
the obvious alternative is nationalization of all assets worth more than 100M.
DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government
[0] https://factually.co/fact-checks/business/did-elon-pay-11b-i...
> buying votes with tax dollars
This was more convincing of an attack on "Socialist politicians" before Sept. 9, when Trump did it more openly than they ever have. I guess you could believe his claims it won't come from tax dollars. But if the government has $1 trillion lying around for this and chooses not to unconditionally lower taxes for everybody, is it any different?
The head of the anti-socialist, anti-wasteful-spending party is spending billions on a more impressive Air Force One, golf days, family vacations, vanity renovations, DHS ads starring a POTUS wannabe, DOGE effectively paying people not to work, etc.
Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.
It makes the timeline GGP laid out impossible:
> We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Unless we don’t share a definition of “tomorrow” or “suddenly”.
The point is that we can do it if we want to.
When you meant "shortly before Memorial Day of 2030", it's not clear that 51% of the misunderstanding is on the reader.
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug.
Yes, businesses are allowed to buy and sell things without being taxed on the sales. If you want to change that rule, you are going to change a giant number of things purely to get at the billionaires you've spent the last few years being trained to hate.
> Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
It's missing the planetwide jungle for the trees if you think giving politicians the ability to reach into ownership percentages of businesses and deciding how much they want to charge you for owning a business is a check on power.
You wont mind if we tax it then will you?
You do, of course.
You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.
Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.
most people have very little illiquid wealth, and its generally in the form of a house.
billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry
An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.
no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated.
it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (more so than a wealth tax) to collect but we still do it.
>An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it
even if it were true, it's not a good reason not to tax him.
in fact, it might even help bring some sanity to the capital markets if he were forced to price his assets for tax purposes.
> He couldn’t convert it into cash even if he wanted to.
Elon musk has been converting his assets into cash recently and he has had no problem doing it.
It's not. The problem is in the calculation of "net worth".
Yeah you did. You wrote "he couldnt turn it [his illiquid assets] into cash even if he wanted to".
>The problem is in the calculation of "net worth".
That is not a problem.
Let them value their own assets. If they value their ming vase at $10k then the government reserves the right to buy it for...$10k. They might get away with avoiding paying taxes. Or the government might get a bargain. The incentive, though, is to be scrupulously honest and accurate.
Some people obviously wouldn't like being put in such a position.
> And, more importantly, the difference is that people choosing to put their money into something is not the same as enabling it to be taken by force.
Im not 100% sure but I think this falls under the category of just saying "wealth taxes not fair!"
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
This is a very strange claim when we have property taxes. Shares are property so they can be taxed just like houses and land.
Yes, everyone in the US can play the same clever little game by taking out a loan against a property and deducting the interest against their income.
> and the estate value is reduced so the heirs won’t pay as much (or any) estate tax
This is just madness. The estate value is reduced so their heirs won't get as much. You still pay inheritance tax on what you get. Anyone can avoid inheritance tax by just not passing anything on.
if you are claiming the high net worth, almost certainly you have raised significant actual money on things you own. a wealth tax means that if you dont actually think your business is worth a billion, you cant raise money as if it was.
thays a net good thing.
if peter theil is lying about being rich and he only has a couple hundred thousand bucks to his name, the publiv overall deserves to know, and it should cost him quite a lot to raise or borrow money.
these people are commiting fraud and should be forced into texas prisons without AC because theyre lying to banks about the value of their assets, and the bankers too beed to go to those same prisons because theyre defrauding their depositors.
this is only a good thing for routing how whos lying about their worth
That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.
Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.
Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
Why can't they pay tax in shares?* If net worth isn't real it shouldn't really matter...right?
*Please no pedantry about how the IRS doesn't currently accept shares as payment for taxes. If laws can be written to add wealth taxes on stocks and bonds, they can easily have a clause to allow payment in kind. Address the question I'm actually asking.
That, exactly, is the problem. It's not even about money and tax evasion but power. Why should one person have more say over the company they work for than 10,000 other employees? Or even worse they don't even work there anymore and just control it from outside?
Even if they are a perfectly good and business smart person who never makes bad decisions or abuses their workers. They will eventually die or sell their share, and in either case it will end up with people who care less about the company's long term health than the founder did. Profit maximizers with no ethics and no feeling of responsibility.
I think the concept of shareholders is the problem. Layoffs, cartels and price inflation happen when the people who make decisions get all the benefits but none of the downsides. If it was up to me I would ban stocks and replace them with time limited shares that give you a right to part of the profits for 1 or 5 or 10 years, but zero control over the company. Leave power to workers and returns to investors but never bind the two together.
Why shouldn't they?
That's how pretty much every organization works. Every military, every government, every sports team, every space mission, every classroom, etc., they all have some person or small group up people with more more decision-making power, or "more say," as you put it.
I fail to see the problem with that. In fact, there's a very real benefit in that it's generally more effective. For example, today people are completely free to create organizations that work differently, and they rarely choose to, and when they do, they rarely out-compete the alternative. So the proof is in the pudding that there's something less effective about it.
If I had to wager a guess: decision-making isn't something that scales well. Bodies might have dozens of organs, but they only really need one brain to control them all.
> They will eventually die or sell their share, and in either case it will end up with people who care less about the company's long term health than the founder did. Profit maximizers with no ethics and no feeling of responsibility.
1. There are plenty of counterexamples where the leader of a company ensures its long-term success after their tenure ends.
2. Even if this were somehow a downside of owner-led companies, you always have to ask the question, "...compared to what?" It's not like the alternative doesn't have its own slew of downsides, as evidenced by the dearth of competitive coops. In other words, organizations are always going to have issues and errors and flaws, no matter how you set up decision-making.
After all, businessmen often use strategies like aiming to be acquired/purchased by a much larger company, merging with their competitors or partners, or anticipating bankruptcy by draining every viable resource and asset they can reach.
At the same time, observers such as JB Crawford have also pointed out that very large corporations function like a religion. For example, telecommunications. https://computer.rip/2024-09-08-private-lines.html
Of course I mean this metaphor internally, as if we were regarding each corporation as a sovereign microstate, which they aren't... hopefully...
If the ideal CEO has psychopathic qualities, and the ideal capitalist corporation is comparable simultaneously to a new religious movement and fascist organ, and the corporations are the primary unit of American culture, then where does that leave us?
If we need revenue to fund useful government programs, great, let's tax Larry. But I don't understand what problem is solved by expropriation qua expropriation.
it does have monopoly power and anticompetitive power all over the place though.
google bans are quite intrusive, but google could pretty easily with their graph knowledge apply secondary or tertiary sanctions, at which point you would not be able to do much of anything, same as if the US government sanctioned you
Yes. They should be broken up because competition is good for consumers and society. If we had functional anti-trust enforcement Google would not have a near-monopoly on search ads where they own both the ad inventory and the marketplace where you have to buy those placements.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the holder keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
> Well, why does something have to be done about this, exactly?
The something here is what's required to have a functional tax system. Without addressing this situation I do see an argument that we have one. How important that is to one is another question.
he doesnt necessarily have to pay it back either. he could just take out another loan against his same now higher valued assets to pay off the old loan
And this is not just theoretical. Larry Page has already sold and paid taxes on tons of stock in reality.
like, if a company's market cap gets too big, the law should stop applying to them? they should be allowed to start their own militaries and enforce martial law a la east india company?
how does a founder keep a single digit of their company after theyve been dead for a thousand years?
These arent nearly as absolute as you are making them to be.
a founder can keep their percent by paying their taxes with other money they have, or by decreasing the worth of their company. theyre a founder, they have control. Maybe founders wont be so keen to enshittify their products if theres a downside to continued growth forever. considering google dropped "dont be evil" in exchange for making larry page's 1% grow for the sake of growing, how's society at large benefiting from continuing to subsidize it?
Larry would still be rich as heck, but probably... less rich..
The broken tax system is that I get taxed about 50% on my marginal income dollar --- the system doesn't wait for me to spend it first --- but when his stock portfolio appreciates by a dollar, he's not taxed! Not until he sells in order to spend. Why are we taxing labor so much more than capital?
And no, I don't think that inventing pagerank really entitles two people to $200B. Although in their case I don't think they've done as much harm with it as some other billionaires.
And, sure, super-rich people can in theory use the appreciated stock as collateral for loans and not pay taxes, but in practice Larry and most other centi-billionaires actually sell loads of stock and pay a lot in capital gains taxes because having your status as super rich dude who owns a huge yacht be totally dependent on Google's stock price is a dumb risk to take on, and it's worth paying some taxes to eliminate that risk.
No.. many cents of it are withheld, by law.
Elon uses his vast wealth to influence, intimidate, and generally get away with lawlessness. He effectively took huge loans from banks to buy a giant bullhorn in Twitter. Those loans are collaterized by unrealized capital gains. And more generally, billionaires have the ear of politicians because of what they could do with their money. So you don't need to realize gains (gains which are taxed at a more or less flat rate!) to make use of your wealth.
Though like I said, Larry is not really a bad guy in the world of billionaires. I would only support taxing him more than I would support levying additional taxes on w2 income assuming CA actually had a provable need for more money. (Right now I think they waste most of the budget.)
Absolutely not. 100% you can take it.
$24 B unaccounted for and lost that was supposed to be for homelessness. $12 B already spent on high speed rail and they want $120 B more. $50 B in EDD unemployment fraud during the pandemic.
This is just in California in the last year or two.
How much more fraud and corruption and incompetence is there that we just don't know about?
There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.
Zero taxes is the only right answer. Any talk of taxation means that you have already given in to being exploited, because it's a slippery slope. Let's be realistic - corruption will never end. The only way to reduce it is to starve the beast.
The point is to lower the economic power of single individuals that compete against the entire rest of the nation.
"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.
yes... this is called the law...
Lots of peoples "pursuit of happiness" is hindered by the law because we've deemed it not good for society.
I actually lived in a society where this was illegal and we were all starving and freezing.
Meanwhile, when you're in an "already too late" situation, it's already too late. You still have to deal with it.
While stock markets provide useful liquidity for investors entering and exiting positions, they are also rampant with finbro kids doing nothing more than jumped-up gambling. We don’t know which market trades fall into the serious wheels-of-capitalism bucket, and which are gambling, because we don’t have to know. The real world works in dollars so, to date, the state taxes people on the realised capital gain in dollars.
If a bunch of kids are selling handfuls of leaves to each other for a nickel each, is the state now valuing my unkempt forest at $99bn? The state is welcome to pull up a chair and watch me try to sell 5 kilotons of leaves to every kindergarten playground in the country. If I succeed then it will take its cut of the capital gain. If I fail, it will not.
When the state starts looking inside the market black box and guesses, based on little Johnny and Becky’s recent playground trades, that I might be able to get at least $300 a tonne for my damp, rotting leaves, then the state is doing something at best weird and at worst unfair, and tates doing unfair things is really bad.
1. If wealth was only motivated by taxes and was going to leave, it would've left already. Fact is, billionaires don't want to live in Tennessee;
2. Nobody is doing the right thing to tackle any of this, including California.
The article mentions California has land and that's the key point. Unfortunately, California homeowners have been coopted into voting against their own interests to raise property values. If the house you bought in SF in 1975 for $80,000 is now worth $3M, you still only own 1 housing unit's worth of wealth. And that housing cost is an input into everything you need to buy because all the workers required for those things have to be paid high enough to pay those exorbitant rents.
Let me repeat that: high housing costs are an input into everything that you buy.
So what needs to happen? We need to stop treating housing as a speculative asset. It's simply stealing from the next generation. Worse, it's diverting investment capital from productive output because land has become the asset with the best tax treatment, highest returns and most government protections. So what does this look like?
1. Some form of land value tax. The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable;
2. Punitively tax land hoarding including second homes. We could give discounted rates to primary residences of state residents. Nobody else should get a discount. This would mean repealing Prop 13 and that's never going to happen. As an example of this, I'll bring up Prop 19. In CA you can inherit a preferential property tax rate. Prop 19 proposed to limit this to only one property could inherit this preferential rate and it barely passed (51% IIRC). Do we think that 49% of California voters have multiple properties that have property tax rates set 40+ years ago? Of course they don't. It's an example of how people vote against their own interests;
3. Part of what sold Prop 13 originally was the idea of pushing seniors out of their homes with property taxes. Well, that gave Disneyland a tax rate that was set in the 1960s. California should do what Texas does: you can defer your property taxes until you die if you're a senior but there's no capped property tax rates like incumbent SF residents have and no inherited preferential property tax rates;
4. Wind back the preferential collateralization of property for mortgage debt over time. Residential property lending now dominates bank lending and earnings. It's significantly harder to get finance for any form of productive output;
5. Wind back over time preferential tax treatment for home ownership.
Do I think any of this will happen? No.
Oh, one of the worst things to do is transaction taxes, often called stamp duty. This is where you pay a percentage of the value on purchase. This really hurts mobility. I guess it's fine if it's only on the luxury end of the market (CA's is at $5M+?) but it's not a good idea regardless.
The other part of this is to provide social housing like Vienna. The government should be a significant supplier of affordable quality housing.
Something I've been yelling from the rooftops.
Housing can either be affordable, or it can be an investment that's bought, rented, and sold for the sole purpose of profit. It's not possible for it to be both.
People expect their house to appreciate faster than inflation, but all that does is rob the next generation of home ownership.
Alternatively, they keep the house, but get either a reverse mortgage or a cash out refi to survive until they die, at which point their kids can't afford to buy it from the bank.
Encourage building upwards to increase housing supply. This can be done via tax breaks or subsidies. Especially encourage multi-use buildings to make cities walkable. Stores/restaurants at the street level with apartments above.
This kind of assumes the only reason a house appreciates in value is because people are "treating it as an asset" rather than "the house I bought 30 years ago in the middle of nowhere is now smack dab in the middle of a very desirable area." At that point it's simple supply and demand, not some homeowner being greedy.
> The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable
This makes the fatal assumption that just because a house is worth dramatically more than what you paid for it many years ago that your income must have risen just as dramatically. "Oh well, too bad, sell your house and deal with it." Maybe people kind of like living where they've put down roots and don't want to be punished for something outside of their control? Any proposal that boils down to "pay more or fuck off" is not going to go over very well.
What you mean is voting against what you think their interests should be.
This phrase is incredibly condescending and undemocratic.
Personally, this is why I am fine with higher income or sales taxes.
And I’m very surprised nobody mentioned cooperative tax in this post. Taxing cooperative profits is the simplest and fairest solution.
They just want continually delivered services from the city funded by taking out increasing amounts of debt or selling off new land in a ponzi scheme to fund existing obligations.
Indeed, the working poor need to pay more in taxes.
The working class are starting to choke and drown in financial stress, and this will only get worse. Capital naturally accretes and we've never had this level of capital concentration in human history.
In comparison to the majority of the population, you know the other 99%. That’s right, you heard it right. 99% of the population does not have $10 million free and clear without debt. In other words, if you are still paying off your house you are not in that upper bracket.
the rich are an astounding amount of wealthy such that they dont show up and still make a good poor wage in the first couple hours/days of a year by their assets increasing in value
you are poor, even if you are doing plenty well for yourself
[1] https://en.wikipedia.org/wiki/Single_tax
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
If they can't be raised, and the costs end up being ruinous to the landlords, they will find other solutions like mass arson. That isn't hyperbole; this was a serious problem in the 1970s: https://en.wikipedia.org/wiki/1970s_South_Bronx_building_fir...
That was obviously not acceptable... but it was predictable.
All legal proposals should be viewed like a chess move. Presume others will respond, and make sure you're ok with that response.
Or the more likely option is they will no longer do investment properties as the return it too low vs the risk.
Landlords who have their entitlements ripped away from them would almost assuredly endorse the use of violence.
Land redistribution (of which this is a form) from the propertied to the propertyless has historically resulted in brutal violence in order to protect the privilege of the propertied.
Essentially taken to the logical conclusion, there will be people competing for more cash to pay their increasing taxes on the same land, it doesn't fundamentally solve the problem. It's such a joke.
You don’t seem to understand how it works or what it does.
But in reality a land value tax incentivizes higher density housing. A single house and an apartment complex pay the exact same amount of tax, while the apartment building can split it up over many occupants. Land value taxes are a very natural hands off way of encouraging the right use of land, empty lots and car parks become unaffordable in highly desirable areas while apartments become relatively very cheap.
Why would a land tax make the state more attractive to higher income renters than where they currently live?
If these communists succeed, they will use the very fact that a landlord cannot synthesize money to prove the landlord passed the cost to the tenant and seize the land.
if landlords were able to raise rent, they would have done that already as its pure profit for them. The fact that they can't, means they will have to eat any marginal tax imposed on them
From economics we know that increase in cost is split between Landlords/Renters in accordance to their elasticities. Whoever is more elastic - will eat the tax.
the cost increase is shared between renters/landlords in the ratio of their elasticities. Whoever is more inelastic, will eat the cost.
Inealstic renters will pay up increased rent (like techbros in SF are eating up all rent increases).
Elastic renters will get up and move to Texas, if renter swill hike rent.
Elastic landlords will lever down and decrease number of low margin properties like rent-controlled properties, or unprofitable properties.
Inelastic landlords will eat the taxes and take a hit to profitability.
My company rents a space in a commercial lot, and the contract states the property tax is split among the tenants. It's separate from the rent.
Apparently this is common in commercial settings. I wouldn't be surprised to see this start happening for consumers.
https://en.wikipedia.org/wiki/Tax_incidence
It's literally econ 101 that says landowners will bear the burden of a land value tax.
Supply of land is perfectly inelastic and land value tax is not a marginal cost of production so does not change MR=MC.
renters rent apartments/houses, and these things are very elastic.
the cost increase is shared between renters/landlords in the ratio of their elasticities. Whoever is more inelastic, will eat the cost.
Inealstic renters will pay up increased rent (like techbros in SF are eating up all rent increases).
Elastic renters will get up and move to Texas, if renter swill hike rent.
Elastic landlords will lever down and decrease number of low margin properties like rent-controlled properties, or unprofitable properties.
Inelastic landlords will eat the taxes and take a hit to profitability.
You can feel free to solve the profit maximization problem of the apartment owner if you want.
https://en.wikipedia.org/wiki/Profit_maximization
A conversation with an LLM where you paste this exchange into the context is likely to clear up the reasons for your misconception.
- some Kendrick guy
This is mostly slop. Don’t waste your time.
not good believer in christ would ever participate, when jesus made it clear you are supposed to freely give away everything you own to the poorest among us
There are plenty of other taxation schemes that are progressive and more durable and effective than a wealth tax.
The main reason we're here is because talking about reforming Prop 13 is political suicide, even if that's the best way to fix CA's budget.
But, you're right, when someone suggests that we poor are just envious of the ultra-rich and that is why we want to tax them, I assume that they think we ought to look elsewhere than the wealthy for taxes. Which kind of suggests tilting toward a more regressive, less progressive tax system.
Introduce a ballot measure that removes the allowances of Prop 13 on retail real-estate and I suspect you'll find it's not political suicide at all.
It is possible to just ... stop spending ...
Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, and increased development.
So many things align for higher growth in ways that more evenly benefit everyone. But our relationship with land is over-complicated, and that is both the reason for change, but the reason change is so hard.
Small attempts have failed, but then, for the rich who can hold land and reap growth in value that outpaces the taxes they pay on it, that remains another tilted economic success.
Georgists want to tackle this with a Land Value Tax, I tend to think it would be difficult to make this robust against highly motivated attack and the better approach is long-term leases with similar duration to building depreciation schedules. Capital appreciation of the dirt goes to public coffers, improvement value goes to the people who made the improvements. That's fair.
Of course, there's also the question of how to get there from here, and one way to do it without guillotines would be to tie the extraordinary tax treatment of property to conversion into a 99 year lease (and then, after 99 years, new issuance could target the ~30 year range). "Sure, you can have your 1031 capital gains tax exemption, but only if you sign up to eventually be part of the solution rather than part of the problem."
I don't think this is a reasonable deformation of the notion of ownership nor externalities.
Use of owned assets, within legal boundaries, allows exclusive of use.
If you're complaint is about the current asset allocation, that's wildly different than either Georgism/LVT or externalities. There is a philosophical there-there, but I really don't grok a feasible defense of your claim; your supporting points are reasonable under a Rawlsian veil defense.
If you make the legitimacy of property rights over land foundational to your philosophy, then of course they can't be challenged within that framework, but that's tautological and uninteresting -- I simply challenge your framework instead. Why should I accept it? In centuries past, a structurally identical framework -- ownership over human beings -- was used to rationalize and administer the institution of slavery, so unless you want to defend slavery then you must accept that the legitimacy of property rights is contingent on their specifics.
Further, relaxing land ownership doesn't make current occupation an externality, which was the original claim. It's a categorical error to mix externalities with morals.
I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.
Why would I fix up my house to look nice, if I’ll be displaced? Why would I invest in my child’s local school system, if we could be displaced? Why would I do any community outreach or support, or get involved in local politics? How can banks underwrite loans if the affordability can fluctuate wildly? Look at the life of people who live in mobile homes and trailer parks - they essentially rent the land, and it’s oppressive because they can’t afford to move but their cost to stay is unpredictable.
The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity of the people living there and renters hoping to finally do the displacing for their own affordability.
Most states in the US do not have Prop-13-like laws and get by just fine. For the few states that do, they are less restrictive taxation-wise than California's.
Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)
We of course shouldn't just abolish Prop 13 overnight, or lots of people will get displaced, also overnight. But we should absolutely reform it and phase it out over time, while building more housing, as fast as we can (something that will be a little bit easier to do as all the NIMBYs realize that if they keep shooting down housing projects, their property taxes are gonna go up a ton).
The problem is all the tax revenue being lost at the municipality level for decades. National tenure average is ~12 years. Los Angeles is 20 years, SF is 16.5 and SJC is in between. It clearly has a meaningful effect, it's just harder to buy into the market and keep the home over a long period of time.
And California has an income tax, whereas Texas doesn't.
Prop 13 has it's problems, but I don't think they're as significant as the rhetoric claims. It makes for a great excuse, though.
And remember that that 2.5k/person is only for residential properties. commercial properties still fall under prop 13 and that’s about 50-60 of the other tax. So a full repeal would make it closer to 10k/person instead of the current 5k.
I agree the story on rents and home prices would be unclear because ultimately the people might move and just rent out their homes with property taxes baling into the new rental price.
Flock. We need more Flock.
Which isn't just a few percent but around ~10% (depending on income).
We live in a gerontacracy. Every advantage and tax break and handout is given to the elderly and the ladder has fully been pulled up for the new generations.
‘We need new shit! Let’s raise taxes.’ While not having to pay them yourself.
IMO this is a much more fair system than just saying "lol no taxes on the elderly."
I have heard this assertion with no proof or backing data a lot. There is an assumption but no explanation how kicking long time residents out of their homes due to tax pressure is a benefit to the community, or real estate market prices. Real estate agents and other service companies might benefit from more transactions.
There is also usually no mention that the main problem of Prop 13 is that it applies to commercial and industrial properties, not just individual primary residences. Individuals have a limited impact scoped to their life, but tax implications applied to long term corporations is what has an outsized effect.
I find that forcing the elderly out of multimillion dollar homes and into apartments or even smaller homes is infinitely preferable to the human catastrophe plainly obvious on the streets of LA and SF.
One benefit of an equal property taxation system would b having workers close to the city centres where they work rather retirees.
If not from land taxes, where? Would you like to double sales tax? Or increase income taxes? Every solution costs something, what does yours cost?
Everything has real negative consequences. One side does not hold the monopoly on side effects.
> double sales tax? Or increase income taxes?
Why not the taxes we have? Why is the presumption that taxes need to be changed at all, never mind doubled?
Any consideration of the consequences of taxes also has to consider the consequences of the current taxation.
But taxes have and will always be a transfer of wealth from the working poor to the rich and powerful. People talking about tax reform or more effective and just systems tend to forget this. It's like the lamb having an opinion on how the wolves should share it.
You're right about my estimate being off though and it was a disservice to the discussion. An equivalent revenue from sales tax would require ~2.1%. In SF, that would move the total sales tax from 8.6% to 10.7%; in Oakland, 13.8%. A large increase would likely bend some consumer behavior (chasing sales that have feet, aka move to the informal/grey market).
> Again, the optimal answer from an economist is not necessarily desirable from an emotional perspective of the people being governed.
This is the real difference between us imo. I believe the optimal answer is based on realistic projections on revenue collected and what prevents bankruptcy. The compromise answer is what passes a vote and in fact, the bankrupt answer.
I would prefer we didn't raise taxes and instead reduce spending. But given the complexity of reducing spending and the scale of our deficit, we will have to do both. On the side of raising revenue, a land tax offers a way of taxing a wealth that cannot flee.
Your friction is real - and already exists.
So the bar for improvement is not no friction.
The bar is less friction, and higher productive use of land, which benefits everyone. Lowering the costs of both housing and business space, while increasing economic output.
That is was economic alignment does, it doesn't just improve one thing, or improve on a one-time or fixed percentage basis.
And less passive, underutilizing, economically-parasitic investments from the rich. (Rich passive investment in land, uses land like Bitcoin for its deflationary nature, which compounds land prices while suppressing its full productive use.
Not raises. Compounds. The more the rich passively invest in land, the more profitable land becomes to passively invest in.
1. There are many states such as New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states.
2. States that freeze property taxes have more volatility and boom/bust cycles. You are trading being shielded from tax volatility for increasing economy-wide volatilty and asset price volatility, so the gains are not as high as you think, and seniors are exposed to this volatility indirectly.
3. There are more targeted relief mechanisms available, such as deferring the tax liability until the owner dies for senior owners.
https://www.redfin.com/blog/most-expensive-states-to-buy-a-h...
Of course I don't think that, which is why I didn't say it. That would be a silly thing to write. What is the advantage for you in mischaracterizing what someone wrote and then expending effort to "correct the record" for a statement no one made?
You created a strawman and then knocked it down.
What I actually said: "New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states."
Both of these statements are demonstrably true. Let's look at the data.
So housing in NJ is more affordable than in CA.Now, let's look specifically at seniors.
In California:
In New Jersey: So we see that across the board, seniors in NJ are not cost burdened more than in California, and that in fact they are cost burdened a bit less.Therefore if your solution is to look to Prop 13 style fixes to address cost burdens for either seniors or the general population, then you are not making a data based argument, and in fact the data goes against you, because there is no excess cost burden in states without these property tax freezes.
And no, I don't think prop 13 style laws would be helpful, it would just create more problems, as it has in California.
I don't know if it changes the result significantly, but remember the NJ has very high property taxes, more than double of California. So mortgage cost alone does not paint the full picture.
This is more significant for seniors, who likely have a paid-off home so their main expense is property tax. So being a fixed-income senior with a home is likely more affordable in California than in NJ. The worst thing after retirement is cost increases when you no longer have a salary that goes up with inflation.
Every tax is unpopular and undesireable.
Why would I work if government is taxing my income? Why would I invest? Why would I drive the car, blah blah.
Land tax is easy to collect, fast to pay, hard to avoid or game.
And this cuddling of boomers who've benefited by piling up gigantic government debts and expect to be paid back (typically holding gov bond) is literally going to destroy the financial system. Part of the benefit of this tax is that if you can't pay for fair value of the land you're preventing others from using, you have to sell and get out, so e.g. a productive family can use it instead of your unproductive self. Just because you're retired doesn't mean "your done with your duties to the rest of society and you can just expect free shit and do nothing".
By land mass that's the majority of the country. Population concentration is the real issue.
I live in San Antonio, a metro of 2M people (city itself is one of the 10 most populous in the US). That's pretty sizable. Median home is between 260K and 310K. That is, of course, with the larger homes you'll find here vs SF/Chicago/LA/etc.
In fact that is all that really needs to be done to ameliorate the housing crisis in California: pass a single law that repeals every single zoning adjustment from after say 1960. Or pass a law that mandates a 4:1 ratio of zoned capacity to population. The ship will right itself if it is allowed to.
I mean, the way you make housing units more affordable is to make more of them, but for existing homeowners of SFH, building condo buildings in their neighborhood will increase their property value because the competition for the remaining lots increase. Given we build close to zero family friendly multi family in this country (ie, appartments buildings have zero family oriented amnenities), there isn’t much in there for nimbys. It’s the right thing to do but you can’t except nimbys to join in on a purely monetary basis.
This isn't always true. I've seen apartment buildings that have a playground and little astroturf field and some small goals. The kids also are using the pool pretty heavily in every apartment I've lived with one. Some have other facilities like basketball or tennis as well that kids could take up (or use the smooth surface for skating or something).
But I think the majority of the tax avoidance goes to not-old-people, like immortal corporations that can own the land forever.
EDIT: random link - it seems like residential owners don't benefit anywhere NEAR as much as commercial, rental and industrial entitites.
https://youngamericans.berkeley.edu/wp-content/uploads/2023/...
Berkeley Institute for Young Americans (2023)
what I attached was: "Who Benefits from Proposition 13?" (2023)
Page 2 of what I attached shows the results in a slightly different light.
Tell me you're not a retiree on social security (or know any) without telling me...
Social security gets adjusted up a very tiny percentage of actual inflation. Watching my elder parent go through this while managing their finances, I'm very aware.
This is bringing us back to the dark ages in terms of land rights.
A few comments:
1) we already have property taxes so I don't understand the objection; a land value tax is just a property tax with a different way of assessing value.
2) I don't think this idea of "not owning property, only renting it" is actually that crazy if you take a long term view over it. Land is a finite, shared resource. We already acknowledge that you don't have absolute rights over land that you own in the same way you do over, say, a toaster. We place all kinds of restrictions on what you can do with it, we tax its ownership, we have eminent domain laws, etc.
The idea of treating land as a pure asset has had a lot of negative social effects and ultimately will lead to a kind of neo-feudalism where the megarich own everything and the underclasses are perpetual renters.
Everything is a finite shared resource.
That's the point of ownership.
>The idea of treating land as a pure asset has had a lot of negative social effects and ultimately will lead to a kind of neo-feudalism where the megarich own everything and the underclasses are perpetual renters.
The idea that land is not a pure asset leads to regular feudalism.
Yup. And despite the claims made that it's a solution for the common folk, the people who "own" and can make decisions about the land will be the megarich, so it will be feudalism, with rent due on the land you own.
I think the point is that (up to a limit that we're a long way from reaching) we can make more toasters to satisfy any additional demand that arises for toasters. But we can't make more land to satisfy any additional demand that arises for land. So we have to share the land in a way that we don't have to share toasters.
how is this any different from the statement "a property tax means that you don't own the property but rent it"
For all practical purposes property/ownership is a service provided by society, not a static "attribute" of stuff (the only exception is when you live entirely without any sort of contact with other people, in which case, however, the concept of property becomes void, at least practically). And any service carries a cost with it.
For instance, in our kind of societies, the institution of property requires, at the very least: (1) legislature that defines what property is and all the related rules, (2) the administrative part that handles property transfers and other issues, and keeps the record of who own what, (3) the judiciary system that interprets the legislation and resolves disagreements and other issues related to property, (4) the police or some other body that enforces and protects the whole system within the society, (5) the army that protect the property of the society against the claims of external groups. In our societies many of these institutions carry also other functions, but enabling the system of ownership is an important part of their job. And this service is very expensive --- so not paying any taxes on property means that those costs must be covered by some other sources (e.g. selling natural resources, income taxes, ...) and, usually, lead to a transfer of wealth within the society.
So the idea that you just "own" something (your house for instance) and any kind costs of that imposed on you by the society/government are unjust is completely and patently misguided. If anything, the opposite it true.
(That does not mean that the tax system must be necessarily constructed to reflect that, as there is no single and obvious correct way to design a tax system, and other important considerations enter that issue.)
This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?
Most people are on social security, which is inflation adjusted.
Others with more wealth have retirement savings, which are likely mostly in bonds and stocks, which weather inflation not too shabbily. Interest rates go up, and banks start actually yielding interest!
Prop 13 passed mostly as a populist revolt against taxes, but in reality it does a lot more for people in their prime of earning and a toooon more for commercial property tax cuts than it does for retirees.
Every other state has better tax deferral mechanisms, and given the tiny fraction of Prop 14 effect that goes to retirees, I don't really buy this back formation of what was going on. If people really voted for such a lie, it wouldn't be the first time with propositions but from the media I've seen from the time I really don't think people were that duped and probably knew the broad effects of Prop 13.
Fortunately, this one did not spread which is very good news, because the long term effects have been absolutely horrific for housing prices in California. However, I hear of other states right now proposing adoption of California's housing crisis via similar tax measures... Hopefully they don't pass and learn the lessons of what has happened here.
Vancouver used to have a land value tax, which was widely credited with the its prosperity up to the ~1960s. However eventually enough homeowners and landowners got sick of paying their fair share and overturned it, which has resulted in Vancouver's housing situation which is possibly even worse than the SF Bay Area's...
It seems an astonishingly large number of people, including on here, talk as if that were the case despite their actual living and retirement finances. People really hate inflation.
Something about the lizard brain wants the exchange rate between shiny object and edible object to be fixed and gets extremely upset if it changes.
(Or, as is becoming increasingly relevant, the exchange rate between shiny object and flammable fluids)
The inflation complaints are people who prefer not to be taxed on for saving currency and earning money in fiat. As far as it is a lizard brain thing it's more about principles of fairness in who should be paying taxes and the aversion people have to things taken away from them.
Right. Technically. And I have a bridge to sell you!
I was managing all the finances of one of my parents until they passed away. In 2022 inflation peaked at ~9%
That same year, their social security monthly payment went up by..... $10
That for sure covered all the rising costs (/s)
https://www.ssa.gov/news/en/press/releases/2022-10-13.html
So either your parents were getting $115 from social security, or you are trying to report increase of a year with essentially 0% inflation as if it were the year with 9% inflation.
This is not from a press release or news article, it's from the actual check that got deposited monthly.
This makes it exceedingly easy to ensure that old people are not affected by property taxes: if you are elderly resident, you simply get a discount. If you are an elderly landlord who owns multiple properties, your younger tenants don't get a property tax discount, and you pay income taxes (not discounted for age) on the rental income. If you are elderly and want to downsize, your property tax discount follows you into the smaller apartment.
The system has its challenges, but it is far superior to Prop 13 and achieves the same goal.
New York does it this way as well. If you are over the age of 65, you get a different rate.
Protecting retirees from getting kicked out of their lifelong homes is a wonderful thing.
But then allowing corporations to take advantage of that is insane.
Why should the typical old person or couple have a large home all to themselves?
I think (in a semi ideal world) individuals and couples should be entitled to small apartments or tiny houses, which would be cheap enough for an old person on retirement benefits. An average American home is for a family: as the parents age, some of their kids start financing the home, while other kids may move living spaces, or everyone splits up and the house goes to a new family (presumably a couple moving from a small apartment).
I do not feel sorry for the elderly person sitting on a large and expensive property who demands to spend their final decades squatting on land which could house a family and allow parents to get to work within a reasonable amount of time. They have options the young person does not. They can get a reverse mortgage, for example. They get social security, and draw down on whatever pensions and investments they've accrued over their lives. Their costs are much lower - they don't have children to support. Or they can move, and I'm sorry, but it's not impossible for a retired person to move. Millions of them do it every year all over the country. Often to really nice elderly communities full of activities and specialised care.
I say all of this as someone who leans more libertarian than collectivist. Society is interconnected and interdependent. We cannot function if he keep young people under our boots. Asking the elderly to move is a *very* small price to pay if we expect the young to shoulder the enormous tax and debt burdens said elderly have imposed upon them.
That line of thinking sounds insanely unpopular to me and while it might be more efficient in some ways, I think its unpopularity makes it unlikely in a democracy.
Injustice, because they refuse to see the other side of the coin, or the full picture, and a decision ignoring the full picture can be just only by accident (at least in common moral systems).
Stupidity, because it betrays a lack of touch with reality. In this regard I am reminded of a recent thread here, where an article about artificial meat was being discussed. An author of the article expressed their uncomfortable feeling when eating the artificial meat, caused by their thought about the unnatural, "lab" origin of that substance. If that article was sincere, that person have probably never visited a slaughterhouse, or killed an animal by their own hands in order to eat it. This kind of cessation of contact with underlying reality behind our everyday experience is quite common in our modern societies.
In order to be succinct, let me just say that historically it was common for elderly people to live in multigenerational households, sharing their space with a younger family and helping (as long as they could) with chores and taking care of children. While that is not the only viable way, and I am in no way against the modern pension system in general (although its current implementations in most if not all western societies have their problems; and also make many people to lose "touch with reality" in the way I alluded to above), it was quite a natural way of handling the issue of old age that reflected constraints under which a human society existed (and still continues to exist today).
Since I feel that the dominant sentiment of the commenters here is based on emotions and "morality" in a way that I believe is inherently evil, I will close this comment with a refrain from emotions and morality, and state a cold-hearted truth: A society that discards its old people might be a bad one to live in but might be able to survive. A society that discards its young people is destined to die. [To avoid misunderstanding: I do not argue that we should discard old people.]
Whether it makes economic sense or not, it is extremely inhumane and that matters (or should matter) far more.
This idea that it is ok to kick out (via taxes) someone who spent 40 or 50 years contributing to society just so someone else can make more profit on their home is very sad.
Once you are old enough it makes a whole lot more sense to move to places designed to care for the elderly. Living alone in a huge house isn't good for your mental health and it isn't for your physical health, either, once you no longer have the energy to maintain it.
This betrays some things. Not everyone is in a "huge house", and having this bias is going to lead you to bad conclusion. Most people don't have a huge house.
And, more importantly, tax should not be used to force people into one way of living in their latter years. They might be self-sufficient into their early 90s, and the last people who should be determining where they live are people who want to do it.
My 92-year-old mom has been the same way. Until one of her daughters moved in, she lived by herself in her house and garden. Just being able to go outside and experience the green space she planned and planted has kept her alive and healthy. If she were in some senior living place, she'd be dead by now. She would have withdrawn into her room and waited for her time.
boo hoo? My generation has never even had access to affordable housing. Sorry you have to take your millions and live on a smaller property for your last few years.
Henry George was obviously a Single Taxer, but "Georgism" has a generally broader meaning than that. Some Georgists are single taxers, but not all, including Greg and I.
When we talk to elected officials, we don't even talk about Henry George all that much (I did in the ACX article series because it all started with the progress and poverty book review). We mostly speak of "Land value return" and our focus is mostly on pragmatic revenue neutral tax shifts to LVT.
That doesn't mean LVT is a panacea.
I think that's a bit of a strawman and a false dichotomy.
If I were offered to double your real wealth but also double Bezos's real wealth, of course I would take that deal! I would benefit from it. But if you offered to double the real wealth of everyone, what would that even mean?
Yes, unlike economics, politics is zero-sum. The solution to that is to fix the political system, not to destroy the things that are working great.
This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free. Individuals can then rent out their land for others to use as needed. Forests/rivers/conservation lands etc. can be seen as truly a common inheritance of mankind and should generally have the least of commercial activity.
p.s - a govt will never agree to such an arrangement because it will not favor them.
If you just allow using X value tax free then those who use less don’t get rewarded.
IDK, governments tend to align with what results in the most economic activity being created / moved into their country ("growth"). If you were able to convince that overall economic growth would be multiple times higher over a few decades with the system, it might just become appealing.
A problem I see with implementation in the US, though, is that local municipalities are who tax land and property value, so entire rural counties and cities would have their funding stunted. And asking the government to buy into that while subsidizing low-growth areas for a long time (decades / forever, if a rural area never develops) is a really hard sell.
So explain the last ~50yr of state and local regulation of land development?
Weird framing. In any case, this would lead to less taxes for most folks, at least compared to property taxes.
I like the thought, but the challenge in most places is that the poor are already paying massive "negative tax" in the form of various social subsidies.
So if you add tax exemptions on top of it, it becomes increasingly impractical to raise enough taxes.
And no, it can't be done simply by taxing the rich more. That should be done too, in my view! But the math is simply such that we need a pretty broad tax base to support our spending.
If you don't want to pay the taxes, thanks to Disneyland you can now sell your land for a nice fat gain, buy cheaper land elsewhere, and pocket the difference. And whoever bought your land will likely use it for the social good (maybe build a hotel or something).
/s
It's just a reality of life that not every homeowner can possibly be entitled to fully control what gets done with the land around them, and that's going to cause some friction.
It's a difficult job to navigate who gets to decide what, while still enabling necessary development. LVT is just one of the more elegant ways to do this.
I would much rather see an overall assets tax that scales with the value of the assets. That would incentivize more smaller businesses, long-term thinking, and wealth distribution. It would hit big corporations in the same way a LVT would, forcing them to be more and more productive with their assets the more they have, without pricing out smaller entities.
This is far from reality. A home is family and life to most people, nobody cares if it went up or down in value, a home is about our life.
If only this were true, we wouldn't have homeowners constantly fighting against new development or construction. Many homeowners treat their primary residence as an investment.
You'll be very hard pressed to find any home owner who actually thinks in this cartoonish way.
When people oppose changing the character of their home neighborhood it has nothing to do with "treating their primary residence as an investment". It is because they selected a place to live, to call home, based on some criteria that they liked. Everyone does. A home is a big commitment, so you spend a lot of time researching exactly where you want to settle down for the next many decades. You pick an area you like, a neighborhood you enjoy.
For some people that might be quite rural, for some people distant suburban, for others near-city suburban, for others inner-city center. Whichever type of area you select, it is because that's the kind of area you personally enjoy the most. Somehow this obvious truth is controversial on HN for reasons I don't understand, but it is the truth. People select what makes them happy, no surprise.
So, when people oppose seeing their suburban area torn down to build highrises, it has absolutely nothing to do with home values or investments.
People oppose it because they very intentionally chose to live in a suburb far away from highrises and now they see those imposed on them. Of course they're unhappy. Basic human nature, nothing to do with investments.
If someone feels this is not so, I'd appreciate an explanation of your viewpoint.
I don't _want_ $1M, I want to live in my house that I bought and lived in for years. Getting money I don't need and having to live in a place I don't want to live in is _not_ a positive situation.
Maybe reverse mortgages are the answer, I'm not sure, I'll admit I'm not very knowledgable about this.
It doesn't need to be.
"No one can ever build any new developments" is also a very negative situation for everyone.*
The goal is to balance these tradeoffs, and it can't just be sunshine and roses for everyone all the time.
*It's also basically our present situation, which is why housing is so absurdly expensive.
Twice in one day for a topic as not specific as this seems intentional.
That sounds like a terrible idea to me. Efficiency isn't everything. Small stripes owned by many people or by many smaller companies it's less efficient than one hedgefond owning everything and yet it has disadvantages.
A forest is much less efficient than a mall and yet, the forest might still be more important.
There's also no way for a government to effectively determine the potential value of land. Asking them to do it means inviting disaster and corruption.
Point being: the government has been assessing land value for a long long time
https://en.wikipedia.org/wiki/Land_value_tax_in_the_United_S...
All other forms of taxation at least have arguments to ethically justify them, including land taxation.
I mention it right there in the very same sentence, you must have stopped halfway.
> I'd like to hear how you think land tax is ethically better.
First things first - "better" is a bit strong of a word since there has never been any argument made in favour for taxing labour except for "might is right" or "the end justifies the means". If you have an argument except for those to why it is ethically right by itself to tax somebody for working, then I'd like to hear it.
Now for the argument in favor of land tax:
Nobody has any inherent right to "own" land. The concept of "owning" is an invention and is also completely absurd once you think deeply and clearly about it. God created all land and it has been there for millions of years before anybody set foot upon it and claimed ownership. Claiming to own the land - and what more claiming to have a right to transfer that ownership to anybody but your children - is something of an abomination.
Compared to owning your labour and the fruits of your labour. Which is an extension of owning your own body. Or owning something you've purchased and can bring with you wherever you go.
The government itself is an extension of the concept of land ownership. So it is natural that they would levy taxes on their vassals - people claiming ownership of any land. The government vouches for your unjustifiable claim on this land and you pay them for the privilege. It also fits very well with the concept of governments being limited geographically in extension.
I don't claim that there aren't very good arguments against taxing land, but there are at least ethical and logical arguments for it, while taxation of labour have no such arguments in favor.
You can also argue ethically in favour of taxation on foreign trade - tariffs. Because in such, the government doesn't interfere in what people do within their country.
> You mention serfdom, which is most similarly linked to land tax as the serfs would have to pay the lord for existing on that place.
You forget that the serfs are given no right to sell the land, which is why they are serfs and not lords. That's the most important factor. The lord certainly did pay a land tax to the king.
The argument is not "pay taxes or we kill you", it's "pay taxes or get out of our town". No one is a slave, if the government asks for too much and provides too little, people will move.
I live in a town with non-trivial taxes. It was my personal decision to move there, no one said "move there or we kill you". When choosing a place to live, I could have moved to some other city/state/country with lower taxes, but I've decided not to. I like that we have working utilities, parks, roads, schools, law enforcement, stores. The town had a vote to increase town tax to raise money for schools and libraries, more than 70% approved.
I don't care about your ethical reasoning about tax types, if you want to live in my town, you contribute to the town's well-being. If you refuse to, on any grounds... well, maybe some other place will be a better fit for you.
You're arguing "end justifies the means" and "might is right". "My town" and all as you argue.
Unless you truly believe that people choose where and how they will be born, which of course might be the case. And then they only have themselves to blame, as you say.
"I don't care about your ethical reasoning" is a good summary of your reply.
As just one example, if I place becomes popular then suddenly the taxes rise and people have to move out. Lots of people hate that idea and so vote it away. And then LVT no longer works.
Now I have to pay for my own kindness.
lmao economists, really
To actually tax the land, the owner needs to sell it, but who is going to buy taxed land? You are forced to sell it to pay the tax.
So taxed land, in the end, loses value, because it's sold more and bought less, and the source of income goes away, because he was forced to sell the land.
If an island produces 2 burgers a day and has 3 inhabitants: one is rich, another is the poorest worker who can afford a burger, and the third is indigent, the rich person buys his burger, the poorest worker buys the second burger, and the indigent buys nothing, because there are only 2 burgers.
So a socialist sees this and claims he will tax the rich to give a burger to the indigent.
He taxes the rich as much as necessary to ensure that the indigent gets the burger.
As the worker tries to pay more for his burger, the price rises, so the socialist raises the tax as much as necessary to ensure that the indigent still gets the burger.
So the next day, the rich person buys his burger, the indigent buys another burger, and the poorest worker goes hungry, because there are only 2 burgers.
The result is the same if the socialist taxes the rich, prints money, or takes on debt. He always takes the burger from the poorest worker.
So taxes and public spending are always paid by the poorest workers. It does not matter where the socialist gets the money from: he always taxes the poorest workers.
Billionaires are not struggling to meet their expenses. If you raise their taxes, they aren't suddenly unable to afford things. They don't need to change their behavior just to get by. A carbon tax forces average people to drive less, but doesn't affect billionaires at all.
Billionaires live where they want to because they can afford to. They're not going to let themselves be chased from jurisdiction to jurisdiction because of numbers that have zero impact on their daily lives. That's what happens to poor people. If California raises taxes on billionaires, very few will actually leave. They're where they want to be and they can afford to stay there. What's the point of having a really big number in your bank account if you have to move to the middle of nowhere in Alabama to keep it from falling just a little?
That individuals won’t optimize their wealth beyond $100m, $1b, or really any number just doesn’t square with observable behavior.
The purpose of a business is money (otherwise you start a hobby or charity or something non-businessey).
Being very successful at business is a selection bias for people that are highly competitive at chasing money.
There's a bunch of traits in very wealthy self-made people due to the filter they have run through.
Tax too much, and we kill the golden geese of the economy. Examples abound around the world of crappy economies that can't afford good socialist stuff because they've demotivated the rain makers.
I agree with this. California’s climate and culture will keep many a billionaire within tax nexus reach of the state. Of course, this isn’t a strategy every locale can pursue, but I don’t see a reason for California not to exploit its advantages.
They can certainly afford it but they obviously like their money to stay theirs and like getting more of it, not less.
they're bad for the world around them, and you can add an exit tax if you want to
Not to mention your businesses need to be in relatively affluent areas where most people can afford your products and from an educational standpoint, most of the better schools are on the west coast or are in the upper east coast.
Worry. about the other 99% maybe more precise, the other lower 90% of American Society.
We're already way past the point where a creative cocktail of 10 different progressive taxation schemes could feasibly fix the root of the problem, and you feel this especially if you were born after the year 2000. You're more likely to see results if you pick up a red scarf than if you pass a higher wealth tax, sales tax, land tax, consumption tax, estate tax...
In your telling, how does the resulting famine that killed of tens of millions fit in?
My understanding is the famine was essentially the middle managers of these collectives over stating yields and being too afraid to admit their lies. To maintain the lie, they shipped off food while the farmers starved.
Painting it as if Mao era collectives are the same as the state quotas that exist today is highly misleading. The HRS was 1979:
"The household responsibility system replaced collective farming." [1]
Broadly speaking, the collectives can and should be blamed for the famine, just as in the Ukraine. Getting into the weeds on the specific mechanisms is fine, but using it to undermine the broader lesson is apologetics.
[1] https://en.wikipedia.org/wiki/Household_responsibility_syste...
> To put it bluntly, it is necessary to create terror for a while in every rural area."
Let's not glamourize the Mao's land reforms. It required the killing of 1-2 million people. Even then, the collectivization was a massive failure - not only did the peasantry not get to enjoy the benefits of land reform, a further 15 million people would die from the resulting famine.
The deep irony is that Taiwan was actually able to do the same reform but with much better outcomes, with much less loss of life or political violence.
Mao pretended to do it but then introduced the familiar Stalinist collectivization that had killed everyone in Ukraine - as he knew.
https://www.astralcodexten.com/p/does-georgism-work-five-yea...
> but you see the same basic patterns everywhere. Land in the city center is worth much, much more than outlying areas.
The calculation of the "unimproved value" always perplexed me.. it seems like you're not taxed for the things you build on your land, but instead for the things other people built around your land. After all, why would property in a city be valuable if not for all the high rises, subways, and office buildings?
So you're completely correct, the value of the land changes with what's around it because it opens up new options for what someone might build there.
if you build even more and get more out of the land than whats around you, you essentially get a lower tax rate until your neighbors catch up.
if you lag behind, you pay a premium in taxes to not develop
So if they vote with their feet and leave, then that's an even better outcome. Now they can't manipulate the government anymore. They can go manipulate and continue extracting wealth from some other place.
Let's hope other states follow suit and they keep on truckin'.
But in essence I do believe I could have had $100k more net worth if they hadn't monopolized all user-acquisition channels and if they hadn't helped bring about the many laws and regulations which made this possible.
I have no ill feelings towards them but I just don't want them in my state competing against me for limited resources using money which they acquired through an unjust scheme which I was coercively made a part of but which I never agreed to and have been protesting for almost a decade (on deaf ears).
It's not personal or even saying anything negative about their character or abilities. From my perspective it's just pure self-preservation. They either need to contribute more tax to make up for the injustice or they leave.