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.
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.
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.
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.
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.
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
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.
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.
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.
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
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?
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.
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.
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.
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
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.
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.
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.
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.
> 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.
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
> 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...
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.
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.
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.
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.
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."
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.
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.
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?
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.
> 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).
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 ).
>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).
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.
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?
>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.
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.
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.
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
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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[ 0.25 ms ] story [ 6.8 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.
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.
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
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.
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
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.
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug.
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
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?
This is a very strange claim when we have property taxes. Shares are property so they can be taxed just like houses and land.
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.
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
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.
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.
"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.
Meanwhile, when you're in an "already too late" situation, it's already too late. You still have to deal with it.
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.
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
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.
- 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.
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 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.
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.
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?
By land mass that's the majority of the country. Population concentration is the real issue.
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/...
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.
how is this any different from the statement "a property tax means that you don't own the property but rent it"
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.
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.
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.
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...
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
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.