> 45:03
The host mentions "ban second ownership" and a "vacant lot tax", and "ban corporate buying of homes", neither of which are what I'm discussing (increasing existing capital tax rates). These are the worst ways to represent the question of "should taxes be higher on rent seeking behavior".
She goes on to state that she "doesn't have patience for solutions that aren't going to help". It's a terrible shallow dismissal of even that flawed suggestion.
> Rich Hickey's 'Simple made Easy' talk[0](don't need to watch this, but I figure most on HN have already seen this) goes into this, and I would argue that the 'simple' solutions that you mention are complected, whereas the LVT really truly is 'simple'. Simple does not mean easy. It can be hard to understand and yet still simple. It can inevitably change the fabric of society and still be simple.
Simple vs Easy is exactly what I meant, and I stand by what I said -- none of the solutions are easy, we can only realistically talk about what is simple. Changing a percentage in an existing statute/law is simpler than introducing a new kind of tax. If we disagree here we probably must agree to disagree.
I think we may be drawing our lines in different spots. The concept of LVT is simple, but the implementation of it, in the current landscape with our current political system is not simple in the least.
We are discussing attempting to introduce a new (to many) kind of tax, versus increasing a percentage that already exists. LVT may work simpler in theory, but we do not live there.
> In addition to stopping building, in much the same way that Prop 13 does, this would result in no one selling property for just about any reason unless they couldn't come up with money in any other way. Transactions are good, as a transaction implies that both sides are better off. They would sit on it until the building rotted, build a house on it, live in for 2 years, and then sell it for full price. LVT is simpler.
> This has been studied, and it does not help.
This would not "stop building". It is a market -- and unless you are implying that all builders would instantly stop building, that's hyperbolic phrasing.
I'm not sure I understand your connection with Prop 13 here -- that is a measure to limit property taxation. What I am proposing is an increase on capital gains taxes for people with multiple properties.
> They further suggest that taxes on real estate capital gains and transaction values are not suitable measures to prevent excessive house price growth. ... Taxes on capital gains, and in particular penalty taxes on short-term gains, seem to fuel price growth by making house owners more reluctant to sell their property. The lock-in effect is strongest in tourist destinations where we expect to find more real estate transactions motivated by pure investment considerations.
We're talking about different things here. It's different in at least these ways:
- They are talking about taxes levied upon sale, I originally proposed higher and more numerous taxes. We can tax the purchase, ongoing renting and time of sale.
- They are discussing house price growth, not reducing demand for homes. Some amount of price growth is reasonable if people choose not to sell (and this is actually a reasonable outcome -- people can/should be able to buy a house for 60-100 years!)
I guess the wording of capital gains is causing an unintended association here. I am advocating increasing existing taxes on behavior that is rent-seeking.
Whether this is increasing taxes upon home purchase for those (for a home that you do not live in), or levying taxes on single/multi family homes that are rented out, or it is taxing capital gains, these are measures to support the same goal.
Also, this is directly in conflict with your statement about builders stopping building -- if we get price growth due to lack of sellers, this will encourage builders to build.
> I'll open this by saying that I think we both agree with a lot of fundamentals here. By far the most important aspect of the LVT to me is that it eliminates speculation and rent-seeking activity. In many ways it would be fine to implement the LVT and then simply burn the money. Maybe you could do that at the federal level. The key aspect is that the incentives are set-up properly. One of the things I think we could do with the LVT money is IP reform, but that's another story.
Same, I think we agree on the fundamentals, just the approach.
My problem with LVT is that it is not direct enough. If you want to reduce demand for homes, remove the people buying 2-5 from the market by increasing taxes specifically on their use case.
That is the most expedient solution, in comparison to introducing a new taxing mechanism which will take years if not decades to roll out, be studied, and see the effects of.
> We're probably going to have to agree to disagree here, but this point might help us see how we're getting to such a large difference. I see government spending as it is today as fairly bad, and you might agree. But the reason that it is horrible is that when government spends, it is local homeowners that reap the benefits(good short video explaining this here[2]). And it is that wrongful capture of value that makes public spending look so terrible. It seems obvious that there is a ton of waste going on, and with such waste comes the ability for corruption to hide. But many projects do provide great value, and it's projects that largely could not be done through individuals or corporations alone.
I agree with you that government spending is often bad (unintelligent/mis-allocated/etc). I do also agree that government can make investments that are beyond individual or corporations!
I agree on both of those points, and the wrongful capture of value point.
I think where we're talking about is that attempting to reform the laws around land value is not the quickest way to lower demand.
> If like in that video explains, that one enhancement to the city provides five times the value in land, they can take the profits from that and build more projects, or if they have run out of projects that provide positive returns, they can simply give it back as a UBI. If the returns are as large as they claim, it should be obvious when we miss.
Again, this is a great idea, and might be better than our current system, but it's just too heavy a lift, I think.
> Under a perfect Land Value Tax, we would remove the property tax and raise the land tax such that the price of land will fall to zero. You would transact the value of simply the building above it. A $250k house to build, both in middle of nowhere and in Manhattan, would trade for $250k.
This I have to say don't understand at all. The value of living in Manhattan and the middle of nowhere must differ greatly, I don't know where the extra cost is going, but it must go somewhere. Just on a basic economics 101 level this doesn't make sense, but I will continue reading and see if I can square the circle.
That said, all of this is besides the point I was hoping to make -- LVT may be a great long term solution, but I'm not interested in reworking the taxation system (introducing a LVT and removing property taxes are LARGE changes), I'm interested in removing marginal buyers from the equation, with an eye on ease-of-implementation. The mechanics are simple -- make the practice of rent-extraction unprofitable and people will find their yield elsewhere.