Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Canada bans foreign home buyers for two years

axios.com

Post reply on HN
Print view View original

881–890 of 1001 posts

Re: Canada bans foreign home buyers for two years

#881

Post by AtlasBarfed »

johnnyanmac wrote: post #619
AtlasBarfed wrote: post #580

Earlier quoted context omitted.

To specifically rail on the "liberal" Bay Area and numerous other "liberal" cities in the US: The NIMBY housing policies and restrictions on building new housing are a massive part of sprawl, and with it the huge amount of excessive carbon emissions from commuting in single passenger cars. A dense city is about the best organization of people for the environment. To get things you need, you travel the furthest distan…

"the simple solution to that is to property tax the shit out of land in the exurbs and suburbs so that urban organization of housing is cheaper than suburban and rural, which is currently the opposite." You can't really tax people money they don't have. Maybe it'd work in suburbs, but generally (at least in american cities) the more rural areas consist of 1. Farmland owners who likely contribute resources and get tax…

The simple solution for global warming has been the carbon tax. But obviously it is a bad idea to do "shock" taxes. A shock tax in ICE vehicles wouldn't maximize the effectivity of stimulating long-term BEV demand, it would be a huge regressive tax on the huge number of people that don't rely on new cars, but used cars for everyday transport. It would inevitably simply lead to political backlash.

But a long term phase-in over a decade, which also is difficult to sustain over successive administrations and controls of congress, would be ideal. Obviously American governance is too incompetent to achieve that.

The carbon tax is for the current largest environmental threat: global warming.

But the sixth mass extinction will probably be the next big environmental issue once GW mitigations come into play. And the key to that is a big land tax to change incentives. And the same issues arise: how to avoid shock pricing and instead phase in over an economically adaptable timeframe.

It even has the same technological potential solutions but lack of supply: vertical farms and artificial meat have the potential to eliminate huge swathes of land that are currently used for 1) grazing and 2) crops that feed grazing animals.

Vertical farming and artificial meat should be getting massive research subsidies right now. Every research university should have substantial grants pursuing these. Because the habitats that we can reclaim back to nature and hopefully avert a total collapse of the "species web" is very important.

I feel we are constantly playing russian roulette with extinctions. Was this species so important that everything collapses? No. Well, how about this one? This one?

I mean, insect populations are dropping. Insects. Very concerning.

Re: Canada bans foreign home buyers for two years

#882

Post by eru »

doliveira wrote: post #41
eru wrote: post #24

This is really, really stupid. It reeks of economic illiteracy. If you think foreign investor cause harm, just estimate how much harm it is, and tax them accordingly. Why would you ban them? Taxing is almost always more economically efficient than banning. You can even pay out (part of) the tax take to the people you think are harmed. (In general, a land value tax for everyone would be a good idea. But if political r…

Would taxing do anything in this specific case? Foreign investors are already willing to pay millions in a single home just for it to lay empty, from what I read in this thread. Why would some fixed (even if progressive) tax on top of that change the demand?

There are two effects:

First, as you mention, taxing clamps down on demand.

Second, taxes bring revenue.

You are worried that the first effect won't kick in. But that's not a problem at all: just keep jacking up taxes either until it does kick in, or you can afford to make everyone in Canada a billionaire from the second effect.

(Incidentally, this is very similar to worries that a central bank won't be able to create inflation.

That also is a good problem to have: keep purchasing assets with newly printed money until you either have the desired inflation, or you managed to buy the rest of the world for the cost of some ink and paper.)

Re: Canada bans foreign home buyers for two years

#883

Post by Mandatum »

stevesimmons wrote: post #135
hallway_monitor wrote: post #110

Earlier quoted context omitted.

I saw an Australian sitcom where the house went up for auction. It was a proper live auction where everyone showed up to bid on the house. I was flabbergasted as I had no idea things were done in any other way than blind bidding as that is how it is always done here in the US.

In Melbourne, this is totally normal. Everyone stands in the street, prospective buyers, neighbours, and people starting their house search. The estate agent stands on the front step, acting as the auctioneer, using the rolled up "Section 32" document like a gavel. Typically the auctioneer draws out bids in $10-20k increments, then knocks it down with a "going once, going twice, going three times..." call. Just befor…

> It's a totally predictable, well regulated, very transparent process.

No it's not.

- Ghost bidders and staff posing as buyers on auction day aren't uncommon with smaller outfits.

- They can list the property at a range of say 1-1.2M but the reserve on the property might be 1.5M. They waste everyone's time doing this, and you don't know until auction day - and that's only IF the property meets it.

- They will negotiate with buyers after hammer down, technically the "right to negotiate" goes to the highest bidder - however there's no laws, and I've seen every single agency in Melbourne do this - will go around and gauge what people are willing to go up to. They'll then instruct the vendor to accept/not accept an amount. This is why they have multiple staff on auction day.

Re: Canada bans foreign home buyers for two years

#884

Post by eru »

jusssi wrote: post #93
doliveira wrote: post #41

Earlier quoted context omitted.

Would taxing do anything in this specific case? Foreign investors are already willing to pay millions in a single home just for it to lay empty, from what I read in this thread. Why would some fixed (even if progressive) tax on top of that change the demand?

The tax could be an "empty house" tax, so there would be an incentive to get a tenant. Alternatively, the tax could be targeted at negating profit from value increase, so that you pay higher tax on profit from sale of property (possibly with a deduction you can apply when buying another one within some reasonable timeframe, so that normal homeowners aren't affected).

I would advise against 'empty house' taxes. They just create lots and lots of grey areas.

Also don't tax transactions: you don't mind if people are buying and selling property. What you mind is foreigners (or others) _holding_ property. So tax that.

Transaction taxes are economically inefficient, because they impede the re-shuffling of assets to the best use.

Look into 'land value tax' for more detail.

Re: Canada bans foreign home buyers for two years

#885

Post by eru »

doliveira wrote: post #337
hrdwdmrbl wrote: post #64

Earlier quoted context omitted.

Hypothetical example: Tax it 100,000,000%. Turn a $1 house into a $1,000,000 house. Do you think they'd still want it? That's the power of taxation to change behaviour. (of course a real tax can be whatever is needed to "get the job done", it doesn't need to be ridiculous). If you don't want empty houses, tax empty houses (though as a distracting aside, the idea that empty houses is a big problem has also been fairly…

Other than an ideological argument of preferring taxes over outright bans, I feel like the effect is the same. If foreign investors are indeed the ones pushing price up orders of magnitude above inflation, they clearly don't care about prices increasing tenfold. So it seems the tax would have to be insanely huge to actually achieve the same effect. And honest question: why do we want foreign investors buying homes an…

> Other than an ideological argument of preferring taxes over outright bans, I feel like the effect is the same.

Taxes also provide revenue.

And they allow people to make their own choices.

If you think that having a foreign investor own a house causes Canadians to feel a collective 1 million CAD of pain per year, then it's only fair to give the foreign investor the chance to pay off the Canadian pain.

(Also gray areas around bans are annoying: you have to draw the line of eg who qualifies as a foreigner and what qualifies as owning somewhere. And there's bound to be some weird corner cases and loopholes that people with expensive lawyers can work around.

The reward for finding the loopholes is immense, because there's a discontinuity in the law.

If you have a tax, you have a finer grained instrument. So you can eg charge people in proportion to how much time they spent out of Canada. Instead of going 51% out: you are banned to 49%: everything is fine, the tax can vary gradually.)

Re: Canada bans foreign home buyers for two years

#886

Post by la6472 »

arrosenberg wrote: post #871
la6472 wrote: post #859

Earlier quoted context omitted.

Suburbs are not rural areas. Suburbs are sane living condition which every human being in the planet is entitled to. Suburbs are also the source of majority of tax revenue.

Entitled, huh? I don’t see what entitles you to any particular mode of living, but its your ethos. Suburbs may be the majority (I have no idea if thats true), but that doesn’t make them self-sustaining. They only exist because cities paid for highways, water, and power infrastructure to make it all possible (and continue to fund their maintenance) - exponentially moreso the further west you go.

Nope I don’t agree. Cities have morphed into Subarus in the 1950s and since then they have been the source of more influence and revenue generation at least in NA.

Re: Canada bans foreign home buyers for two years

#887

Post by eru »

pastacacioepepe wrote: post #54
Dylan16807 wrote: post #47

Earlier quoted context omitted.

Are there any empty house taxes that charge a significant amount of money? 5% would barely get you into the same range as price growth.

How do you tax foreign investors only, if they can set up subsidiaries and use dirty tricks anyway? You're gonna penalize the local market as well.

That's why I am suggesting not singling out foreigners in the first place.

Use the tax you collect to finance local goods and services (and to reduce other local taxes).

So local pay the tax and get something in return. Non-residents pay the same tax, but don't get the local goods and services; just because they aren't there. And all without any complicated rules.

Re: Canada bans foreign home buyers for two years

#888

Post by eru »

hrdwdmrbl wrote: post #68
pastacacioepepe wrote: post #50

Earlier quoted context omitted.

Explain how would you tax them effectively then, since they are foreign. Every time I talk about taxing the rich, I'm stormed by people calling me economically illitterate and telling me it's impossible as the rich will always find a loophole. So if you think they can find loopholes on the ban, why couldn't they find loopholes on new taxes? They do already and very effectively.

A % tax on the cost of the property would be pretty simple. Can't buy without paying the tax up front. It's usually the more complicated taxes that have exceptions to rules that are exploitable. It's hard to find exploits in simple rules.

Yes. Look at land value taxes.

Btw, I would _not_ charge a transaction tax. Charge them every year for holding the property. (Eg charge whoever holds the property on New Year, the market will do the rest.)

That way you don't impede transactions.

Re: Canada bans foreign home buyers for two years

#889

Post by eru »

pastacacioepepe wrote: post #89
hrdwdmrbl wrote: post #68

Earlier quoted context omitted.

A % tax on the cost of the property would be pretty simple. Can't buy without paying the tax up front. It's usually the more complicated taxes that have exceptions to rules that are exploitable. It's hard to find exploits in simple rules.

I mean yes but then you'd also hit your population, unless you restrict the tax to non-citizens, but then foreign investors can still use some sort of a front man or other loopholes.

Hitting the local population with this particular tax is fine from an economic point of view.

Just use the tax take to finance local goods and service and to lower other local taxes.

Re: Canada bans foreign home buyers for two years

#890

Post by eru »

zarzavat wrote: post #78
eru wrote: post #18

Earlier quoted context omitted.

In economics, in general it's usually better to tax than to ban. In this case, you could just tax foreigners for owning property. Or you could tax non-residents for owning property. A land value tax would be a good idea in general. But if it's politically necessary to restrict that to people from far away, that's still better than a ban.

The people who buy these properties are often looking to put their money somewhere safe from government seizure (i.e. 100% tax). A tax is not going to be much of a deterrent unless it is really very big.

As the sibling comment said: that's a good problem to have.

Taxes give you a behaviour change and revenue. If the behaviour doesn't change, you can jack them up to get more revenue.

Post reply on HN