this post was submitted on 24 Aug 2023
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Income tax when you aren't receiving an income is a weird idea.
It sounds like the author wants a land tax, but hasn't ever heard the term.
Another term is a vacant homes tax, something Vancouver and Toronto in Canada are using.
These sorts of narrow, “feel-good” taxes are the wrong way to go. People find loopholes to avoid paying them.
Georgist land value tax (LVT) is straightforward and cannot be avoided. It incentivizes owned land to be utilized, otherwise it becomes a huge liability. It does not disincentivize improvements (building stuff) because taxes are tied to underlying land values, not improved property value.
For those who are interested enough to read some fairly dense text on the topic here is a website for you. land value taxation: urban land values
So, if I own a condo in a high rise building, how does this work? Does the building get the tax, and that gets divided up among all the condos? Or does each living space get it's own tax?
Would get divided based on your share.
Isn't that just effectively another property tax where it's needed? Afaik the issue isn't people sitting on empty land, it's sitting on empty housing.
Property taxes discourage building. Empty land is really cheap, property tax wise. Once you build on the land, property taxes go way up. This discourages you from building on the land.
Land value tax is the opposite. The tax you pay is based on how much the land is worth, based on its location and supply/demand. An empty lot in NYC would cost the same in LVT as if it had a big apartment full of renters. This makes it very expensive to hold on to unless you’re going to build on it.
The same applies for improvement. If you own a plot with a single family house on it in an area where demand is skyrocketing, your LVT is going to shoot up along with it. This encourages you to either tear it down to build apartments or sell it to someone who will.
The really interesting part about LVT is that it paradoxically makes housing more affordable. One of the biggest problems with the current property tax system is that people’s taxes don’t go up when the value of their property increases. This leads to little old ladies sitting on multi million dollar homes and paying almost no taxes at all in places like the Bay Area. Land Value Tax would force tons of those houses onto the market, causing prices to go down due to increased supply. Truly expensive areas would also have to have apartments built to cover the tax.
The other nice thing about LVT is that landlords can’t pass it on by raising rent. Since the cost of rent in the area directly determines the value of the land, rent increases just turn into tax increases. At some point landlords have to stop increasing rent otherwise everyone would move out and then they couldn’t afford the taxes, so this leads to an equilibrium.
The only thing left to solve in this system is to make sure taxes are used to benefit regular people and not wasted.
Empty housing is empty land. It just has a house on it. And there are times and places where landowners will spend decades sitting on infill waiting for land values to go up. Additionally, land that could be developed into high density housing but is being held at low density at the behest of the area's politically connected residents, is kind of like "empty" land. It isn't a binary.
Owning a house that you don't inhabit is weirder.
So renting a house for your vacation is also weird?
It's certainly wasteful. If people are going without any proper shelter, then having extra, mostly vacant housing to yourself should be discouraged.
This right here. The US averages some thirty unoccupied houses for every homeless person. A lot of those are just owned by investment firms who will sit on them because housing is treated as an investment first and a human need second. It's not a supply problem, it's a fucking greed problem.
Just make property taxes higher for empty buildings. Prorate per month. I thought some country was trying this?
For rentals in general, trying to solve a different problem, we should drastically increase property taxes and then give a discount for primary residence that puts it back to where it is now.
That's what I think too. A law where you pay more tax for additional properties you own on top of your first home. I don't know enough about the housing market to know if such a law would actually help, but at first glance it does seem like it'd break up some of the corporate slum lord businesses around the US
The owner of an apartment is always receiving income from it, either in the form of the rent check or whatever utility it provides for him to keep it to himself.
I don't like land taxes and other property taxes because I don't think there's a good way to apply those taxes progressively. Rather, if we just take the imputed rent of a given asset (land, building, car, etc.) and add that to the taxpayer's income, the the progressive income tax can just do its thing.
Land value taxation is inherently progressive. That's probably why it's never been implemented.
No, he's receiving value from it. That's not the same thing as income. You can't tax a percentage of value, only actual money.
You're guessing how much rent he could be collecting and taxing a percentage of the imaginary rent payments... You're really bending over backwards here to implement a property tax or vacancy tax but with a bunch of extra steps.
Wrong. Basically everyone who's ever paid property taxes has been taxed on value. Even though I haven't sold it or nor plan to anytime soon, I owe increased taxes because the estimated value of it has gone up.
That's not true. If I receive artwork, a car, shares of stock, room and board, free tuition, etc., then that is income on I which I will owe taxes. Figuring out the value of these things isn't a guess. It's an estimate based on actual market data. It's actually kind of easy in the case of a rental property since the landlord will have advertised the rent amount. So, if he wants to pay lower tax then he can just lower his ask.