The solution to the housing crisis is extremely simple(medium.com)
medium.com
The solution to the housing crisis is extremely simple
https://medium.com/@djrobstep/the-solution-to-the-housing-crisis-is-extremely-simple-bcb0511e761d
59 comments
This has to be satire. No one can be this narrow minded. It sounds like this author wants the government to essentially own all of the land, and only those who can afford to (the rich) to actually do anything with it. What's valuable land? What is this tax actually for? I think this is satire and the author is trying to make a point about socialism or something, no one can be these inept at economics.
I thought I'd open the article and see war as the answer. After all, if we just killed everyone looking for a place to live, then there'd no longer be a problem. It seems to be equally ethical.
This is exactly the same system of ownership as now, and a type of tax that already exists in many countries, but at a higher rate. I'm not sure why this is so horrifying.
I'm also not sure what makes it so hard for people to see the obvious fact that landlording is morally unjustifiable. Ideology is a hell of a drug I guess.
I'm also not sure what makes it so hard for people to see the obvious fact that landlording is morally unjustifiable. Ideology is a hell of a drug I guess.
I don't want to maintain a home or a yard, presently. Renting out apartments is perfectly moral and ethical when there are people like me around (that is, I have a choice and have chosen to rent over own). The risk is more of the "slum lord" sort, taking advantage of people without the choice due to whatever circumstances. It's a risk of immoral or unethical behavior, but it's not guaranteed. My landlords (the company and their local staff) are quick to do repairs, have reasonable rates for rent, and have done a good job in maintaining the building (vermin free, which is a feat for an old warehouse). They guarantee protection of the commons (the building's infrastructure, safety, etc.) that would be nearly impossible to coordinate amongst the 80 or so units (about 120-150 people).
Absolutely, renting is a lot more convenient in many ways. Most people only buy for investment/financial stability reasons. Once you remove the land speculation incentives, I think you'd find that more people would rent.
You're confusing me, you wrote:
I'm also not sure what makes it so hard for people to see the
obvious fact that landlording is morally unjustifiable.
I rent because I have no specialization in identifying property value, and I don't like gambling. I feel no regret in letting my landlord take on the additional risk of managing the property for a chance at higher returns.
I feel like I'm failing an IQ test here. I assumed he meant 100% tax on rent, but then there's this line:
>Owners of valuable land would be forced to make maximum use of land with higher density rentals in order to make sufficient rental income to pay the land tax.
What would the 100% be on exactly?
>Owners of valuable land would be forced to make maximum use of land with higher density rentals in order to make sufficient rental income to pay the land tax.
What would the 100% be on exactly?
> Income from land is thus completely unearned and thus any income gained from land ownership should be completely taxed at 100%.
I believe he's mixing up profit with income, which should tell you how well-read he is on the subject matter.
I believe he's mixing up profit with income, which should tell you how well-read he is on the subject matter.
100% of the rental income generated from land value (as opposed to buildings/improvements).
Formula: total rental income * (value of land / value of land and buildings)
Formula: total rental income * (value of land / value of land and buildings)
Why would anyone buy property under this regime?
[deleted]
For exactly the same reasons that they do now other than speculating on its value increasing in the future. And of course, the prices for property would be much, much lower under this regime.
For the exact same reasons they buy it now.
somewhere to live..
Your article did not make this clear at all.
That is a communist bullshit.
To begin with, is there a housing crisis in America? In my books, there is more housing per capita in U.S. than in every other country of the world save for Australia, and it is also more modern that almost everywhere else except a few countries that built out from nothing in the recent years like China (but per capita housing stock is much much lower there, and that housing is Soviet-style apartment blocks).
To begin with, is there a housing crisis in America? In my books, there is more housing per capita in U.S. than in every other country of the world save for Australia, and it is also more modern that almost everywhere else except a few countries that built out from nothing in the recent years like China (but per capita housing stock is much much lower there, and that housing is Soviet-style apartment blocks).
The crisis is that many people can't afford the housing that exists.
Much of the profit from the economy gets ploughed into land values, so land prices increase due to growth of the wider economy. So, much like owning company stock, you do nothing yet still profit from other people's effort, except with land, there's much less risk.
100% land tax was proposed by Henry George, and I'm surprised the article doesn't mention him. The idea is simply that land, natural resources etc, belong to all of us.
Consider a newborn child in a world where all the land is owned by other people. They are essentially born a slave, having to work a substantial amount simply to pay rent to someone who does nothing but own land. This proposal effectively acknowledges that we are all entitled to a share of the earth.
Of course any proposal that advocates "tax" or "government" is going to touch certain sensibilities, but rather than imagining an evil government sucking wealth from plucky individuals, consider it instead a big shared pool of cash, and every individual has a say in how (and how much) is collected and spent - which is what government ideally is.
Much of the profit from the economy gets ploughed into land values, so land prices increase due to growth of the wider economy. So, much like owning company stock, you do nothing yet still profit from other people's effort, except with land, there's much less risk.
100% land tax was proposed by Henry George, and I'm surprised the article doesn't mention him. The idea is simply that land, natural resources etc, belong to all of us.
Consider a newborn child in a world where all the land is owned by other people. They are essentially born a slave, having to work a substantial amount simply to pay rent to someone who does nothing but own land. This proposal effectively acknowledges that we are all entitled to a share of the earth.
Of course any proposal that advocates "tax" or "government" is going to touch certain sensibilities, but rather than imagining an evil government sucking wealth from plucky individuals, consider it instead a big shared pool of cash, and every individual has a say in how (and how much) is collected and spent - which is what government ideally is.
Why everyone needs to be able to afford the housing? Down here in Europe we have about 30% homeownership rate and nobody says we are in a crisis, in fact, we are doing very well. U.S. is again near top of the world in homeownership rate.
You are making things up - trying to see a problem where there isn't. Better think about fixing childcare, and healthcare - that's where the real crisis is.
You are making things up - trying to see a problem where there isn't. Better think about fixing childcare, and healthcare - that's where the real crisis is.
Yes they could just live on the street.
By "afford housing" I don't mean just buying, but also renting. Rent prices reflect sale prices.
By "afford housing" I don't mean just buying, but also renting. Rent prices reflect sale prices.
Well, this again sounds like communism. No one is entitled to real estate. For that matter, there is a great amount of essentially free real estate in every country, a lot of it in good repair - just in the places where there are no jobs. That isn't even a thing - what's limited is a supply of real estate in places where everyone wants to be.
No fiscal solution could fix San Francisco housing prices, only 'fix' would be crushing Silicon Valley so it ceases to be attractive place to be.
If renting is a problem you are doing something wrong. Median gross rent in U.S. is $959 a month. That doesn't sound much for developed country to me. Buying real estate is accessible to majority of U.S. households, in fact almost every dual income household. 63.7% have it, and many who don't have it, just don't want it (for example, i am making what it takes to buy an apartment i am living in, in 8-9 months, but i am not buying because i am not a gambler). To me not buying real estate seems a rational choice, unless you have a very 'fixed' career - like, certain that you are going to stay in a place for decades. There are fewer and fewer people like that, labor market gets a lot more fluid.
No fiscal solution could fix San Francisco housing prices, only 'fix' would be crushing Silicon Valley so it ceases to be attractive place to be.
If renting is a problem you are doing something wrong. Median gross rent in U.S. is $959 a month. That doesn't sound much for developed country to me. Buying real estate is accessible to majority of U.S. households, in fact almost every dual income household. 63.7% have it, and many who don't have it, just don't want it (for example, i am making what it takes to buy an apartment i am living in, in 8-9 months, but i am not buying because i am not a gambler). To me not buying real estate seems a rational choice, unless you have a very 'fixed' career - like, certain that you are going to stay in a place for decades. There are fewer and fewer people like that, labor market gets a lot more fluid.
"No one is entitled to real estate."
Why not? We are born onto the earth, and yet under the current system it is already owned by someone else, and we have to slave to those owners just to "earn" a place to be. IMHO We are each entitled to a share of nature as a birthright, and a way to achieve that while still allowing "ownership" or exclusive access to land is to apply a 100% tax. Should one be able to own the air? Or the world's water? It's not far different to land ownership.
Why not? We are born onto the earth, and yet under the current system it is already owned by someone else, and we have to slave to those owners just to "earn" a place to be. IMHO We are each entitled to a share of nature as a birthright, and a way to achieve that while still allowing "ownership" or exclusive access to land is to apply a 100% tax. Should one be able to own the air? Or the world's water? It's not far different to land ownership.
LoL, exactly. It's just a metter of supply x demand. China is full of empty buildings due to keneysian policies. We should be worried on figuring out ways to increase well paid jobs offer.
China is full of empty properties due to rampant speculation and a brand new financial-capitalist system (larger that the US banking system) that financed it.
This is just a weak form of Georgism [1], which is a very old concept and has been both praised and panned since introduced in the late 19th century. Mostly it remains popular in Left-Libertarian circles.
[1] https://en.wikipedia.org/wiki/Georgism
[2] http://www.economist.com/blogs/freeexchange/2015/04/land-val...
[1] https://en.wikipedia.org/wiki/Georgism
[2] http://www.economist.com/blogs/freeexchange/2015/04/land-val...
>Income from land is thus completely unearned and thus any income gained from land ownership should be completely taxed at 100%.
That pretty much sums up the article. This is a horrible idea and will never happen.
That pretty much sums up the article. This is a horrible idea and will never happen.
It's not a horrible idea. It's an old idea that's been popular with various economists including (gasp) Adam Smith: https://en.wikipedia.org/wiki/Land_value_tax
(I don't know enough about this subject to have a strong opinion either way, but I feel pretty confident saying that this isn't a terrible idea)
(I don't know enough about this subject to have a strong opinion either way, but I feel pretty confident saying that this isn't a terrible idea)
> It's not a horrible idea.
It is, for a wide array of reasons. Assessment for ad valorem, as-is, taxation of land is highly contentious as it is, but there is at least some coherent basis for such assessment since there are usually reasonably comparable referents involved in actual marker trade on which to base an assessment.
LVT inherently relies on assessment of the unimproved value of improved lots, which means you need to assess something for which there will rarely be comparable examples in trade. That's a practical concern.
There's a deeper theoretical concern that the fundamental basis of LVT (that land in the conventional sense represents the ultimate source of all extractions from the commons, such that an LVT represents a generalized tax on the use of the commons) is fundamentally flawed. While land holding can be viewed as a kind of use of the commons which should be taxed, wealth more generally itself (and moreso the farther that wealth is beyond that which one could personally supervise with one's inherent bodily facilities) represents such a use in any system with public enforcement of property rights, as do resource extraction and pollution generation.
> It's an old idea that's been popular with various economists including (gasp) Adam Smith
Adam Smith also thought that the landholding class was inherently the only class that could be trusted with government, since the business-owning class (Smith wrote early enough in the feudalism-capitalism transition that the fact that the latter class would subsume the former was not obvious to him) would favor interests that were distinct from the common interest, while the working class, which like the land-holding class would have interests aligned with the common interest -- would inherently be too ill-informed to understand or politically pursue their own interest.
Smith is an important and often insightful figure in the history of political economy, but, especially when it comes to the relationship of land-holding to capitalist and post-capitalist economies, not exactly a source where "he thought X was a good idea" is a particularly strong endorsement.
It is, for a wide array of reasons. Assessment for ad valorem, as-is, taxation of land is highly contentious as it is, but there is at least some coherent basis for such assessment since there are usually reasonably comparable referents involved in actual marker trade on which to base an assessment.
LVT inherently relies on assessment of the unimproved value of improved lots, which means you need to assess something for which there will rarely be comparable examples in trade. That's a practical concern.
There's a deeper theoretical concern that the fundamental basis of LVT (that land in the conventional sense represents the ultimate source of all extractions from the commons, such that an LVT represents a generalized tax on the use of the commons) is fundamentally flawed. While land holding can be viewed as a kind of use of the commons which should be taxed, wealth more generally itself (and moreso the farther that wealth is beyond that which one could personally supervise with one's inherent bodily facilities) represents such a use in any system with public enforcement of property rights, as do resource extraction and pollution generation.
> It's an old idea that's been popular with various economists including (gasp) Adam Smith
Adam Smith also thought that the landholding class was inherently the only class that could be trusted with government, since the business-owning class (Smith wrote early enough in the feudalism-capitalism transition that the fact that the latter class would subsume the former was not obvious to him) would favor interests that were distinct from the common interest, while the working class, which like the land-holding class would have interests aligned with the common interest -- would inherently be too ill-informed to understand or politically pursue their own interest.
Smith is an important and often insightful figure in the history of political economy, but, especially when it comes to the relationship of land-holding to capitalist and post-capitalist economies, not exactly a source where "he thought X was a good idea" is a particularly strong endorsement.
Isn't saying that it isn't terrible an opinion of itself? Also pointing out that hsitorically people thought certain something isn't enough on its own to show that it is the least bit reasonable in the modern era.
Some pretty highly regarded economists in the past century have backed up the idea of a land value tax. Does that alone make it a great idea? No, but I think it makes the parent comment seem pretty silly.
I certainly have an opinion, but (like I said) it's not a strong one. I don't understand all the moving pieces and all the incentives involved here, but I'd be interested in seeing some more knowledgeable people talk about the LVT.
I certainly have an opinion, but (like I said) it's not a strong one. I don't understand all the moving pieces and all the incentives involved here, but I'd be interested in seeing some more knowledgeable people talk about the LVT.
Could you explain why it's a horrible idea?
Merely asserting it isn't the same as refuting the article (which lays out some arguments) and doesn't really add anything to the discussion.
Merely asserting it isn't the same as refuting the article (which lays out some arguments) and doesn't really add anything to the discussion.
Income from idle land is certainly unearned. But little idle land can earn anything (grazing land, I suppose, but then you still may have some maintenance or security you provide). Anything else will be earning income not from the land, but things built on the land, grown on the land, etc. A house that I have built (or maintain) isn't land, it's a house. It requires land to sit on. So when I rent it out, what percentage of that income is because of the land and what percentage is from the house? If it's farmland, what percentage of the income is because of the labor and materials put into the land?
Taxes on land certainly make sense, but as written this essay's suggestion is to have a 100% tax on landholders income from land. So how, then, do they make money? Does this only apply to people who rent land but have done nothing to improve it? If I have a family farm that I want to hold onto, but rent out 100 acres to a lumber company does that mean I can't earn anything from that rent because I'm not the one doing the work? This essay needs some work to produce anything approaching a reasonable solution.
Taxes on land certainly make sense, but as written this essay's suggestion is to have a 100% tax on landholders income from land. So how, then, do they make money? Does this only apply to people who rent land but have done nothing to improve it? If I have a family farm that I want to hold onto, but rent out 100 acres to a lumber company does that mean I can't earn anything from that rent because I'm not the one doing the work? This essay needs some work to produce anything approaching a reasonable solution.
The number one way of earning money from idle land is just to wait for its value to increase. That doesn't apply to all land, but it does apply to all land in areas that have a housing affordability problem.
By this proposal, can you even make money off the sale of land? Wouldn't that, also, be taxed 100%?
Presumably yes, since the explicit purpose of this proposal is to prevent all profit from idle ownership of land.
I may not be understanding his proposal fully, so please bear with me. If I'm making a complete jackass of myself through misunderstanding, let me know.
> It’s worth noting that more tax on land doesn’t mean higher housing costs! For those living in enormous houses in very expensive neighbourhoods, it certainly will: but that’s by design. But shifting the tax burden onto rich folks like this, means that the average person pays less.
I'm confused - what exactly is going to stop the company that owns the 50-unit apartment building that I live in from passing that tax directly onto me and the other tenants via rent?
And how does this help my parents, who own land and have completely paid off their house? Should they, age 60 and 80, start working the land to produce a profit to offset the tax? Should I come back and start having more kids to work the farm?
> It’s worth noting that more tax on land doesn’t mean higher housing costs! For those living in enormous houses in very expensive neighbourhoods, it certainly will: but that’s by design. But shifting the tax burden onto rich folks like this, means that the average person pays less.
I'm confused - what exactly is going to stop the company that owns the 50-unit apartment building that I live in from passing that tax directly onto me and the other tenants via rent?
And how does this help my parents, who own land and have completely paid off their house? Should they, age 60 and 80, start working the land to produce a profit to offset the tax? Should I come back and start having more kids to work the farm?
> what exactly is going to stop the company that owns the 50-unit apartment building that I live in from passing that tax directly onto me and the other tenants via rent?
Competition. Your landlords are already charging as much as they can get away with.
> And how does this help my parents, who own land and have completely paid off their house?
The enormous pool of money raised could help fund public healthcare and social security programs that they would benefit from.
> Should they, age 60 and 80, start working the land to produce a profit to offset the tax? Should I come back and start having more kids to work the farm?
If they own a farm but don't want to do anything with the land, they should probably downsize to a smaller property, yes?
Competition. Your landlords are already charging as much as they can get away with.
> And how does this help my parents, who own land and have completely paid off their house?
The enormous pool of money raised could help fund public healthcare and social security programs that they would benefit from.
> Should they, age 60 and 80, start working the land to produce a profit to offset the tax? Should I come back and start having more kids to work the farm?
If they own a farm but don't want to do anything with the land, they should probably downsize to a smaller property, yes?
Competition will not resolve the issue of taxes being passed on, because all properties will have an increased tax burden.
The smallest tax/rent increase will go to those using the land relatively optimally (to be decided by tax surveyors).
The smallest tax/rent increase will go to those using the land relatively optimally (to be decided by tax surveyors).
Tenants are already "taxed" this amount. It just goes to the landholder, rather than the government.
I think your statement requires some justification. After a property has changed hands, the speculative value has gone away with the seller (who was a landholder but is no longer). The new landholder paid for the cash flow at market rates and so any significant additional cost (tax) would result in a loss. The new landholder will have to increase rents to make up the loss. This will be played out across the market.
I'd also like to suggest that a lot of the price increases in the SF bay area are related to difficulty developing new units. The intention of the land tax is to increase the usage (density) of valuable areas; however, that requires being able to develop! Development is very hard and risky in many parts of the SF bay area.
The path is a bit roundabout but it makes sense.
The point is to make underutilized land uneconomical to keep that way. Landowners can no longer just sit on land that's not generating revenue. To generate revenue they will build more housing. The economics of supply and demand with additional supply will make housing cheaper more than additional taxes passed on to tenants will make it more expensive.
The point is to make underutilized land uneconomical to keep that way. Landowners can no longer just sit on land that's not generating revenue. To generate revenue they will build more housing. The economics of supply and demand with additional supply will make housing cheaper more than additional taxes passed on to tenants will make it more expensive.
But the article's proposal is summed up here:
Income from land is thus completely unearned and thus any
income gained from land ownership should be completely taxed
at 100%.
That's not his proposal being summed up, that's the problem summed up.
> you might as well leave it empty until the property taxes (if you kept them in this scheme) became overwhelming.
I believe he's proposing increasing property taxes until they're 100% (though I'm not sure what this means; you basically have to pay to purchase the land every year?)
> you might as well leave it empty until the property taxes (if you kept them in this scheme) became overwhelming.
I believe he's proposing increasing property taxes until they're 100% (though I'm not sure what this means; you basically have to pay to purchase the land every year?)
How do they pass a 100% tax on net income on?
Raising the rent more (to offset the tax) generates new taxes in exactly the amount raised.
Now, I'm sure they'll just layer it through a few steps to avoid the tax (like outrageously priced management services they happen to own), but I'm not seeing how they'd (directly) pass the tax on.
Raising the rent more (to offset the tax) generates new taxes in exactly the amount raised.
Now, I'm sure they'll just layer it through a few steps to avoid the tax (like outrageously priced management services they happen to own), but I'm not seeing how they'd (directly) pass the tax on.
I don't think OP's proposal is to tax the income from the land, but the land itself. The whole idea is to prevent people from just sitting on un-utilized land.
My guess (and I´m ok it's not what is in the article) is that taxes should be on benefits and not on land surface. A 100% tax on benefits mean that there are no need to overprice the rent once all maintenance costs are paid.
And then there will be no more interest in renting. Just own your piece of land.
And then all collapse.
And then there will be no more interest in renting. Just own your piece of land.
And then all collapse.
> Rural land and average suburban land would be taxed at low rates because that land is comparatively cheap.
How would we know what the value of that land is? Does some assessor come around and place an "expert opinion" sticker price on that land?
How would we know what the value of that land is? Does some assessor come around and place an "expert opinion" sticker price on that land?
Is that not done in America?
The city of Toronto taxes my condo based on a fraction of it's assessed value. They don't even enter the building up decide what that value is, but they have a database of every homes estimated value.
The city of Toronto taxes my condo based on a fraction of it's assessed value. They don't even enter the building up decide what that value is, but they have a database of every homes estimated value.
Assessments made by estimating the value based on actual sales data from similar properties. But the value of those real sales are made based on the expected profitability of the land.
It may be easier to see in rural areas. As a farmer, the price of farmland in the current climate seems to move to where the net profit on the productive use of that land is expected to be ~2-3% of the land's current value. So, as a rule of thumb, if you can expect to make $20-30,000 per year off 100 acres, then that 100 acres will sell for ~$1M.
If the tax on profits is 100%, the expected income will always be zero. Thus, the land is worth nothing. It doesn't really matter if it is in the heart of a city, or out in the middle of nowhere.
It may be easier to see in rural areas. As a farmer, the price of farmland in the current climate seems to move to where the net profit on the productive use of that land is expected to be ~2-3% of the land's current value. So, as a rule of thumb, if you can expect to make $20-30,000 per year off 100 acres, then that 100 acres will sell for ~$1M.
If the tax on profits is 100%, the expected income will always be zero. Thus, the land is worth nothing. It doesn't really matter if it is in the heart of a city, or out in the middle of nowhere.
I don't think this is a good solution. Where is the incentive for anyone to maintain properties anymore?
"Owners of valuable land would be forced to make maximum use of land with higher density rentals in order to make sufficient rental income to pay the land tax."
I don't see how this follows if all income is taxed at 100%.
The correct solution is to eliminate NIMBYism by eliminating the ability for homeowners to restrict the construction of new buildings so that new housing can be built. Rent control should also be eliminated, allowing demand to match supply.
"Owners of valuable land would be forced to make maximum use of land with higher density rentals in order to make sufficient rental income to pay the land tax."
I don't see how this follows if all income is taxed at 100%.
The correct solution is to eliminate NIMBYism by eliminating the ability for homeowners to restrict the construction of new buildings so that new housing can be built. Rent control should also be eliminated, allowing demand to match supply.
You don't need to tear this post a new asshole, it disproves itself.
> No profit from land ownership means no price bubbles, because there’s no incentive (in fact, a powerful financial disincentive) to idly hold onto land.
There is no incentive to hold land at all. Business transactions are motivated by monetary gain. If there is none, business will seldom occur.
> No profit from land ownership means no price bubbles, because there’s no incentive (in fact, a powerful financial disincentive) to idly hold onto land.
There is no incentive to hold land at all. Business transactions are motivated by monetary gain. If there is none, business will seldom occur.
I can't tell whether this is satire, like "A Modest Proposal".
Let's start by all agreeing that the proposal to tax land at 100% (of what?) is a bit nutty and not going to happen. Possibly this is satire. Poe's Law.
But toned down, would an increased, progressive tax on land ownership have positive benefits? More tax income, yes. And the author isn't wrong in that such a change would serve to level land values (and therefore rents, probably) out a bit.
There would sure be some upheaval bringing it in ("my mom can't afford to live in her family home anymore after 40 years!"). But it's an interesting proposal.
But toned down, would an increased, progressive tax on land ownership have positive benefits? More tax income, yes. And the author isn't wrong in that such a change would serve to level land values (and therefore rents, probably) out a bit.
There would sure be some upheaval bringing it in ("my mom can't afford to live in her family home anymore after 40 years!"). But it's an interesting proposal.
Every single law or solution you can make up for this problem (and many other similar ones) has one big flaw. That is the people who make the rules will ensure their properties are excluded, and every single lawyer and accountant will then follow these same rules for their clients to ensure they are also excluded.
This is currently the way the world works. Get over it!
This is currently the way the world works. Get over it!
I think housing crisis (what/where is that anyway?) could be solved if there was a way to own space vertically. So that someone could build over or under existing buildings.
just get rid of the tax incentives.