> 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 (actually moving or repurposing land is hard) 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.

For what it's worth, the way Israel deals with this is that property tax is levied on the property resident, not the property owner. In other words, when you rent a house, the person who is legally responsible for paying the tax is the renter.

This makes it exceedingly easy to ensure that old people are not affected by property taxes: if you are elderly resident, you simply get a discount. If you are an elderly landlord who owns multiple properties, your younger tenants don't get a property tax discount, and you pay income taxes (not discounted for age) on the rental income. If you are elderly and want to downsize, your property tax discount follows you into the smaller apartment.

The system has its challenges, but it is far superior to Prop 13 and achieves the same goal.

> fixed income at the end of your life in no position really to deal with inflation.

This might be true if you have everything in cash in a safe at your house and plan on taking out fixed amounts for the rest of your life, I guess, but who are those people?

Most people are on social security, which is inflation adjusted.

Others with more wealth have retirement savings, which are likely mostly in bonds and stocks, which weather inflation not too shabbily. Interest rates go up, and banks start actually yielding interest!

Prop 13 passed mostly as a populist revolt against taxes, but in reality it does a lot more for people in their prime of earning and a toooon more for commercial property tax cuts than it does for retirees.

Every other state has better tax deferral mechanisms, and given the tiny fraction of Prop 14 effect that goes to retirees, I don't really buy this back formation of what was going on. If people really voted for such a lie, it wouldn't be the first time with propositions but from the media I've seen from the time I really don't think people were that duped and probably knew the broad effects of Prop 13.

Retirees are not on fixed income and haven't been for decades. Social Security gets adjusted for inflation. 401ks grow. https://www.slowboring.com/p/seniors-arent-living-on-fixed-i...

The key bit is that California is relatively unique here. There are a few other states that have Prop-13-like laws, but California's is the most restrictive and incumbent-homeowner-friendly. All those other states (and the ones with nothing similar) seem to get along just fine.

Of course, the solution to increased demand (driving increases in property market value) is to build more housing. 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 taxes.

I think it would be reasonable and productive to phase out Prop 13 over time, rather than immediately getting rid of it. We could structure it so a property doesn't lose Prop 13 protection until the next time it's sold (and then it never has that protection again). We could completely remove the inheritance loophole (which was tightened up in 2020 but still exists). We could even set a date, say, 10 or 15 years in the future, when re-assessments at market value will start for everyone, regardless of whether or not they've sold. We could also phase in higher allowed assessment percentage increases over time (right now it's capped at 2% per year, but we could, say, add 0.5% to that figure every year for some number of years).

Hell, we could even leave Prop 13 in place as it is today, and just bump up the assessment increase cap to 5% or 10% or something like that. (Texas, for reference, has their own 10% yearly cap on assessment increases.)

There are so many ways to solve this, but all of them are politically unpopular. (Hell, we couldn't even reform Prop 13 as it applies to commercial properties.) As a homeowner in California, I get it, but I still support Prop 13 reform and eventual Prop 13 abolishment.

This is what already happens. While not via taxes, the COL already rises with how nice a place becomes.

Do the taxes rise because an increase in rate or the underlying value. If it is the value then cry me a river.

I am a friendly guy and good neighbour. People want to be near me. The value of land in my area rises.

Now I have to pay for my own kindness.

lmao economists, really

  > A forest is much less efficient than a mall and yet, the forest might still be more important.

This is a good example of a very common problem: data isn't objective, it needs to be interpreted. Metrics will give you information, but they aren't the full story. That's why Goodhart's Law is so prolific. You can't just look at data and act on it without context. It depends what your actual goals are. And a huge part of that is that we have to consider how much we value things, especially things that haven't already been assigned monetary value. Sure, we can assign monetary value to things like a forest (economists do this), but it would also be wildly inappropriate to just accept those estimates as cold hard facts void of interpretation too. What's the saying? Reality has a surprising amount of resolution.

In a weird twist of irony our efforts to be lazy end up costing us a lot of work. But that's also because there's two types of lazy: short term and overall work. We used to say we want to hire programmers that are lazy because they'll find the most efficient way to do something. But now we don't revere that kind of lazy, we like the kind of lazy that procrastinates. Do the quick cheap thing now, telling ourselves that we'll make it better in the future, knowing that's a lie. That pattern isn't unique to programming, it's just marshmallows.

In WA state (maybe others too?), the county assess my land value and the building value separately on my property taxes.

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...

I'm curious as to how you think we should divide up who gets what plots, can you explain how that works?

Raise X in land tax and then you spend it evenly amongst the population. Anyone using less than their fair share gets a bonus, anyone uses more has to pay.

If you just allow using X value, but tax free, then those who use less don’t get rewarded.

Effectively one non transferable share, one per citizen, with proceeds as a dividend.

> 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.

> This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.

Weird framing. In any case, this would lead to less taxes for most folks, at least compared to property taxes.

Yeah, because the value of your land just went up and you didn't do anything to make that happen. Only right that excess value goes back to society and reduces the tax burden of the working class.

Makes sense to me.

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).

Obviously. If you live in a single family home next door to Disneyland you’re ducking over all the people who want to stay in a hotel there. You should have to pay for that privilege.

Landlord costs affect supply in the long term, so you will see changes, just not necessarily immediately over a one year period, but definitely over a 5-10 year period.

> We also don't see landlords who own their properties outright (and thus don't have mortgage interest costs) charging lower rents than landlords in the neighborhood with identical properties who have mortgages. When landlords' costs drop, do they drop the rent in response?

If costs are uniform for each landlord (they have to pay for), it limits the amount of money they can invest in new capacity, and you will see the effects over a decade. If one landlord has cost advantage over another, then they will of course probably just take the extra money as extra profit.

> Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.

They provide friction with what can be done with the land, because the cost of owning the land has to be paid. If it is just a land tax, however, you can game it by building as much as possible on it so the landowners who can't build as much as you can subsidize your usage (long term, you either have to build as much as you can on your land, or sell the land to someone who can).

> Taxes on land do not affect the supply of the land, this implies they are not passed on and the research literature largely agrees with this.

Taxes may not affect the amount of land that physically exists, but they absolutely can and do affect the amount of land available for rent as opposed to other income-generating use cases.

On top of that, a tax that applies equivalently to all of the land available to the rental market in a given area will simply push prices upwards across the board, which is likely to just be absorbed by renters given the usually low price elasticity of demand for housing.

> We also don't see landlords who own their properties outright (and thus don't have mortgage interest costs) charging lower rents than landlords in the neighborhood with identical properties who have mortgages.

Why would they as long as they find a renter? The market always charges the marginal cost.

A transaction can occur if the price is >= the seller's cost, and <= the value to the buyer. If it's at the minimum, the seller must pass on the tax or not trade, at the maximum (down to the max minus the tax) , the seller can't pass on (all of) the tax and still trade. We observe that landlords make profit, so we are not at the minimum. Are we at the maximum?

I think there are cases where we are in between for significant periods of time. Consider a positive shock to wages. Can landlords put up prices overnight? I don't think so, unless the landlords all co-ordinate to do so, prices will be sticky as there are always some properties in the market, so it's difficult to be the first to increase rent. Unlike a purchase, a landlord who waits for a buyer at the right price is forgoing income during the void. So the market price can be a Schelling Point.

A tax increase, however, happens at the same time to all landlords. All of them would prefer to pass it on, and they know that so they can assume all other landlords will try to pass it on. If the rent is currently below the maximum possible, they will succeed.

How long it takes prices to adjust I don't know. It is an empirical question, but I don't know what data would answer it. But it seems like it took decades for landlords to capture the two-income surplus after it became common for women to have a career.

> Rent is a function of supply and demand, not a landlord's costs,

Do you really believe that landlords will subsidize tenants for a long time?

More to the point, if landlords are losing money, why would anyone build rental housing? Instead, why wouldn't they take housing off the market?

That’s one of the ideas of LVT actually: building apartments in land doesn’t increase tax burden, burning the apartments doesn’t lower it

Feel free to quote in the article what supports your summary given the article doesn't actually talk about that

In fact it mentions insurance fraud as the cause...

Additionally it certainly wasn't increasing cost but reduced income which is a very different issue

If landlords can already raise the price of rent, why haven’t they?

>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 to land rents or other natural resource rents they've captured ripped away from them would almost assuredly endorse the use of violence.

Land redistribution (of which this is a form) from the landed rentiers to the landless has historically resulted in brutal violence in order to protect their privileged claim on non-human created wealth.

> they will find other solutions like mass arson.

Or the more likely option is they will no longer do investment properties as the return it too low vs the risk.

And if margins are decreased, then... (what happens to new supply?)

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.

In theory the land value tax could be set so the overall taxation is the same as before, but but the distribution is such that the people with massive blocks of land in highly desirable areas foot most of the bill. This would over time make housing cheaper over time as more housing is built to reduce the tax burden.

youd think that, but you can fit another 10 people into that studio apartment

The author makes the comment about the land value tax not being able to be passed on to renters in the context of comparing it to a property tax.

If I’m understanding the argument you’re making here correctly, wouldn’t what you’re saying be equally true for a property tax?

I’m not saying you’re wrong, but I don’t think the author would agree with your point since I don’t see how your argument could be true for a land tax, but not for a property tax.

> The fact that they can't, means they will have to eat any marginal tax imposed on them

My company rents a space in a commercial lot, and the contract states the property tax is split among the tenants. It's separate from the rent.

Apparently this is common in commercial settings. I wouldn't be surprised to see this start happening for consumers.

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...

>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.

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.

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.

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.

> 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.

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’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.

You could quite literally introduce a wealth tax and then set the (additionally) taxed money on fire; and it would improve living standards.

The point is to lower the economic power of single individuals that compete against the entire rest of the nation.

>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.

The broken part is that there is third world-level poverty on the streets outside Google’s offices, working class people cannot afford to live in the Bay Area, and a fifth of California lives in poverty.

> 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.

Yes. No one person should have assets worth as much as the GDP of Qatar.

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.

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.

> 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.

Not necessarily. The problem isn’t that the taxes are unpopular, it’s the supermajority requirement for tax increases that makes it a challenge. The L.A. Times had done a study in the 90s that showed that most tax increase referenda submitted post Prop 13 had majority support but all but one failed because it failed to hit the supermajority threshold.

The only need another $100B and another 20 years and they WILL build the High Speed Rail!