> Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons… On an individual level there isn’t too much I can do.… Maybe I sell my home to a developer who turns it into a mall or a 5 story apartment building.… And if I can’t afford it you force me out of my house, away from friends and family?
I think what you said is somewhat contradictory. You said you don’t know what you could do if your land value were to increase, but then you list a couple good things that you could do (develop an apartment or sell the house), as well as a couple illiberal policies you would pursue (immigration restrictions or limits on children). I would add that you could rent out a bedroom or build a modest extension to rent out. And I think it is contradictory to say that you could build an apartment and be displaced; it is exactly apartments that would prevent you and your neighbors from being displaced.
> By the way, we don’t seem to have much of a problem with prices decreasing, even if that causes a larger financial impact (if you buy a home for $300,000 and policies out of your voting control cause you to lose value, you’re just screwed with no recourse).
I agree! This is actually another reason to want higher property taxes. In places like the Bay Area where the land value is so high, buying a house is a very big bet that the high values will be maintained. If taxes on land were higher, then the price would be lower and the government instead of individual homeowners would bear more of the risks.
> but as a homeowner in the Great Lakes Region, I feel more sympathy toward other home owners than some here may do.
And how do you feel about tenants, who face the same problems but worse?
What is the right level of privilege that owners should have above renters and future buyers? The property tax allows society to tune the amount of privilege that owners have over renters and future buyers. If the tax rate were 0% (allodial ownership), landlords would have a great degree of privilege over their serfs. At the other extreme, a tax rate of 100% of the rental value would be equivalent to leasing from the government, and landlords would have no privilege over other tenants. When we break the property tax by preventing it from adjusting to property value (as Proposition 13 did), then current owners become rich from the booming economy even as renters and future buyers become impoverished, or as the article puts it, “it’s especially unfair to their children, who are in effect subsidizing their parents’ generation.” In my opinion, the property tax rate should be moderately high, so that landowners and tenants’ interests would be more aligned and the government would have the resources it needs to address displacement and inequality.
Yes, you’re right I mentioned some things that you could do. Though I’d also like to point out that whether the policies are liberal or not is not very important to me, they are just natural reactions people will have. Restricting immigration or child rearing is a logical consequence, and it doesn’t make people bad. If you like things the way they are, you’ll protect against population explosions.
One of the issues here with doing something like building an apartment complex means now you have to live in the apartment or move your family and become a landlord. You do become displaced, and you have to sever neighborhood ties you have. In an era where many people are searching for meaning and community, I’m not sure that having your neighbors move and build an apartment complex on the lot next to you is a good thing.
You will potentially have conflicts with increased road usage, or maybe property taxes increase to pay for a dozen more children to attend a school that previously didn’t. Although some here have suggested property taxes are meant more so for distributing wealth than to pay for services. At some point somebody pays to build a new school. If you’re a home owner a lot of this just seems like a bad idea. It makes more sense to maintain things how they are.
With respect to rent, I’m not sure. Maybe it makes more sense to tax rental income than the property. Ultimately we have a few problems that aren’t easy to solve, and unclear goals. I don’t think apartment buildings everywhere is a good thing, and that’s the future of the Bay Area. I’d want to develop a tax and property rights structure that encourages medium density mixed use development. We have to question home ownership too - passing on a home to your kids means because you happened to be here first locks others out of the market. Why is it considered fair that I can’t afford ably buy a home in Tahoe just because someone was born before me? Maybe it is fair. Maybe it isn’t. Tough questions. And even if you raise property taxes, rich people won’t care. They’ll still live in Tahoe and I’ll still only be able to afford to life next to cornfields.
> Though I’d also like to point out that whether the policies are liberal or not is not very important to me, they are just natural reactions people will have… Maybe it is fair. Maybe it isn’t
In my opinion, a liberal society with progressive taxation (including the property tax) tends to provide more opportunities for those who are born without assets than a society that overly protects the privileges of feudal estates (“passing on a home to your kids”), and would be a better society to live in behind a veil of ignorance.
> One of the issues here with doing something like building an apartment complex means now you have to live in the apartment or move your family and become a landlord
You can also build a condo building and own one of the condos instead of managing rentals.
> With respect to rent, I’m not sure. Maybe it makes more sense to tax rental income than the property
The problems with the income tax on rent are that 1) it penalizes renting out land while rewarding speculators who leave land vacant, and 2) it punishes renters who bear a higher burden than owner-occupiers who do not pay tax on the imputed rent (incidentally, the fact that imputed rent is excluded is basically a mistake of the original Form 1040; see Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008). The property tax is a fairer and less distortionary tax than an income tax on rent.
> If you’re a home owner a lot of this just seems like a bad idea. It makes more sense to maintain things how they are.
From a Bay Area resident to a Great Lakes resident, I hope people there heed the cautionary tale that is the Bay Area: maintaining the residential housing stock almost unchanged despite strong economic growth and agglomeration effects, and protecting property owners by discriminating against later generations, is an absolute disaster for lower income and even middle income households.
I think what you said is somewhat contradictory. You said you don’t know what you could do if your land value were to increase, but then you list a couple good things that you could do (develop an apartment or sell the house), as well as a couple illiberal policies you would pursue (immigration restrictions or limits on children). I would add that you could rent out a bedroom or build a modest extension to rent out. And I think it is contradictory to say that you could build an apartment and be displaced; it is exactly apartments that would prevent you and your neighbors from being displaced.
> By the way, we don’t seem to have much of a problem with prices decreasing, even if that causes a larger financial impact (if you buy a home for $300,000 and policies out of your voting control cause you to lose value, you’re just screwed with no recourse).
I agree! This is actually another reason to want higher property taxes. In places like the Bay Area where the land value is so high, buying a house is a very big bet that the high values will be maintained. If taxes on land were higher, then the price would be lower and the government instead of individual homeowners would bear more of the risks.
> but as a homeowner in the Great Lakes Region, I feel more sympathy toward other home owners than some here may do.
And how do you feel about tenants, who face the same problems but worse?
What is the right level of privilege that owners should have above renters and future buyers? The property tax allows society to tune the amount of privilege that owners have over renters and future buyers. If the tax rate were 0% (allodial ownership), landlords would have a great degree of privilege over their serfs. At the other extreme, a tax rate of 100% of the rental value would be equivalent to leasing from the government, and landlords would have no privilege over other tenants. When we break the property tax by preventing it from adjusting to property value (as Proposition 13 did), then current owners become rich from the booming economy even as renters and future buyers become impoverished, or as the article puts it, “it’s especially unfair to their children, who are in effect subsidizing their parents’ generation.” In my opinion, the property tax rate should be moderately high, so that landowners and tenants’ interests would be more aligned and the government would have the resources it needs to address displacement and inequality.