Then we'll see thousands of articles about how SF, Boston, and so forth can't pay for the public services the cities want to pay for, and how terrible it is that companies are leaving. Those stories will contrast with the ones we've seen over the last decade, about how companies are evil and driving up the cost of housing.
Edit to add, the other question is eviction. Right now SF appears to have banned eviction: https://sfist.com/2020/06/10/sf-supervisors-extend-eviction-.... If or when that ends, we'll see what the market clears at. I assume courts will eventually forbid an indefinite eviction moratorium, but courts are already willing to go along with rent control, so who knows?
[1] National Bureau of Economic Research paper on Boston between 1640 and 2003 https://www.csus.edu/indiv/c/chalmersk/econ251fa12/glaeserbo...
People often say the stock market is disconnected from actually funding companies, but it seems like not in this area.
I believe biotech is the best area in the long run, but the fundamental cause of a bubble is that people start believing something is always a good buy at any price, and that always means the price has to go up enough to change minds.
The more you believe something is always good, the worse it has to become to change your mind, which is pretty scary to me.
>Then we'll see thousands of articles about how SF, Boston, and so forth can't pay for the public services the cities want to pay for, and how terrible it is that companies are leaving.
Good. Stupid should hurt. These cities had 20yr and nearly unbounded money they could have used to become somewhat sustainable. That they didn't is only their fault. And I say that as someone who lives in one of those cities.
Austin has many of those, but without mass transit, and Phoenix has some, but it's less urban and the traffic is horrible.
Also, climate modelling says that it's going to get wetter which would make its land more arable.
So, good retirement investment.
An elevated line would be more feasible (and is indeed in place for some portions of the existing rail lines), but again, you still have to sink your supporting piles deep due to the soil, and that raises the costs. This is why the existing rail transit in the metro area largely follows rail corridors that existed beforehand.
Finally, botched project management has eroded public will to support more rail lines.
I want more transit rail too, but getting it is going to be an uphill battle.
It's really terrible there, don't move there!
Legal weed, friendly people, crazy nice weather, 30 degrees and people are out in tshirts and boots, outdoor stuff.
It's some kind of hippie Shangra La. We go there when we can for long weekends.
Mountains are the thing.
Perhaps, but I've also gotten the impression those companies weren't paying that much to begin with. But perhaps it is they were paying a lot, but not nearly as much as they should have been if they weren't able to buy their own legislation?
Additionally, I don't get the impression that companies are able to buy legislation in SF. Otherwise, we wouldn't have policies like Gross Receipts tax, which most of tech companies in SF opposed [0].
In general, I think this obsession with "making corporations pay their fair share" isn't the right way of deciding a good tax policy. We should tax things we want to incentivize as little as possible, and tax things we want to discourage as much as possible. Maybe that leads to higher corporate taxes (I suspect it wouldn't), but the mindset should not revolve around trying to get a pound of flesh. Additionally, it isn't even guaranteed that the tax burden will fall on the corporation just because they're the ones writing the check. So even if our goal is "make corporations pay", tax incidence can just lead to us making labour and customers pay instead.
[0] - FWIW, I don't think gross receipts is not a very efficient tax, since it just encourages vertical integration and discourages multiple companies working together; ie. less competition. Unfortunately, Prop 13 prevents the economically efficient and fair source of revenue
They could just use VAT, which gives no advantage to vertical integration.
I think VAT/sales tax is bad in other ways, since it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich), and it also reduces transactions being made, which just creates dead weight loss. Our goal should be to keep money moving around, not add barriers to new transactions.
If I had to pick, I think I'd prefer the gross receipts tax, but I haven't studied the underlying economics to come to a conclusion on which is better/worse.
Gross receipts tax is just sales tax that doesn't show up on the customer's receipt. They like to pretend that it's then the seller who pays it instead of the buyer, but that's not how it works. It gets paid by whoever can't pass it on. In a competitive market that's the consumer, because the seller already has thin margins and can't absorb the cost without going out of business. (In a monopolistic market it's the monopolist, but that's just as true of sales tax -- in a monopolistic market the customer can't absorb higher prices because they're already paying monopoly prices.)
> SF already has a fairly high sales tax (~9%), so I doubt they could raise it anymore (I'm considering sales tax and VAT to be the same for this discussion, since they lead to the same revenue for the government, and same cost for the consumer).
Denmark and Sweden have 25% VAT. The EU requires it to be at least 15%.
> it's a regressive tax (the poor spend more of their income/wealth on consumption vs. the rich)
People always use this argument to justify income tax over VAT even though everything about the income tax doesn't actually work like that. "Progressive income tax" but not for FICA, which is like half the income tax ordinary people pay, and hey let's disguise that fact by alleging that it's being paid half by the employer even though that's not how it works. Let's put a cap on that too, so the wealthiest pay proportionally less than regular people. And then we'll have a bunch of means-tested benefits so that even for the "progressive" income tax, in practice lower income people are paying the highest marginal rates due to the benefits phase outs. Meanwhile we'll have income tax on the "profit" of international corporations, but only on paper because they don't actually report their profits in your country.
It also doesn't work when comparing VAT to property tax, because the rich generally don't use a disproportionate amount of their wealth to buy real estate -- unless it's rental properties in which case the property tax ends up being passed on to the tenants.
If you want to make VAT progressive then use it to fund a UBI. All of these other games only give people with accountants more holes to hide in.
All taxes except the land tax cause some sort of dead weight loss, which just leads to lower spending and economic activity, which leads to more unemployment.
> because the rich generally don't use a disproportionate amount of their wealth to buy real estate
Most valuable land is owned by the wealthy, and most poor people rent, so I don't see how a land tax would fall on the poor more than the wealthy.
> the property tax ends up being passed on to the tenants.
A land tax cannot be passed onto a tenant, since the supply of land is fixed, and so taxing land doesn't changing the supply-demand curve (leaving the equilibrium price the same).
> All of these other games only give people with accountants more holes to hide in
Actually, land tax has the least loopholes. Capital, businesses, high income individuals etc. can simple move to a jurisdiction with lower taxes if they want to. But they can't take their land with them, so the tax will always be paid (either they keep it, and pay the tax, or sell it to someone else, who can then use it).
Land tax does the same thing. If you try to generate all tax revenue from land tax then land tax is really high. Land tax is set based on the value of the land, so land in the city center becomes even more expensive than it is already and you increase the incentive for sprawl by not allowing the owners of the best land to recoup its value themselves, which deters investment there. (Property tax does this too, and moreso, because it taxes the investment in buildings as well; but trying to get 100% of tax revenue from property tax would be problematic too. It's bad enough as it is.)
> Most valuable land is owned by the wealthy, and most poor people rent, so I don't see how a land tax would fall on the poor more than the wealthy.
Rents are always proportional to ownership costs. If it cost much less to rent than own then the existing owners would sell their properties to by non-real estate investments until property values fell to parity. If it cost much more to rent than own then investors would bid up property values or build more properties in order to get those returns, until that wasn't the case anymore.
If you increase the cost of property ownership, you increase rents, and vice versa.
> A land tax cannot be passed onto a tenant, since the supply of land is fixed, and so taxing land doesn't changing the supply-demand curve (leaving the equilibrium price the same).
Tenants don't buy land, they by housing units. You can build more housing units or not on the same land.
> the tax will always be paid (either they keep it, and pay the tax, or sell it to someone else, who can then use it).
This is the basic flaw in the land tax theory -- that somebody has to pay the tax.
A piece of undeveloped land in the city center starts off as very valuable, so it has a very high land tax. Anybody who wants to buy it had better be getting a very large return. It makes it more profitable to buy one plot of land and build a 100 story building on it than to buy ten plots and build 10 story buildings. So enough people do that and break even from that to saturate the local demand for real estate.
But then there are those other 9 plots which are now empty, or still have 5 story buildings on them, next to the 100 story buildings. There isn't enough local demand to justify any more 100 story buildings, but they're paying the same land tax as the 100 story building next to them because the land is of the same type and in the same approximate location, so they're completely bankrupt. The land is worthless because the tax is more than the returns you can get from it -- you can't build another 100 story building because the rental market is saturated and its existence would lower rents to below your cost, but nothing else brings in enough revenue to pay the land tax either.
So you abandon the property, or donate it to a non-profit which doesn't pay the tax, and the tax is thereby avoided.
So in the most desirable locations you end up with a handful of very tall buildings next to a larger number of abandoned lots. That is not efficient land allocation.
Meanwhile in the suburbs the land value is not very high because it isn't as scarce (compare how much land is in the city center to how much is in the suburbs around it), and affluent people like to live there anyway, so everybody with money is living there and paying low taxes. And even there you might get the same thing -- a few 20 story buildings that completely fill a plot of land where people live, surrounded by empty lots.
With a landlord demanding rent that high, how could you NOT move? :) Either way, this gives me a flicker of hope that maybe I can negotiate my rent down a bit this year.
Though, in the Midwest you could have a mortgage on a five bedroom house for that amount.
Surely you know this?
I don't have town sewer but I have a septic system (tank and leach field) and that's pretty normal in more rural areas. I'm not sure I've ever heard of someone with a cesspool that needs to be pumped on a regular basis although I'm sure that exists. Septic tanks should get cleaned out now and then too but that's an every few years thing.
I do also pay for trash disposal and some things like that which are paid for by taxes in most cities but that's hardly a problem.
Our upstairs neighbours, who share a 3 bedroom apartment are also all out. One moved to Denver (job opportunity), the other two are finding a more affordable alternative outside the city. These are young professionals who enjoy a patio and drinks on a Friday.
Our landlord originally listed our unit back at $2,800/month but I see it's now at $2,500/month.
My anecdotal evidence of the shift :)