It makes sense only if you see taxes as a positive good, ignore the concept of ownership, and are pretty loose with the human suffering implications.
Housing is very expensive, but that's due to a failure to build.
Higher property taxes doesn't reduce the cost of ownership or make housing more affordable.
This is like saying we should rise the tax rate on food because people are starving in the street
What a bright boy you are
https://www.statista.com/statistics/187867/public-debt-of-th...
The low maximum property tax rate and systematic failure to tax full value created by Prop 13 is a reason for the failure to build.
(Now, actually, I think residential property tax is a horribly regressive tax, and its better to fund government by progressive income taxes, but there needs to be a funding allocation formula that gives local government more of an incentive for development; California has adopted some limits on discretion and consequences for not meeting targets as a stick, but that's not enough to encourage good positive planning.)
Only by indirect argument. IF homeowners were taxed more, they would be more sensitive to housing costs in general, and perhaps more inclined to expanding the housing stock.
Given that the government is funded, this would simply be a punitive tax incentive to motivate policy.
I don't particularly buy the lack of local government incentive. New development is already taxed at substantially higher rates relative to older stock due to prop 13. If expanding the tax base were a major driver of policy, then we would expect to be building already.
Also, a big shift in overall revenue from property tax to income tax. This is less stable source and tends to benefit the investor class over W2 earners.
My point was rather that props through 13 isn't what's driving the cost of housing up in California. In fact it does the opposite.
If Prop 13 were removed, taxes for new home buyers would go down, enabling even higher costs.
Vacant lots are taxed based on their purchase price, so there's no real reason to develop them when the land value keeps on rising while the taxes don't. Commercial zoned buildings aren't affected by prop 13, which leads to more revenue for the cities, hence them preferring commercial development to housing.
All that prop 13 does is favor people who bought real estate decades ago, at the detriment of everyone else.
You can always argue that the proportion should be even higher, but the proportion of income is certainly not lower
For example, one loophole during the ZIRP era was that one could get a very low interest rate loan (<1% APR, so effectively lower than inflation) against appreciated securities and use that money tax free. If the wealthy person passes away and gives the appreciated securities to their heirs, their heirs have a step-up cost basis which is the market value at the time of transfer, so no taxes are ever paid on the appreciation of the stock. The heirs could then turn around and settle the loan, tax free, as their cost basis matches the market value.
https://abcnews.go.com/blogs/business/2012/01/warren-buffett...
This is an anecdote but there's no reason to expect that this doesn't apply to his classmates.
So, yes; given all the rebates and loopholes and shenanigans that the rich and mega-rich can use, the proportion of income is lower.
IF you drop trash on your neighbor's lawn, that is an externality. If you refuse to mow their lawn, that is not an externality, no matter how much they have to pay someone else.
Efficiency is not an inherent good, and Pigouvian taxes on inefficiency are a huge moral hazard. Is it inefficient for a doctor to play with their children instead of work? Who are the decision makers?
I brought it up specifically in this context (and article about patent litigation) because I think it is potentially a good idea in some domains (like patent law) where the overriding consideration should legitimately be economic efficiency. I think it is entirely reasonable to design our intellectual property rights around the idea that the person or firm that can derive the most economic value from any piece of IP is the most desirable owner of that IP.
I was mostly picking at how you invoked externalities, which is a major pet peeve of mine. I feel that between sloppy economics and utilitarianism, the concept of externalities is invoked anytime anyone doesnt get what they want.
I think you’re saying the quiet part out loud. But you’re certainly right that there are many people interested in maximum tax and minimum property rights.
Today, we have this illogical situation where you can sell your property for $X but when the taxman comes, it's all "oh, but my property is only worth $Y!" It doesn't make sense.
When you pay taxes, there is a disconnect between your total income and adjusted income. Is that similarly illogical?
If a Jeff Bezos announces he'd be buying property at irrational prices in your neighborhood just as you are reporting your taxes and then changes his mind afterwards should your tax returns be affected by some oligarch's whims?
The value of anything is nothing more than an opinion. A sale is a temporary agreement of 2 opinions. The "market price" is someone's estimation of prevailing opinion. As the good book says, prevailing opinion can change from "hosanna" to "crucify him" in the span of 2 weeks.
Why shouldn't inland revenue have it's own opinion on prices?
Which is pretty on-point for Posner, who thought that a free market would solve the problem of racism and segregation.
If I had to propose a mechanism, I'd suggest using prediction markets instead.
Of course in the real world there would need to be some way to prevent "predatory" offers (where the "buyer" can't or won't actually close the deal if you accept the offer) but that seems solvable to me. You may have to put down a non-refundable deposit or escrow the sale price, etc.
So it might be better to establish a prediction market for any such asset that settles on the owner of the asset on, say, a quarterly basis. Instead of predicting the value of the asset, it predicts the owner of the asset at a particular price level. Instead of presenting the current owner with a bid directly, ownership transfers and tax payments would be handled exclusively through the market platform.
...
That said, this is all getting pretty complex.
Y’all underestimate the number of people with enough money to screw someone (or everyone) over just because they can.
Like when someone made a phoney valuation for a web site at $44B.
That can easily be maliciously abused too, using it to drive someone's taxes up until they're forced to sell.
This is mostly a thought experiment so there is not an actual detailed implementation plan by the authors. But my sense was that it's not that you actually have to sell immediately but more like someone can offer to buy at $X and then you either have to sell or $X becomes the new declared value for future tax payments.