Land, as apposed to the property on it, is raw nature. If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it, balances with the common interest in it.
Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
And in turn, only taxing land, not property, incentivizes increased development, as higher property investment amortizes land tax against higher returns.
Greater investment in housing being just one way land tax, without property tax, incentives greater productive use.
So many things align for higher growth in ways that more evenly benefit everyone. But our relationship with land is over-complicated, and that is both the reason for change, but the reason change is so hard.
Small attempts have failed, but then, for the rich who can hold land and reap growth in value that outpaces the taxes they pay on it, that remains another inefficient/negative-externality, that pays off for them.
The hard part is that we've structured life such that you are on a fixed income at the end of your life in no position really to deal with inflation. At least when you are still working, in theory at least your wages will go up with inflation. This is really why prop 13 happened to pass at all: the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
The first time I heard about a Land Value Tax it sounded great. You can then go read where it's been tried and find that it's extremely hard to implement.
As just one example, if I place becomes popular then suddenly the taxes rise and people have to move out. Lots of people hate that idea and so vote it away. And then LVT no longer works.
> Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
That sounds like a terrible idea to me. Efficiency isn't everything. Small stripes owned by many people or by many smaller companies it's less efficient than one hedgefond owning everything and yet it has disadvantages.
A forest is much less efficient than a mall and yet, the forest might still be more important.
There's also no way for a government to effectively determine the potential value of land. Asking them to do it means inviting disaster and corruption.
The main problem with this view is that land value is laggard to the economy. You will end up taxing people more than what the land is actually worth during downturns, instigating a vicious feedback loop to cause further problems. The logical path is to tax money where there is money - income.
>If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it
This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free. Individuals can then rent out their land for others to use as needed. Forests/rivers/conservation lands etc. can be seen as truly a common inheritance of mankind and should generally have the least of commercial activity.
p.s - a govt will never agree to such an arrangement because it will not favor them.
So a data center pays the same taxes as a homeowner, foot for foot? It seems unfair at first, but then it occurs to me that data centers would not be so desirable if they were not paying higher taxes. If land value tax helped to pop the data center bubble it would make the more off-putting aspects (organic farming is a less efficient use of land than factory farms) more palatable. Why not have a hybrid approach, where the local community can decide to apply different types of tax systems to different types of land and land uses?
A hedge fund or a lawyer office with with a huge income but a a small office pays some tax. A sandwich shop close to them which barely had ends meet pays the same amount of tax.
I believe we should tax hedge funds much more than sandwich shops.
wonderful -- now take the modern case where the most fertile land, covered with farming, is converted to cement and home sales due to 100x immediate cash returns. The price? pavement is forever
If an island produces 2 burgers a day and has 3 inhabitants: one is rich, another is the poorest worker who can afford a burger, and the third is indigent, the rich person buys his burger, the poorest worker buys the second burger, and the indigent buys nothing, because there are only 2 burgers.
So a socialist sees this and claims he will tax the rich to give a burger to the indigent.
He taxes the rich as much as necessary to ensure that the indigent gets the burger.
As the worker tries to pay more for his burger, the price rises, so the socialist raises the tax as much as necessary to ensure that the indigent still gets the burger.
So the next day, the rich person buys his burger, the indigent buys another burger, and the poorest worker goes hungry, because there are only 2 burgers.
The result is the same if the socialist taxes the rich, prints money, or takes on debt. He always takes the burger from the poorest worker.
So taxes and public spending are always paid by the poorest workers. It does not matter where the socialist gets the money from: he always taxes the poorest workers.
> The land value tax can’t be dodged by leaving nor can it be passed on to renters.
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
Rent is a function of supply and demand, not a landlord's costs, otherwise we would expect changes in e.g. mortgage interest costs to be passed on to, but in practice we don't see this effect. 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?
Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the component of the tax that falls on the building. Tax buildings, get less buildings.
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.
That cost will, of course, be passed on to renters unless the rental prices cannot be raised at all.
If they can't be raised, and the costs end up being ruinous to the landlords, they will find other solutions like mass arson. That isn't hyperbole; this was a serious problem in the 1970s:
https://en.wikipedia.org/wiki/1970s_South_Bronx_building_fir...
That was obviously not acceptable... but it was predictable.
All legal proposals should be viewed like a chess move. Presume others will respond, and make sure you're ok with that response. In a sense that's also the point of the original article too, a law was passed without adequqtely thinking through what would happen.
Rents are already as high as renters can bear. If a tax is introduced, you'd expect landlord competition to drive down the landlord margins, not increase rents.
the rent is already priced to the maximum of purchasing power of the local renters ability.
if landlords were able to raise rent, they would have done that already as its pure profit for them. The fact that they can't, means they will have to eat any marginal tax imposed on them
The author probably has a very superficial understanding of economics. It's economics 101, like VAT, the cost will be passed to BOTH the renter and the landlord. The portion of each is dependent on market dynamics and hard to calculate.
This is the problem with governments who think they can synthesize value. They think all businesses can too.
If these communists succeed, they will use the very fact that a landlord cannot synthesize money to prove the landlord passed the cost to the tenant and seize the land.
LVT is incoherent, it pretty much only benefits people who are cash rich and land poor. Which is why it gets so much oxygen from tech elites with lots of cash and an inability to buy a house somewhere like mill valley, or wherever.
Essentially taken to the logical conclusion, there will be people competing for more cash to pay their increasing taxes on the same land, it doesn't fundamentally solve the problem. It's such a joke.
Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
I would care more about the broken tax system if the politicians didn't waste our tax money. Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
$24 B unaccounted for and lost that was supposed to be for homelessness.
$12 B already spent on high speed rail and they want $120 B more.
$50 B in EDD unemployment fraud during the pandemic.
This is just in California in the last year or two.
How much more fraud and corruption and incompetence is there that we just don't know about?
There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.
Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?
> If you let someone get to hundreds of billions in net worth
"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.
Norway, Spain, and Switzerland have wealth (net worth) taxes. Why don't we see the same outrage from rich people living there? Also, most billionaires get rich with equity in a business that they built. How else can we tax that net worth?
We're in a situation where it's already "too late". We can't go back 100 years. How do you propose we fix it, assuming time machines won't get invented soon?
Additionally, the state gets to tax you on what they say you’re worth based on the markets. That’s a pretty weird way to assign dollar value to someone instead of, say, looking at how many dollars they have.
While stock markets provide useful liquidity for investors entering and exiting positions, they are also rampant with finbro kids doing nothing more than jumped-up gambling. We don’t know which market trades fall into the serious wheels-of-capitalism bucket, and which are gambling, because we don’t have to know. The real world works in dollars so, to date, the state taxes people on the realized capital gain in dollars.
If a bunch of kids are selling handfuls of leaves to each other for a nickel each is the state now valuing my unkempt forest at $99bn? The state is welcome to pull up a chair and watch me try to sell 5 kilotons of leaves to every kindergarten playground in the country. If I succeed then it will take its cut of the capital gain. If I fail, it will not.
When the state starts looking inside the market black box and guesses, based on little Johnny and Becky’s recent playground trades, that I might be able to get at least $300 a tonne for my damp, rotting leaves, then the state is doing something at best weird and at worst unfair, and states doing unfair things is really bad.
Fix the system properly: when you inherit stock, you inherit the cost basis as well. Rinsing off capital gains liabilities through “buy/borrow/die” is the real villain here.
If the $100B+ was created through ownership of a company and is unrealized wealth, how would you have taxed it if not through a wealth tax? Nobody is getting to $100B by way of income.
If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
Property tax increases are hamstrung by Prop 13 and until that’s repealed, will continue to be.
And while the wealthy always threaten to leave when faced with higher taxes, the fact is that they never seem to actually do so.
The site is based around georgism whose fundamental premise is that taxing land is the universal solution (much like for republicans cutting taxes is their solution to everything: economy going great? We should cut taxes. Economy going poorly? Cut taxes. Deficit too high? Cut taxes.) I don’t put much stock in analysis by single-solution thinkers.
They're hamstrung by property tax increases being massively politically unpopular. Prop 13 only bans taxes on the value of land, there's nothing stopping politicians from approximating LVT by an "urban acreage tax" based off plot size in cities other than the fact that it'd get them all voted out.
Even the conservative states who supposedly stand for the individual can’t get anything like proposition 13 passed through their state legislature and it’s been over 48 years.
Whats wild is the commercial side didn’t get closed. I understand the argument for individuals or households (I don’t love it - I’m on the wrong side of it, but at least it’s somewhat defensible), but if you’re running a business and your income isn’t keeping up with inflation, that’s called failing.
Old voters like the house they brought 20 years ago for 100k being worth 1.5 million today. They also like not paying taxes on that 1.4m in wealth accumulation.
It drives me crazy that California voters will wave through every single regressive sales tax hike that is placed in front of them, yet they will crawl through broken glass to vote against a property tax hike on corporations.
If the SEIU healthcare workers union is going to amend the state constitution, they should chip away at Proposition 13 instead of amending the constitution to make a bad tax that encourages capital flight.
But neglects to consider why it won a majority of votes. Why did it? And how does Prop 13 relate to the more recent Prop 19, which substantially weakened it?
Why would someone spend their time online advocating for themselves to pay a higher percentage of their wealth to taxes than people who make more than them?
This is the reason I would leave if I was a billionaire. Living in California I never felt like my tax dollars got me anything more than they got me in other states and if the city/country/state got even more I knew it would go to some sort of tomfoolery like a high speed rail that doesn’t actually get built or a $1m bathroom.
I don’t have experience elsewhere but in Santa Clara county, the county assessor calculates a very much incorrect split between land value and value of the improvements (buildings) when they assess the property tax. Sometimes they just divide the total value by two and call it value of the land; in other cases the value seems to match reality more, and the value of improvements match the actual cash value (but not replacement cost) from insurance companies.
How would a land value tax accurately compute the land value?
Not all assessors do this accurately, especially in California, but there are many that do. This article includes a section on land valuation which summarizes and links out to various other articles about various approaches
There is a very weird but real phenomenon where it costs more to build/remodel in an upscale part of town. Roof repair: same roof, same company, two jobs 10 miles apart with wildly different invoices.
As I see it, the value in a wealth tax isn't just in a cash grab. It's about reining in the behaviour of the wealthy.
If you can cap individual wealth to eight or maybe nine figures, you take options like "bankroll major state/national elections on a whim" and "buy up major media and communications brands" off the table. As far as I'm concerned, these are things we can do without and probably have a healthier society as a result.
California's attempt might be well-intentioned, but it seems so weaksauce that it won't reach to the behaviour-modifying level.
The "why bother investing" mentality that's used to argue against Georgist land-taxes might be interesting applied to a high wealth tax too. If your stock portfolio is already approaching the cutoff line, will you press as aggressively for that last short-term bubble with long-term expenses?
Prop 13 should only cover primary residences. No vacation homes, no investment homes, no apartment complexes, no Airbnbs, no commercial properties, no offices. This single change would fix the majority of the state's tax shortfall. Going on about billionaires and not fixing this obvious loophole should tell you that people in charge aren't actually interested in solving the problem, just using populism to get votes.
I was talking to a friend about the billionaire's tax and this issue came up. Here's how I see it: either individually wealthy people stay here, and we take their money to build state capacity to even out the distortions created by their wealth, or, they leave, and the distortions fix themselves.
The easiest one to point to is property prices. Wealthy people buy land, and drive up the price of land and rent for everyone else. If a lot of people suddenly make a lot of money in San Francisco, in general, for me and most of the people I know, there's no "rising tide" that lifts our boats. Our income remains the same, but our rent goes up, and maybe our lives don't make sense anymore, and we have to move.
But if there's a wealth tax, and it encourages rich people to leave the state? Awesome. Go drive up rents in Texas or Montana or somewhere else. Or pay the tax, and then the state can use that money to build affordable housing.
Before you say anything: I lived through the 90s, and you can't trick me with "WOW YOU THINK THE GOVERNMENT CAN DO THINGS? WHAT ABOUT THE DMV???" Go somewhere else.
Perhaps I'm uniquely able to read and understand simple instructions, or maybe I've never asked the DMV to do anything especially complicated, but I've never had the DMV fail to do what I came there to have it do for me. The worst I've gotten from a DMV was having to wait for literally an entire day when I made the mistake of going to the San Francisco DMV to get something done, rather than doing the smart thing and going to an office in one of the nearby towns. It's... very stupid that there's a single DMV office for a city of -last I checked- nearly a million people.
The problem is the wealthy people can still buy and own the land without being residents. These billionaires "moved" to Austin or Florida or wherever, but they still own the same multi-million dollar mansions in the bay area or LA or wherever. They just spend less time in them.
I don't think that makes sense. The wealth tax, as written affects a pretty small percentage of "rich people". Most "rich people" will not pay a wealth tax.
So sure, let's say for the sake of your argument that everyone who would be subject to the wealth tax moves away. That won't move the needle when it comes to housing affordability in California.
So, ok, change the wealth tax so it applies to a lot more people. Ok, so maybe more people leave. Do you really think driving people with money out of your state will actually be good for you and the state? That's just not how economics works.
I don't think this assessment is connected with reality. Land on its own isn't valuable, its the labour and investment people put in while on the land that produces taxable value. Just because the land can't leave doesn't mean the value of the land stays. As long as the government spends more than it can collect, simply charging more people to operate will cause regular people to leave. The higher you tax above the laffer optimal you are just destroying value. My opinion.
The billionaire tax is an experiment, they did put the bar pretty high to measure how many families will relocate (that's super easy to track); once that's measured, it's easy to build a model to adjust this threshold to whatever is advantageous for the state and keep things in balance this way, where the outflow is carefully measured and weighted against the tax threshold. The "hard part" was just getting this to pass the vote; then they can adjust this threshold anytime as voters have already approved it. What isn't measured is that billionaires create jobs "around them"; and, implicitly, jobs will be created somewhere else; unfortunately this model will not measure that.
I’m not convinced billionaires “create jobs” in any meaningful numbers.
Sure, the companies that made them wealthy do, but the billionaires themselves? Doubt.
So if the only consequence of this is that the billionaires flee to Texas, with its regressive taxes, and take the wealth inequality and corruption that goes with them… I’m not seeing that as a bad thing.
I think the point of the article is correct; the issue with CA is everyone wants to live there, including rich people. If we try and tax them then they'll leave just long enough to not pay state income tax, if we tax property values then the state actually gets the tax and doesn't miss out on job creation or future revenue.
Red states have implemented low income tax with heavy property taxes (think Texas) with great results. and although I'm sure California would just manage to mess it up it's a great idea.
I would not frame Texas as having great results. If anything places should get as little like Texas as they possibly can. I mean they send you to jail for an abortion or a gram of weed. It's living under Shari-yall law.
I agree the proposed wealth tax is a bad idea, but raising property taxes is probably not viable. They are incredibly unfavorable to voters. No one who owns a home wants to pay rent, that's why you buy in the first place.
Personally, this is why I am fine with higher income or sales taxes.
> No one who owns a home wants to pay rent, that's why you buy in the first place.
If this is actually a common attitude, people are... ridiculous. Real property is a limited resource, and allowing people to own property comes with strings attached. This is a pretty normal thing in very many places.
But I do agree that raising property taxes in CA in particular is a politically toxic topic.
They just want continually delivered services from the city funded by taking out increasing amounts of debt or selling off new land in a ponzi scheme to fund existing obligations.
Sales Taxes are the worst ones. Burden on seller, burden on buyer, regressive. Income is more fair but easy to mask-out for the wealthy. Property is meh, Wealth tax is the best one. Assuming all were well designed.
Most land I bet is leveraged (hence the high price!) and taxing it will put pressure on home owners and investors. It is great for the truely rich who have a $50m mansion because it is chump change and will pay $375k which is approx zero but for someone with a typical house $1m it is $7500 which is less money for food and other household expenses and they may be paying a big mortgage already and not rich in the true sense.
Taxation ain't simple. There are always second order effects.
I am not against land tax but using it as a kneejerk levy could have unintended consequences.
Instead taper onto a reasonable land tax. Just raise taxes if you need more money in a fair and progressive way.
Of all the places you can avoid flight from to avoid tax California must be the easiest.
Since so much of land value is in downtowns, in a theoretical shift to land value tax, most of the increased land value revenue would come from vacant and underdeveloped parcels downtown. The median tax burden on single or multi family homes would actually be reduced. An example is this model of Spokane: https://landeconomics.org/reports/spokane-report#:~:text=sin...
And a lot of the time, it’s those truly rich people who own those vacant/underdeveloped parcels in downtowns.
What would happen if a state just let its government fail? Close all the offices, fire all the the people who spend the day thinking about money,laws, email, and other ways to justify their jobs? Just pay the police from local tax. Oh wait, local taxes already pay for the police. We have too many layers of government. Garbage collection, fire departments, public works - all are locally administered. Why do we need a state layer?
The government is simply the gang that won (vs the other gangs).
If the government fails, then you briefly get anarchy and violence until people organize into groups and use more violence to quash the anarchists. This repeats until there is only one group remaining, and that group is the government going forward.
Georgism aside, the theory that very rich individuals will move if targeted for taxation tends to be _mostly_ false, when it's actually tried (though it's true for companies to a large extent).
If this were to go ahead, how many people would actually move? "I'm going to uproot my life to avoid paying an amount that's kinda immaterial to me" would be mildly weird.
California, more so than other places, have a lot of paper billionaires living a middle-class lifestyle because these billionaires are tech founders that hold illiquid ownership in their own startups.
I am less worried about the one time influx of tax revenue than I am about this state’s wanton inability to balance a budget or show a modicum of fiscal restraint.
I think the author may be right about multiple points but I think it doesn't matter? This is one of those, don't let the perfect be the enemy of the good situations. A state-level, one-time wealth tax _is_ something that billionaires can run away from. And this law seeking to apply to people who lived in the state _before its passing_ seems structurally sketchy. This article has some fair concerns.
But we have a one-time billionaire's tax proposal on the upcoming ballot, and we don't have an LVT proposal on the ballot. Saying that the Billionaire's tax will be less effective than promoters say maybe true -- but we're definitely going to get exactly $0 from a statewide LVT for 2026. If the Center for Land Economics gets an LVT on the ballot in a future year, I would strongly consider voting for it -- but that's not on its own a reason to not do the Billionaire Tax this year.
What _would_ be a convincing piece of info, and which no one knows, is what the long-term impacts of a one-time wealth tax are. E.g. Zuckerberg is moving his residence to FL but Meta isn't going to stop employing Californians. And if the state is _credible_ in saying it's a one-time tax, will the billionaires who fled come back after it's done?
From what I can tell the residency change for a billionaire is about how often you fly to your various homes. Zuckerberg I think hasn't gotten rid of his Palo Alto or Lake Tahoe property, he just added a FL house and will have a cap on how many days per year he's in CA right? This isn't like a normal person with 1 house relocating.
"None of this is really about billionaires; California reaches for exotic taxes because its normal one has been broken since 1978."
The author then goes on to talk about CA's property taxes ... but LAND HAS NOTHING WHATSOEVER TO DO WITH THE BILLIONAIRE'S FORTUNES!!! Zuckerberg did make his money trading property, he made it through companies.
Nothing about California's property tax decisions have anything to do with 99.9% of Zuck's (and others') wealth not being taxed!
> Nothing about California's property tax decisions have anything to do with 99.9% of Zuck's (and others') wealth not being taxed!
That may be true, but you appear to have missed the part of the sentence you quoted that came after the semicolon:
California reaches for exotic taxes because its normal one has been broken since 1978.
Property taxes make up a large portion of many states' tax income. 1978's Proposition 13 made it so that California is -more or less- unable to tax the actual value of any property in the state. Wealthy people who've held on to property for decades get to borrow against the "market value" of that property, but the value of the property used to calculate the tax owed to the state only increases at a maximum of something like 2% per year. This means that you'll see long-term landlords (and holding companies) getting the financial benefits of a -say- multi-million dollar property, but the state only gets the tax of -say- a multi-deca-thousand dollar property.
Because of Proposition 13, property tax increases in California will affect an extremely tiny slice of landowners, [0] so it must turn to other mechanisms when it needs more tax revenue.
In regards to private "wealth creation", it turns out that money is fungible and you absolutely can built a bunch of wealth off of a mortgage if the "market" value of that property has increased by a huge amount, but the costs of holding that property haven't increased much at all.
[0] This doesn't contradict what I've said, I've just left out some details. A quick summary:
Ignoring a few exceptions, when a property changes ownership its property tax is adjusted to be based on the current "market" rate. When nontrivial improvements are made to a property, the property tax is adjusted to account for the "market" value of only those improvements. [1] Some "clever" people have been known to get around the "property changes hands" trigger by making the property be owned by a company and distributing private shares in that company. Want out? Get rid of all of your shares. Want in? Get shares from someone who already has them, or maybe convince those who are in to make more for you. The property is still owned by the company, so its tax is not adjusted.
[1] It's important to note that repairs are not improvements. It's also important to note that the government can choose to ignore all of these rate-reset rules whenever it wants, as it did when all those extremely wealthy people in LA got their houses burned down in that big wildfire that hit LA.
So what? The goal is to fund the government. You may want to stick it to Zuck and other billionaires (and I admit, there's appeal to that), but if fixing our broken property tax system will fund the government (without causing mass displacement as people's property taxes go up), then we should do that. It's a fix to a structural problem, and a fix that will be durable and be reliable in the future.
Taxing billionaires is not a durable fix to budget deficits. The article very clearly explains why this is the case.
If the tax is calculated based on residency at the time it was earned or granted rather than when it vested or was sold then it doesn’t matter if they leave.
I don't live in California but the article mentioned Proposition 13 which capped property tax rates and the reassessment is only when the property changes ownership?
Is that right?
That seems unfair to people who recently moved compared to the people that stay in their house for decades.
Reading more it looks like California created alternative types of property taxes like Mello-Roos.
In my state we used to have property tax values reassessed every 8 years, then they changed it to every 4 years. But my bill goes up every year. I started off paying about $2000 25 years ago and now it is about $5000 but my property value has also increased about 3X
It seems like if you just taxed an ordinary house at a percentage and you taxed a billionaire's huge house at the same percentage that you would get more money from the billionaire without needing to create special laws and special taxes.
Yup, Prop 13 is a mess and is a big part of why housing in CA is broken. But it's politically toxic to even mention substantial reform, let alone abolishing it or even just phasing it out over time.
The article contains significant inaccuracies. Individuals in the lower and middle economic strata need not advocate for the interests of billionaires or those with assets exceeding $100 million; these individuals have already benefited disproportionately.
Over the past 50 to 60 years, wealth concentration in many Western nations—coupled with the relocation of jobs to East Asia—has primarily favored the upper class rather than the middle class. Similarly on a different battlefield, Brexit has not served the majority of the United Kingdom’s working class population the average citizen has experienced a decline in wealth. In Great Britain, most residents did not benefit from North Sea oil revenues, which were largely directed toward affluent groups—a contrast to Norway’s more unselfish. forward thinking approach of establishing a sovereign wealth fund which benefit it all to the consternation of the wealthy well connected conservative class within Norway.
Remarkably, adherence to sound financial principles—living within one’s means, settling obligations, and saving—can enhance long-term economic stability across all income levels and even at the governmental level.
Much like Proposition 13, voting in favor of Proposition 40 is a straightforward choice. Historically and currently, western political leaders have failed to act in the best interest of the majority usually, they have to be dragged along kicking, and scratching.
It shall be interesting will the middle and lower end carry water for the wealthy again and vote against their interests to save the lucky 214 billionaires in California, that’s right you heard it right, 214 out of 40 million people…
The billionaires won’t be going anywhere. There’s a reason why the West Coast, California, and Oregon are what they are, when compared to the rest of the United States outside the Northeast, climate, higher education, better business opportunities, better political climate for the population, particularly if you look a little different or have a different religion in comparison to a large part of the United States, particularly after 1945.
Brexit is such an odd case, that it seems not worth comparing.
It's so tied into British classicism, and the generally pathetic nature of the middle class English, that trying to extend the results outside of the UK produces absurd ideas.
Essentially the British people took a (not particularly economically motivated) deal to reduce migration, at the cost of economic connection to the EU.
This upset the UK political class greatly, so much of the following policy was about punishing the population, rather than long term economics.
The land value tax is a good idea, but the pure conceptualization that die-hard Georgists have, in which it's a flat tax, doesn't seem in the same line as the billionaire tax. What'd like is just a (drastically) revised version of Prop 13 in which those protections apply only to the first $N of property value. We can effectively tax the real estate of billionaires without having to tax everyone else. I would like to see taxes on luxury properties approach 100% of the property value, to make it extremely painful for anyone to own such properties, and encourage them to be split up among smaller owners.
Feel free to look up the percentage of the CA tax base by 50th, 90th, 95th, 99th and 99.9th percentiles. The myth that billionaires don’t pay their fair share is just that - a myth. A lot of lower income people don’t pay any tax at all and have their state services entirely subsidized by the rest, the vast majority of which is paid by the richest 5%. Every time I see a call to tax the billionaires I know I’m hearing from a fool too partisan to look at really simple to understand numbers.
The effectiveness of other taxes aside, the argument that billionaires will leave if taxed at a higher rate isn't compelling.
Billionaires are not struggling to meet their expenses. If you raise their taxes, they aren't suddenly unable to afford things. They don't need to change their behavior just to get by. A carbon tax forces average people to drive less, but doesn't affect billionaires at all.
Billionaires live where they want to because they can afford to. They're not going to let themselves be chased from jurisdiction to jurisdiction because of numbers that have zero impact on their daily lives. That's what happens to poor people. If California raises taxes on billionaires, very few will actually leave. They're where they want to be and they can afford to stay there. What's the point of having a really big number in your bank account if you have to move to the middle of nowhere in Alabama to keep it from falling just a little?
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Edit: Yes, some billionaires have changed their tax residency, but not necessarily their physical location. They likely still own properties in California and can likely be found on them rather a lot. This is evasion, in spirit if not law. Taxing land is just one way to make them pay. Others should be pursued as well. The argument that we shouldn't tax billionaires because billionaires are good at not paying taxes is complete hogwash.
It may not be logical, but money effectively turns into a scoreboard at a certain point. The ultra-wealthy care whether they show up to the yacht club in a 100m or 150m yacht.
That individuals won’t optimize their wealth beyond $100m, $1b, or really any number just doesn’t square with observable behavior.
Starting a business self-selects for people that desire money (over other benefits).
The purpose of a business is money (otherwise you start a hobby or charity or something non-businessey).
Being very successful at business is a selection bias for people that are highly competitive at chasing money.
There's a bunch of traits in very wealthy self-made people due to the filter they have run through.
Tax too much, and we kill the golden geese of the economy. Examples abound around the world of crappy economies that can't afford good socialist stuff because they've demotivated the rain makers.
If you are rich, you want to be in places where you can enjoy and show off and well be rich. Living in some third world or second world hell hole or some deep red state with no mountains or beaches where you can’t drive and enjoy your fancy car just would not be fun it’s basically the reason why you wouldn’t want to be rich from America and live in Mexico or further south.
Not to mention your businesses need to be in relatively affluent areas where most people can afford your products and from an educational standpoint, most of the better schools are on the west coast or are in the upper east coast.
Worry. about the other 99% maybe more precise, the other lower 90% of American Society.
The article claims that 6 individually named billionaires already left (presumably recently), and another is likely to leave if he loses his court challenge.
This is a strange argument coming from the side of the argument that usually talks about billionaires being greedy and doing anything to make the numbers go up even though they can't feel the difference.
They can certainly afford it but they obviously like their money to stay theirs and like getting more of it, not less.
> the argument that billionaires will leave if taxed at a higher rate isn't compelling
I agree with this. California’s climate and culture will keep many a billionaire within tax nexus reach of the state. Of course, this isn’t a strategy every locale can pursue, but I don’t see a reason for California not to exploit its advantages.
> The land value tax can’t be dodged by leaving nor can it be passed on to renters
Of course you can. You just charge more. Yeah the market dynamics can put a cap on it but the Bay Area mints millionaires like there’s no tomorrow. They can pay.
But I think the purpose of a wealth tax is precisely to get rid of greedy billionaires.
So if they vote with their feet and leave, then that's an even better outcome. Now they can't manipulate the government anymore. They can go manipulate and continue extracting wealth from some other place.
Yeah because they got billions by extracting it like mosquitos. It came mostly from your billions I assume. Without that it would have been all yours. Clearly you have zero concept of how an economy works.
You know the extraction is more like 10000-to-1 than 1-to-1.
But in essence I do believe that I (and thousands of others) could have had at least $100k more net worth if they hadn't monopolized all user-acquisition channels and if they hadn't helped bring about the many laws and regulations which made this possible.
I have no ill feelings towards them but I just don't want them in my state competing against me for limited resources using money which they acquired through an unjust scheme which I was coercively made a part of but which I never agreed to and have been protesting for almost a decade (on deaf ears).
It's not personal or even saying anything negative about their character or abilities. From my perspective it's just pure self-preservation. They either need to contribute more tax to make up for the injustice or they leave.
When they sell their assets, it makes those assets more affordable for the rest of us. So any forced sale is good for society. I don't see any issues with it. We were/are forced to prop up their stocks through government contracts, grants and regulatory monopolies... So they should contribute something on their end too.
And I don't care about the "jobs they create" - They created jobs for my competitors to get easy money in cushy jobs. I want those jobs gone too! I don't want FAANG employees bidding up house prices in my area.
I only want to compete against people who are playing by the same rules as me! I don't want to compete against people who can rewrite the rulebook as we go, to suit them.
Well Mamdani's pied-a-tierre tax was specifically a real estate tax, levied on the real estate of people who don't have residency in the city. It's a marginal tax in the grand scheme of things, but unlike the billionaire wealth tax, it actually works, because the real estate can't move. And the owners can't just threaten to leave because they've already left, that's why the tax hits them.
Not sure if anyone could get such a policy change made given that California politics is now just "Whatever the California Democratic Party Wants" and they are very rigid in the ideas they accept.
But I think the proposal being discussed is 1000% more consistent with the principles of a free, non-communist society than the crazy "wealth tax," which sets the precedent that if the government thinks you have "too much" stuff, they can just declare that to be so, and come and take it. Given that the people in charge of drawing the line between "so rich that we need to take your stuff" and "not that rich" will be the same people who have blown up the state budget, I don't see why anyone would trust them.
(No, I'm not Zuck's sock puppet account -- I expect it won't be my turn for "wealth" confiscation for at least 5 years, worst case.)
You’re just carrying water for him. Zuckerberg is a winner. Zuckerberg and the other 214 billionaires in California will be fine you don’t have to suck up to them they’ll be ok a billion times over.
wealth taxes are from the old roman republic. the wealthy showed off their worth to each other by how much they could pay in taxes.
its not particularly crazy and is far older than communism or socialism which have the much more straightforward setup of seizing the means of production rather than taxing it.
however, it didnt stop the ultrawealthy from seizing power for themselves
As a rather economic left European person I think this:
Last week California certified a Billionaire Wealth Tax for the November ballot: a 5 percent one-time levy on the state’s billionaires, paid out over five years, to raise about $20 billion a year for health care, food aid, and schools after federal cuts
Is just flat out crazy.
To pretend that politicians who are in a perpetual political battle for short-term survival will somehow use this weapon of mass financing responsibly and only once it comically absurd.
1. If wealth was only motivated by taxes and was going to leave, it would've left already. Fact is, billionaires don't want to live in Tennessee;
2. Nobody is doing the right thing to tackle any of this, including California.
The article mentions California has land and that's the key point. Unfortunately, California homeowners have been coopted into voting against their own interests to raise property values. If the house you bought in SF in 1975 for $80,000 is now worth $3M, you still only own 1 housing unit's worth of wealth. And that housing cost is an input into everything you need to buy because all the workers required for those things have to be paid high enough to pay those exorbitant rents.
Let me repeat that: high housing costs are an input into everything that you buy.
So what needs to happen? We need to stop treating housing as a speculative asset. It's simply stealing from the next generation. Worse, it's diverting investment capital from productive output because land has become the asset with the best tax treatment, highest returns and most government protections. So what does this look like?
1. Some form of land value tax. The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable;
2. Punitively tax land hoarding including second homes. We could give discounted rates to primary residences of state residents. Nobody else should get a discount. This would mean repealing Prop 13 and that's never going to happen. As an example of this, I'll bring up Prop 19. In CA you can inherit a preferential property tax rate. Prop 19 proposed to limit this to only one property could inherit this preferential rate and it barely passed (51% IIRC). Do we think that 49% of California voters have multiple properties that have property tax rates set 40+ years ago? Of course they don't. It's an example of how people vote against their own interests;
3. Part of what sold Prop 13 originally was the idea of pushing seniors out of their homes with property taxes. Well, that gave Disneyland a tax rate that was set in the 1960s. California should do what Texas does: you can defer your property taxes until you die if you're a senior but there's no capped property tax rates like incumbent SF residents have and no inherited preferential property tax rates;
4. Wind back the preferential collateralization of property for mortgage debt over time. Residential property lending now dominates bank lending and earnings. It's significantly harder to get finance for any form of productive output;
5. Wind back over time preferential tax treatment for home ownership.
Do I think any of this will happen? No.
Oh, one of the worst things to do is transaction taxes, often called stamp duty. This is where you pay a percentage of the value on purchase. This really hurts mobility. I guess it's fine if it's only on the luxury end of the market (CA's is at $5M+?) but it's not a good idea regardless.
The other part of this is to provide social housing like Vienna. The government should be a significant supplier of affordable quality housing.
> We need to stop treating housing as a speculative asset.
This kind of assumes the only reason a house appreciates in value is because people are "treating it as an asset" rather than "the house I bought 30 years ago in the middle of nowhere is now smack dab in the middle of a very desirable area." At that point it's simple supply and demand, not some homeowner being greedy.
> The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable
This makes the fatal assumption that just because a house is worth dramatically more than what you paid for it many years ago that your income must have risen just as dramatically. "Oh well, too bad, sell your house and deal with it." Maybe people kind of like living where they've put down roots and don't want to be punished for something outside of their control? Any proposal that boils down to "pay more or fuck off" is not going to go over very well.
> We need to stop treating housing as a speculative asset.
Something I've been yelling from the rooftops.
Housing can either be affordable, or it can be an investment that's bought, rented, and sold for the sole purpose of profit. It's not possible for it to be both.
People expect their house to appreciate faster than inflation, but all that does is rob the next generation of home ownership.
And now, when mom and dad downsize after the kids move out, rather than selling the house or pass it to one of their children, they rent it out.
Alternatively, they keep the house, but get either a reverse mortgage or a cash out refi to survive until they die, at which point their kids can't afford to buy it from the bank.
Increase taxes on rental income on single-family homes and double the property tax on vacant homes to discourage hoarding.
Encourage building upwards to increase housing supply. This can be done via tax breaks or subsidies. Especially encourage multi-use buildings to make cities walkable. Stores/restaurants at the street level with apartments above.
Ditch or reform/restrict the 30-year fixed-rate mortgage. Remove barriers to building more housing. Other stuff, but you can do a web search, I'm sure.
California is full of people who do not understand how investment works and want it gone. This is progress missing from progressive. It is the social missing from socialist. Ists and ivs with nothing, merely a pack of stupid ideas. The residual is reality: no-teeth, drug-induced stupor sleeping in street squalor and their rent-seeking enablers cozying up to the tax authorities.
California already has a property tax, about half of which is based on the land value, and the other half on the structure on the land. So this is not some brilliant idea, just a renaming of what we already have.
If the author is suggesting to repeal Prop 13, that is also not a new idea, and has been discussed for decades. Good luck.
Which economic system are you critiquing? I would tend to agree, since I think wealth taxes amount to a breaking of the 8th and 10th commandments. But I also think some would argue that the consumerism (envy) that often drives capitalism is a form of covetousness. I think the counter argument is that capitalism does not require consumerism, and that consumerism (envy) can appear in any economic system.
not good believer in christ would ever participate, when jesus made it clear you are supposed to freely give away everything you own to the poorest among us
It's covetous to expect someone else to give you a part of something they worked for and you contributed nothing to. One of the basic 10 commandments is not to covet your neighbour's property; envy is a sin.
But, you're right, when someone suggests that we poor are just envious of the ultra-rich and that is why we want to tax them, I assume that they think we ought to look elsewhere than the wealthy for taxes. Which kind of suggests tilting toward a more regressive, less progressive tax system.
Introduce a ballot measure that removes the allowances of Prop 13 on retail real-estate and I suspect you'll find it's not political suicide at all.
I think the idea is that if the market demand is such that it allows them to raise rents, they'd already have done it, whether or not expenses justify it.
Did tariffs raise prices? Or did prices stay the same because "if the market demand is such that it allows them to raise [prices], they'd already have done it"?
It won't grind to a halt. The owner will sell, because they can't make the business work.
At what price will they sell? At whatever price a buyer who thinks will make it work. And by "work" there are many definitions, from continuing operation at current rents, to building more units on the land so that it generates enough income to pay the tax.
Land value taxes shift tax burden away from productive use of land and on to unproductive uses of land. The people who pay more are land speculators and those with empty lots, and the people who pay less are those productively using the land, which is 99% of homeowners and businesses.
So what happens then? High enough property taxes could in theory result in a situation like Detroit where the land value drops so low that properties are abandoned, with no buyers. But that seems unlikely in California?
At less of an extreme, there are still buyers, but they offer less money so they can still make a profit. So, the property tax basically comes out of land values. The current owners lose money on the property. It's the opposite of the windfall profits that California property owners have gotten from rising land values, taken out of whoever owns the land now.
For the next owner, their mortgage expense is lower, their property tax is higher, and maybe rents and profit margins stay about the same.
Notice that if the demand is there, falling land values doesn't result in lower rents. If your complaint is that the rent is too damn high, higher property taxes won't fix it. Only more housing does that.
I'm a bit skeptical that it would really work out that way. In California, we can have the odd situation where the current owner pays low property taxes, the new owner will pay higher property taxes, and yet property prices get bid up, and whoever buys it has to pay both more property tax and a higher mortgage. But they can still afford it, because there are a lot of rich people out there.
If the assessed land value is actually correct, then someone can make that land work profitably, by definition. That might mean bulldozing a single-family home and building a 4-unit building, for example, but it's doable.
If the assessed land value is incorrect, then that would need to be fixed.
Yeah, that's unlikely. There are certain classes of renters it can't be passed on to during their rental term, but I'm guessing it can and likely would in general.
People can also sell their land/homes and move. It's less liquid than other assets, but less doesn't mean people won't sell/leave.
In Massachusetts it’s legal to pass on real property tax increases during the term of a residential lease, provided the lease contains specific clauses. (Most leases do, as a result.) And most commercial leases are triple-net, meaning the tenant is also on the hook for increases.
I would be surprised if most land consumption taxes (whether structured as property or land) would not get directly passed through to the beneficial consumers of that land quite quickly, or for their privilege to consume that land to be terminated/non-renewed at the expiration.
One of the benefits of a land value tax is that it has zero dead weight loss: because there's a fixed supply of land, the tax won't cause less of it to be around, and you don't lose out on the beneficial transactions that property tax can prevent.
There are several key benefits and I like the theoretical soundness.
My primary concern is that there are generally no market comparables for undeveloped land in developed areas.
If I believe it’s over-stated, I can appeal my property tax assessment by using comparables for nearby developed property. There is no equivalent market-based process for land values alone.
This is a reasonable and common concern, and one I shared until I looked into it in fine detail. Turns out it's far easier to estimate the value of land that things sit on than the entire property value, and most of the country actually operates on continually updated estimates of total property value rather than just land.
There's several anchoring sales nearby, you can regress out from all sales, etc. etc. And it's smoothly varying for nearby parcels, with very little change!
I will read that link later tonight (thanks!), but this still seems like a system where a particular property owner could be “targeted” (politically or economically) and suffer without reasonable legal recourse.
It's actually much harder to target a particular owner, because it's based only on land area, and the value of land in a general area! Property taxes are much much more susceptible to targeting as individual properties are much more variable and there's far more judgement about individual buildings and the potential value of a building.
Great! I’ll take all the oceanfront/riverfront land in an area and all the land immediately adjacent to major metro stops, please.
This highly local variation in land value does not seem to be adequately addressed n the California link above either (other than “The estimation runs at the level of each property category within each California county or census tract, using parcel-level data”, which does not seem fine-grained enough to cover waterfront property).
Surely the land value overlooking La Jolla or Malibu is worth far more than the lots just one block back. And those lots are likely to have more expensive improvements on them in any taxation system, but at least in a property taxation system there is a direct market reference to come back to rather than just an assessor’s judgment.
How much is the dirt at 28824 Cliffside Dr, Malibu worth? $5M? $25M? $50M? $75M? What does the census-tract level estimate come up with? How does that compare to 28867 Cliffside with an ever-so slightly larger lot, both in Census tract 8004.12?
In California some percentage of certain developments need to be rental controlled, so those are exempt from increases for those lower income folks, but I'm sure the difference would be spread out among everyone who isn't rent controlled.
I co-wrote the article. Neither Greg nor I are single taxers. We think LVT is better than a poorly designed wealth tax, but we are not single tax maximalists.
I hope we agree that we need more taxes, it doesn't matter if they are taxes on billionaires, taxes on property, taxes on sales, taxes on crypto, or taxes on the poor. Without taxes we can't have a civilized society.
The number of different taxes is constantly increasing, obfuscating the total tax burden, and making democratic accountability almost impossible. Additionally, tax collections are already at a historical high, while government deficits world-wide are also at record levels, with services on the decline, and no realistic prospect of balancing budgets. This is true for most western countries.
Given the current situation, I do not agree that "we need more taxes", but would welcome your clarifying exactly what you mean.
For a long time I agreed with you, but seeing how the tax money is spent I cannot agree any longer. In most cases government is no longer even spending the money itself, instead it is giving the money to NGOs.
I would much rather see people keep more of their dollars and use them to 'vote' for the products and services that benefit them most, via their purchases.
It would be interesting to run the counter-factual on the EPA. Lawsuits around pollution were already increasing significantly prior to the EPA even company vs. company.
Would the resources have been better spent on a more efficient legal system, then leverage that?
Taxes aren’t 0 right now, nor particularly close for anyone being taxed. Your statement supports taxes as a concept at all, but what’s the specific argument that they must be more than they are today?
I think we should start with changing taxes on corporations/companies, specifically being able to indefinitely write off expenses against income regardless of size/etc...
Most companies take profit eventually, but if it's possible for a company to decide to never take profit and grow/acquire perpetually without paying any taxes on gross income, that's a problem.
That'd be like individuals being able to deduct living expenses and having uncapped pre-tax 401k contributions.
The ratio of the economy that gets collected as taxes has only gone up over time. Do you have an idea for how much should be collected as some ideal ratio? At what point do the effects of taxation become counterproductive?
Well, the general economic consensus is that for income taxes, the revenue-maximizing peak of the Laffer curve is around 65-70% [1]. Revenue maximization isn't necessarily the right primary goal, though.
Same back at you. Clearly you think they’re too high. So what is the correct ratio?
The straightforward answer is there is no correct ratio. The best tax regime is the one that allows for sufficient funding of necessary and desired services and long-term economic investment while also balancing wealth creation with wealth inequality. That number isn’t fixed and it’s clear that it shouldn’t be evenly borne by the population as a whole.
I made no such claim. I simply asked someone who said that we can all agree taxes must go up to what level they were referring to and how they chose the number. If there is no fixed ratio such as you say, then their claim is clearly false.
Sorry, but this is bullshit. You’re not fooling anyone. If you think the GP needs to provide an ideal tax ratio, so do you. You don’t get to opt out and pretend you’re above it all.
You don’t understand the natural order of things: productivity for you(the worker constantly told to do more), not for me(governments of all sizes, middle management & execs, dumb owners).
If the government keeps doing this, land owners will blow their wealth on the only things that government can't easily tax: blow and hookers.
But leave it to the ineptitude of California liberal politicians to always find a way to steal from the citizens that have the ability to produce and save, in order to transfer the wealth to illegals, politicians friends, druggies, and foreign powers.
If you're participating in a conversation between adults in the 21st century, yeah. We've got a word for it, even if it's like garlic to the private equity vampires on this website.
“ Larry Page, Sergey Brin, Peter Thiel, Don Hankey, Travis Kalanick, and Steven Spielberg, worth roughly $540 billion combined — had already moved their tax residency out of state before the measure”
Imagine being worth billions USD and rather than being a part of the solution to support the state that helped build your wealth, you spend your money to just get around paying your small share.
It is trivial for the wealthy to buy another house elsewhere and “move” their primary residence.
The greatest feat that Mao achieved was to take the land that had been tightly gripped by generations upon generations of owners and to shake up the distribution of it so that the land could produce again. People naturally want to work the land, but you end up with suboptimal inertia because owners just end up letting it sit fallow if it doesn't immediately return. It's how you turn a billion serfs into a billion entrepreneurs.
We're already way past the point where a creative cocktail of 10 different progressive taxation schemes could feasibly fix the root of the problem, and you feel this especially if you were born after the year 2000. You're more likely to see results if you pick up a red scarf than if you pass a higher wealth tax, sales tax, land tax, consumption tax, estate tax...
The famine is unrelated to the land distribution but also the farm land distribution didn't last. They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
My understanding is the famine was essentially the middle managers of these collectives over stating yields and being too afraid to admit their lies. To maintain the lie, they shipped off food while the farmers starved.
> They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
Painting it as if Mao era collectives are the same as the state quotas that exist today is highly misleading. The HRS was 1979:
"The household responsibility system replaced collective farming." [1]
Broadly speaking, the collectives can and should be blamed for the famine, just as in the Ukraine. Getting into the weeds on the specific mechanisms is fine, but using it to undermine the broader lesson is apologetics.
Famine along the yellow river and yangtze river has been happening for thousands of years across all dynasties, its specifically what land distribution was meant to fix, and since 1960s there hasn't been a famine since. My parents and grandparents lived through it and left cities to work in countryside fields during the cultural revolution. You tell me how the famine fits in and I'll let you know if you're accurate or not.
I think not. Your framing thus far is so wildly inaccurate that I believe this is a propaganda account, and hesitate to engage further. But in case any not familiar with the history read this in passing, I will leave a reference to an actually reputable source:
"Mao’s violent collectivization and forced labour campaigns during China’s Great Leap Forward (1958–1962) led to as many as 45 million deaths in what is widely regarded as the worst famine in human history." [1]
those who advocate for land value tax are usually advocating for single/minimal types of taxes (and, in fact, against sales and income taxes) rather than a cocktail of them. "Single Tax" predominantly refers to a single land value tax. https://en.wikipedia.org/wiki/Single_tax
My point is that a single land value tax would have the same effect as piecemeal improvements to current tax portfolio - none of it would fix the inertia already priced and baked into the system.
> A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous."
> To put it bluntly, it is necessary to create terror for a while in every rural area."
Let's not glamourize the Mao's land reforms. It required the killing of 1-2 million people. Even then, the collectivization was a massive failure - not only did the peasantry not get to enjoy the benefits of land reform, a further 15 million people would die from the resulting famine.
The deep irony is that Taiwan was actually able to do the same reform but with much better outcomes, with much less loss of life or political violence.
Taiwan did not have anywhere near the land distribution occur under CKS/CCK, nor the same veracity of landlord clique ownership. And, you're further wrong in that a big part of white terror was specifically due to 外省人 owners of factories and farms, from land stolen from the aborigines. The white terror wasn't by any means less violent and senseless than cultural revolution.
Land, as apposed to the property on it, is raw nature. If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it, balances with the common interest in it.
Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
And in turn, only taxing land, not property, incentivizes increased development, as higher property investment amortizes land tax against higher returns.
Greater investment in housing being just one way land tax, without property tax, incentives greater productive use.
So many things align for higher growth in ways that more evenly benefit everyone. But our relationship with land is over-complicated, and that is both the reason for change, but the reason change is so hard.
Small attempts have failed, but then, for the rich who can hold land and reap growth in value that outpaces the taxes they pay on it, that remains another inefficient/negative-externality, that pays off for them.
The hard part is that we've structured life such that you are on a fixed income at the end of your life in no position really to deal with inflation. At least when you are still working, in theory at least your wages will go up with inflation. This is really why prop 13 happened to pass at all: the idea of being displaced at the end of your life out of the home you already paid off due to market forces you aren't even a participant in is actually widely unpopular even if it makes better economic sense.
The first time I heard about a Land Value Tax it sounded great. You can then go read where it's been tried and find that it's extremely hard to implement.
As just one example, if I place becomes popular then suddenly the taxes rise and people have to move out. Lots of people hate that idea and so vote it away. And then LVT no longer works.
> Economist Henry George in the 1800's, pointed out that taxing land, but not the property on it, incentivizes efficient use of land, because holding land for its passive (parasitic) return even when underused, becomes unprofitable when the land is taxed in proportion to the value it can enable.
That sounds like a terrible idea to me. Efficiency isn't everything. Small stripes owned by many people or by many smaller companies it's less efficient than one hedgefond owning everything and yet it has disadvantages.
A forest is much less efficient than a mall and yet, the forest might still be more important.
There's also no way for a government to effectively determine the potential value of land. Asking them to do it means inviting disaster and corruption.
The main problem with this view is that land value is laggard to the economy. You will end up taxing people more than what the land is actually worth during downturns, instigating a vicious feedback loop to cause further problems. The logical path is to tax money where there is money - income.
Georgists think that my taxes should go up if someone builds Disneyland near my land.
>If we view raw nature as a common inheritance of mankind, then paying a tax on land is how the exclusionary use of it
This will have some of the unfortunate effect of collectivism. We don't want the govt to tax you into poverty.
A simpler overall approach (I've left out the nuances) would be to have an equal amount of land per person completely tax free. Individuals can then rent out their land for others to use as needed. Forests/rivers/conservation lands etc. can be seen as truly a common inheritance of mankind and should generally have the least of commercial activity.
p.s - a govt will never agree to such an arrangement because it will not favor them.
So a data center pays the same taxes as a homeowner, foot for foot? It seems unfair at first, but then it occurs to me that data centers would not be so desirable if they were not paying higher taxes. If land value tax helped to pop the data center bubble it would make the more off-putting aspects (organic farming is a less efficient use of land than factory farms) more palatable. Why not have a hybrid approach, where the local community can decide to apply different types of tax systems to different types of land and land uses?
Seems backward, especially for California.
A hedge fund or a lawyer office with with a huge income but a a small office pays some tax. A sandwich shop close to them which barely had ends meet pays the same amount of tax.
I believe we should tax hedge funds much more than sandwich shops.
wonderful -- now take the modern case where the most fertile land, covered with farming, is converted to cement and home sales due to 100x immediate cash returns. The price? pavement is forever
Is this a collective push right now for LVT ? I got an e-mail this morning from Astral Codex Ten on the same topic - seems like a campaign is a foot.
Twice in one day for a topic as not specific as this seems intentional.
Taxing is a lie.
If an island produces 2 burgers a day and has 3 inhabitants: one is rich, another is the poorest worker who can afford a burger, and the third is indigent, the rich person buys his burger, the poorest worker buys the second burger, and the indigent buys nothing, because there are only 2 burgers.
So a socialist sees this and claims he will tax the rich to give a burger to the indigent.
He taxes the rich as much as necessary to ensure that the indigent gets the burger.
As the worker tries to pay more for his burger, the price rises, so the socialist raises the tax as much as necessary to ensure that the indigent still gets the burger.
So the next day, the rich person buys his burger, the indigent buys another burger, and the poorest worker goes hungry, because there are only 2 burgers.
The result is the same if the socialist taxes the rich, prints money, or takes on debt. He always takes the burger from the poorest worker.
So taxes and public spending are always paid by the poorest workers. It does not matter where the socialist gets the money from: he always taxes the poorest workers.
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Using up land is an externality, and thus should be taxed accordingly.
> The land value tax can’t be dodged by leaving nor can it be passed on to renters.
In what sense can't it be passed to renters? Esp if all landlords in the market were faced with a new land tax that they had not previously planned for, why would it not be passed on?
Rent is a function of supply and demand, not a landlord's costs, otherwise we would expect changes in e.g. mortgage interest costs to be passed on to, but in practice we don't see this effect. 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?
Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the component of the tax that falls on the building. Tax buildings, get less buildings.
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.
That cost will, of course, be passed on to renters unless the rental prices cannot be raised at all.
If they can't be raised, and the costs end up being ruinous to the landlords, they will find other solutions like mass arson. That isn't hyperbole; this was a serious problem in the 1970s: https://en.wikipedia.org/wiki/1970s_South_Bronx_building_fir...
That was obviously not acceptable... but it was predictable.
All legal proposals should be viewed like a chess move. Presume others will respond, and make sure you're ok with that response. In a sense that's also the point of the original article too, a law was passed without adequqtely thinking through what would happen.
Rents are already as high as renters can bear. If a tax is introduced, you'd expect landlord competition to drive down the landlord margins, not increase rents.
the rent is already priced to the maximum of purchasing power of the local renters ability.
if landlords were able to raise rent, they would have done that already as its pure profit for them. The fact that they can't, means they will have to eat any marginal tax imposed on them
The author probably has a very superficial understanding of economics. It's economics 101, like VAT, the cost will be passed to BOTH the renter and the landlord. The portion of each is dependent on market dynamics and hard to calculate.
Sounds like the debate from 2 years ago whether the importer or exporter pays for tarrifs
My understanding is that LVT would be lower than current property taxes, so it should be viewed as a tax cut for landlords not an increase.
This is the problem with governments who think they can synthesize value. They think all businesses can too.
If these communists succeed, they will use the very fact that a landlord cannot synthesize money to prove the landlord passed the cost to the tenant and seize the land.
LVT is incoherent, it pretty much only benefits people who are cash rich and land poor. Which is why it gets so much oxygen from tech elites with lots of cash and an inability to buy a house somewhere like mill valley, or wherever.
Essentially taken to the logical conclusion, there will be people competing for more cash to pay their increasing taxes on the same land, it doesn't fundamentally solve the problem. It's such a joke.
Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
I would care more about the broken tax system if the politicians didn't waste our tax money. Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
$24 B unaccounted for and lost that was supposed to be for homelessness. $12 B already spent on high speed rail and they want $120 B more. $50 B in EDD unemployment fraud during the pandemic.
This is just in California in the last year or two.
How much more fraud and corruption and incompetence is there that we just don't know about?
There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.
Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?
This fundamentally misunderstands how this paper wealth actually works.
> If you let someone get to hundreds of billions in net worth
"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.
Norway, Spain, and Switzerland have wealth (net worth) taxes. Why don't we see the same outrage from rich people living there? Also, most billionaires get rich with equity in a business that they built. How else can we tax that net worth?
We're in a situation where it's already "too late". We can't go back 100 years. How do you propose we fix it, assuming time machines won't get invented soon?
They can move to Afghanistan. I'm not sure the wealth leaving the state, or the country, is such a bad thing.
Meanwhile, when you're in an "already too late" situation, it's already too late. You still have to deal with it.
Additionally, the state gets to tax you on what they say you’re worth based on the markets. That’s a pretty weird way to assign dollar value to someone instead of, say, looking at how many dollars they have.
While stock markets provide useful liquidity for investors entering and exiting positions, they are also rampant with finbro kids doing nothing more than jumped-up gambling. We don’t know which market trades fall into the serious wheels-of-capitalism bucket, and which are gambling, because we don’t have to know. The real world works in dollars so, to date, the state taxes people on the realized capital gain in dollars.
If a bunch of kids are selling handfuls of leaves to each other for a nickel each is the state now valuing my unkempt forest at $99bn? The state is welcome to pull up a chair and watch me try to sell 5 kilotons of leaves to every kindergarten playground in the country. If I succeed then it will take its cut of the capital gain. If I fail, it will not.
When the state starts looking inside the market black box and guesses, based on little Johnny and Becky’s recent playground trades, that I might be able to get at least $300 a tonne for my damp, rotting leaves, then the state is doing something at best weird and at worst unfair, and states doing unfair things is really bad.
Fix the system properly: when you inherit stock, you inherit the cost basis as well. Rinsing off capital gains liabilities through “buy/borrow/die” is the real villain here.
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> it’s already too late.
Absolutely not. 100% you can take it.
If the $100B+ was created through ownership of a company and is unrealized wealth, how would you have taxed it if not through a wealth tax? Nobody is getting to $100B by way of income.
If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
It's only too late if you're timid and wimpy.
Property tax increases are hamstrung by Prop 13 and until that’s repealed, will continue to be.
And while the wealthy always threaten to leave when faced with higher taxes, the fact is that they never seem to actually do so.
The site is based around georgism whose fundamental premise is that taxing land is the universal solution (much like for republicans cutting taxes is their solution to everything: economy going great? We should cut taxes. Economy going poorly? Cut taxes. Deficit too high? Cut taxes.) I don’t put much stock in analysis by single-solution thinkers.
> And while the wealthy always threaten to leave when faced with higher taxes, the fact is that they never seem to actually do so.
Around 2T worth of wealthy individuals left california when the wealth tax propositon was started.
They're hamstrung by property tax increases being massively politically unpopular. Prop 13 only bans taxes on the value of land, there's nothing stopping politicians from approximating LVT by an "urban acreage tax" based off plot size in cities other than the fact that it'd get them all voted out.
do they believe its a universal solution? or one tax among many that triggers a certain asset, land, to be used more efficiently?
Even the conservative states who supposedly stand for the individual can’t get anything like proposition 13 passed through their state legislature and it’s been over 48 years.
Isn’t California one of the richest states in the richest nation? Does that government really need more revenue?
> Does that government really need more revenue?
That's not accounting for the Cali govt being also one of the best in the world at wasting money.
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Whats wild is the commercial side didn’t get closed. I understand the argument for individuals or households (I don’t love it - I’m on the wrong side of it, but at least it’s somewhat defensible), but if you’re running a business and your income isn’t keeping up with inflation, that’s called failing.
And it will never be repealed.
Old voters like the house they brought 20 years ago for 100k being worth 1.5 million today. They also like not paying taxes on that 1.4m in wealth accumulation.
It drives me crazy that California voters will wave through every single regressive sales tax hike that is placed in front of them, yet they will crawl through broken glass to vote against a property tax hike on corporations.
Please don't post snarky dismissals like this on HN. The guidelines make it clear we're trying for something better here. https://news.ycombinator.com/newsguidelines.html
If the SEIU healthcare workers union is going to amend the state constitution, they should chip away at Proposition 13 instead of amending the constitution to make a bad tax that encourages capital flight.
But neglects to consider why it won a majority of votes. Why did it? And how does Prop 13 relate to the more recent Prop 19, which substantially weakened it?
But let's be clear: Prop 13 is bad and is holding down property taxes on both commercial and residential land.
> News at 9.
The idiom is "film at 11."
California is already collecting way more taxes than needed, perhaps the state needs to learn how to better manage existing taxes
Why would someone spend their time online advocating for themselves to pay a higher percentage of their wealth to taxes than people who make more than them?
This is the reason I would leave if I was a billionaire. Living in California I never felt like my tax dollars got me anything more than they got me in other states and if the city/country/state got even more I knew it would go to some sort of tomfoolery like a high speed rail that doesn’t actually get built or a $1m bathroom.
I don’t have experience elsewhere but in Santa Clara county, the county assessor calculates a very much incorrect split between land value and value of the improvements (buildings) when they assess the property tax. Sometimes they just divide the total value by two and call it value of the land; in other cases the value seems to match reality more, and the value of improvements match the actual cash value (but not replacement cost) from insurance companies.
How would a land value tax accurately compute the land value?
Not all assessors do this accurately, especially in California, but there are many that do. This article includes a section on land valuation which summarizes and links out to various other articles about various approaches
https://www.astralcodexten.com/p/does-georgism-work-five-yea...
There is a very weird but real phenomenon where it costs more to build/remodel in an upscale part of town. Roof repair: same roof, same company, two jobs 10 miles apart with wildly different invoices.
https://www.openavmkit.com
As I see it, the value in a wealth tax isn't just in a cash grab. It's about reining in the behaviour of the wealthy.
If you can cap individual wealth to eight or maybe nine figures, you take options like "bankroll major state/national elections on a whim" and "buy up major media and communications brands" off the table. As far as I'm concerned, these are things we can do without and probably have a healthier society as a result.
California's attempt might be well-intentioned, but it seems so weaksauce that it won't reach to the behaviour-modifying level.
The "why bother investing" mentality that's used to argue against Georgist land-taxes might be interesting applied to a high wealth tax too. If your stock portfolio is already approaching the cutoff line, will you press as aggressively for that last short-term bubble with long-term expenses?
> [C]ritics estimate the lost revenue would have to be made up by roughly doubling the state sales tax
It is possible to just ... stop spending ...
If you have specific suggestions for what spending to cut, by all means...
Spot on. Seen too many colleagues pack up for lower tax states, taking their equity and talent with them.
Anecdotal, of course. Which states they going to? Do they compare to CA?
Prop 13 should only cover primary residences. No vacation homes, no investment homes, no apartment complexes, no Airbnbs, no commercial properties, no offices. This single change would fix the majority of the state's tax shortfall. Going on about billionaires and not fixing this obvious loophole should tell you that people in charge aren't actually interested in solving the problem, just using populism to get votes.
I was talking to a friend about the billionaire's tax and this issue came up. Here's how I see it: either individually wealthy people stay here, and we take their money to build state capacity to even out the distortions created by their wealth, or, they leave, and the distortions fix themselves.
The easiest one to point to is property prices. Wealthy people buy land, and drive up the price of land and rent for everyone else. If a lot of people suddenly make a lot of money in San Francisco, in general, for me and most of the people I know, there's no "rising tide" that lifts our boats. Our income remains the same, but our rent goes up, and maybe our lives don't make sense anymore, and we have to move.
But if there's a wealth tax, and it encourages rich people to leave the state? Awesome. Go drive up rents in Texas or Montana or somewhere else. Or pay the tax, and then the state can use that money to build affordable housing.
Before you say anything: I lived through the 90s, and you can't trick me with "WOW YOU THINK THE GOVERNMENT CAN DO THINGS? WHAT ABOUT THE DMV???" Go somewhere else.
> "...WHAT ABOUT THE DMV???"
And I'd ask them: "What about the DMV?".
Perhaps I'm uniquely able to read and understand simple instructions, or maybe I've never asked the DMV to do anything especially complicated, but I've never had the DMV fail to do what I came there to have it do for me. The worst I've gotten from a DMV was having to wait for literally an entire day when I made the mistake of going to the San Francisco DMV to get something done, rather than doing the smart thing and going to an office in one of the nearby towns. It's... very stupid that there's a single DMV office for a city of -last I checked- nearly a million people.
> or, they leave, and the distortions fix themselves.
It's always funny how often people ignore this. 99% of the problem would go away if the outliers moved away.
The problem is the wealthy people can still buy and own the land without being residents. These billionaires "moved" to Austin or Florida or wherever, but they still own the same multi-million dollar mansions in the bay area or LA or wherever. They just spend less time in them.
I don't think that makes sense. The wealth tax, as written affects a pretty small percentage of "rich people". Most "rich people" will not pay a wealth tax.
So sure, let's say for the sake of your argument that everyone who would be subject to the wealth tax moves away. That won't move the needle when it comes to housing affordability in California.
So, ok, change the wealth tax so it applies to a lot more people. Ok, so maybe more people leave. Do you really think driving people with money out of your state will actually be good for you and the state? That's just not how economics works.
I don't think this assessment is connected with reality. Land on its own isn't valuable, its the labour and investment people put in while on the land that produces taxable value. Just because the land can't leave doesn't mean the value of the land stays. As long as the government spends more than it can collect, simply charging more people to operate will cause regular people to leave. The higher you tax above the laffer optimal you are just destroying value. My opinion.
> laffer optimal
"optimal" is an annoying term here.
That point is the maximum taxation burden possible, but it shouldn't be a target.
"optimal" might actually be a much smaller number, where prosperity what is maximized.
The billionaire tax is an experiment, they did put the bar pretty high to measure how many families will relocate (that's super easy to track); once that's measured, it's easy to build a model to adjust this threshold to whatever is advantageous for the state and keep things in balance this way, where the outflow is carefully measured and weighted against the tax threshold. The "hard part" was just getting this to pass the vote; then they can adjust this threshold anytime as voters have already approved it. What isn't measured is that billionaires create jobs "around them"; and, implicitly, jobs will be created somewhere else; unfortunately this model will not measure that.
I’m not convinced billionaires “create jobs” in any meaningful numbers.
Sure, the companies that made them wealthy do, but the billionaires themselves? Doubt.
So if the only consequence of this is that the billionaires flee to Texas, with its regressive taxes, and take the wealth inequality and corruption that goes with them… I’m not seeing that as a bad thing.
They are neither competent enough nor incentivized to perform this optimization for the benefit of the state.
I think the point of the article is correct; the issue with CA is everyone wants to live there, including rich people. If we try and tax them then they'll leave just long enough to not pay state income tax, if we tax property values then the state actually gets the tax and doesn't miss out on job creation or future revenue.
Red states have implemented low income tax with heavy property taxes (think Texas) with great results. and although I'm sure California would just manage to mess it up it's a great idea.
I would not frame Texas as having great results. If anything places should get as little like Texas as they possibly can. I mean they send you to jail for an abortion or a gram of weed. It's living under Shari-yall law.
How is it that landlords can't pass a land value tax on to renters? The link makes this claim, but I don't understand it.
It's a (real) property tax. Adjusting rent accordingly seems pretty easy. And, as I hope we all know, property tax is inherently regressive.
I agree the proposed wealth tax is a bad idea, but raising property taxes is probably not viable. They are incredibly unfavorable to voters. No one who owns a home wants to pay rent, that's why you buy in the first place.
Personally, this is why I am fine with higher income or sales taxes.
"Personally, this is why I am fine with higher income or sales taxes."
Indeed, the working poor need to pay more in taxes.
> No one who owns a home wants to pay rent, that's why you buy in the first place.
If this is actually a common attitude, people are... ridiculous. Real property is a limited resource, and allowing people to own property comes with strings attached. This is a pretty normal thing in very many places.
But I do agree that raising property taxes in CA in particular is a politically toxic topic.
> No one who owns a home wants to pay rent
They just want continually delivered services from the city funded by taking out increasing amounts of debt or selling off new land in a ponzi scheme to fund existing obligations.
And higher taxes on capital gains & dividends.
Sales Taxes are the worst ones. Burden on seller, burden on buyer, regressive. Income is more fair but easy to mask-out for the wealthy. Property is meh, Wealth tax is the best one. Assuming all were well designed.
Most land I bet is leveraged (hence the high price!) and taxing it will put pressure on home owners and investors. It is great for the truely rich who have a $50m mansion because it is chump change and will pay $375k which is approx zero but for someone with a typical house $1m it is $7500 which is less money for food and other household expenses and they may be paying a big mortgage already and not rich in the true sense.
Taxation ain't simple. There are always second order effects.
I am not against land tax but using it as a kneejerk levy could have unintended consequences.
Instead taper onto a reasonable land tax. Just raise taxes if you need more money in a fair and progressive way.
Of all the places you can avoid flight from to avoid tax California must be the easiest.
Since so much of land value is in downtowns, in a theoretical shift to land value tax, most of the increased land value revenue would come from vacant and underdeveloped parcels downtown. The median tax burden on single or multi family homes would actually be reduced. An example is this model of Spokane: https://landeconomics.org/reports/spokane-report#:~:text=sin...
And a lot of the time, it’s those truly rich people who own those vacant/underdeveloped parcels in downtowns.
What would happen if a state just let its government fail? Close all the offices, fire all the the people who spend the day thinking about money,laws, email, and other ways to justify their jobs? Just pay the police from local tax. Oh wait, local taxes already pay for the police. We have too many layers of government. Garbage collection, fire departments, public works - all are locally administered. Why do we need a state layer?
The government is simply the gang that won (vs the other gangs).
If the government fails, then you briefly get anarchy and violence until people organize into groups and use more violence to quash the anarchists. This repeats until there is only one group remaining, and that group is the government going forward.
Georgism aside, the theory that very rich individuals will move if targeted for taxation tends to be _mostly_ false, when it's actually tried (though it's true for companies to a large extent).
If this were to go ahead, how many people would actually move? "I'm going to uproot my life to avoid paying an amount that's kinda immaterial to me" would be mildly weird.
The amount here is not immaterial. Which is why this tax won’t be like other taxes predicted to cause individuals to move.
If you're a billionaire, it's going to have precisely no impact on your lifestyle. It's a non-issue.
California, more so than other places, have a lot of paper billionaires living a middle-class lifestyle because these billionaires are tech founders that hold illiquid ownership in their own startups.
If price was the driver they’d all live in Oklahoma.
See also this recent post on the practicalities and rationales of a Land Value Text: https://www.astralcodexten.com/p/does-georgism-work-five-yea...
I am less worried about the one time influx of tax revenue than I am about this state’s wanton inability to balance a budget or show a modicum of fiscal restraint.
I think the author may be right about multiple points but I think it doesn't matter? This is one of those, don't let the perfect be the enemy of the good situations. A state-level, one-time wealth tax _is_ something that billionaires can run away from. And this law seeking to apply to people who lived in the state _before its passing_ seems structurally sketchy. This article has some fair concerns.
But we have a one-time billionaire's tax proposal on the upcoming ballot, and we don't have an LVT proposal on the ballot. Saying that the Billionaire's tax will be less effective than promoters say maybe true -- but we're definitely going to get exactly $0 from a statewide LVT for 2026. If the Center for Land Economics gets an LVT on the ballot in a future year, I would strongly consider voting for it -- but that's not on its own a reason to not do the Billionaire Tax this year.
What _would_ be a convincing piece of info, and which no one knows, is what the long-term impacts of a one-time wealth tax are. E.g. Zuckerberg is moving his residence to FL but Meta isn't going to stop employing Californians. And if the state is _credible_ in saying it's a one-time tax, will the billionaires who fled come back after it's done?
No, once you've spent the time and hassle to immigrate, moving back is unlikely.
From what I can tell the residency change for a billionaire is about how often you fly to your various homes. Zuckerberg I think hasn't gotten rid of his Palo Alto or Lake Tahoe property, he just added a FL house and will have a cap on how many days per year he's in CA right? This isn't like a normal person with 1 house relocating.
It's very expensive to move the business that owns the assets, and then you need to ensure you don't become resident again.
Once the money moves, it won't come back to where it can be grabbed.
That's why the USA has exit taxes when giving up green cards and citizenship.
But the business didn't move. Meta not moving to FL, and Prop 40 doesn't give any reason to move it; it's a tax on the resident, not the business.
All of the billionaires have corporations, called the "Family Office". Moving the office would be a pain point.
They have been moving both themselves and their family offices.
https://ca.finance.yahoo.com/news/google-cofounders-sergey-b...
"None of this is really about billionaires; California reaches for exotic taxes because its normal one has been broken since 1978."
The author then goes on to talk about CA's property taxes ... but LAND HAS NOTHING WHATSOEVER TO DO WITH THE BILLIONAIRE'S FORTUNES!!! Zuckerberg did make his money trading property, he made it through companies.
Nothing about California's property tax decisions have anything to do with 99.9% of Zuck's (and others') wealth not being taxed!
> Nothing about California's property tax decisions have anything to do with 99.9% of Zuck's (and others') wealth not being taxed!
That may be true, but you appear to have missed the part of the sentence you quoted that came after the semicolon:
Property taxes make up a large portion of many states' tax income. 1978's Proposition 13 made it so that California is -more or less- unable to tax the actual value of any property in the state. Wealthy people who've held on to property for decades get to borrow against the "market value" of that property, but the value of the property used to calculate the tax owed to the state only increases at a maximum of something like 2% per year. This means that you'll see long-term landlords (and holding companies) getting the financial benefits of a -say- multi-million dollar property, but the state only gets the tax of -say- a multi-deca-thousand dollar property.Because of Proposition 13, property tax increases in California will affect an extremely tiny slice of landowners, [0] so it must turn to other mechanisms when it needs more tax revenue.
In regards to private "wealth creation", it turns out that money is fungible and you absolutely can built a bunch of wealth off of a mortgage if the "market" value of that property has increased by a huge amount, but the costs of holding that property haven't increased much at all.
[0] This doesn't contradict what I've said, I've just left out some details. A quick summary:
Ignoring a few exceptions, when a property changes ownership its property tax is adjusted to be based on the current "market" rate. When nontrivial improvements are made to a property, the property tax is adjusted to account for the "market" value of only those improvements. [1] Some "clever" people have been known to get around the "property changes hands" trigger by making the property be owned by a company and distributing private shares in that company. Want out? Get rid of all of your shares. Want in? Get shares from someone who already has them, or maybe convince those who are in to make more for you. The property is still owned by the company, so its tax is not adjusted.
[1] It's important to note that repairs are not improvements. It's also important to note that the government can choose to ignore all of these rate-reset rules whenever it wants, as it did when all those extremely wealthy people in LA got their houses burned down in that big wildfire that hit LA.
So what? The goal is to fund the government. You may want to stick it to Zuck and other billionaires (and I admit, there's appeal to that), but if fixing our broken property tax system will fund the government (without causing mass displacement as people's property taxes go up), then we should do that. It's a fix to a structural problem, and a fix that will be durable and be reliable in the future.
Taxing billionaires is not a durable fix to budget deficits. The article very clearly explains why this is the case.
If the tax is calculated based on residency at the time it was earned or granted rather than when it vested or was sold then it doesn’t matter if they leave.
Has there been a good study that firmly demonstrates that tax rates are the primary motivation that rich people have to live in one place or another?
So they're dealing with the problem the rest of the country has been dealing with since everyone started wanting to move to California?
I don't live in California but the article mentioned Proposition 13 which capped property tax rates and the reassessment is only when the property changes ownership?
Is that right?
That seems unfair to people who recently moved compared to the people that stay in their house for decades.
Reading more it looks like California created alternative types of property taxes like Mello-Roos.
In my state we used to have property tax values reassessed every 8 years, then they changed it to every 4 years. But my bill goes up every year. I started off paying about $2000 25 years ago and now it is about $5000 but my property value has also increased about 3X
It seems like if you just taxed an ordinary house at a percentage and you taxed a billionaire's huge house at the same percentage that you would get more money from the billionaire without needing to create special laws and special taxes.
Yup, Prop 13 is a mess and is a big part of why housing in CA is broken. But it's politically toxic to even mention substantial reform, let alone abolishing it or even just phasing it out over time.
If you are retired and did manage to buy a house and are not rich, proposition 13 is the only thing keeping you in your house.
"I'm livin' to keep warm, you livin' to pay rent [...] Bitch, I made my moves with shackled feet"
- some Kendrick guy
Narrator: Kendrick’s feet were never shackled.
The article contains significant inaccuracies. Individuals in the lower and middle economic strata need not advocate for the interests of billionaires or those with assets exceeding $100 million; these individuals have already benefited disproportionately.
Over the past 50 to 60 years, wealth concentration in many Western nations—coupled with the relocation of jobs to East Asia—has primarily favored the upper class rather than the middle class. Similarly on a different battlefield, Brexit has not served the majority of the United Kingdom’s working class population the average citizen has experienced a decline in wealth. In Great Britain, most residents did not benefit from North Sea oil revenues, which were largely directed toward affluent groups—a contrast to Norway’s more unselfish. forward thinking approach of establishing a sovereign wealth fund which benefit it all to the consternation of the wealthy well connected conservative class within Norway.
Remarkably, adherence to sound financial principles—living within one’s means, settling obligations, and saving—can enhance long-term economic stability across all income levels and even at the governmental level.
Much like Proposition 13, voting in favor of Proposition 40 is a straightforward choice. Historically and currently, western political leaders have failed to act in the best interest of the majority usually, they have to be dragged along kicking, and scratching.
It shall be interesting will the middle and lower end carry water for the wealthy again and vote against their interests to save the lucky 214 billionaires in California, that’s right you heard it right, 214 out of 40 million people…
The billionaires won’t be going anywhere. There’s a reason why the West Coast, California, and Oregon are what they are, when compared to the rest of the United States outside the Northeast, climate, higher education, better business opportunities, better political climate for the population, particularly if you look a little different or have a different religion in comparison to a large part of the United States, particularly after 1945.
Brexit is such an odd case, that it seems not worth comparing.
It's so tied into British classicism, and the generally pathetic nature of the middle class English, that trying to extend the results outside of the UK produces absurd ideas.
Essentially the British people took a (not particularly economically motivated) deal to reduce migration, at the cost of economic connection to the EU.
This upset the UK political class greatly, so much of the following policy was about punishing the population, rather than long term economics.
https://www.pangram.com/history/afa0fd9b-eeae-49d0-932a-24b8...
This is mostly slop. Don’t waste your time.
The land value tax is a good idea, but the pure conceptualization that die-hard Georgists have, in which it's a flat tax, doesn't seem in the same line as the billionaire tax. What'd like is just a (drastically) revised version of Prop 13 in which those protections apply only to the first $N of property value. We can effectively tax the real estate of billionaires without having to tax everyone else. I would like to see taxes on luxury properties approach 100% of the property value, to make it extremely painful for anyone to own such properties, and encourage them to be split up among smaller owners.
Feel free to look up the percentage of the CA tax base by 50th, 90th, 95th, 99th and 99.9th percentiles. The myth that billionaires don’t pay their fair share is just that - a myth. A lot of lower income people don’t pay any tax at all and have their state services entirely subsidized by the rest, the vast majority of which is paid by the richest 5%. Every time I see a call to tax the billionaires I know I’m hearing from a fool too partisan to look at really simple to understand numbers.
The effectiveness of other taxes aside, the argument that billionaires will leave if taxed at a higher rate isn't compelling.
Billionaires are not struggling to meet their expenses. If you raise their taxes, they aren't suddenly unable to afford things. They don't need to change their behavior just to get by. A carbon tax forces average people to drive less, but doesn't affect billionaires at all.
Billionaires live where they want to because they can afford to. They're not going to let themselves be chased from jurisdiction to jurisdiction because of numbers that have zero impact on their daily lives. That's what happens to poor people. If California raises taxes on billionaires, very few will actually leave. They're where they want to be and they can afford to stay there. What's the point of having a really big number in your bank account if you have to move to the middle of nowhere in Alabama to keep it from falling just a little?
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Edit: Yes, some billionaires have changed their tax residency, but not necessarily their physical location. They likely still own properties in California and can likely be found on them rather a lot. This is evasion, in spirit if not law. Taxing land is just one way to make them pay. Others should be pursued as well. The argument that we shouldn't tax billionaires because billionaires are good at not paying taxes is complete hogwash.
The article quite literally states the opposite, showing that almost half of the taxable base left because of the Jan 1, 2026 cutoff.
It may not be logical, but money effectively turns into a scoreboard at a certain point. The ultra-wealthy care whether they show up to the yacht club in a 100m or 150m yacht.
That individuals won’t optimize their wealth beyond $100m, $1b, or really any number just doesn’t square with observable behavior.
Starting a business self-selects for people that desire money (over other benefits).
The purpose of a business is money (otherwise you start a hobby or charity or something non-businessey).
Being very successful at business is a selection bias for people that are highly competitive at chasing money.
There's a bunch of traits in very wealthy self-made people due to the filter they have run through.
Tax too much, and we kill the golden geese of the economy. Examples abound around the world of crappy economies that can't afford good socialist stuff because they've demotivated the rain makers.
If you are rich, you want to be in places where you can enjoy and show off and well be rich. Living in some third world or second world hell hole or some deep red state with no mountains or beaches where you can’t drive and enjoy your fancy car just would not be fun it’s basically the reason why you wouldn’t want to be rich from America and live in Mexico or further south.
Not to mention your businesses need to be in relatively affluent areas where most people can afford your products and from an educational standpoint, most of the better schools are on the west coast or are in the upper east coast.
Worry. about the other 99% maybe more precise, the other lower 90% of American Society.
The article claims that 6 individually named billionaires already left (presumably recently), and another is likely to leave if he loses his court challenge.
This is a strange argument coming from the side of the argument that usually talks about billionaires being greedy and doing anything to make the numbers go up even though they can't feel the difference.
They can certainly afford it but they obviously like their money to stay theirs and like getting more of it, not less.
Why move to Alabama, do you know Austin is very good
so what if they do leave?
they're bad for the world around them, and you can add an exit tax if you want to
A dozen billionaires already left California.
> the argument that billionaires will leave if taxed at a higher rate isn't compelling
I agree with this. California’s climate and culture will keep many a billionaire within tax nexus reach of the state. Of course, this isn’t a strategy every locale can pursue, but I don’t see a reason for California not to exploit its advantages.
> The land value tax can’t be dodged by leaving nor can it be passed on to renters
Of course you can. You just charge more. Yeah the market dynamics can put a cap on it but the Bay Area mints millionaires like there’s no tomorrow. They can pay.
But I think the purpose of a wealth tax is precisely to get rid of greedy billionaires.
So if they vote with their feet and leave, then that's an even better outcome. Now they can't manipulate the government anymore. They can go manipulate and continue extracting wealth from some other place.
Yeah, kind of a win-win in my mind too.
Let's hope other states follow suit and they keep on truckin'.
Truckin straight to the trash heap where you can sort recycled cans by hand for a living. What an abysmal vision.
Yeah because they got billions by extracting it like mosquitos. It came mostly from your billions I assume. Without that it would have been all yours. Clearly you have zero concept of how an economy works.
You know the extraction is more like 10000-to-1 than 1-to-1.
But in essence I do believe that I (and thousands of others) could have had at least $100k more net worth if they hadn't monopolized all user-acquisition channels and if they hadn't helped bring about the many laws and regulations which made this possible.
I have no ill feelings towards them but I just don't want them in my state competing against me for limited resources using money which they acquired through an unjust scheme which I was coercively made a part of but which I never agreed to and have been protesting for almost a decade (on deaf ears).
It's not personal or even saying anything negative about their character or abilities. From my perspective it's just pure self-preservation. They either need to contribute more tax to make up for the injustice or they leave.
When they sell their assets, it makes those assets more affordable for the rest of us. So any forced sale is good for society. I don't see any issues with it. We were/are forced to prop up their stocks through government contracts, grants and regulatory monopolies... So they should contribute something on their end too.
And I don't care about the "jobs they create" - They created jobs for my competitors to get easy money in cushy jobs. I want those jobs gone too! I don't want FAANG employees bidding up house prices in my area.
I only want to compete against people who are playing by the same rules as me! I don't want to compete against people who can rewrite the rulebook as we go, to suit them.
California made its bed with regulation and housing costs. Now the productive folks are just finding better places to build.
if its got feet, why all the focus on RTO all over the place?
I think the point is that it's possible to move the assets without moving their owner.
This is an old argument. Remember how all the billionaires were going to flee NYC if/when Mamdani was elected. And... then they didn't.
Well Mamdani's pied-a-tierre tax was specifically a real estate tax, levied on the real estate of people who don't have residency in the city. It's a marginal tax in the grand scheme of things, but unlike the billionaire wealth tax, it actually works, because the real estate can't move. And the owners can't just threaten to leave because they've already left, that's why the tax hits them.
He also hasn't really done anything. Mostly because he made a bunch of promises to do things he doesn't have the authority to do.
Except that several billionaires have already left California, in anticipation of this law, as the article notes.
Not sure if anyone could get such a policy change made given that California politics is now just "Whatever the California Democratic Party Wants" and they are very rigid in the ideas they accept.
But I think the proposal being discussed is 1000% more consistent with the principles of a free, non-communist society than the crazy "wealth tax," which sets the precedent that if the government thinks you have "too much" stuff, they can just declare that to be so, and come and take it. Given that the people in charge of drawing the line between "so rich that we need to take your stuff" and "not that rich" will be the same people who have blown up the state budget, I don't see why anyone would trust them.
(No, I'm not Zuck's sock puppet account -- I expect it won't be my turn for "wealth" confiscation for at least 5 years, worst case.)
You’re just carrying water for him. Zuckerberg is a winner. Zuckerberg and the other 214 billionaires in California will be fine you don’t have to suck up to them they’ll be ok a billion times over.
They won't BE in California to be taxed, which will only accelerate all our turns.
wealth taxes are from the old roman republic. the wealthy showed off their worth to each other by how much they could pay in taxes.
its not particularly crazy and is far older than communism or socialism which have the much more straightforward setup of seizing the means of production rather than taxing it.
however, it didnt stop the ultrawealthy from seizing power for themselves
Tax golf courses
Why not both?
As a rather economic left European person I think this:
Last week California certified a Billionaire Wealth Tax for the November ballot: a 5 percent one-time levy on the state’s billionaires, paid out over five years, to raise about $20 billion a year for health care, food aid, and schools after federal cuts
Is just flat out crazy.
To pretend that politicians who are in a perpetual political battle for short-term survival will somehow use this weapon of mass financing responsibly and only once it comically absurd.
This will open Pandoras box.
It’s nuts to me that anyone doesn’t see it. Unlimited money, just declare your victims “too rich.”
Two things:
1. If wealth was only motivated by taxes and was going to leave, it would've left already. Fact is, billionaires don't want to live in Tennessee;
2. Nobody is doing the right thing to tackle any of this, including California.
The article mentions California has land and that's the key point. Unfortunately, California homeowners have been coopted into voting against their own interests to raise property values. If the house you bought in SF in 1975 for $80,000 is now worth $3M, you still only own 1 housing unit's worth of wealth. And that housing cost is an input into everything you need to buy because all the workers required for those things have to be paid high enough to pay those exorbitant rents.
Let me repeat that: high housing costs are an input into everything that you buy.
So what needs to happen? We need to stop treating housing as a speculative asset. It's simply stealing from the next generation. Worse, it's diverting investment capital from productive output because land has become the asset with the best tax treatment, highest returns and most government protections. So what does this look like?
1. Some form of land value tax. The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable;
2. Punitively tax land hoarding including second homes. We could give discounted rates to primary residences of state residents. Nobody else should get a discount. This would mean repealing Prop 13 and that's never going to happen. As an example of this, I'll bring up Prop 19. In CA you can inherit a preferential property tax rate. Prop 19 proposed to limit this to only one property could inherit this preferential rate and it barely passed (51% IIRC). Do we think that 49% of California voters have multiple properties that have property tax rates set 40+ years ago? Of course they don't. It's an example of how people vote against their own interests;
3. Part of what sold Prop 13 originally was the idea of pushing seniors out of their homes with property taxes. Well, that gave Disneyland a tax rate that was set in the 1960s. California should do what Texas does: you can defer your property taxes until you die if you're a senior but there's no capped property tax rates like incumbent SF residents have and no inherited preferential property tax rates;
4. Wind back the preferential collateralization of property for mortgage debt over time. Residential property lending now dominates bank lending and earnings. It's significantly harder to get finance for any form of productive output;
5. Wind back over time preferential tax treatment for home ownership.
Do I think any of this will happen? No.
Oh, one of the worst things to do is transaction taxes, often called stamp duty. This is where you pay a percentage of the value on purchase. This really hurts mobility. I guess it's fine if it's only on the luxury end of the market (CA's is at $5M+?) but it's not a good idea regardless.
The other part of this is to provide social housing like Vienna. The government should be a significant supplier of affordable quality housing.
> We need to stop treating housing as a speculative asset.
This kind of assumes the only reason a house appreciates in value is because people are "treating it as an asset" rather than "the house I bought 30 years ago in the middle of nowhere is now smack dab in the middle of a very desirable area." At that point it's simple supply and demand, not some homeowner being greedy.
> The higher the value goes, the higher the taxes go. You raise the rent and your land value taxes go up because it's more valuable
This makes the fatal assumption that just because a house is worth dramatically more than what you paid for it many years ago that your income must have risen just as dramatically. "Oh well, too bad, sell your house and deal with it." Maybe people kind of like living where they've put down roots and don't want to be punished for something outside of their control? Any proposal that boils down to "pay more or fuck off" is not going to go over very well.
> We need to stop treating housing as a speculative asset.
Something I've been yelling from the rooftops.
Housing can either be affordable, or it can be an investment that's bought, rented, and sold for the sole purpose of profit. It's not possible for it to be both.
People expect their house to appreciate faster than inflation, but all that does is rob the next generation of home ownership.
Many, many years ago multiple generations would live in one home that may have even been built by a generation that is long dead.
And now, when mom and dad downsize after the kids move out, rather than selling the house or pass it to one of their children, they rent it out.
Alternatively, they keep the house, but get either a reverse mortgage or a cash out refi to survive until they die, at which point their kids can't afford to buy it from the bank.
What are the proposals for accomplishing this?
Increase taxes on rental income on single-family homes and double the property tax on vacant homes to discourage hoarding.
Encourage building upwards to increase housing supply. This can be done via tax breaks or subsidies. Especially encourage multi-use buildings to make cities walkable. Stores/restaurants at the street level with apartments above.
Ditch or reform/restrict the 30-year fixed-rate mortgage. Remove barriers to building more housing. Other stuff, but you can do a web search, I'm sure.
> voting against their own interests
What you mean is voting against what you think their interests should be.
This phrase is incredibly condescending and undemocratic.
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California is full of people who do not understand how investment works and want it gone. This is progress missing from progressive. It is the social missing from socialist. Ists and ivs with nothing, merely a pack of stupid ideas. The residual is reality: no-teeth, drug-induced stupor sleeping in street squalor and their rent-seeking enablers cozying up to the tax authorities.
>California is full of people who do not understand how investment works and want it gone
You're being too generous. California is full of envious dysgenics who want free stuff and don't care how they get it.
Good plan. Raise property taxes so non-billionaires are forced to sell property to billionaires who have an insane surplus of wealth.
Billionaires aren't going to leave, they're going to acquire more property.
> nor can it be passed on to renters
This is an asinine claim - any cost can be passed along to a willing payer.
Tax - why not both billionaires and land.
This article is nonsense.
California already has a property tax, about half of which is based on the land value, and the other half on the structure on the land. So this is not some brilliant idea, just a renaming of what we already have.
If the author is suggesting to repeal Prop 13, that is also not a new idea, and has been discussed for decades. Good luck.
Coveting is a terrible basis for an economic system.
Yes, agreed. It's expected, that what the peasant's do, envy the rich and have lots of children.
Which economic system are you critiquing? I would tend to agree, since I think wealth taxes amount to a breaking of the 8th and 10th commandments. But I also think some would argue that the consumerism (envy) that often drives capitalism is a form of covetousness. I think the counter argument is that capitalism does not require consumerism, and that consumerism (envy) can appear in any economic system.
capitalism itself is covetousness and greed.
not good believer in christ would ever participate, when jesus made it clear you are supposed to freely give away everything you own to the poorest among us
It's covetous to expect someone else to give you a part of something they worked for and you contributed nothing to. One of the basic 10 commandments is not to covet your neighbour's property; envy is a sin.
You prefer a regressive one?
Don't argue something the GP didn't say.
There are plenty of other taxation schemes that are progressive and more durable and effective than a wealth tax.
The main reason we're here is because talking about reforming Prop 13 is political suicide, even if that's the best way to fix CA's budget.
I wasn't arguing—asking.
But, you're right, when someone suggests that we poor are just envious of the ultra-rich and that is why we want to tax them, I assume that they think we ought to look elsewhere than the wealthy for taxes. Which kind of suggests tilting toward a more regressive, less progressive tax system.
Introduce a ballot measure that removes the allowances of Prop 13 on retail real-estate and I suspect you'll find it's not political suicide at all.
>. The land value tax can’t be dodged by leaving nor can it be passed on to renters
ROFL what? I'd bet the author a lot of money that costs WILL roll downhill, the source matters not.
I think the idea is that if the market demand is such that it allows them to raise rents, they'd already have done it, whether or not expenses justify it.
Did tariffs raise prices? Or did prices stay the same because "if the market demand is such that it allows them to raise [prices], they'd already have done it"?
Looks like this is complicated and the short answer is "it depends":
https://chatgpt.com/share/6ab5ca51-3e0c-83e8-a232-892d3e4ef9...
If they can't raise rents to cover expenses plus "enough profit to make this PITA worth it" then things (slowly over time) grind to a halt.
It won't grind to a halt. The owner will sell, because they can't make the business work.
At what price will they sell? At whatever price a buyer who thinks will make it work. And by "work" there are many definitions, from continuing operation at current rents, to building more units on the land so that it generates enough income to pay the tax.
Land value taxes shift tax burden away from productive use of land and on to unproductive uses of land. The people who pay more are land speculators and those with empty lots, and the people who pay less are those productively using the land, which is 99% of homeowners and businesses.
So what happens then? High enough property taxes could in theory result in a situation like Detroit where the land value drops so low that properties are abandoned, with no buyers. But that seems unlikely in California?
At less of an extreme, there are still buyers, but they offer less money so they can still make a profit. So, the property tax basically comes out of land values. The current owners lose money on the property. It's the opposite of the windfall profits that California property owners have gotten from rising land values, taken out of whoever owns the land now.
For the next owner, their mortgage expense is lower, their property tax is higher, and maybe rents and profit margins stay about the same.
Notice that if the demand is there, falling land values doesn't result in lower rents. If your complaint is that the rent is too damn high, higher property taxes won't fix it. Only more housing does that.
I'm a bit skeptical that it would really work out that way. In California, we can have the odd situation where the current owner pays low property taxes, the new owner will pay higher property taxes, and yet property prices get bid up, and whoever buys it has to pay both more property tax and a higher mortgage. But they can still afford it, because there are a lot of rich people out there.
If the assessed land value is actually correct, then someone can make that land work profitably, by definition. That might mean bulldozing a single-family home and building a 4-unit building, for example, but it's doable.
If the assessed land value is incorrect, then that would need to be fixed.
Economists for generations have agreed a land value tax is the least prone to this problem. You might want to take it up with Adam Smith.
Yeah, that's unlikely. There are certain classes of renters it can't be passed on to during their rental term, but I'm guessing it can and likely would in general.
People can also sell their land/homes and move. It's less liquid than other assets, but less doesn't mean people won't sell/leave.
In Massachusetts it’s legal to pass on real property tax increases during the term of a residential lease, provided the lease contains specific clauses. (Most leases do, as a result.) And most commercial leases are triple-net, meaning the tenant is also on the hook for increases.
I would be surprised if most land consumption taxes (whether structured as property or land) would not get directly passed through to the beneficial consumers of that land quite quickly, or for their privilege to consume that land to be terminated/non-renewed at the expiration.
One of the benefits of a land value tax is that it has zero dead weight loss: because there's a fixed supply of land, the tax won't cause less of it to be around, and you don't lose out on the beneficial transactions that property tax can prevent.
There are several key benefits and I like the theoretical soundness.
My primary concern is that there are generally no market comparables for undeveloped land in developed areas.
If I believe it’s over-stated, I can appeal my property tax assessment by using comparables for nearby developed property. There is no equivalent market-based process for land values alone.
This is a reasonable and common concern, and one I shared until I looked into it in fine detail. Turns out it's far easier to estimate the value of land that things sit on than the entire property value, and most of the country actually operates on continually updated estimates of total property value rather than just land.
There's several anchoring sales nearby, you can regress out from all sales, etc. etc. And it's smoothly varying for nearby parcels, with very little change!
A much better explanation than what I can write can be found in the "Estimating" section here https://landeconomics.org/reports/california-billionaire-wea...
I will read that link later tonight (thanks!), but this still seems like a system where a particular property owner could be “targeted” (politically or economically) and suffer without reasonable legal recourse.
It's actually much harder to target a particular owner, because it's based only on land area, and the value of land in a general area! Property taxes are much much more susceptible to targeting as individual properties are much more variable and there's far more judgement about individual buildings and the potential value of a building.
Great! I’ll take all the oceanfront/riverfront land in an area and all the land immediately adjacent to major metro stops, please.
This highly local variation in land value does not seem to be adequately addressed n the California link above either (other than “The estimation runs at the level of each property category within each California county or census tract, using parcel-level data”, which does not seem fine-grained enough to cover waterfront property).
Surely the land value overlooking La Jolla or Malibu is worth far more than the lots just one block back. And those lots are likely to have more expensive improvements on them in any taxation system, but at least in a property taxation system there is a direct market reference to come back to rather than just an assessor’s judgment.
How much is the dirt at 28824 Cliffside Dr, Malibu worth? $5M? $25M? $50M? $75M? What does the census-tract level estimate come up with? How does that compare to 28867 Cliffside with an ever-so slightly larger lot, both in Census tract 8004.12?
In California some percentage of certain developments need to be rental controlled, so those are exempt from increases for those lower income folks, but I'm sure the difference would be spread out among everyone who isn't rent controlled.
I'm curious what costs you think will roll downhill and why
billionaires are truly the parasites of this world.
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It's the single taxers again, with a new argument.
I'm not a single taxer.
The article is. It's an argument for the main tax being on real property.[1]
[1] https://en.wikipedia.org/wiki/Single_tax
I co-wrote the article. Neither Greg nor I are single taxers. We think LVT is better than a poorly designed wealth tax, but we are not single tax maximalists.
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just make it federal, bump it to 20%, permanent, each year over shares they own... then they will still pay 20% less than the other 90% of USA
I hope we agree that we need more taxes, it doesn't matter if they are taxes on billionaires, taxes on property, taxes on sales, taxes on crypto, or taxes on the poor. Without taxes we can't have a civilized society.
The number of different taxes is constantly increasing, obfuscating the total tax burden, and making democratic accountability almost impossible. Additionally, tax collections are already at a historical high, while government deficits world-wide are also at record levels, with services on the decline, and no realistic prospect of balancing budgets. This is true for most western countries.
Given the current situation, I do not agree that "we need more taxes", but would welcome your clarifying exactly what you mean.
For a long time I agreed with you, but seeing how the tax money is spent I cannot agree any longer. In most cases government is no longer even spending the money itself, instead it is giving the money to NGOs.
I would much rather see people keep more of their dollars and use them to 'vote' for the products and services that benefit them most, via their purchases.
I’ve long thought if you doubled tax revenue or halved it the public services rendered would be the same. Tax revenue is not the problem.
How much of California's budget is "giving the money to NGOs"?
Congragulations you have just rediscovered conservatism.
…and how to never have any large infrastructure projects like highways or just services that run at a loss while being essential like the EPA
It would be interesting to run the counter-factual on the EPA. Lawsuits around pollution were already increasing significantly prior to the EPA even company vs. company.
Would the resources have been better spent on a more efficient legal system, then leverage that?
*Disclaimer: This definition not valid in American politics, consult your doctor before self-labeling.
Taxes aren’t 0 right now, nor particularly close for anyone being taxed. Your statement supports taxes as a concept at all, but what’s the specific argument that they must be more than they are today?
No thanks, I pay too much in taxes as it is. California has a spending problem, not a revenue problem.
Spending problem? What spending problem?
https://www.smartcitiesdive.com/news/california-high-speed-r...
I think we should start with changing taxes on corporations/companies, specifically being able to indefinitely write off expenses against income regardless of size/etc...
Most companies take profit eventually, but if it's possible for a company to decide to never take profit and grow/acquire perpetually without paying any taxes on gross income, that's a problem.
That'd be like individuals being able to deduct living expenses and having uncapped pre-tax 401k contributions.
The ratio of the economy that gets collected as taxes has only gone up over time. Do you have an idea for how much should be collected as some ideal ratio? At what point do the effects of taxation become counterproductive?
Well, the general economic consensus is that for income taxes, the revenue-maximizing peak of the Laffer curve is around 65-70% [1]. Revenue maximization isn't necessarily the right primary goal, though.
[1] https://en.wikipedia.org/wiki/Laffer_curve#Income_tax_rate_a...
Same back at you. Clearly you think they’re too high. So what is the correct ratio?
The straightforward answer is there is no correct ratio. The best tax regime is the one that allows for sufficient funding of necessary and desired services and long-term economic investment while also balancing wealth creation with wealth inequality. That number isn’t fixed and it’s clear that it shouldn’t be evenly borne by the population as a whole.
I made no such claim. I simply asked someone who said that we can all agree taxes must go up to what level they were referring to and how they chose the number. If there is no fixed ratio such as you say, then their claim is clearly false.
Sorry, but this is bullshit. You’re not fooling anyone. If you think the GP needs to provide an ideal tax ratio, so do you. You don’t get to opt out and pretend you’re above it all.
this is the sadest assertion i've ever seen. if sucking the life out of people is the only way people can remain civilized then we are truely lost.
How else are we going to support public infrastructure and society?
More efficiency in spending? We have newer tools and equipment, technology, automation etc. Do more with less, that is called productivity.
You don’t understand the natural order of things: productivity for you(the worker constantly told to do more), not for me(governments of all sizes, middle management & execs, dumb owners).
Progressive taxation and more efficient spending.
(And in CA, fixing Prop 13, and knocking out more hurdles to housing development in desirable areas.)
Assuming we do need more taxes, the manner of taxation absolutely does matter.
haha. did you say taxes on the poor? I'd like to see you implement that.
If the government keeps doing this, land owners will blow their wealth on the only things that government can't easily tax: blow and hookers.
But leave it to the ineptitude of California liberal politicians to always find a way to steal from the citizens that have the ability to produce and save, in order to transfer the wealth to illegals, politicians friends, druggies, and foreign powers.
I ctrl+f search for "gentrification" and nothing pops up. I close the Substack blog and proceed with my day.
why is that?
Because TFA ignored the problem.
“I think people shouldn’t be displaced from their neighborhoods because of lack of affordability”
I didn’t mention gentrification in the above sentence. Does that mean I’m ignoring the problem?
If you're participating in a conversation between adults in the 21st century, yeah. We've got a word for it, even if it's like garlic to the private equity vampires on this website.
“ Larry Page, Sergey Brin, Peter Thiel, Don Hankey, Travis Kalanick, and Steven Spielberg, worth roughly $540 billion combined — had already moved their tax residency out of state before the measure”
Imagine being worth billions USD and rather than being a part of the solution to support the state that helped build your wealth, you spend your money to just get around paying your small share.
It is trivial for the wealthy to buy another house elsewhere and “move” their primary residence.
More money isn't going to solve our issues. The limiting factor of affordable housing is policy
you spend your money to just get around paying your small share
I wonder how much they spend on lobbying compared to what their tax bill would be.
Comedic article related: https://www.mcsweeneys.net/articles/i-will-pay-any-amount-to...
The greatest feat that Mao achieved was to take the land that had been tightly gripped by generations upon generations of owners and to shake up the distribution of it so that the land could produce again. People naturally want to work the land, but you end up with suboptimal inertia because owners just end up letting it sit fallow if it doesn't immediately return. It's how you turn a billion serfs into a billion entrepreneurs.
We're already way past the point where a creative cocktail of 10 different progressive taxation schemes could feasibly fix the root of the problem, and you feel this especially if you were born after the year 2000. You're more likely to see results if you pick up a red scarf than if you pass a higher wealth tax, sales tax, land tax, consumption tax, estate tax...
> shake up the distribution of it so that the land could produce again... It's how you turn a billion serfs into a billion entrepreneurs.
In your telling, how does the resulting famine that killed of tens of millions fit in?
The famine is unrelated to the land distribution but also the farm land distribution didn't last. They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
My understanding is the famine was essentially the middle managers of these collectives over stating yields and being too afraid to admit their lies. To maintain the lie, they shipped off food while the farmers starved.
> They changed course and put the land into collectives and it is still in collectives today so the famine cannot be blamed on collectives.
Painting it as if Mao era collectives are the same as the state quotas that exist today is highly misleading. The HRS was 1979:
"The household responsibility system replaced collective farming." [1]
Broadly speaking, the collectives can and should be blamed for the famine, just as in the Ukraine. Getting into the weeds on the specific mechanisms is fine, but using it to undermine the broader lesson is apologetics.
[1] https://en.wikipedia.org/wiki/Household_responsibility_syste...
Famine along the yellow river and yangtze river has been happening for thousands of years across all dynasties, its specifically what land distribution was meant to fix, and since 1960s there hasn't been a famine since. My parents and grandparents lived through it and left cities to work in countryside fields during the cultural revolution. You tell me how the famine fits in and I'll let you know if you're accurate or not.
> I'll let you know if you're accurate or not
I think not. Your framing thus far is so wildly inaccurate that I believe this is a propaganda account, and hesitate to engage further. But in case any not familiar with the history read this in passing, I will leave a reference to an actually reputable source:
"Mao’s violent collectivization and forced labour campaigns during China’s Great Leap Forward (1958–1962) led to as many as 45 million deaths in what is widely regarded as the worst famine in human history." [1]
[1] https://www.cambridge.org/core/journals/china-quarterly/arti...
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those who advocate for land value tax are usually advocating for single/minimal types of taxes (and, in fact, against sales and income taxes) rather than a cocktail of them. "Single Tax" predominantly refers to a single land value tax. https://en.wikipedia.org/wiki/Single_tax
My point is that a single land value tax would have the same effect as piecemeal improvements to current tax portfolio - none of it would fix the inertia already priced and baked into the system.
> A revolution is not a dinner party, or writing an essay, or painting a picture, or doing embroidery; it cannot be so refined, so leisurely and gentle, so temperate, kind, courteous, restrained and magnanimous."
> To put it bluntly, it is necessary to create terror for a while in every rural area."
Let's not glamourize the Mao's land reforms. It required the killing of 1-2 million people. Even then, the collectivization was a massive failure - not only did the peasantry not get to enjoy the benefits of land reform, a further 15 million people would die from the resulting famine.
The deep irony is that Taiwan was actually able to do the same reform but with much better outcomes, with much less loss of life or political violence.
Taiwan did not have anywhere near the land distribution occur under CKS/CCK, nor the same veracity of landlord clique ownership. And, you're further wrong in that a big part of white terror was specifically due to 外省人 owners of factories and farms, from land stolen from the aborigines. The white terror wasn't by any means less violent and senseless than cultural revolution.
I prefer sun yat sen’s Land reform ideas to mao’s
Solon did this in Athens. The French Revolution did it. They actually maintained it and had historic states with strange liberty.
Mao pretended to do it but then introduced the familiar Stalinist collectivization that had killed everyone in Ukraine - as he knew.
The French Revolution ended up in dictatorships until it got to something that can call itself liberty.