
L.A. council members propose taxing landlords who leave homes vacant - onetimemanytime
https://www.latimes.com/local/lanow/la-me-ln-vacant-housing-tax-rental-homeless-crisis-20190611-story.html
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shereadsthenews
How about if Prop 13 just doesn't apply to homes except one's primary
residence?

~~~
jnordwick
This is the simplest solution while still keeping the benefits of prop 13.

People seem to forget that it was intended to prevent forcing people to move
because the had capital appreciation but no income growth, and this
disproportionately affected low and fixed income families.

~~~
threezero
Prop 13 was actually intended to make Howard Jarvis and his friends at the
Apartment Owners Association even wealthier. He did a great job of selling a
tax scam to the public. A property tax law designed to benefit low income
families would only have lowered property taxes for primary residences, not
for places like the Los Angeles Country Club that pays $200k a year in
property taxes on 313 acres of prime land.

~~~
jnordwick
Prop 13 opponents always sound unhinged.

~~~
threezero
Curious what you find unhinged about my comment.

“Jarvis was a lobbyist for the Los Angeles Apartment Owners Association—a
group that stood to benefit hugely from decreased property taxes.”

[https://la.curbed.com/2016/10/17/13304912/history-
propositio...](https://la.curbed.com/2016/10/17/13304912/history-
proposition-13-property-taxes)

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ToFab123
I Denmark there are so many difference taxes. The most unfair of them all is
"lejeværdi af egen bolig" which directly translates to "Rental value of your
own house".

Short version. Had you chosen to rent out your house to someone else instead
of living there yourself, you would have made a profit". You have to pay taxes
on that value.

"But, hey stop wait a minute", you might say. "I am not renting out my house.
I am actually living there all by myself."

Well sorry, that is irrelevant. You still have to pay taxes of that imaginary
profit regardless if you live there or not.

The tax rule (in Danish)
[https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm](https://tax.dk/jv/ch/C_H_3_2_2_2_3.htm)

WTF? Yes, WTF but true.

~~~
jacquesm
Same in NL: Huurwaardeforfait.

~~~
reallydontask
is this on top of property taxes?

What's the rationale?

~~~
yonran
Landlords have to pay income tax on the rent. If owner-occupiers didn’t pay
tax on the imputed rent, then the owner-occupier would pay a lower income tax
than the landlord+renter. In effect, the implicit tax deduction that owner-
occupiers get on imputed rent in US Income Taxes is a regressive tax on the
renter+landlord. See also this explanation:
[https://www.vox.com/2016/4/15/11432676/imputed-rent-
taxation](https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation)

~~~
reallydontask
thanks for this.

At first blush, this sort of tax would seem to disincentivize home ownership
but all countries listed on the article apart from Switzerland have higher
rates than the UK/US.

Curiously, article doesn't mention Denmark, which does have slightly lower
rates than UK/US.

[https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...](https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate)

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mullingitover
Seems lazy for the author of the article to fail to mention any hard numbers
for the actual vacancy rate. Without that context it's hard to judge whether
this is meaningless grandstanding by the city council or determined problem-
solving.

The real problem with homelessness in LA is that the street camping isn't
being rolled back now that the terms of the 2007 settlement with the ACLU have
been fulfilled. Instead the slums are being normalized. Shelters aren't even
full. It makes homelessness an increasing lifestyle choice at a time when
unemployment is reaching multi-decade lows.

We need to put a permanent hard ban on street camping and work backwards from
that to handle the humanitarian needs of the population.

~~~
threezero
Shelters in LA have waiting lists, and Section 8 housing has 37,000 families
on waiting lists. Sounds like it’s not a “lifestyle choice” for a lot of
people.

~~~
mullingitover
> Reviews conducted at 60 shelters funded by LAHSA last year found more than
> half -- 33 -- were not filling all of their beds. Overall, LAHSA-funded
> shelters had a 78 percent utilization rate, well below the 90 percent
> required in their contracts.

[https://www.kqed.org/news/11668623/why-do-thousands-of-l-
a-s...](https://www.kqed.org/news/11668623/why-do-thousands-of-l-a-s-homeless-
shelter-beds-sit-empty-each-night-rats-roaches-bedbugs-mold)

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zhoujianfu
What about just allowing developers to build as much housing as the market
will bear?

~~~
reallydontask
Are you advocating the removal of zoning provisions at all?

~~~
zhoujianfu
Not really, but I guess sort of... I think it’d be fine. Maybe it’s because my
family moved every 2-3 years my whole childhood, but I don’t think it’s your
right to live somewhere forever just because you live there now. If there were
no zoning laws, people could always move if they don’t like how the free
market is changing their neighborhood. And housing would always be
“affordable”.

~~~
reallydontask
> If there were no zoning laws, people could always move if they don’t like
> how the free market is changing their neighborhood. And housing would always
> be “affordable”.

I think this is a very optimistic view of what would happen.

Zoning laws are not perfect but without them there would be a race to the
bottom and the public left to pay for the externalities.

edit:

I might be wrong on this but I think that Victorian England kind of points
towards what would happen

I know it's not 100% applicable but ...

~~~
pwinnski
Houston, Texas, has minimal zoning laws, and I don't know if that has led to a
race to the bottom.

[http://blog.urbanleasing.com/five-ways-houstons-lack-of-
zoni...](http://blog.urbanleasing.com/five-ways-houstons-lack-of-zoning-
affects-city-life/)

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xondono
There’s an important point missing not only in this article but on most
conversations on this topic (we had similar proposals in Barcelona), and it’s
how long is the mean vacant time.

Given the size of LA, it’s not unlikely that 100k homes is the result of the
normal dynamic equilibrium of the city, in other words, these 100k homes are
not the same as two months ago, even if the number is quite stable.

My feeling is that these taxes will achieve nothing, and might even raise the
cost of rentals, pricing out even more people.

~~~
wallace_f
LA towes away homeless people's tiny homes(1). Maybe after another several
trillion spent on the war on poverty, drugs and terrorism we will wake up to
what's happening here.

1- [https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-
sei...](https://www.latimes.com/local/lanow/la-me-ln-tiny-houses-
seized-20160224-story.html)

~~~
imtringued
Those "wars" aren't meant to be solutions. They are just a way to embezzle
money in a way that is politically acceptable and a way to remove poor and
mentally ill people from the public instead of helping them.

War on poverty? Just give them a house and food. War on drugs? Just let a
doctor administer a safe dose that doesn't make them high. War on Terrorism?
Fund their education system and foster good relationships with those countries
instead of bombing them.

There are obvious reasons why those solutions haven't been implemented: the
population is happy with the way things are going.

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pbiggar
Wonderful. Homes are for people to live in.

Related: [http://cityobservatory.org/housing-cant-be-
affordable_and_be...](http://cityobservatory.org/housing-cant-be-
affordable_and_be-a-good-investment/)

------
praptak
Taxing empty property feels like a treatment for symptom rather than the
cause. Maybe it would be better if the tax on the land value would be high
enough so that it does not make economical sense to keep properties vacant?

~~~
ivalm
But at the same time you don't want to squeeze people who have lived in a
particular location for a long time simply because the neighborhood is
gentrifying. One proposal that I liked more than the LA proposal is to simply
tax additionally properties that are not someone's primary residences (checked
against address on the California tax, for example).

~~~
imtringued
If only the land were taxed then people can simply move from overpriced single
family homes into denser construction to amortize the land tax over multiple
units.

~~~
ryandrake
If only land were taxed, single family homes would probably not even exist.
They'd all eventually be torn down and replaced with apartment buildings as
dense as the law allowed. Not a great consequence either.

The need for city services (which property taxes fund) tends to scale more
with population size, than with land area.

------
yonran
It makes sense to tax homeowners who leave their units vacant, since their
decision to keep scarce property off the market is a waste that exacerbates
the housing crisis.

The same applies to landowners who leave land vacant or underdeveloped when
they could develop it into an apartment that alleviates the housing crisis.

It also makes sense to tax landlords who charge market rents. While tenants
suffer from the shortage, it is landlords who reap unearned windfalls. While
vacant property owners waste value every month that could benefit society,
landlords capture that value for themselves, so the city should take a cut.

And if we charge landlords a tax for the high rents they collect, then we
should also charge homeowners for the imputed rent they would have collected,
to remove the inequity between owner-occupiers and landlords.

If we combine these 4 taxes, we would have a pretty good system for
encouraging vacant landowners to use their land efficiently while also raising
revenue from the landlords who benefit from the crisis. But then we would
realize that the simpler solution is a higher, fairer property tax to begin
with (by repealing Proposition 13).

~~~
TeMPOraL
> _And if we charge landlords a tax for the high rents they collect, then we
> should also charge homeowners for the imputed rent they would have
> collected, to remove the inequity between owner-occupiers and landlords._

Never understood that part. Why would we want to "remove the inequality
between owner-occupiers and landlords"? What inequality anyway, since
landlords often already are owner-occupiers themselves, with extra properties
they rent out?

~~~
yonran
As this Vox article explains[1], if rent is taxed but imputed rent is not,
then a homeowner would pay no tax, but if he and his neighbor decided to rent
their house to each other (with zero net change in income after rent), then he
would pay the tax as a landlord. The decision to _exclude_ imputed rent in US
Income Taxes was apparently a decision of the Treasury in designing the first
Form 1040 for 1913 despite economists’ arguments for _including_ it in the
tax[2].

In US income taxes, the inequality exists to this day. Owner-occupiers get to
keep their rental income without paying taxes that landlords would have to pay
(though landlords get to deduct maintenance), in effect taxing poorer renters
at a higher rate than wealthier homeowners. When someone buys a house instead
of renting, he gets an implicit tax deduction on the imputed rent that
renters+landlords aren’t allowed to take.

So if we were to design a tax on hoarding scarce land, logically we would want
to avoid the mistake that the US Treasury made in 1914, and include vacant
landowners, rentiers, and homeowners in the same bucket. A normal property tax
according to value gets this right by treating them all the same.

[1]: [https://www.vox.com/2016/4/15/11432676/imputed-rent-
taxation](https://www.vox.com/2016/4/15/11432676/imputed-rent-taxation)

[2]: Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of
Homeowners”
[https://doi.org/10.1017/9781108377157.008](https://doi.org/10.1017/9781108377157.008)

~~~
TeMPOraL
I'm going to read the references you linked more carefully, but after
skimming, I already have questions:

> _if he and his neighbor decided to rent their house to each other (with zero
> net change in income after rent), then he would pay the tax as a landlord_

If I sold something to you only to immediately buy it back, we'd both pay a
tax on the transaction. But this kind of transaction makes no sense anyway,
why would anyone want to do it?

The Vox article gives an example of a cross-city house rent, but that's
essentially tax evasion scenario. Is it worth trying to fight it by just
making everyone obligated to pay the tax?

> _If you own a home in the United States, it really pays to live in it rather
> than to use it as an income-generating asset that helps you afford to rent
> to live somewhere else._

This may be the core philosophical difference, and I may be wrong about this,
but: isn't this situation good? Shouldn't people be encouraged to own a home
and actually live in it?

> _In my capacity as landlord, I allow myself to live rent-free in my own home
> rather than explicitly charging myself rent that would be taxed as income._

I've heard this line of thinking before, and it always sounded to me like
ridiculous mental gymnastics. Should I pay tax on my phone, or dishwasher, or
clothes, or every other thing I own, just because I'm theoretically renting it
to myself for free?

> _So if we were to design a tax on hoarding scarce land, logically we would
> want to avoid the mistake that the US Treasury made in 1914, and include
> vacant landowners, rentiers, and homeowners in the same bucket. A normal
> property tax according to value gets this right by treating them all the
> same._

Again, this probably just betrays how little I know on the topic, but:
couldn't we just tax land and housing separately?

~~~
yonran
I think the differences are that 1) Equipment can be produced competitively,
driving down the profit on an equipment rental business, whereas in certain
cities the housing is not allowed to be produced in great numbers, and 2) For
a business, the depreciable capital expenses are tax deductible, while land is
never depreciated or amortized (since land lasts forever). These factors
reduce the profit and income tax for an equipment rental business. On the
other hand, where housing is expensive, a large fraction of the rent is
payment for the land, which the business cannot deduct.

> Again, this probably just betrays how little I know on the topic, but:
> couldn't we just tax land and housing separately?

Yes, my point in this thread was that individual taxes on vacant, rental, and
imputed rental property are more complicated than a tax on the land value
(except that Proposition 13 prevents us from increasing property value taxes).

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chrisco255
Ah, the logic of progressivism. These "vacant" homes are already taxed at
whatever millage rate is set in Los Angeles...I'm presuming it's more than
zero. Furthermore, investment homes do not get tax exemptions, so they're
already taxed at higher rates than primary homes. Finally, this is
unenforceable without weekly spying to determine if a home is occupied or not.
In other words it will cost more to enforce, is potentially a violation of the
4th amendment, and will do nothing to fix homelessness.

California needs to revamp zoning laws and fix the mess that those laws
created.

~~~
onion2k
_Finally, this is unenforceable without weekly spying to determine if a home
is occupied or not._

Just ask the utility companies how much electricity and water are being used.
No spying required.

~~~
fiter
What do you think will be more expensive: wasted water and electricity or this
proposed tax?

~~~
TheOtherHobbes
What do you think would be more expensive: a criminal conviction for
fraudulently disguising property status, or this tax?

~~~
chrisco255
There's nothing criminal about owning a second house and using electricity.
Maybe there's staff members keeping it clean. Maybe there's a pool pump that
needs to run. You completely ignore the spectrum of utility consumption for
completely vacant, minimally occupied, half occupied, etc. homes that exist on
the market.

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Jerry2
Has any city tried taxing short-term rentals at a higher rate?

~~~
hanniabu
kind of comes naturally when shorter leases have higher rates

~~~
shereadsthenews
That's only right if you tax rent, which LA does not.

~~~
rockinghigh
California does. It’s taxed as income.

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ryandrake
Excellent. But this should not just be for "landlords." It should also be for
anyone who buys a property and then just holds on to it vacant, waiting for it
to appreciate as if it's a bar of gold. Every vacant home is essentially a
theft from someone else who has no home or is priced out of the market. I say
for any home that is unoccupied 180 days or more per year :

1\. Remove the property's Prop 13 protection, ratcheting the assessed value of
the home up to its actual market value.

2\. Double the resulting property tax.

3\. Remove the owner's ability to deduct any mortgage interest on that
property from their income taxes.

~~~
icelancer
>> Every vacant home is essentially a theft from someone else who has no home
or is priced out of the market.

If you are correct, then the thief is not the private owner. It is the
government that refuses to make it easier to build more houses.

~~~
steve-s
Well, I don't know which "solution" is more utopian. Land is not infinite.

~~~
wongarsu
Greater Los Angeles has a lower population density than Germany or the UK.
It's densely populated for a country, not so much for a city. The County of
Los Angeles is somewhat denser at about twice the population density of
England. Los Angeles itself is fairly densely populated, at slightly below the
population density of London, or 1/4th that of Paris (a city known for
resisting skyscrapers).

------
writepub
Affordable housing (and rent) is an issue, but this isn't a well thought out
solution for the same. The assumption of malice on the home owner for leaving
a home vacant is unfair. If the state wants to impose such a tax, proving
malice should be the state's burden. Otherwise, it's a breach of the right to
property enshrined in the Constitution.

~~~
writepub
I understand the knee jerk reaction of HN to downvote, but a counterpoint,
especially one explaining the Constitutionality of this proposal would be
helpful

~~~
zimpenfish
'a person may not be deprived of property by the government without “due
process of law,” or fair procedures'

I'm obviously not a Constitutional Scholar but how does this a) deprive people
of property (it's just taxing empty ones) and b) not come under 'due process
of law' (will be voted on by the public)?

Also can't see how it falls under "eminent domain" since the Government isn't
seizing these properties - you can still have an empty property, you just
can't do it consequence-free.

~~~
writepub
This proposal is the equivalent of "there's x% unemployment, and 100,000 open
jobs. If you insist on not filling those jobs, we'll tax you"

There might be numerous reasons for the vacancy, but malice, where homeowners
are possibly price gouging the rental market for greed, is pretty much the
only reason that justifies government interference. Everything else is the
government imposing what one does with their private property, which is
overstepping it's jurisdiction, especially when the property's use is fully
compliant with decades old law

~~~
TheOtherHobbes
Ownership is a collective phenomenon. There is no such thing as private
property. No matter what it's called or how it works, ownership is _always_
embedded in a network of relationships and social and political transactions.

The myopic view that it's all about the owner is wrong to the point of
narcissism.

It's never just about the owner. It's about the web of relationships in which
these transactions and claims happen, and the effects they have on the rest of
the web.

~~~
writepub
This might be a "philosophical, rhetorical" take on ownership, but by US law,
it means something VERY specific, and grants very specific rights to owners,
and prohibits those rights to non-owners.

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known
London does that

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teej
I thought Toronto passed this years ago and proved that it makes effectively
no difference?

~~~
ncmncm
Vancouver did; and now you can rent a Chinese gangster-owned McMansion there
for $1000 a month.

~~~
dev_dull
Which says the problem clearly was the purchasing / money laundering, not a
lack of government regulation regarding rentals.

~~~
ncmncm
Who cares? Mansion for C$1k/mo!

