Imagine you live in a neighborhood with deep community or family ties. Someone down the street wins the lottery/makes an 8-figure exit and wants to buy out the block for a mega mansion. Can tax rates be low enough for you to raise your own valuation to "defend" your middle class home against vast wealth? What does that do to local government revenues?
The very rich regularly spend $15m or more on a home. If Jeff Bezos came by my house and decided he liked the view, I would have to start paying $300k in taxes or move (if 2% tax). I get that making $15m for my house would make me rich, but this is our first home as a family and all our memories are here. I shouldn't be forced to choose like that - protection from arbitrarily being forced out of my home is one of the main reasons to own a home in the first place.
Be bookstore owner. Set the value to be twice as much as comparable neighbor property. Get bought by B&N. Buy property next to you, move your books, pocket the difference.
> I get that making $15m for my house would make me rich, but this is our first home as a family and all our memories are here.
Price it accordingly. :)
Yes, the whole idea is that the tax is much lower (1% maybe) than the value of the land.
Also, some regulations might be added, that eg. a person who got forcefully bought-out, has a year or two to move out, just to make it less convenient to use it "aggressively", while allowing wise long-term investments.
I don't see this as very helpful. The above poster views their home as something to protect from the market. It is a safehaven for family and friends and community connections, it is something that holds all the most important things in life and so it is above market mechanisms to the extent possible. Seeing this and purposefully advocating a system which forces them to put an actual price on their family memories supposes that there should be zero aspects of our life which are safe from market mechanisms. That seems like an impoverished way of looking at life.
Owning a piece of land is not really owning it. Not in the USA, and most of the world. You are having a "privilege" of using the land vs. paying some taxes.
That being said I don't approve of home taxes in the US. The taxes should be applied equally on all citizens to provide the required amenities (roads, cables, sanitary, etc...) The money should go to maintain the relevant infrastructure.
I'm not sure if the taxes you pay on your home value in the US goes to relevant infrastructure; or else (nor do I really care!)
Eg. I buy a property that I want to use as a factory. Some people who work for me move their own accomodation to be close to my factory. I spend absolutely tons of time and money filling my factory with machines, some of which are bolted to walls or have to be constructed inside the warehouse.
The price I'm willing to accept for this property isn't the price of the property, it's the cost to me of moving all my people and goods and rebuilding things. Plus the cost of the interruption to my production flow etc.
Caveat I know nothing about manufacturing but the point is more general, property isn't even close to fungible.
Tesla wouldn't sell their hyperfactory thing for the price they bought it for!
Everyone would be overpaying tax to the extent that their reliance on property isn't fungible, I'm not sure what the implications of that are but property is so fundamental and so much money that they'd be huge.
If I understand, your argument is that self-assessed taxes would eliminate investment efficiency.
The property owner should factor transaction costs into their own value of the building. This would increase their assessment of the land-value, and increase their taxes. This works because, keeping land valuations constant, the one with the highest transaction costs is the one who can derive the most efficiency from the land.
Then maybe the rule is that you will be forced to sell to anyone who pays you N × the value you self-assessed at, where N > 1. E.g. if transaction costs average 20%, you have to sell to anyone who will pay 1.2 times your self-assessed value.
I think the real issue is whether is promotes certain uses of land over others, and whether that's problematic.
Everyone overpays, but they overpay in proportion to how sticky their business is to a specific property. It would take someone who knows more about commercial property to dissect what businesses would get destroyed by that.
Valuing an asset takes work. The process consumes resources. There is a reason we have brokers for assets where one needs someone standing ready to auction. Making this proposal belies a fundamental misunderstanding of the history of markets.
This proposal lets the actor with the keenest interest and best knowledge of the property set a value, and lets the 'challenge' occur in the marketplace, by someone who's willing to buy it at that price. It lets the "brokers" and other experts of the world set the assessed value, by their actions (or potential actions), at a higher resolution than the current processes (which wait for actual sales or later bureaucratically-settled re-assessments).
"... people are not experts at property valuation, and would have to spend a significant amount of time and mental effort figuring out what self-assessed value to put for their house, and they would complain much more if they accidentally put a value that’s too low and suddenly find that their house is gone."
The solution: users would choose an AI to generate real time valuations.
In the property/personal home context, I think this is a bad idea, because if the AI gets it wrong, and you're forced to sell your house, that is bad. However, this idea could work very well in other types of property markets (this was all discussed in the article).
Then there is clearly the problem with current market set up, which basically allows people to trade with infinite length property rights, especially on land. This gives incentive to buy and never sell, because you know that new generations will have to live somewhere and you will be the one able to provide this service. Esentially leading back to pure feudalism.
A middle ground solution could be to make the land market with land tax not immediate, ie. sell whenever someone else outbids you, but as auction for the property every, let's say, 7 years.
This would give you enough time to consider investing into the property withou losing it right away due to trivial underpricing. It would also solve the optimal property allocation, just on longer term. Another advantage for agricultural land would be that a piece of land couldn't enter the market unless it underwent the seventh sabbatical year of
resting, which you could actually enforce under this system.
Sadly this isn't a solution, it just adds another layer of complexity to the decision making process. AI isn't magically unbiased, there's a multitude of ways for human bias/ particular interests to enter the model, from feature selection to model layout up to interpretation of the results.
So now people have to be both experts at assessing housing and neighborhood values and AI to make an informed decision.
That's the big problem of market-based social designs: There's always the fundamental asymmetry between a professional, better-equipped actor (a corporation specialized in that particular market, or a rich person like the bezos example, who can outsource that to employees) and a normal person.
Regulation, society's solution to that problem, tries to level the field: People knowledgable in the problem domain think about possible negative externalities and risks to citizens, and implemenent barriers for abuse.
I'd also add that using an AI also doesn't necessarily mean something opaque. A hand-made decision tree would be preferable to a neural net, for example. The decision tree could prompt you for your human decision if it encounters an outlying, uncertain instance.
Constantly offering to the market is market making. It's a difficult, risky and specialized domain in any asset classes. Most markets cannot support real-time market making for the simple reason that price discovery is expensive and intrinsically tied to liquidity.
I know this is just a hypothetical example, but...the government takes all property at the end of the year, except for money? Since presumably people need something with which to buy property at the auction. How does this work out at all from individual economic incentives? Seems like that just incentivizes everyone to try to end up with as much money and as little property as possible as the end of the year. And does the money from the highest bidder go to the previous owner? That would make sense, but this article implies that it just becomes government revenue.
Of course, the system also needs a mechanism to deal with the opposite: nuisance bids from people who don't have the will or ability to actually complete the purchase. Buying property is not like buying shares.
What's missing is the how. He's far too optimistic about the complexity and inertia inherent in the very constructs he believes we should revise.
Above all is the question of incentivizing progress: it's much easier to describe sensible, efficient solutions than it is to move societies towards them.
Of course you can't swap every system we have for a fair and automated equivalent. You also run into problems around the question of what we should optimize for, which will be swayed by a person's political opinion. Ideal systems would probably lie at a balancing point between socialism and capitalism (as a model, equivalent to tuning parameters), but establishing that point and getting everyone to agree on it would be extremely challenging.
Really you just want to become one of those people, something that takes decades of work.
This would be an interesting hypothesis to explore with swarm reinforcement learning. It seems to me that rights have a lot to do with optimal/stable cooperation strategies in certain types of games, and maybe RL can uncover better strategies, or maybe not.
The simplest well-studied problem of this sort is the iterated prisoner's dilemma. The strategies we have today are remarkably similar to the Axelrod's original strategies three decades ago.
Some taken from here: https://i.imgur.com/mOWKrQE.jpg