HN

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  Nevermark
  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.
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  abeppu
  > 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?
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  binlog
  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.
• bijowo1676
  California is already collecting way more taxes than needed, perhaps the state needs to learn how to better manage existing taxes
• dhosek
  Property tax increases are hamstrung by Prop 13 and until that’s repealed, will continue to be.And while the wealthy always threaten to leave when faced with higher taxes, the fact is that they never seem to actually do so.The site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.
• grommet_kit
  Spot on. Seen too many colleagues pack up for lower tax states, taking their equity and talent with them.
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  kccqzy
  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?
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  Ancalagon
  [flagged]
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  MrZander
  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.
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  jadar
  > [C]ritics estimate the lost revenue would have to be made up by roughly doubling the state sales taxIt is possible to just ... stop spending ...
• chasd00
  Isn’t California one of the richest states in the richest nation? Does that government really need more revenue?
• binlog
  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.
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  qwertyhjkl
  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.
• marten31
  California made its bed with regulation and housing costs. Now the productive folks are just finding better places to build.
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  beloch
  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?----------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.
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  abeppu
  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?
• 8note
  if its got feet, why all the focus on RTO all over the place?
• leecoursey
  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...
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  lizknope
  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 3XIt 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.
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  hungryhobbit
  "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!
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  mbgerring
  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.
• sinkasapa
  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?
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  guywithahat
  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.
• digitaltrees
  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.
• xp84
  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.)
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  slantedview
  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.
• chewbacha
  Why not both?
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  flenserboy
  Coveting is a terrible basis for an economic system.
• duhhhhh1212
  https://www.pangram.com/history/afa0fd9b-eeae-49d0-932a-24b8...This is mostly slop. Don’t waste your time.
• gregglain
  Tax - why not both billionaires and land.
• marcell
  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.
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  happyopossum
  > nor can it be passed on to rentersThis is an asinine claim - any cost can be passed along to a willing payer.
• lenerdenator
  So they're dealing with the problem the rest of the country has been dealing with since everyone started wanting to move to California?
• sdh
  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.
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  sublinear
  "I'm livin' to keep warm, you livin' to pay rent [...] Bitch, I made my moves with shackled feet"- some Kendrick guy
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  jmyeet
  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.
• the_optimist
  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.
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  jongjong
  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.
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  cucumber3732842
  >. The land value tax can’t be dodged by leaving nor can it be passed on to rentersROFL what? I'd bet the author a lot of money that costs WILL roll downhill, the source matters not.
• focusgroup0
  [dead]
• demo4567
  [flagged]
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  bigyabai
  I ctrl+f search for "gentrification" and nothing pops up. I close the Substack blog and proceed with my day.
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  Animats
  It's the single taxers again, with a new argument.
• xlayn
  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
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  cuzezzzbbfofai
  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.
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  dluan
  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...
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  Scottn1
  “ 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.