California is chasing wealth that has feet

bigyabai

I ctrl+f search for "gentrification" and nothing pops up. I close the Substack blog and proceed with my day.

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.

cucumber3732842

>. 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.

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.

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.

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.

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.

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.

Animats

It's the single taxers again, with a new argument.

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?

sublinear

"I'm livin' to keep warm, you livin' to pay rent [...] Bitch, I made my moves with shackled feet" - some Kendrick guy

duhhhhh1212

https://www.pangram.com/history/afa0fd9b-eeae-49d0-932a-24b8... This is mostly slop. Don’t waste your time.

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

flenserboy

Coveting is a terrible basis for an economic system.

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?

jadar

> [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 ...

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.

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.

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...