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naraburns  nihil supernum  1yr ago (text post)   32887 thread views

Culture War Roundup for the week of October 10, 2022

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This is economically very efficient, as it encourages land to be used for its most economically efficient purpose. However, this butts directly up against peoples' real-world desires to "settle" - to establish a home in a place and be able to stay there indefinitely. If, for reasons beyond their control, the price of their property increases, they can be financially forced from their homes, which is about as soulcrushing as being foreclosed upon, while also seeming much more unfair.

The solution I've seen mentioned is that you can permit the homeowner to 'name their price' i.e. the value of what they think their home/land is truly worth, with the caveat being that if someone offers to purchase at said price they are legally compelled to accept it.

If they name an astronomically high price, then they are going to be taxed accordingly.

So the incentive would be that they name a price that is sufficiently high to make up for the the distress of leaving a cherished home, of finding and moving to a new one, and whatever other burdens would be placed on them if they were to move, but not so high that they couldn't afford the tax burden.

I've not thought of nor seen a solid rebuttal to this proposal. If a homeowner has a price they are genuinely willing to accept for a property they have an extreme emotional attachment to, then 'forcing' them to sell at that price is barely a harm. If they claim that the property is actually worth far more than any buyer would reasonably be willing to pay, then they are prevented from complaining if their inflated valuation is the one they pay tax on.

Because if we take the complete inverse of your scenario, we end up with nail houses where a person refuses all reasonable offers to sell, and ends up having all the positive features of their neighborhood stripped away and end up distressed anyway, but with no money to show for it.

What happens when the prices overlap? As in, I wouldn't want to sell at a price that's high enough to tax me out of my own home. This should be more common than not, since most people value their homes more than what they can sell them for - which is why they're not selling right now.

Come to think of it, everything you have should be worth more to you than what you could sell it for (counting transaction costs). That's why you bought and kept the thing for in the first place!

The proposal you're talking about is called a common ownership self-assessed tax, or COST.

I'm sympathetic to Georgism, and COST seems like a good idea for purely economic assets (e.g. farmland), but actually implementing it for housing would probably impose large social costs which would outweigh the economic benefits. People tend to get emotionally attached to their homes in a way that can't really be quantified.

As another comment said, eminent domain exists for the rare situation where a small number of people are preventing development. Everyone else should feel safe knowing their home won't be expropriated.

For more information on this style of taxation (called a "Harberger tax"), see the paper Property Is Only Another Name for Monopoly.

The existing system of private property interferes with allocative efficiency by giving owners the power to hold out for excessive prices. We propose a remedy in the form of a tax on property, based on the value self-assessed by its owner at intervals, along with a requirement that the owner sell the property to any third party willing to pay a price equal to the self-assessed value. The tax rate would reflect a tradeoff between gains from allocative efficiency and losses to investment efficiency, likely in the range of 5–10% annually for most assets. We discuss the detailed design of this system from an economic and legal perspective.

The authors expand on the history of the idea in chapter 1 of the book Radical Markets.

These kinds of choices are just degrading, painful and exploitative. What’s the harm if I offer a poor man one million dollars to have sex with his wife? If he values his wife’s purity he can just refuse, no harm right? Obviously not, if he’s in a situation where he needs the money, even just having this option can be deeply distressing.

You know, I'm going to call you on this one:

Under what possible, realistic set of circumstances would someone actually be willing to pay $1,000,000 to have sex with a particular woman, rather than just buying time with 500 top-tier escorts?

And what person would experience emotional distress in excess of what 1 million dollars could ameliorate?

Okay, so imagine a much smaller offer, say $10,000. You could prevent having to accept that offer by naming a higher price, but you have to pay a tax to do so, a tax calculated to be punitive enough that you would be indifferent toward paying the tax or not increasing your price.

Under what possible, realistic set of circumstances would someone actually be willing to pay $1,000,000 to have sex with a particular woman, rather than just buying time with 500 top-tier escorts?

Revenge or sadism, by a fairly rich person.

The fact that people kill other people over infidelity should be taken as evidence that infidelity is sometimes taken to a million-dollar-equivalent level.

Revenge or sadism, by a fairly rich person.

Have to imagine this will result in maybe a couple dozen instances, tops. Which is to say 99.999999% of couples will never face this particular conundrum.

I guess I don't see this as something I'd consider an appreciable threat. Feel free to convince me otherwise.

I happen to think that the vast, vast majority of wealthy people aren't really so villainish in their tastes, but I'd be open to seeing an example of one who was and used their wealth to exercise their sadism in this way.

The fact that people kill other people over infidelity should be taken as evidence that infidelity is sometimes taken to a million-dollar-equivalent level.

Or as evidence that people make rash decisions without thinking through the consequences.

Assuming we could get rid of all counterparty risk, and the parties involved were given ample time to consider their options, what are the odds of a couple who agrees to accept $1,000,000 for a single instance of infidelity ending up involved in a murder somehow?

The million dollars is an example. You probably wouldn't be offering it to someone who can afford to pay the tax on a million dollars, so you wouldn't have to make the offer that large.

Wow, there was some French movie with that exact plot I saw when I was four. Wonder what the title was.

Indecent Proposal in America

Oh thanks, don't know why I thought it was French. Probably the degeneracy.

the value of what they think their home/land is truly worth, with the caveat being that if someone offers to purchase at said price they are legally compelled to accept it

This is even worse. Under either the present system or full gay space communism georgism, at least I do not wake up one morning and get told I have to move out within the next month.

You are robbing the entire owner surplus here. I am sure the grocery store would like to figure out exactly how much I am willing to pay for a loaf of milk or a jar of bread, or the car salesman to figure out exactly what a car is worth to me.

There is being more economically efficient, and then there is negotiating with the swarm of AI drones outside my house exactly how much my child's life is worth to me compared to their value of him in paperclips.

I have a bunch of things in my house that I would like to sell for their market price but the transaction costs are too high to bother. That is essentially negative surplus for me. But I also own things that I value much more than their market value in cash, which is positive surplus, so it balances out. So the idea of a future where I lose the positive surplus but lose the negative surplus is extremely distressing.

loaf of milk or a jar of bread

You must go to a different grocery store than me

at least I do not wake up one morning and get told I have to move out within the next month.

If you set your asking price correctly, then this should be priced in.

You are robbing the entire owner surplus here.

Again, if they set their price accurately and account for all the value they can reasonably extract from the land, they should be capturing close to all of the 'surplus' available to them, OR there's simply nobody out there that would match their asking price.

then there is negotiating with the swarm of AI drones outside my house exactly how much my child's life is worth to me compared to their value of him in paperclips.

I guess I have a hard time accepting that someone would be so attached to a piece of land that they cannot express a price point at which they would gleefully part with it.

As opposed to parting with a human who is, from an emotional standpoint, of nigh-infinite value and not replaceable.

If you set your price high enough, you could use the sale proceeds to pay to have the entire property reconstructed in exacting detail at a different location, such that you would barely notice the difference.

But I also own things that I value much more than their market value in cash, which is positive surplus, so it balances out.

Can you name one such thing that can't be replaced by a good-enough reproduction if it were ever lost or broken? Do you have some unique pieces of art or some item that has sentimental value only to you?

Otherwise, why do you value such items more than a near-identical one you could just buy on the market?

Can you name one such thing that can't be replaced by a good-enough reproduction if it were ever lost or broken?

Yes, location! This is what the entire point of land ownership is to begin with!

If I live in a neighborhood with a nice school, people I know, family nearby, close to my job, etc. then there's literally no way to reproduce it even with infinite money - unless everyone and everything moves to an exact replica in some other location, which requires moving the entire world, which is both impossible and makes buying my original home pointless.

If you set your asking price correctly, then this should be priced in.

If you know even a smidgen about the financial acumen and long-term planning capabilities of the median American, you should realize that just about no-one will set their asking price """correctly""".

You could offload a significant portion of the price-setting burden to professionals by inverting the system. Have purchase offers go through the government land registry, and base the land tax on the highest offer rejected in the past year or something.

Offers unanswered in some time are rejected by default, and you have a somewhat fair system to assess land value for tax purposes where the owner isn't forced into regular active price setting or having to sell for a previously committed price.

In such a system purchase offers would presumably need collateral or preapproved mortgages to ensure against frivolous purchase offers.

This makes the argument for getting value-producing assets out of their hands stronger.

Why are we letting financial illiterates sit on land that could be producing much greater value? This is no way to run an economy!

But more seriously, fine. Require that they consult with a professional before declaring a price. An agent of sorts. Ah, there we go. Lets set up a profession of "Real Estate Agents", who are familiar with local market conditions, that people can hire so they can set a good asking price for their house and not get taken advantage of by buyers. Maybe require licensing.

Crazy idea, I know.

Why are we letting financial illiterates sit on land that could be producing much greater value?

Because its their land, and properly their decision to sit on it or not. Not yours, not even "ours".

Right, and the issue of people being too financially illiterate to know the 'right' price for their property has been solved for decades upon decades, so this is simply not a good objection to the overall point.

Why are we letting financial illiterates sit on land that could be producing much greater value? This is no way to run an economy!

People are not cogs in an economy. An "economy" is literally the art and science of managing households. To destroy the concept of a household in the service of household management would be a horrifying historical irony, and so fundamentally inhuman I'm having trouble staying civil over it.

How is it unfair to have someone name the value they believe their house is worth for taxation purposes, but fair to have the government declare a value and tax on that value by fiat?

That's been my point the entire time. The most fair way to do a land value tax is to have the person who owns the land declare the value, whilst holding them to said valuation if a sale offer is made.

Financial illiteracy is not a viable objection to this because it is a solved problem.

You did not propose having someone name their value for taxation purposes; you proposed having people name the price at which they would be obligated to accept and sell.

all of the 'surplus' available to them,

Surplus is an established economic concept, not something for scare quotes.

Otherwise, why do you value such items more than a near-identical one you could just buy on the market?

I do not fucking want to wake up and find my kitchen table replaced with $400 in cash even though that is what it is "worth" in some market sense. I would probably pay more much than $400 to have a table but anyone trying to find my price point is my blood enemy. That is valuable information. Mail me an offer if you want it. Tell me how much it is worth to you.

People have things to do with their day besides deal with transaction bots.

I do not fucking want to wake up and find my kitchen table replaced with $400 in cash even though that is what it is "worth" in some market sense.

At what price would this start to be acceptable to you? That's the price you set.

At some value X you'd be pleased to wake up and find your table replaced with $X in cash.

People have things to do with their day besides deal with transaction bots.

Then set the price high enough that the transaction bots leave you alone. If you place a premium on privacy and autonomy, all this hypothetical requires is that you price that premium in.

Okay, so I set the price at $1B, and everyone else does that too. Why not? Oh yes, because this will bump the property tax beyond what I can afford. On the other hand, if I bring it down to what I can afford, bots will no longer leave me alone. Point is, you’re trying to pull a fast one here.

Why not? Oh yes, because this will bump the property tax beyond what I can afford

So your real disagreement is really with the tax rate it sounds like.

Advocate for the tax to be brought down to, say 0.0001% of the property's value and it ceases to be a problem.

We just have to fiddle with the dials a bit to solve your objection.

If your problem is with taxes as a concept then just say that! Its a fine position!

On the other hand, if I bring it down to what I can afford, bots will no longer leave me alone. Point is, you’re trying to pull a fast one here.

I'm trying to explain how this system can be made fair, rather than depending on the government to set accurate values by fiat, which is how almost everywhere does it currently.

So your real disagreement is really with the tax rate it sounds like.

Advocate for the tax to be brought down to, say 0.0001% of the property's value and it ceases to be a problem.

We just have to fiddle with the dials a bit to solve your objection.

Fine, we set it to 0.000001%, I set the value of my table to $999999.00, pay a cent a year tax and we are back to where we are now, no change in anyone's behaviour. Except that's not what's being lined up. The whole point of this system is to change people's behaviour, no? So the tax rate will necessarily be raised to the point where the choice becomes difficult, where accepting a low offer or paying a high tax are equally painful.

This is like a pro-gun advocate saying

"So your real disagreement is really with the calibre it sounds like. Don't worry, once I have power to set gun laws I could just set a calibre limit of .01, that would barely hurt a fly! Just let me set the laws and we can sort that out!"

Except that's not what's being lined up. The whole point of this system is to change people's behaviour, no? So the tax rate will necessarily be raised to the point where the choice becomes difficult, where accepting a low offer or paying a high tax are equally painful.

Presumably it's the same people who own the land being taxed who are voting on the proposals for setting the tax rate.

In which case, again, this is the fairest possible way to do it.

That's the other neat feature of the land value tax: the people impacted by the tax are incentivized, by nature of being property-owners, to try to find the tax rate that isn't exorbitant and burdensome, but still enough to pay for the services that they rely on as property-owners.

So again, are you objecting to the tax being imposed at all, or to some other aspect of the process?

I've not thought of nor seen a solid rebuttal to this proposal.

The simplest rebuttal is that it is immoral to tax people for having natural human feelings of attachment to their home. You could make the same case for forcing people to set a sale price for their children. Very efficient for clearing the adoption market. Or for their spare organs, even. By forcing people to pay for the right to not be forced from their home, you are turning a voluntary market into an involuntary one, which degrades the market and degrades basic human rights and dignity.

That said, I'm not totally against the use of eminent domain powers where you have obstinate sellers blocking genuine civic improvements. But I think the "public benefit" of such seizures needs to be adequately established.

The simplest rebuttal is that it is immoral to tax people for having natural human feelings of attachment to their home.

If we grant that people's feelings have moral weight then we're opening up quite the can of worms here.

If people aren't willing to place a specific price tag on their 'feelings of attachment' then how can we know that their attachment outweighs that of the buyer's desire to have the house?

What if the buyer is actually attempting to re-purchase their childhood home, and has INTENSE positive feelings associated with it?

How ELSE can you figure out how to weigh the disparate interests here?

If we grant that people's feelings have moral weight then we're opening up quite the can of worms here.

I don't see how. We account for them in myriad other laws.

If people aren't willing to place a specific price tag on their 'feelings of attachment' then how can we know that their attachment outweighs that of the buyer's desire to have the house?

Because otherwise they would sell at that higher price voluntarily, presumably.

How ELSE can you figure out how to weigh the disparate interests here?

Voluntary transactions, the same way we clear most markets. This is only a problem because you're starting with the assumption that the owner shouldn't be able to benefit from the transaction.

Voluntary transactions, the same way we clear most markets.

Yes, that's the trick. You ask a person "at what price would you voluntarily part with this piece of property?"

and if they offer such a price, they should by definition be willing to accept an offer at that price without a fuss.

They're free to name an arbitrarily high amount, but then they'll be held to that number by being taxed on it.

If you are objecting to the morality of taxing assets at all you can find this problematic Otherwise, there's really no fairer way to establish a valuation for purposes of imposing a tax.

They're free to name an arbitrarily high amount, but then they'll be held to that number by being taxed on it.

Well then it's not strictly voluntary, is it? If you can't afford to pay the taxes on your subjective valuation, you're forced out of your home just as surely as if the government re-assessed your property at a higher rate than you can afford.

This is why we don't normally tax wealth.

Well then it's not strictly voluntary, is it?

In the same way any tax isn't strictly voluntary, yes.

But this argument generalizes to literally any sort of tax you could impose. I'm happy to have that discussion.

But I thought we were engaging with the LVT idea itself.

If you can't afford to pay the taxes on your subjective valuation, you're forced out of your home just as surely as if the government re-assessed your property at a higher rate than you can afford.

Which is why you better set your valuation at the correct level!

Is it better to depend on the government to declare a valuation which you have almost no control over?

This is why we don't normally tax wealth.

Also because wealth can be easily hidden or obfuscated. As opposed to land, which is physically located exactly where you expect it to be at all times, and can't be hidden.

But surely taxing land doesn't prevent someone from shifting their wealth into other, non-taxed assets!!!!

In the same way any tax isn't strictly voluntary, yes.

But this argument generalizes to literally any sort of tax you could impose. I'm happy to have that discussion.

But I thought we were engaging with the LVT idea itself.

The LVT is a taxation of 100% of land value. This is unlike any other tax we currently do impose that I am aware of.

Is it better to depend on the government to declare a valuation which you have almost no control over?

Yes, quite obviously, because I don't have to pay to vote. If I don't like the taxation level or think the assessments are wildly inaccurate, I have regulatory, judicial, and electoral recourse. In your system, if any person in the world decides they want to force me out, they can and I can't do anything about it except pay them their declared value.

Imagine how this affects investment, too: if you want to attempt a development, you have to pay extra taxes for the privilege of not having your investment bought ought from under you as soon as the risk is retired. If you're lucky, you get to just about break even. If you're unlucky, you lose your investment and the high taxes you paid.

Yes, that's the trick. You ask a person "at what price would you voluntarily part with this piece of property?"

No. You come to me with an offer and earnest money, and I decide if it is worth my time to bother listening to you based largely on the number.

It is aggravating to price everything in my life, knowing that I am fucked if I get it wrong because they are out to get me.

If someone values my home at $3 million because of the feng shui, they can offer me $2 million and keep $1 million of surplus for themselves. $2 million is more than I value my current home. Now someone is going to try "we already know you are a whore we are just negotiating on the price" to figure out exactly where below $2 million my value is and that is when I tell them to eat shit. If I have to defend my property constantly then I might as well go full ancap and blast anyone who steps on it.

No. You come to me with an offer and earnest money, and I decide if it is worth my time to bother listening to you based largely on the number.

I mean this happens, constantly, all the time. If you live in a desirable area you will get a veritable stream of calls, texts, e-mails trying to make you an offer on your land.

It's dreadfully annoying to filter.

From my perspective, I'd much rather just publicly set the asking price for which its worth my time to even engage with a possible buyer, and only interact with those who can prove the ability to pay the asking price, and everyone else can pound sand.

If someone values my home at $3 million because of the feng shui, they can offer me $2 million and keep $1 million of surplus for themselves.

And if you think there's someone out there who values your house at $3 mil, maybe set the price at $3 mil, or $2.5 to split the difference.

Nothing in this hypothetical situation demands you set the price exactly where you value it. You're free to set a 'strategic' asking price too.

I mean this happens, constantly, all the time. If you live in a desirable area you will get a veritable stream of calls, texts, e-mails trying to make you an offer on your land.

It's dreadfully annoying to filter.

Less annoying than if you can't say no to them.

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