A negative tax on the lowest bracket would also probably work, that’s just a minor adjustment though. The big goal is to refund the land value taxes so that the net change for an average family taking up a reasonable amount of land would be $0. Use more land, pay more. Use less land, end up better off than you are right now.
Ah, well that’s more reasonable. It’s a low-density tax. Wouldn’t you want to calculate by (residentially-allocated) area rather than property value, then?
You’re also missing how mortgages work. The return was 5% on the property value, but not 5% on my investment. In the first year of my mortgage of my first house, I invested only around $45,000 including the down payment for 10% and the first year of mortgage payments. Lets say the property went up 5% in that time, which would have been around $15,000 on that first starter house I owned. So on an investment of $45k, I made $15,000k, that’s a return of 33%. But it’s worse than that, because the 45k is only my cash output value, not my actual costs. The whole down payment of $30,000 went to my principal, and is essentially 100% equity. Given it’s my first year of my mortgage, almost all of the monthly payment is for interest, equity from my monthly payment was only like 20% or something, so that’s another $3000 paid off on the home as equity. Of course there’s insurance, maintenance, etc. costs, a few thousand dollars so that pretty much eliminates that amount. So my actual investment costs is actually closer to the mortgage payments of $15,000, which gave me a return of $15000 (5% on the property value) for a 100% return on investment.
It’s a leveraged investment. It earns more in good times as a result, as would leveraged equities. To be fair, I haven’t actually looked into what kind of leverage the average mortgage-holder could get for that, but double the rate of return for the underlying instrument is no joke.
The proper way to calculate this would include the entire period of amortisation, all the payments together, and whatever you finally sell the house for added to the rent you didn’t pay as the return. Risk is also a consideration - where I live, out in the country, the return would have been be a lot lower than that. If you bought a house in somewhere like Detroit you’re just in the hole, because your house is only in one place and not diversified.
As for my own situation, I’m still young and building back up from rock bottom so I can’t really talk about the last 14 years.
Ah, well that’s more reasonable. It’s a low-density tax. Wouldn’t you want to calculate by (residentially-allocated) area rather than property value, then?
It’s not really a low-density tax, because it doesn’t apply to everywhere with low-density. If you were in a rural area, it shouldn’t be a high amount at all.
The property (land) value already calculates the desirability of the area and the specifics of that property (things like views, water access, access to schools, rec centers, etc) in much finer detail than a per-area calculation would do. I don’t see the point of re-inventing the wheel when the existing one works pretty well.
It’s a leveraged investment.
Yes, but it’s a secured leveraged investment, which makes the rate for borrowing stupidly low compared to what you’d pay to do it with equities. Yes there’s still some risk, but I don’t know a single home owner in my province who has lost money in the last 40 years. I’m sure they exist, just absolutely terrible timing followed by a divorce or something, but it’s really rare.
All I’m saying at the core is that we need a land value tax to fix the housing market, probably something that escalates over 40-50 years so as to not absolutely crash the economy while we’re implementing it. Doing it overnight would literally wipe out the majority of equity of every single home owner, and unfortunately due to what’s happened a lot of those people are relying on that for retirement. It would also be political suicide given how many homeowners exist.
The property (land) value already calculates the desirability of the area and the specifics of that property (things like views, water access, access to schools, rec centers, etc) in much finer detail than a per-area calculation would do.
Yeah, too finely. If you tax everything, you tax nothing. If people using too much space is your issue you should tax the space.
I don’t think you should make a distinction between the suburbs and the exurbs; it’s only a matter of degree. Farmers are a different thing, which is why you’d want to make some kind of rule for “lived-in” area vs. area for other uses on the same property. I know families that live in tinyhouses in the middle of a field, and I know of “farms” that are pretty much leisure space for rich guys who may or may not even live in the area.
You do want it to be fine though, because we don’t actually need that much space and some specific things like waterfront/views are vastly different than the average suburb location. As I mentioned before, there’s actually tons of space. You don’t want 70% of detached home owners to sell their property all at the same time, you want the ones closest to jobs/amenities to sell first, give developers the time to build them up, then slowly push further out depending on how supply and demand for that location change over time. The goal isn’t to just pave every single detached house near a city center. It’s to make sure that people use a reasonable amount of land given the desirability of the location, or pay everyone else for the privledge of using more.
Ah, well that’s more reasonable. It’s a low-density tax. Wouldn’t you want to calculate by (residentially-allocated) area rather than property value, then?
It’s a leveraged investment. It earns more in good times as a result, as would leveraged equities. To be fair, I haven’t actually looked into what kind of leverage the average mortgage-holder could get for that, but double the rate of return for the underlying instrument is no joke.
The proper way to calculate this would include the entire period of amortisation, all the payments together, and whatever you finally sell the house for added to the rent you didn’t pay as the return. Risk is also a consideration - where I live, out in the country, the return would have been be a lot lower than that. If you bought a house in somewhere like Detroit you’re just in the hole, because your house is only in one place and not diversified.
As for my own situation, I’m still young and building back up from rock bottom so I can’t really talk about the last 14 years.
It’s not really a low-density tax, because it doesn’t apply to everywhere with low-density. If you were in a rural area, it shouldn’t be a high amount at all.
The property (land) value already calculates the desirability of the area and the specifics of that property (things like views, water access, access to schools, rec centers, etc) in much finer detail than a per-area calculation would do. I don’t see the point of re-inventing the wheel when the existing one works pretty well.
Yes, but it’s a secured leveraged investment, which makes the rate for borrowing stupidly low compared to what you’d pay to do it with equities. Yes there’s still some risk, but I don’t know a single home owner in my province who has lost money in the last 40 years. I’m sure they exist, just absolutely terrible timing followed by a divorce or something, but it’s really rare.
All I’m saying at the core is that we need a land value tax to fix the housing market, probably something that escalates over 40-50 years so as to not absolutely crash the economy while we’re implementing it. Doing it overnight would literally wipe out the majority of equity of every single home owner, and unfortunately due to what’s happened a lot of those people are relying on that for retirement. It would also be political suicide given how many homeowners exist.
Yeah, too finely. If you tax everything, you tax nothing. If people using too much space is your issue you should tax the space.
I don’t think you should make a distinction between the suburbs and the exurbs; it’s only a matter of degree. Farmers are a different thing, which is why you’d want to make some kind of rule for “lived-in” area vs. area for other uses on the same property. I know families that live in tinyhouses in the middle of a field, and I know of “farms” that are pretty much leisure space for rich guys who may or may not even live in the area.
You do want it to be fine though, because we don’t actually need that much space and some specific things like waterfront/views are vastly different than the average suburb location. As I mentioned before, there’s actually tons of space. You don’t want 70% of detached home owners to sell their property all at the same time, you want the ones closest to jobs/amenities to sell first, give developers the time to build them up, then slowly push further out depending on how supply and demand for that location change over time. The goal isn’t to just pave every single detached house near a city center. It’s to make sure that people use a reasonable amount of land given the desirability of the location, or pay everyone else for the privledge of using more.