> almost everywhere it has a double function in also being an appreciating retirement fund.
That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth.
Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look like at 10% per annum? 20%? 100%?
At 100% per annum, the average land value of a house needs to be below $50k or so in current dollars (most would need to be much less). Any higher, and ~nobody is willing to pay the taxes.
A large home costs $200k or so to build vs a small/cheap home at 80k, so property prices now range from 50k (old cheap home) to 250k (new, high-end home).
That's a huge result for housing affordability! People are currently saving deposits of 80k to get a mortgage.
Instead of paying mortgage costs to capital holders, you're paying tax to a government that ostensibly exists to serve you. Instead of buying "the most I can afford so I get a retirement fund", now people are buying housing based on their willingness to pay an ongoing cost for access to amenities.
I think at that point you’re disincentivising capital works too strongly, since there’s a higher risk you’ll lose the property via default on taxes, but it’s not clear to me that the same effect would exist even at a 20% rate.
That's true, but it's also a looming economic disaster as it prices out the younger generation and entrenches generational wealth.
Chicago are famous for their highest rate of 2.5% per annum, grown smoothly over 15+ years. Thought experiment: What happens if the land value tax rate keeps growing smoothly? What does it look like at 10% per annum? 20%? 100%?
At 100% per annum, the average land value of a house needs to be below $50k or so in current dollars (most would need to be much less). Any higher, and ~nobody is willing to pay the taxes.
A large home costs $200k or so to build vs a small/cheap home at 80k, so property prices now range from 50k (old cheap home) to 250k (new, high-end home).
That's a huge result for housing affordability! People are currently saving deposits of 80k to get a mortgage.
Instead of paying mortgage costs to capital holders, you're paying tax to a government that ostensibly exists to serve you. Instead of buying "the most I can afford so I get a retirement fund", now people are buying housing based on their willingness to pay an ongoing cost for access to amenities.