This old article, Tax Price, Not Value, has been stuck in my brain since I first read it and I periodically wonder why the core policy idea isn’t actually tried. interfluidity.com/v2/4911.html
Conversation
The immediate provocation is the debate around the realization rule, which means wealth can’t be taxed until it is sold or transferred. But the principle applies to any asset with social costs to exclusionary control. Real estate and patents are Steve’s primary examples.
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The basic idea is: you pay property taxes on capital gains even if unrealized, but you do so on a value *you* declare. So if property tax is 5%, you could claim your home is worth $100 and pay $5.
The catch? If someone offers you $101 for the house you must sell.
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So the declared property value on which tax is assessed becomes an option strike price for everyone else’s or a period. Say a week after tax day.
The logic mainly applies to things where your use of an asset has exclusionary effects on everyone else — a social cost.
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Often the exclusionary effect is due to you being unwilling to work hard to realize more gains from the property than you want, leaving it underutilized and others deprived. If a hungrier person were in control they’d do more. It’s actually a capitalist means to a socialist end.
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So you, a NIMBY have 1 single-family house while 5 others struggle with long commutes/slum housing. A property developer is willing to set up a 6-unit MFH. How to resolve: pay taxes on a price at which property developer won’t buy! State uses taxes to help other 5 families.
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Replying to
The one problem with this is that it enables you to literally buy the home out from under someone if you have enough money and don’t like them
Jeff Bezos can wake up one day and decide he’s just going to make you homeless
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This is not a problem if you paid taxes on a price premium above market value. That’s the whole point. You’re hurting the market by holding on, so either pay taxes on real value or cede to someone capable of realizing that real value. Whether Bezos or anyone else is irrelevant.

