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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Replying to
Isn’t a problem that this category of items tend to have high non-economic value ascribed to them by their owners? I don’t want someone buying my house from me for $1k over fair market value. Need poison pill analog
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That’s fine. It can be a holy temple to the owner for all I care. But if it excludes me from having my own holy temple, I get to compete for it in a reasonable way.


