You’ll have to summarize any key points from the book, since I don’t own a copy.

You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go. Maybe some small portion goes to the state, but I believe all go directly toward local projects, firefighters, police, and schools.

Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons. The fact that the property has increased in value is an unrealized gain, are we sure it makes sense to increase property taxes? If my income stays the same, and as you say, property taxes is a progressive tax to reduce inequality, what more income do I have to give?

> if my home value doubles just because of natural reasons.

There's a lot to unpack with just that. Decades of aggressive downzoning and increasing regulatory hurdles to make building more difficult & costly, is not a natural reason (even if it is the status quo). Just as an analogy, that would be kind of like saying the tens of thousands of automobile deaths per year in the US are deaths from natural causes, since it's a status quo that we don't even blink twice at anymore.

You're arguing that your lifestyle has not increased just because your home value increased. It definitely has, basically by definition, now you live in a more expensive house and more desireable location. If we were to itemize the additional value you're getting, the big line item is the cost of keeping other people out of the neighborhood and keeping the density low. 30 years ago that was pretty cheap, now that is an extreme luxury that you are getting. Not to mention other tangible benefits, like access to home equity credit or the ability to sell and move to a much bigger or fancier house almost anywhere else in the country. Just because you aren't going to exercise your ability to do that doesn't mean you aren't getting the value from having that flexibility.

This seems to really get at one of the most fundamental things driving NIMBYism, that people's expectation is if they buy a house they have also bought the right to freeze time in their immediate vicinity and remove themselves from the continually evolving outside world. So if they don't perceive that their lifestyle has doubled in value, they're free to just decide that it hasn't and carry on living and paying property tax as if it hasn't.

To be clear (and this is probably my fault) when I said natural reasons I was thinking along the lines of naturally occurring economic reasons. For example, if people move to my town that will drive property prices. On an individual level there isn’t too much I can do. Maybe I vote to restrict immigration or enact anti-growth policies such as a maximum limit on children. Maybe I sell my home to a developer who turns it into a mall or a 5 story apartment building. Many reasonable courses of action here. By the way, we don’t seem to have much of a problem with prices decreasing, even if that causes a larger financial impact (if you buy a home for $300,000 and policies out of your voting control cause you to lose value, you’re just screwed with no recourse).

I don’t buy for a second though, that if your home value doubles that your lifestyle doubles. My mortgage payment and neighborhood are exactly the same. It can certainly have a positive impact, but it’s unrealized.

Largely I think people are too quick to focus on demonizing the NIMBY, without really considering the full scope. What if people in the state legislatures vote for something that increases my home value and I vote, write reps, and do anything a person has a reasonable capacity to do. Now my taxes should double or triple? And if I can’t afford it you force me out of my house, away from friends and family?

Life isn’t fair I guess? But then people can’t get upset if people go and vote themselves Prop 13 or to defund affordable housing. It’s in their self-interest. Economics is hard.

I don’t know the right answer, but as a homeowner in the Great Lakes Region, I feel more sympathy toward other home owners than some here may do.

> I don’t buy for a second though, that if your home value doubles that your lifestyle doubles.

That's just true by definition of how a price works though, it's not really up to each person to agree or disagree with.

I get that you're not realizing the gains when your house goes up in value. But a property tax is not a capital gains tax, it's a wealth tax on a specific type of wealth (that happens to be very important to society and easy to track). The rules that everyone else is playing by, are that you're taxed based on the value of the property. Whether you realize the gains or not, to give you a break on it at the expense of people who happen to be newer, is not somehow inherently more fair. It's a transfer of wealth that is very regressive on average and goes directly from those with less money to those with more. And it has been a huge driver of the housing and budget problems created in California over the last 40 years.

But it’s not true by definition. If my property value doubles tomorrow, whether I want it to or not, my salary doesn’t double. So taxing me means I make less money now. I think we can argue about it, but you can’t say that my “lifestyle doubles” it doesn’t.

I think we can argue about whether or not it's fair to you that this happened when you didn't necessarily want the value to double. But you really do have double the wealth, there's no two ways about it.

Another analogy, is imagine you paint for a hobby. If the price of paint doubles it's not going to double the value of your paintings, you don't realize any of thos gains. You could argue that it's unfair, you didn't ask for the price to increase, you should be able to go to the store with the same amount of money as you used to and buy the paints. But that would be silly, it's not how the world works.

In general people understand that it's not owed to them that everything will continue to work the same way it used to. But for some reason when it comes to home ownership, people think they are buying the right to keep everything about their home and neighborhood exactly the same, even the things that are not just affecting them individually but have a big impact on the rest of the community (like who else can live nearby, how much property tax they should pay, etc.)

The problem is that it’s a mismatch between wealth and income. Property taxes are taken from income, and if your income doesn’t increase in line with property taxes that may rise completely out of your control, you essentially may have to sell your house to pay property taxes. That doesn’t seem like a good solution to me.

I was thinking on the way home that maybe you lock property taxes in but then you have to lock your home price as well, but that probably wouldn’t work.

With respect to your last sentence, I think one of the issues is that we actually mix public policy into home prices. You can’t want a free market and also not want a free market. It seems like many home owners have chosen to not have a free market when it comes to home prices. It’s also not helpful because, like medicine, your home is a big deal. Uprooting you’re family is a big deal. Think about how a family feels if they buy a house, all of a sudden their neighborhood is “cool” and then they have to uproot their family because rich people push them out?

Not a lot of good solutions to a big problem here.

There are two solutions to the property tax income mismatch issue. Which often effects old or disabled people. One I think some places do is allow people to freeze property taxes when they retire. The other is just to allow people to take a property tax lean against their property. When it's sold the state gets it's cut.

> I was thinking on the way home that maybe you lock property taxes in but then you have to lock your home price as well, but that probably wouldn’t work.

I think this might be an interesting improvement on Proposition 13: you can choose to lock in your low assessed value, but then you have to sell at that assessed value or pay taxes on the difference. This would allow homeowners to opt out of the free market for property tax purposes, but without having their cake and eating it too. I believe cities or the state actually have the authority to impose price controls under the same constitutional authority that allows them to impose rent controls; see https://blog.yonathan.org/posts/2018-09-proposition-10-rent-... for details.

Your borrowing power doubles.

> Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons… On an individual level there isn’t too much I can do.… Maybe I sell my home to a developer who turns it into a mall or a 5 story apartment building.… And if I can’t afford it you force me out of my house, away from friends and family?

I think what you said is somewhat contradictory. You said you don’t know what you could do if your land value were to increase, but then you list a couple good things that you could do (develop an apartment or sell the house), as well as a couple illiberal policies you would pursue (immigration restrictions or limits on children). I would add that you could rent out a bedroom or build a modest extension to rent out. And I think it is contradictory to say that you could build an apartment and be displaced; it is exactly apartments that would prevent you and your neighbors from being displaced.

> By the way, we don’t seem to have much of a problem with prices decreasing, even if that causes a larger financial impact (if you buy a home for $300,000 and policies out of your voting control cause you to lose value, you’re just screwed with no recourse).

I agree! This is actually another reason to want higher property taxes. In places like the Bay Area where the land value is so high, buying a house is a very big bet that the high values will be maintained. If taxes on land were higher, then the price would be lower and the government instead of individual homeowners would bear more of the risks.

> but as a homeowner in the Great Lakes Region, I feel more sympathy toward other home owners than some here may do.

And how do you feel about tenants, who face the same problems but worse?

What is the right level of privilege that owners should have above renters and future buyers? The property tax allows society to tune the amount of privilege that owners have over renters and future buyers. If the tax rate were 0% (allodial ownership), landlords would have a great degree of privilege over their serfs. At the other extreme, a tax rate of 100% of the rental value would be equivalent to leasing from the government, and landlords would have no privilege over other tenants. When we break the property tax by preventing it from adjusting to property value (as Proposition 13 did), then current owners become rich from the booming economy even as renters and future buyers become impoverished, or as the article puts it, “it’s especially unfair to their children, who are in effect subsidizing their parents’ generation.” In my opinion, the property tax rate should be moderately high, so that landowners and tenants’ interests would be more aligned and the government would have the resources it needs to address displacement and inequality.

Yes, you’re right I mentioned some things that you could do. Though I’d also like to point out that whether the policies are liberal or not is not very important to me, they are just natural reactions people will have. Restricting immigration or child rearing is a logical consequence, and it doesn’t make people bad. If you like things the way they are, you’ll protect against population explosions.

One of the issues here with doing something like building an apartment complex means now you have to live in the apartment or move your family and become a landlord. You do become displaced, and you have to sever neighborhood ties you have. In an era where many people are searching for meaning and community, I’m not sure that having your neighbors move and build an apartment complex on the lot next to you is a good thing. You will potentially have conflicts with increased road usage, or maybe property taxes increase to pay for a dozen more children to attend a school that previously didn’t. Although some here have suggested property taxes are meant more so for distributing wealth than to pay for services. At some point somebody pays to build a new school. If you’re a home owner a lot of this just seems like a bad idea. It makes more sense to maintain things how they are.

With respect to rent, I’m not sure. Maybe it makes more sense to tax rental income than the property. Ultimately we have a few problems that aren’t easy to solve, and unclear goals. I don’t think apartment buildings everywhere is a good thing, and that’s the future of the Bay Area. I’d want to develop a tax and property rights structure that encourages medium density mixed use development. We have to question home ownership too - passing on a home to your kids means because you happened to be here first locks others out of the market. Why is it considered fair that I can’t afford ably buy a home in Tahoe just because someone was born before me? Maybe it is fair. Maybe it isn’t. Tough questions. And even if you raise property taxes, rich people won’t care. They’ll still live in Tahoe and I’ll still only be able to afford to life next to cornfields.

Idk.

> Though I’d also like to point out that whether the policies are liberal or not is not very important to me, they are just natural reactions people will have… Maybe it is fair. Maybe it isn’t

In my opinion, a liberal society with progressive taxation (including the property tax) tends to provide more opportunities for those who are born without assets than a society that overly protects the privileges of feudal estates (“passing on a home to your kids”), and would be a better society to live in behind a veil of ignorance.

> One of the issues here with doing something like building an apartment complex means now you have to live in the apartment or move your family and become a landlord

You can also build a condo building and own one of the condos instead of managing rentals.

> With respect to rent, I’m not sure. Maybe it makes more sense to tax rental income than the property

The problems with the income tax on rent are that 1) it penalizes renting out land while rewarding speculators who leave land vacant, and 2) it punishes renters who bear a higher burden than owner-occupiers who do not pay tax on the imputed rent (incidentally, the fact that imputed rent is excluded is basically a mistake of the original Form 1040; see Lawrence Zelenak, “The Early Income Tax and the Imputed Rental Income of Homeowners” https://doi.org/10.1017/9781108377157.008). The property tax is a fairer and less distortionary tax than an income tax on rent.

> If you’re a home owner a lot of this just seems like a bad idea. It makes more sense to maintain things how they are.

From a Bay Area resident to a Great Lakes resident, I hope people there heed the cautionary tale that is the Bay Area: maintaining the residential housing stock almost unchanged despite strong economic growth and agglomeration effects, and protecting property owners by discriminating against later generations, is an absolute disaster for lower income and even middle income households.

> You’ll have to summarize any key points from the book, since I don’t own a copy.

The first few chapters of Rethinking the Economics of Land and Housing describe the distinction between competitive capital (whose price signals the economy to create more) and land (which cannot be created) and thus why they should be taxed differently. I think it is mostly based on this essay by Mason Gaffney: “Neo-classical Economics as a Stratagem against Henry George” (http://masongaffney.org/publications/K1Neo-classical_Stratag...)

> You say that property tax is a tool to reduce inequality, but I’m not 100% sure about that. For example, I don’t even know where my property taxes go

Broadly speaking, progressive taxation is all about taxing any income that is above and beyond what the average wage-earner earns from wages and competitive capital, and using it to fund services that are used by everybody. Virtually everyone has their own labor, whereas income from ownership of natural resources and monopolies is concentrated, so taxation of income above and beyond wages and interest reduces inequality.

Increases in land rent are unearned income that are not due to the owner’s wages and do not incentivize the creation of capital, so it is fair game to tax it as part of a progressive income tax system. If we don’t tax it using property taxes, then land value increases only become a windfall to the owner, leading to greater wealth inequality.

> Further, I’m not sure what I’m supposed to do if my home value doubles just because of natural reasons

The subject of this article is California’s ”severe shortage of houses.” What you are supposed to do in response to the price signal is expand the building so that more people can live on your lot.