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this post was submitted on 08 Jan 2025
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Lottery for poor people, if it even happens.
Besides decommodification, the other end goal here is enough affordable houses that it's no longer a lottery and simply open as an option to people in general.
There are already more bedrooms in Canada than people, and the fact that a lot of people(coupkes and young children) share bedrooms on top of that means that there isnt actually a housing shortage. The problem is the housing isn't allocated properly.
If people are allowed to want an unlimited amount of housing, then there can never be an end to the "shortage" and you're just chasing moving goalposts.
The important thing is that you can stay mad at any amount of good news. Sometimes you might have to work hard at it, but I believe that you can, in the brightest light, find a dark shadow to be pissy about.
Good job. /s
How is giving people hope, then not actually delivering anything considered good news?
Go ask New Yorkers how social housing is working out. Literally 1000 applications per unit that gets built.
Hey, keep it up. Getting mad about your imagined version of stuff before it even happens is pretty much peak internet.
This shit has been tried in dozens of cities worldwide, and it's never helped. Why would it work here?
This is what we call Beggaring the Question.
This is what we call stupidity. Trying the same thing and expecting different results.
What's your solution? If you have none, STFU and let the grown-ups do their work.
Land value taxes high enough to completely remove all income taxes.
Ah. I smell conservative scambait.
Well maybe you should read a little deeper then.
Removing income taxes in favor of land taxes is one of the most progressive possible taxation policies. People with more wealth own more land, and therefore get taxed more. Less land owned, less tax.
That's a frankly terrible idea, especially for lower income people.
Income taxes are bracketed based on income, with significant amount of deductions and exceptions for things like disability, having a family, retirement savings, education, etc.
Taxing land, especially rental property, means that the tax landlords pay is just passed down to the renter which makes it more difficult for the individual to then assess how much tax they have actually paid and are responsible for. If we then say the individual is not responsible for paying any of that property tax, then the government will be obligated to refund those tax payments to the individual, which means the government is losing that revenue. If the tax is not refunded, then the individual is going to be responsible for a much higher tax burden than the current system.
None of this actually creates new housing, it just creates a new opportunity for the wealthy to play their money shell game.
Viable solutions include:
Not sure if I mentioned:
Yea, you haven't actually read up on LVT. You should probably go do that before arguing against it.
I suggest reading up on why LVT can't be effectively passed to renters, it's a very important concept in why they're so good.
LVT are even more progressive than the income tax brackets, as a) poor people don't tend to own much if any land, especially valuable land and b) it prevents tax evasion by wealthy people because you cannot hide land, or even work around it by paying yourself $1 or something other financial shell-game bullshit.
The only way to avoid LVT is to not own land, which means that land is then available for other people to own. You want a mansion in a prime part of a city? You'll pay through the teeth for it. You're fine with a condo downtown, the taxes will be quite cheap.
This whole "housing shortage" thing is fake, or misleading at best. There are more bedrooms in Canada than people. The problem isn't a lack of housing, it's that the current distribution of housing is simply broken. There are far too many detached houses with 4+ bedrooms and 2 retired people living in it because the kids moved out a decade(s) ago. They were supposed to downsize, but they never did, and it's fucked up the housing market for the next generation. Land value taxes replacing income taxes effectively penalize them for not downsizing when they no longer work and don't need the space.
Yeah, they're not the enemy here, and more often than not can't afford to move either. When your retirement plan relies on having a paid-off house to either offset living costs or to have as an asset to sell when it's time to move into assisted living.
Forcing LVT on them means they will need to sell early (and likely quickly) to buy into a condo, which is now going to be FAR more valuable since they will have increased demand (similar to what happened during the pandemic when people were buying houses left and right for the space to quarantine/WFH, houses on my street that sold for $200k a few years before were going for a million+). Subsequently, the property they are selling will be far less valuable due to the tax. So now a retiree is being forced to undersell and overbuy just to avoid a hefty tax bill, pay lawyers, realtors, movers, likely have to sell a lifetime's accumulation of stuff (or abandon it) among all the other costs associated with selling a house and moving. Chances are, they will end up having to pay a mortgage or begin renting possibly decades earlier than when they planned to, eating up their retirement savings.
What do we do with those people? If we left them alone, they would eventually give up the house either when they die, or move into assisted living. It's a very short-lived problem in the long-term, and not nearly as impactful as apartment buildings with 50% occupancy because the landlords want $3k a month or people who own multiple homes as rental properties.
How will the value of the land be assessed? Property value is assessed as an estimation of the fair market value if it were to be sold today. Unless it's an empty lot, the fair market value is a homogeneous combination of the land and building(s). To get the value of the property, you would have to subtract the value of the building from that total. This is an estimate that insurers and lenders make all the time and there is little to no real accountability as to how these estimates are made. Say I have a property with a house and the whose thing is assessed at $500k. I take out insurance and they estimate that the replacement value of the house is $600k because that's what they think it would cost to build a similar house there. Does that mean the land it sits on is valued at -$100k?
Maybe instead we try to use recent empty-lot sales to assess land value based on dollars per acre. The only empty lot near me has been vacant for years because nobody has been able to get through the permitting process to build on it and has been sitting with a for-sale sign on it for as long as I can remember. Since nobody wants to buy it, does that make it worthless? If that lot is worthless and it's close to the lot I live on, does that make my land worthless? If I use that to prove that my land has no value, does that mean I pay no tax?
All that still doesn't solve housing for low-income people, though. If I had a plot of empty land big enough to build an apartment/condo building, it would be advantageous for me to build something that I could rent out for as much money as possible, and luxury units are more profitable. If I have a building with empty units, they occupy the same land as the units with tenants, who are covering the tax bill for the land the building sits on. I can then improve the empty units and rent them at a higher rate, because why would I hamstring my profits? LVT encourages me as a landowner to maximize the amount of profit I can extract from that parcel.
I am also not convinced that LVT can be used as a complete taxation system and additionally, I am not convinced that it will address the true shortage of tax revenue, which is that of the extremely wealthy and massive corporations, who extract an amount of wealth far disproportionate to the amount of land they use.
Either house prices drop and become affordable, or they stay high and stay unaffordable. Yes this means people with houses lose money, but that's the only solution. There is no fix where house prices stay high AND become affordable. That's literally impossible.
My proposal to fix this issue is to introduce LVT over a 40-50 year period with it just slowly ramping up over time. This allows all the people who've currently banked on their home as their retirement plan to die off as the value slowly drops. People who have just started get time to figure out other retirement plans.
BC assessment splits land from buildings on their assessments already... and there is a process to challenge the valuations already. This is a solved issue.
Insurers don't give a shit about your land, they care about replacement cost of the building. You can't replace an old building with a similar old building, so they're always insuring for the "new" cost of a replacement home which is why your example could end up negative. It's not a useful value for determining land value, but luckily BC assessment is smart enough to already take that into account, if you watch the house value of a particular property over multiple years you'll notice they depreciate the house price over time.
Everything encourages maximum extraction of profit, that's literally how capitalism works. The benefit to LVT in this situation is that sitting on the land and doing nothing with it (or utilizing it in a sub-optimal state) will lose you a lot of money, so you're much more incentivized to maximize the productivity of a valuable piece of property or sell it to someone else who will. Density in desirable areas will effectively become mandatory, potentially even driving the land price down to 0 dollars in some cases.
If you look at the current condo developments in Vancouver, and do a little math, you'll figure out that the land costs alone make up some $300-500k of the price on each condo. Driving that value to 0 would be absolutely incredible for affordability.
I never suggested LVT become a complete taxation system, I only suggested using it to replace Income taxes. Business taxes should absolutely stay a thing (and need their own fixes to prevent loopholes). That being said, while the corporations often don't have a lot of land use, their shareholders do. Most wealthy people have significant housing assets which would be taxed under LVT.
It often helps. The best example is Vienna.
Vienna has decade long waitlists, you have to live in the city to get on the waitlist in the first place, AND private housing is still expensive.
The only people it works for is the people who already have a unit, and not even many of those because once you get one, you can't move if for example you have a kid and need more space.
https://policyoptions.irpp.org/magazines/march-2024/vienna-housing-lessons/
People keep using it as an example, but it has failed at this policy too.
Your own source disagrees with you:
And the conclusion is:
Which I fully agree with. As the report shows, in recent years Vienna has also failed to keep up with demand. Vienna isn't perfect, but if their model is actually followed, and supply scales with demand, then costs can be low.
Now, do one final calculation.
How much would it cost the BC government to purchase or build 40% of the residential properties to replicate what Vienna has in terms of accommodations?
Residential properties in BC have a total value of around 1.5 TRILLION dollars in 2023. 40% of that would be $600 billion.
There is no realistic way to reach even 4% social housing in BC, let alone 40%, and that's all to achieve something that as per the article I linked, isn't actually enough to keep the market in line.
There are better options than social housing for the province to spend money on if they wish to address this problem. With the amount of money they can reasonably spend, as per my original comment, it's nothing but a lottery for poor people. It's a "look, we're doing something" which doesn't actually benefit anyone who doesn't receive a unit. The only path to affordable housing for everyone is to force ALL housing prices down, and a lottery will never impact that.
I'm sick and tired of the government spending my tax dollars on a policy which only helps a minute fraction of people. I want it to help everyone.
The cost of real property to governments is almost inconsequential. Governments can often get loans against assets at below inflation, and usually well below the increases in real estate market value. There are many cases of municipalities that bought property, then changed their plans and resold that property for a profit, even when factoring in maintenance, legal fees, and borrowing costs.
If the government dumped $600 billion into the BC real estate market, it would make the inflation from COVID look like a speedbump in comparison.
Also, the whole point of this is to reduce housing costs. If the government charges the same amount, then it won't do fuck all.
I’m not suggesting BC purchase $600 million in housing all at once. More non-market is a medium/long-term goal. I’m just demonstrating that governments can purchase/build real property at very little cost to their budget, since you’re worried about BC misusing your tax dollars. It “costs” a lot to buy or build property but that is paid for with debt not general funds. That debt is very cheap to finance since governments typically have good credit ratings and the debt secured against assets.
I’m also not sure why you think the government would charge market rates, I never said that.
From your other comments, you seem to want a quick and simple solution to a complex problem that has been growing for decades. I agree that LVT is a good idea and would help but it’s not a solution unto itself. And your ideas about abolishing income tax are right out of the southern states; not exactly the examples we want to follow.
They can't though, even over time. It's $600 BILLION, not million. That's 5x larger than the total current provincial debt. If they issued that as bonds, it would ruin the credit rating for the province and cause massive inflation.
AND, that's just to get us to Vienna level of social housing, which as stated in the article I linked isn't helping keep the market under control any more.
If you want the government to issue that much debt, how exactly are they supposed to pay it back (and the interest) if they don't charge at or near market rents? If you buy a million dollar property, even at the bank of Canada rate of 3.25%, that would be $32,500 a year in interest costs, or $2700 per month. Which means that they have to charge at least that to even service the debt, and more if they ever hope to pay it off. That's a starting point that's already unaffordable.
Why are you against replacing income tax with land taxes? What's the actual reason you're against this.
While I do want LVT, and it is quick and simple, LVT can't actually happen anytime soon. It's political suicide. It literally relies on destroying the equity of every single home owner. Given that residential properties are still about 65% owner occupied, and home owners tend to vote more than renters, there's no way they will ever allow a policy like this to take away their hundreds of thousands (or millions) of dollars.
However, all these other suggestions are nothing but band aids. There's a simple problem, you can't have home prices stay up, and also have affordable housing. Building more housing, building more social housing, first time home buyers credits, rezoning, none of these actually reduce the prices of homes at a realistic implementation, even when done together. Until policies designed to significantly drop existing house prices are implemented, the situation will get worse.
I want better for my kids.