Income tax when you aren't receiving an income is a weird idea.
It sounds like the author wants a land tax, but hasn't ever heard the term.
this post was submitted on 24 Aug 2023
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Another term is a vacant homes tax, something Vancouver and Toronto in Canada are using.
These sorts of narrow, “feel-good” taxes are the wrong way to go. People find loopholes to avoid paying them.
Georgist land value tax (LVT) is straightforward and cannot be avoided. It incentivizes owned land to be utilized, otherwise it becomes a huge liability. It does not disincentivize improvements (building stuff) because taxes are tied to underlying land values, not improved property value.
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That's the thing, it's not a "property tax" that they want, it's for landlords to have to utilize the apartments for low income housing like they are supposed to. What's going to happen is that they are going to leave the apartments vacant for 5+ years and then say, "No one wants to live here, so I'm not making money. I have to renovate to draw in new tenants, so I'll have to increase the cost to cover my cost." This is just modern day blockbusting, and it's fucking terrible.
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Just make property taxes higher for empty buildings. Prorate per month. I thought some country was trying this?
For rentals in general, trying to solve a different problem, we should drastically increase property taxes and then give a discount for primary residence that puts it back to where it is now.
The owner of an apartment is always receiving income from it, either in the form of the rent check or whatever utility it provides for him to keep it to himself.
I don't like land taxes and other property taxes because I don't think there's a good way to apply those taxes progressively. Rather, if we just take the imputed rent of a given asset (land, building, car, etc.) and add that to the taxpayer's income, the the progressive income tax can just do its thing.
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There are so many empty business spaces in my town because landlords can just sit on them -- and potentially rake in tax credits -- even though no one wants to rent at their rates.
Needs to stop.
That's why San Francisco implemented a vacant storefront tax.
But getting commercial landlords to comply has been a struggle.
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"Income tax on their properties whether they're rented or not" is just a long way of saying "land value taxation".
I disagree. Land value taxes are flat unlike a progressive income taxes. Therefore, a land value tax can be unfairly burdensome to people with low incomes who happen to own land. If imputed rent is taxed as income, then the tax burden is more fairly shared. It also creates more insentive to keep rents low and units occupied.
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That’s how it works in Switzerland and there are no empty unrented places anywhere to be seen.
They also have relatively low amount of homelessness.
Based on the mean projection, 0.02% of the adult population is homeless in this country. The proportion in neighbouring Austria is 0.25%. In Germany, the share of homelessness is 0.41%, in France it is 0.22% and in Italy the share is 0.08%.
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So much to unpack there, not the least of which are the sweeping generalization of "landlord" and the truly odd assumption that all landlords "enjoy" every single vacant unit "for themselves"... I mean, I appreciate your outrage, but damn. Stay in school?
No outrage here. I'm using the word enjoy in an economic sense, as in possessing something and getting some benefit out of it. The concept is called "imputed rent" if you'd like to look it up.
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There are lots of ways to tax landowners, but ultimately they all punish landowners for existing (which is a great thing for society) so instead they become weird neo-liberal market based schemes like tax credits for entrepreneurs who own land in a disadvantaged area for at least 3 years. so that the people that will be targetted by the tax are able to avoid it by claiming that they also own the bodega in their slum, thereby making them an entrepreneur.
Ultimately it's not that the people proposing these taxes can't come up with better tax schemes, it's that they are paid to come up with ridiculous schemes that are designed not to eliminate landowners.
Its owner is just receiving it in the form of enjoying the unit for himself
What's actually wrong with that?
I don't know about anywhere else but in Australia if you are using the unit you can't claim the expenses as a rental, so there's no advantage to keeping it empty.
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Where do landlords get their money? (the money they exist with).
From renters.
If they have to pay money (as taxes) for rentals that aren't occupied, where will that money come from?
From renters in the form of higher rents.
Are you SURE you want to go through with this?
The solution is simply for landlords to keep their units occupied and they can increase occupancy rates by lowering rents, which will also have the effect of lowering their tax obligations. I'm not sure what you think the problem is.
That's certainly the preferable solution, I guess it's worth asking if it would work out that way.
So for example, I own 100 houses and I earn £100 per month for each one. (Values for purposes of illustration only!)
Let's assume 10% are empty at one time.
With an income of £9,000 per month I'm paying 20% tax on that, £1800.
Up that tax to £2000 under this scheme, costing me £200 per month.
so do I drop rents by £5 per building which is going to mean my income changes to £9500 minus £1900 tax for a net earnings of £7600
Or do I increase rents by £5 and keep running with 10% empty buildings? Earnings are now £9450 with a tax bill of £2100. Net earnings of £7350 while holding onto hope that I could rent out some of those other empty buildings?
Put simply, if I'm the kind of person who owns a 100 buildings do you imagine my instinctive response is going to be to cut prices or to pass on my costs to tenants?
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The effect of this would be a massive disincentive for landlords to engage in major remodels or reconstructions to rental units, impeding growth in housing and remodeling of units beyond the kind of basic paint and sweep that is typical between tenants.
Just increase the land value tax.
Easiest solution would be to have 2 property tax brackets and manage it at a city council level.
Occupied/under maintenance or vacant. If you rent a house you show the city council the lease and they give you a form that says you're entitled to the lower rate for the term of the tenancy,or you go to them and inform them that the property is underrgoing maintenance and is expected to be that way for X months and again you're entitled to the lower rate. If you cant provide evidence or tenancy or maintenance/repairs for say... 75% of the year, you pay a higher rate. Not extortion levels of higher but a definite incentive.
Oh and absolutely ball breaking fines for anyone found to be doing dodgy shit.
This is for apartments only. For the most part I don’t believe corporations should own single family housing, with the exception of vacation homes and those numbers need to be booked up at least 50% of the year and there should be a cap on how many a corporation can own
I would do a tiered tax rate depending on vacancy for apartments.
Example 1% property tax if property is 95-100%
5% 80-94%
10% 60-79%
Etc etc
Absolutely punish the complexes that charge ridiculous rates while sitting at a 20% vacancy. I know plenty in my town that are doing exactly that. Charging $1500 for a small one bedroom apartment while all the units are sitting empty.
Reward the full ones with a low tax rate and punish the ones sitting on empty housing with a high rate.
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