alt Hacker News> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
TADA.
And if someone wants to artificially inflate the value of their home, to reflect the difficulty of moving out, finding a new secondary residence, etc, then that's their business. No worries. We'll tax that additional value, no problem.
I think this system goes back thousands of years. Why not use it?
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It isn't done because it has overt pathological economic characteristics. This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option. This puts the asset permanently underwater by construction, which would crater asset values. The maths don't math. You can't just pick one side of a balanced equation and pretend the other side doesn't exist.
At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.
Forcing people to pay property tax on an inflated valuation of their house or face eviction sounds like a terrible system, actually. If you offered to buy my house for a number that I agreed was a perfectly fair market value that I didn't expect to be able to beat on the open market, I would say no immediately. You'd have to offer something like 50% over what I'd expect to get for me to seriously consider the offer.
It is very common to have goods where the price a buyer is willing to pay is smaller than the price a seller is willing to accept, and in a free market that simply results in no transaction happening. Forcing the transaction to happen is always going to make at least one side of the deal unhappy.
What if the city lets you declare your chosen value without being able to force you to sell, but if you ever sell at a higher value then you owe back-taxes on the difference?
And if the difference is more than X% then it’s fraud unless you can persuade a judge otherwise.
The loophole might be that Billionscorp LLC is listed as the property owner, and Jeff Billions technically only rents the penthouse from his own company, which lives forever, and never has to sell up. Closing that loophole by banning corporations from owning residential property would do everyone a favor.
What happens after the city buys it?
Also, most municipalities do not have the funds on hand to buy up people's houses just to call their bluff on taxes.
Sorry all, I wasn't explicit, but I was proposing that this would be on non-primary residences.
> Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
Isn't that what got Guatemala invaded back in the 1950s?
So in the end, the government still needs a department that assesses properties to determine if the owner has undervalued it.
This would be a exquisitely horrible way to live.
> Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.
Uhh... what? How is this not an insane system?
1. You give an accurate, good faith projection.
2. Government taxes you.
OR
3. Repeat.
> Why not use it?
It dramatically cuts housing security, and allows local governments to inflate their own property values by doing what is basically eminent domain without the requirement to show need. Make everyone pay taxes, use those to buy up homes, re-list the homes at a higher price. They can effectively price gouge using tax dollars. This could happen to you at literally any point, and that local government doesn't care if the house won't even sell as long as the other houses rise enough in value to cover the lost tax revenue.
I've also heard the same thing but allowing private citizens to buy them, which is almost worse. Anyone sufficiently well off can just wreck someone else's life. If I hate my neighbor and they report the real value of their house, I can force them to sell it to me so they have to move and I can resell it while only losing fees in the process. They would have to over-value their house by an amount that I'm not okay losing, which ends in a sort of auction of escalating values. At the very tippy top, if I'm Warren Buffet's neighbor there's probably not a value I can pay taxes on that would stop him from buying me out if he wanted. Any number that would be a meaningful loss to him is something I can't even pay the taxes on.