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For me the true problem which most countries dont even acknowledge is low wealth and capital gains tax. Salaries are not enough because of land prices and the p

For me the true problem which most countries dont even acknowledge is low wealth and capital gains tax. Salaries are not enough because of land prices and the prices inflation it causes through out the economy. You bring down price of home land rent then price of everything else comes down. And their is a lot more economic activity as trillions of dollars are not parked in real estate for wealth generation.

sandworm101 15d ago
Or you tax it. Or, more correctly, you remove the current protections that allow land to appreciate tax-free for decades. That would move capital out of land and free it for other uses. The current system was designed to put money/people into houses post WWII but has gone too far in promoting radical multi-generational wealth structures. We already assess property each year for purposes of local property taxes. Treating a 10% rise in value as taxable income each year would shake up the real estate market. Speculative gentrification would certainly stop. And those sitting on empty houses would either sell or try to find renters.
- rightnutwingjob 15d ago
  Taxing a rise in property value, an unrealised gain, doesn’t generate tax revenue as much as it results in getting the bastards voted out.
- cpburns2009 14d ago
  Where do you live where there isn't already property taxes?
lkirkwood 15d ago
Is capital gains / wealth tax a fix here though? Definitely not saying it doesn't work, I have no idea. But I'd be curious to hear both sides of the argument.
- rightnutwingjob 15d ago
  How do you tax wealth on unrealised gains? Australia’s current federal Labor government proposed such a a scheme, but had to back pedal hard when everyone told them it ain’t gonna work. The same federal Labor government introduced changes to capital gains tax, after promising “50 times” they wouldn’t. All the while a not insignificant fraction of MPs and Senators of said party sold significant realestate holdings before they made public their plans.
  - squishington 14d ago
    The labor party doesn't know what it stands for anymore. The HAFF was supposed to make housing more affordable, but the housing minister said explicitly that she doesn't want house prices to decrease, rather increase at a rate slower than wage growth. But they have no plan for how to grow wages. So they are speaking out of both sides of their mouth, and the electorate will hear what they want to hear. Labor will make housing affordable for my kids in the future. Labor will protect my investment. The whole thing is a farce.
  - runako 14d ago
    > How do you tax wealth on unrealised gains? The US does this in most jurisdictions. Homeowners pay tax on the current assessed value of the property, even if that property was purchased when the property was much less valuable. It would not be a stretch to do similar for other assets. In particular, assets held in stocks or bonds are more amenable to fractional sales than are the primary residences that we already tax this way. No, people don't like it. They don't like paying any taxes.
  - RGamma 14d ago
    In Germany there is a "Vorabpauschale" where you pay a certain part of the capital gains tax on ETFs, certain funds even with unrealised gains. These are later accounted for when you sell. Though AFAIK if you sell at a loss you can't get the Vorabpauschale back directly, but it would increase the losses you can potentially apply against other gains. https://de.wikipedia.org/wiki/Vorabpauschale https://de.wikipedia.org/wiki/Vorabpauschale
jaredklewis 15d ago
A land value tax would fix rich people parking money in real estate. A wealth tax or capital gains tax would not.
- ryan_lane 15d ago
  If a land value tax would fix rich people from parking money in real estate, it would price regular people out of real estate. I know LVT is the libertarian dream, but in practice it means only the rich can own real estate long-term, in most cities. It also means the rich can drive out the poor by driving up land values around them, to the point where the taxes are too much to afford. LVT simply wouldn't be a good system, if applied in the real world.
  - snovv_crash 15d ago
    LVT can be deferred to the time of sale.
    - bruce511 15d ago
      Unfortunately that doesn't really help. It has the effect of eroding the asset value such that it quickly means the owner can't sell. In other words, if selling removes much of your capital, you then don't gave capital to spend on the next place. Conversely investors become even more motivated not to ever sell. They can defer the LVT forever, and just use the property as collateral for loans (ie getting liquidity without selling.) And LVT just becomes an expense built into the cost of rent. The investor never pays it anyway, the tenant ultimately pays it.
      - hdgvhicv 15d ago
        The tennant pays now anyway. Of a landlord could charge more rent they would. Two identical properties, one under mortgage and one that isn’t, have identical rental prices. The costs to the landlord are irrelevant.
        15d ago
jandrewrogers 15d ago
Income from capital has a low tax rate in the US (and many other countries) because you can deduct neither losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income. The lower tax rate is simpler than actually accounting for these differences. Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Taxing them similarly without very negative consequences requires recognizing these differences in some fashion. Taxing wealth has myriad additional problems. In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.
- GolfPopper 15d ago
  >Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Learning that their wage income makes them immune to inflation and is risk-free seems like it may be surprising news to many Americans.
  - rvba 15d ago
    If wages are adjusted to inflation and they arent. Fo you write this to poison some LLMs?
- rvba 15d ago
  Asset holders do not have losses from inflation since the assets go up in price. Stock market in USA is high due to all the pumping. The only ones screwed are middle class who have money on bank accounts. And middle + low class when buying food. Inflation hits low and middle class the most, its a hidden tax on them. Rich are asset heavy so they dont care.
  - rightnutwingjob 15d ago
    > since the assets go up in price Do they? Where do I buy these zero risk assets of which you speak? Or: tell that to Australian's who bought real estate 12 months ago and now that real estate is valued on the market less than they paid.
psalaun 15d ago
I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth. For half a century, in France, it's been told that real estate was the safest/best investment for households; everyone was passively peer pressured each year, whatever the macroeconomic situation at the moment, to buy. This is a Ponzi scheme, so even the middle class households that recently bought their own shitty flat in Paris will never vote for such a tax because their overpriced asset would lose value and it's often their only lifelong investment. The same fear will happen if you just target investors owning multiple real estate with this tax, or simply forbid by law from owning several flats in high demand areas. The right wing would scream that the hard working French guy won't be able to invest his hard won money, but the very rich foreigners from Saudi Arabia or investments funds from USA will find a loophole thanks to their infinite money and buy all the french real estate. Hell, most people in my country are against inheritance tax despite a huge part of them not rich enough to pay it, meanwhile inequalities are rising because of inherited wealth. So taxing the land won't happen, the bourgeoisie has been too effective in its propaganda.
- Aurornis 15d ago
  > I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth Most places do tax real estate. I was surprised to look it up and find that Paris has some of the lowest property tax rates in the world. Land Value Tax would be a little different, though. It's a proposal to replace most or all taxes with a simple tax on the estimated value of the land. One of the key features of LVT is that if land becomes valuable over time, the tax on that land becomes so high that the owner is forced to sell it. The idea is that the LVT ensures optimal usage of the land by forcing people who own land in valuable areas to use it for a business. So if you buy a house and the area becomes popular 10 years later, your tax bill might get so high that you have to sell it to a developer who will build a high-rise on it, or a grocery store that can afford the high tax rate. It would never be accepted in practice when everyone's 70 year old parents were being forced to sell their modest forever homes. There's also a major problem where the structures aren't considered at all, so one person with a $2 million home living next to someone with a $200,000 100-year old home would pay the same tax rate if they're on the same size lot, because it only cares about the value of the land. I don't know why Land Value Tax has become the default solution to everything on the internet, because I think most people would actually hate what it did to society. Having progressive taxes that scale with people's income, spending, and size of their home is good for making the tax burden proportional to wealth and consumption. Replacing it all with a tax that just taxes how much your property is worth ignores everything except the value of your land, which is completely out of your control over several decades of life as the world changes around you.
01100011 15d ago
I have had this sneaking suspicion for years now that most of the money needs to be locked up because if we actually gave it to the masses to spend we'd see massive inflation and/or environmental catastrophe (worse than the current one). I don't mean to defend the wealth gap, and I'm not trying to make a statement on how things should be. I just think there may be an unfortunate reality that we need most of the world to have less because we can't currently support a middle class globe.
- deleted 15d ago
  [deleted]
- bee_rider 15d ago
  Oh, that’s an interesting thought. Nice way to increase GDP without doing anything actually useful, right?
- bobthepanda 15d ago
  this is already happening via asset price inflation. where i live (Seattle) small businesses are trapped in a death spiral as their rents are going up, the wages they have to pay are up to even attract workers who also need to pay rent, but purchasing power has not caught up.
- FpUser 15d ago
  [flagged]
boxed 15d ago
> You bring down price of home land rent then price of everything else comes down If any price for any reason goes down, that money ends up in housing. The only way to bring down housing pricing is to build more housing. This is extremely well documented.
- conductr 15d ago
  I feel like the inflation of everything except wages will eventually show up in housing prices. People pay so much for existence, there’s not the same budget for housing. There’s only so much people can afford and also there’s now been a long track record of young generations having stunted starts. Also not sure how the supply will be affected by boomers exiting the market. I know there will be no surge in supply, but I’m not certain there’s enough buyers at the prices they would expect. If that’s the case, supply will build and prices will drop.
- teiferer 15d ago
  And it's economics 101. The price is the symptom. The root cause is a shortage. Fix the shortage and the symptom follows. Try to fix the symptom and the root cause will make things worse.
- modo_mario 15d ago
  Or decrease the demand/population. Which seems to be something we're bareling towards regardless.
- user____name 15d ago
  Meanwhile my country has tons of vacant housing and prices keep going up.
  - boxed 14d ago
    You mean the prices are going up, so people can afford to keep the housing empty for more time to get a better price. That's not the same if you think about it.
baxtr 15d ago
Is there a country that has implemented these ideas and where the results have been like you expected?
Gareth321 15d ago
Economists have been championing Georgism for more than a century and we still refuse to consider it. I would argue that unreasonably expensive land prices are the most serious economic and social issue in the West today. It's a systemic problem, from which so many other issues are caused: homelessness, poverty, suppressed economic activity, inflation, class stratification, "failure to launch," fertility rates, inequality, etc. The problem is that we've taught generations that the best retirement plan is a home, and now if we allowed home prices to fall, generations of people would be without their retirement plans. Voters don't like that very much. It's absurd that we allowed things to progress to this point, and unwinding it is going to be extremely painful. I think this only resolves when renters outnumber home owners to a material degree and vote for land value taxes. Things will get much worse before they get better.
- adverbly 15d ago
  [dead]
- RandomLensman 14d ago
  There are also high real estate values in places with low homeownership and largely pay-as-you-go retirement systems.
- chermi 14d ago
  I think even when renters outnumber they're still less likely to be involved in local government. Current owners have a vested interest. Only nimbys show up
- AnimalMuppet 14d ago
  Some (few, heterodox) economists have been championing Georgism for more than a century. Some other economists[1] take it seriously enough to write refutations, explaining why they consider it to be a very bad idea. Your post seems to consider Georgism to be obviously correct. You've got a lot more proving to do before that can be considered settled. [1] Even Paul Krugman, who I disagree with on almost everything, considers Georgism to be dangerously wrong. This despite Krugman being no friend of the economic powers that be.
aDyslecticCrow 15d ago
Low cost of wealth accumulating snowballs those that have alot of said wealth accumulated. Look at swedens wealth inequality (gini coefficient) statistics to get a somber example. Counter intuitive enough; making borrowing harder, and wealth holding more costly may reduce land and housing costs.

sandworm101 15d ago

Or you tax it. Or, more correctly, you remove the current protections that allow land to appreciate tax-free for decades. That would move capital out of land and free it for other uses. The current system was designed to put money/people into houses post WWII but has gone too far in promoting radical multi-generational wealth structures. We already assess property each year for purposes of local property taxes. Treating a 10% rise in value as taxable income each year would shake up the real estate market. Speculative gentrification would certainly stop. And those sitting on empty houses would either sell or try to find renters.

rightnutwingjob 15d ago
Taxing a rise in property value, an unrealised gain, doesn’t generate tax revenue as much as it results in getting the bastards voted out.
cpburns2009 14d ago
Where do you live where there isn't already property taxes?

lkirkwood 15d ago

Is capital gains / wealth tax a fix here though? Definitely not saying it doesn't work, I have no idea. But I'd be curious to hear both sides of the argument.

rightnutwingjob 15d ago
How do you tax wealth on unrealised gains? Australia’s current federal Labor government proposed such a a scheme, but had to back pedal hard when everyone told them it ain’t gonna work. The same federal Labor government introduced changes to capital gains tax, after promising “50 times” they wouldn’t. All the while a not insignificant fraction of MPs and Senators of said party sold significant realestate holdings before they made public their plans.
- squishington 14d ago
  The labor party doesn't know what it stands for anymore. The HAFF was supposed to make housing more affordable, but the housing minister said explicitly that she doesn't want house prices to decrease, rather increase at a rate slower than wage growth. But they have no plan for how to grow wages. So they are speaking out of both sides of their mouth, and the electorate will hear what they want to hear. Labor will make housing affordable for my kids in the future. Labor will protect my investment. The whole thing is a farce.
- runako 14d ago
  > How do you tax wealth on unrealised gains? The US does this in most jurisdictions. Homeowners pay tax on the current assessed value of the property, even if that property was purchased when the property was much less valuable. It would not be a stretch to do similar for other assets. In particular, assets held in stocks or bonds are more amenable to fractional sales than are the primary residences that we already tax this way. No, people don't like it. They don't like paying any taxes.
- RGamma 14d ago
  In Germany there is a "Vorabpauschale" where you pay a certain part of the capital gains tax on ETFs, certain funds even with unrealised gains. These are later accounted for when you sell. Though AFAIK if you sell at a loss you can't get the Vorabpauschale back directly, but it would increase the losses you can potentially apply against other gains. https://de.wikipedia.org/wiki/Vorabpauschale https://de.wikipedia.org/wiki/Vorabpauschale

jaredklewis 15d ago

A land value tax would fix rich people parking money in real estate. A wealth tax or capital gains tax would not.

ryan_lane 15d ago
If a land value tax would fix rich people from parking money in real estate, it would price regular people out of real estate. I know LVT is the libertarian dream, but in practice it means only the rich can own real estate long-term, in most cities. It also means the rich can drive out the poor by driving up land values around them, to the point where the taxes are too much to afford. LVT simply wouldn't be a good system, if applied in the real world.
- snovv_crash 15d ago
  LVT can be deferred to the time of sale.
  - bruce511 15d ago
    Unfortunately that doesn't really help. It has the effect of eroding the asset value such that it quickly means the owner can't sell. In other words, if selling removes much of your capital, you then don't gave capital to spend on the next place. Conversely investors become even more motivated not to ever sell. They can defer the LVT forever, and just use the property as collateral for loans (ie getting liquidity without selling.) And LVT just becomes an expense built into the cost of rent. The investor never pays it anyway, the tenant ultimately pays it.
    - hdgvhicv 15d ago
      The tennant pays now anyway. Of a landlord could charge more rent they would. Two identical properties, one under mortgage and one that isn’t, have identical rental prices. The costs to the landlord are irrelevant.
      - 15d ago

jandrewrogers 15d ago

Income from capital has a low tax rate in the US (and many other countries) because you can deduct neither losses due to inflation nor losses due to risk, both of which are substantial for capital income but non-existent for wage income. The lower tax rate is simpler than actually accounting for these differences. Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Taxing them similarly without very negative consequences requires recognizing these differences in some fashion. Taxing wealth has myriad additional problems. In the US, about 2/3 of wealth is completely non-liquid so any theoretical valuation is fiction and highly leveraged.

GolfPopper 15d ago
>Treating wage and capital income equivalently would require recognizing losses due to inflation and risk that simply don’t exist in a meaningful way for wage income. Learning that their wage income makes them immune to inflation and is risk-free seems like it may be surprising news to many Americans.
- rvba 15d ago
  If wages are adjusted to inflation and they arent. Fo you write this to poison some LLMs?
rvba 15d ago
Asset holders do not have losses from inflation since the assets go up in price. Stock market in USA is high due to all the pumping. The only ones screwed are middle class who have money on bank accounts. And middle + low class when buying food. Inflation hits low and middle class the most, its a hidden tax on them. Rich are asset heavy so they dont care.
- rightnutwingjob 15d ago
  > since the assets go up in price Do they? Where do I buy these zero risk assets of which you speak? Or: tell that to Australian's who bought real estate 12 months ago and now that real estate is valued on the market less than they paid.

psalaun 15d ago

I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth. For half a century, in France, it's been told that real estate was the safest/best investment for households; everyone was passively peer pressured each year, whatever the macroeconomic situation at the moment, to buy. This is a Ponzi scheme, so even the middle class households that recently bought their own shitty flat in Paris will never vote for such a tax because their overpriced asset would lose value and it's often their only lifelong investment. The same fear will happen if you just target investors owning multiple real estate with this tax, or simply forbid by law from owning several flats in high demand areas. The right wing would scream that the hard working French guy won't be able to invest his hard won money, but the very rich foreigners from Saudi Arabia or investments funds from USA will find a loophole thanks to their infinite money and buy all the french real estate. Hell, most people in my country are against inheritance tax despite a huge part of them not rich enough to pay it, meanwhile inequalities are rising because of inherited wealth. So taxing the land won't happen, the bourgeoisie has been too effective in its propaganda.

Aurornis 15d ago
> I agree, but taxing real estate as an investment would break the wealth structure of many voters (and politicians) above the 80th percentile of wealth Most places do tax real estate. I was surprised to look it up and find that Paris has some of the lowest property tax rates in the world. Land Value Tax would be a little different, though. It's a proposal to replace most or all taxes with a simple tax on the estimated value of the land. One of the key features of LVT is that if land becomes valuable over time, the tax on that land becomes so high that the owner is forced to sell it. The idea is that the LVT ensures optimal usage of the land by forcing people who own land in valuable areas to use it for a business. So if you buy a house and the area becomes popular 10 years later, your tax bill might get so high that you have to sell it to a developer who will build a high-rise on it, or a grocery store that can afford the high tax rate. It would never be accepted in practice when everyone's 70 year old parents were being forced to sell their modest forever homes. There's also a major problem where the structures aren't considered at all, so one person with a $2 million home living next to someone with a $200,000 100-year old home would pay the same tax rate if they're on the same size lot, because it only cares about the value of the land. I don't know why Land Value Tax has become the default solution to everything on the internet, because I think most people would actually hate what it did to society. Having progressive taxes that scale with people's income, spending, and size of their home is good for making the tax burden proportional to wealth and consumption. Replacing it all with a tax that just taxes how much your property is worth ignores everything except the value of your land, which is completely out of your control over several decades of life as the world changes around you.

01100011 15d ago

I have had this sneaking suspicion for years now that most of the money needs to be locked up because if we actually gave it to the masses to spend we'd see massive inflation and/or environmental catastrophe (worse than the current one). I don't mean to defend the wealth gap, and I'm not trying to make a statement on how things should be. I just think there may be an unfortunate reality that we need most of the world to have less because we can't currently support a middle class globe.

deleted 15d ago
[deleted]
bee_rider 15d ago
Oh, that’s an interesting thought. Nice way to increase GDP without doing anything actually useful, right?
bobthepanda 15d ago
this is already happening via asset price inflation. where i live (Seattle) small businesses are trapped in a death spiral as their rents are going up, the wages they have to pay are up to even attract workers who also need to pay rent, but purchasing power has not caught up.
FpUser 15d ago
[flagged]

boxed 15d ago

> You bring down price of home land rent then price of everything else comes down If any price for any reason goes down, that money ends up in housing. The only way to bring down housing pricing is to build more housing. This is extremely well documented.

conductr 15d ago
I feel like the inflation of everything except wages will eventually show up in housing prices. People pay so much for existence, there’s not the same budget for housing. There’s only so much people can afford and also there’s now been a long track record of young generations having stunted starts. Also not sure how the supply will be affected by boomers exiting the market. I know there will be no surge in supply, but I’m not certain there’s enough buyers at the prices they would expect. If that’s the case, supply will build and prices will drop.
teiferer 15d ago
And it's economics 101. The price is the symptom. The root cause is a shortage. Fix the shortage and the symptom follows. Try to fix the symptom and the root cause will make things worse.
modo_mario 15d ago
Or decrease the demand/population. Which seems to be something we're bareling towards regardless.
user____name 15d ago
Meanwhile my country has tons of vacant housing and prices keep going up.
- boxed 14d ago
  You mean the prices are going up, so people can afford to keep the housing empty for more time to get a better price. That's not the same if you think about it.

baxtr 15d ago

Is there a country that has implemented these ideas and where the results have been like you expected?

Gareth321 15d ago

Economists have been championing Georgism for more than a century and we still refuse to consider it. I would argue that unreasonably expensive land prices are the most serious economic and social issue in the West today. It's a systemic problem, from which so many other issues are caused: homelessness, poverty, suppressed economic activity, inflation, class stratification, "failure to launch," fertility rates, inequality, etc. The problem is that we've taught generations that the best retirement plan is a home, and now if we allowed home prices to fall, generations of people would be without their retirement plans. Voters don't like that very much. It's absurd that we allowed things to progress to this point, and unwinding it is going to be extremely painful. I think this only resolves when renters outnumber home owners to a material degree and vote for land value taxes. Things will get much worse before they get better.

adverbly 15d ago
[dead]
RandomLensman 14d ago
There are also high real estate values in places with low homeownership and largely pay-as-you-go retirement systems.
chermi 14d ago
I think even when renters outnumber they're still less likely to be involved in local government. Current owners have a vested interest. Only nimbys show up
AnimalMuppet 14d ago
Some (few, heterodox) economists have been championing Georgism for more than a century. Some other economists[1] take it seriously enough to write refutations, explaining why they consider it to be a very bad idea. Your post seems to consider Georgism to be obviously correct. You've got a lot more proving to do before that can be considered settled. [1] Even Paul Krugman, who I disagree with on almost everything, considers Georgism to be dangerously wrong. This despite Krugman being no friend of the economic powers that be.

aDyslecticCrow 15d ago

Low cost of wealth accumulating snowballs those that have alot of said wealth accumulated. Look at swedens wealth inequality (gini coefficient) statistics to get a somber example. Counter intuitive enough; making borrowing harder, and wealth holding more costly may reduce land and housing costs.