California is chasing wealth that has feet
California's proposed billionaire wealth tax will fail because mobile wealth flees, whereas a modest land value tax could reliably raise billions from immobile real estate.
summary is enough Skim this piece for its concise case on replacing mobile wealth taxes with a land value tax, complete with California real estate estimates.
summary
California recently certified a billionaire wealth tax to cover budget shortfalls, but multiple billionaires have already relocated to avoid it. Proponents of land economics argue that mobile wealth is a fragile tax base compared to California's $8.14 trillion in immobile land. Instead of squeezing income and wealth, the state should implement a low land value tax modeled on Georgist principles to capture public-created wealth. This approach bypasses tax flight and addresses the structural decay caused by Proposition 13.
key points
- California certified a 5 percent billionaire wealth tax spread over five years to raise $20 billion annually.
- Several prominent California billionaires moved their tax residency out of state before the cutoff, undermining the projected tax base.
- A bottom-up estimate values California's total land at $8.14 trillion, representing an immobile tax base eight times larger than the billionaire wealth pool.
- A 0.25 percent land value tax could raise the targeted $20 billion without distorting markets or encouraging tax flight.
who should read it
Economists, policymakers, and technologists interested in alternative tax structures and urban planning.
discussion mixed
consensus
Commenters intensely debate Georgist economic theory, with many agreeing that land value taxes avoid economic distortions while others dispute how land values are assessed and whether taxes trickle down to renters.
pushback
Critics push back against single-solution economic theories and argue that California's fundamental issue is severe government spending waste rather than a lack of revenue streams.
Rent is a function of supply and demand, not a landlord's costs, otherwise we would expect changes in e.g. mortgage interest costs to be passed on to, but in practice we don't see this effect. We also don't see landlords who own their properties outright (and thus don't have mortgage interest costs) charging lower rents than landlords in the neighborhood with identical properties who have mortgages. When landlords' costs drop, do they drop the rent in response?
Taxes can be passed on when the tax induces a change in supply. Conventional property taxes are partially passed through because the …
Explains the economic mechanism behind why land value taxes cannot be passed on to renters, contrasting it with building taxes.
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