Home > Uncategorized > Great time for a vacant property tax

Great time for a vacant property tax

from Dean Baker

I have long been a big fan of a vacant property tax. As the old saying goes, you tax what you want less, and why would we want vacant properties. This is especially likely to be relevant in many high-priced cities where the demand for commercial real estate is likely to go through the floor due to an increase in telecommuting.

As cities mull many types of tax increases to deal with pandemic caused budget shortfalls, a vacant property tax should stand out as a productive alternative. The economy would be best-served by having landlords quickly recognize that their property is not worth as much as it use to be, and therefore lower rents to keep it occupied. This will be good for keeping old businesses and supporting new ones, since rent is major expense for most businesses, especially small businesses.

At the end of the day, recognizing reality is likely to be good for  landlords, since they don’t  make money on vacant property.  Of course landlords are often not very good at economics. Both Donald Trump and Jared Kushner are major property owners.

  1. Dave Raithel
    June 27, 2020 at 1:21 am

    Ha ha ha. Let’s get really empirical. I live at 402 Lema Lane, Columbia, Missouri, 65202. I have lived here with the family I and Liz made since 1993. Today I can stand in my backyard and see THREE homes not lived in. One of those is left empty since the last American capitalist (writ large) crisis of 2008; another a few years after; the third is in probate etc for about 2 years. But I can also point to other un-lived, unfilled houses in the neighborhood. Let me tell you about Page Avenue, in St. Louis County, Missouri – take a drive east from I-270….I have no theory, only feckless praxis.

  2. Ikonoclast
    June 28, 2020 at 3:02 am

    In Australia, believe it or not, we have the opposite of a vacant property tax! We have a vacant property subsidy. We have what we call “negative gearing” which means an investor can buy with borrowed money a house, apartment or flat to rent out and then the any losses on that property are deductions from taxable income! Of course, this is an absurd policy which favors landlords over tenants and residential home owners. In the USA, I believe, mortgage payments by a home owner in residence are tax deductible. Not in Australia! Only the landlords get that privilege.

    Many of other policies are better than those in the USA. We have a free public hospital system and Medicare. This mean you can go to hospital or doctor free if you are poor. These services are very good, world class probably. If you are middle class you have to pay a bit but you can pay less if you have added health care insurance to your position. And you can still elect to have free non-urgent operations if you are willing to go on the wait list.

    Most of the COVID-19 crisis assistance has gone to the poor in Australia. Unemployment assistance has been doubled and has no tests (except being unemployed) for the duration of the pandemic or until the federal government changes the rules again. The federal government is also paying quite a lot employers to keep workers employed (passing the money one) even when there is not enough work for the workers. Many banks have been told to suspend mortgage payments for some home owners who cannot make the payments now. Big corporations have asked for government subsidies but have not got them unless they provide an essential service.

    But even with all these measures there are still a lot of lay-offs and rising unemployment. Some BLM and refugee marches here but no rioting or looting.

    COVID-19 is all but eradicated here except in one state, Victoria. People are freaking out that this state of 6.3 million is having a second wave of 20 to 40 cases a day. More than half of these are returning infected from overseas. Having a big moat around one’s country and banning all incoming passengers except Aussies returning home, is a darn good thing during a pandemic. We will have to open again eventually, but when? I would say only if and when a fully safe and effective vaccination is developed. Could be years, rather than months. Never mind, Australia is self-sufficient in all necessities, especially food.

  3. Gerald Holtham
    June 29, 2020 at 11:31 am

    A useful alternative found in a few US cities and some in Australia too, I believe, is site value rating. Tax is levied not on a property but on the value of the land where it sits. Then the owner pays tax whether the property is occupied or not or, indeed, if the land is left undeveloped when zoned for use.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.