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by RandomLensman
728 days ago
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Sorry, but I don't understand how that follows from an LTV. If the payout from being a slumlord is positive, making no investments might lead to higher IRR than investing, for example. Even if investments where the way to go for higher profit, it might not mean that investments go towards nicer houses. I think the idea that an LTV can so finely steer investment seems unlikely to me (also, would need to take varying interest rates into account). Trying to steer investments by increasing certain costs has in the past led to a lot of unexpected behavior - I'd assume the same would happen here. |
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Options for landlord:
Slum: investment: 5$ Monthly income 100$
Decent landlord: Investment: 500$ Monthly income: 180$
In a world without LVT the slum option is quite attractive, especially if you don't have much capital, don't want to do effort, or expect to sell soon.
If you introduce an LVT, that might turn out at about 90$. All of a sudden, investment becomes much more profitable.
And it isn't inconceivable the LVT comes out at 105$ . At that point the slumlord is forced ti either improve, or divest.
The issue with LVT here, is that it will wreck the financials of anyone with significant landownership. It will be a massive transfer of wealth and incine. It will be a totally fair transfer of income. No one is working to earn the money LVT taxes. The transfer of wealth is more hairy, people have worked hard to buy their land. It was at worst a slightly immoral decision if they invested most of their wealth in land, but it is harsh to destroy that wealth.
Regardless of fairness tho, it will face a loooooot of opposition from self interested parties, with a lot of power and influence.