How California Destroyed its Middle Class (A Cautionary Tale)

What would really astound you, if you were willing to know the facts (you're not), is that that money all goes to landowners, as the Henry George Theorem proves. THAT'S WHY LAND COSTS SO MUCH.

And almost everything that those taxes pay for is a subsidy to landowners, as the Henry George Theorem proves. THAT'S WHY LAND COSTS SO MUCH.

And the government then gives all that money to landowners, as the Henry George Theorem proves. THAT'S WHY LAND COSTS SO MUCH.

 

Or the money ends up going to people after they sell their property. Other than that it's just a giant pyramid scheme.

But bringiton, I think you continue to keep going off-topic in threads, delving too deep into the land ownership theory issue.
I mean that's kind a of specific long discussion in itself.

If I were you, I'd just try to provide a short summary of what I was trying to say, and then provide a link to another thread that provides a longer explanation on the issue. It seems absurd to try to turn every economics discussion into a discussion on this theory.

 

It's also possible there are just too many people squeezed into certain areas. That's what has been driving land prices up over time.

If there are more people, all vying for a limited area of building space, and there are not enough existing homes and new space in that area is in short supply, then it's going to create a shortage, and a shortage results in people bidding up the prices.

 

No. Land value is identical to the expected future subsidy to the owner. THAT'S ALL. Reduce the subsidy and you reduce land prices, independently of how many people there are.

People will only bid up the price if they think it will go still higher. That can only happen if the subsidy increases.

 

How?

It's a giant theft scheme, because it's based on stealing.

It governs everything else.

That's like the 19th century doctors who pooh-poohed the Germ Theory of Infectious Disease: "Yeah, yeah, all disease is caused by these little animals that live inside our bodies but are too small to see. Riiiigghhhttt."

 

No it hasn't, as already proved.

Only if it will be profitable to hold the item. If the tax on vacant land was greater than the expected value increase, people would not buy it except to build on it, and its value would collapse.

 

That's the cost of the subsidy to landowners.

That is entirely because of Proposition 13, which forces the state and all local governments in CA to give exorbitant, increasing, and unsustainable subsidies to landowners.

 

And it’s killing the Goose of the Golden Egg -

 

6 is just baldly false. You don't need countervailing privilege to counter the injustice of privilege. You just need justice.

 

I think the point is it changes the behavior of people who own land for profit. The fixed low rate of taxation means that the property is undertaxed compared to its value vs alternative markets like Texas. This means that more people who are buying property for profit are incentivized to buy up Californian property, which raises the prices of the property, and makes housing unaffordable for those who want property to live on.

I thought the intention of prop 13 was to protect old people from losing their homes due to increasingly unaffordable property taxes. I am not sure if it does that, but it definitely screws over people buying homes to live in.

 

No, that was not the intention, because no old Californian ever lost their home due to increasingly unaffordable property taxes. It was a lie. It never happened. NO ONE has ever been able to document a single such case.

That was the intention: to increase, without limit, the exorbitant, increasing, and unsustainable subsidy to landowners. The big winners from Prop 13 have been large, long-term corporate landowners whose effective property tax rate is now an order of magnitude lower thanks to the assessment cap. That was the intention.

 

I live in Western Australia, where a huge economic force is the mining industry. You can quite easily earn $200k+ as a young person working up North on the mines. This is not like mining used to be, they are safety mad and it is by and large a comfortable, easy experience.

Unfortunately it has created a situation where many people are on massive money, while anyone with a mum and pop business is still on the old salaries. The FIFO mining people are able to considerably overpay and outprice people on housing.

California has a similar thing going on, but with the tech industry.

Not to discount any of the other factors at play, but I was struck by the similarity to my own experience.

 

Something about supply vs demand...