Context:
To prevent corporations from making the United States a perpetual renter nation a number of policies should be put in place to have progressively larger penalties for purchasing real estate if building a corporate real estate portfolio.
Any individual with drive and work ethic should be able to make a living that is great enough to afford to purchase a home.
The goal:
Make home ownership more accessible by reducing competition from cash rich corporations.
Potential solution:
Tax a higher tax rate for the purchase of additional homes if a real estate portfolio is beyond certain dollar figures (ex. >800,000=6% sales tax. >2,500,000= 12% tax; >15,000,000=25% tax; >50,000,000 = 40% tax).
Curiously, this policy prosal managed to include two of the most despised words in today’s American politics within a single title: “Progressive” and “Taxes”.
Anyway, I had my share of higher taxes and do not support any more regulations and control that uses “higher taxes” as a means to accomplish a goal – not even if it is for Dr. Doom and Professor Evil, in order to save the planet.
I think that we need to become more inventive on how we get things done in America. Knee-jerk “increased taxes” as a solution got us into the mess to begin with – with so many fiscal restricitions in place, and so many inventive schemes to get around said restrictions, that nothing gets done and only the individual American suffers for it.
Perhaps it is time to think differently about solutions and dump the “tax everyone we dont agree with” mentality. Taxation as a means of control is more of a European trait than it is, American. We should move away from this concept and focus more on using free market principles and fair market protections to control monopolistic behavior – not taxes. Slinging taxes everywhere for all sorts of conditions only gets in the way of the proper functioning of markets, our society in general, and the ideal we call, “The American Dream”. We need less taxes – not more variations of them. My two cents. Thx.
This is more of a local tax issue, not a federal one, but it addresses a problem of our national security. A progressive property tax structure makes sense. I also think that the first residence should get a break, minimal or no property tax for lots at or under average size. We ought to be protecting families and making them more secure. No one is secure if they have to pay tax just to live somewhere.
The first home should be tax-free in a local jurisdiction. If this is true for every individual and for every owner of a business then a household with two parents could have 3 property tax-free homes and two of them could be used as rentals.
If the tax creates a surplus and simultaneously benefits those that are working hard to progress their lives, wouldn’t that be great for the masses? This would hurt those who are currently leveraging their advantageous network or their advantageous access to capital… thus evening the playing field for the everyday American.
I’m not looking for handouts, I’m just looking to keep State Street, Vanguard, or Black Rock from owning entire zip codes worth of homes and forcing those homes to only be accessible as rental homes. This is really happening throughout the country.
On another note, interest rates for mortgages would be able to fall if we found our local jurisdictions in tax surpluses due to the overwhelming cost of corporate home ownership portfolios.
Additionally, the tax structure permanently prevents other corporations from snapping up a firesale as these corporations inevitably offload their homes.
This sort of policy would need to be rolled out over a period of time in order to allow these corporations to recoup their costs of purchasing their portfolio of homes. A 7-year rollout of these taxes would allow corporations to choose when to start selling their portfolios.
I anticipate that home prices would fall drastically if this policy were to be rolled out. I also anticipate that most responsible, capable, and hard-working Americans would be able to buy a home or two.
A first step would be to phase out the depreciation deduction for anyone owning more than 10 single family or duplex homes. This would protect mom & pop landlords, but eliminate this subsidy to Wall Street. An income tax on rental income that was 0.1% x the number of units owned or controlled would be the poison pill that made the single family residential market unattractive to Wall Street. Start it low so we don’t crash the market with housing being unloaded and ratchet it up over a 5-year period.
Many markets have a relatively tight supply of SFR housing, and losing even a relatively small portion of the housing supply to Blackrock can tip a market onto a sellers market. Then you have sellers (who have to jump through the inspection / appraisal / loan approval) hoops competing with all cash offers from Wall Street- they loose.
Stepping back a bit, historically the middle class built generational wealth through owning housing, operating a small business or acquiring a skilled trade. Unfortunately, Wall Street’s ever darkening shadow over Main Street has managed to choke off all three paths to the middle class. Amazon, Walmart, Dollar General and a plethora of dining chains have reduced opportunities for an individual to be a successful small business owner. Technology, globalization and automation are reducing the demand for some skilled trades ranging from software engineers to machinists. First time home buyers are being crowded out by Wall Street.
Tax policy has traditionally been a tool for achieving societal goals, absent tax policy as a tool what are your suggestions?
I would disagree with you. Legislation via regulation is generally the tool used for societal control/goals…taxation happens to be merely a subset of that.
Does one need to create a tax in order to create state-level legislation that would include the imposition of the number of homes that can be held by a corporation?
Does one need a tax to ban out-of-state investment houses and hedge funds from owning in-state houses?
There are many creative ways to craft legislation without the use of taxation, as evidenced by the sheer volume that exists today, which have nothing to do with taxation.
If you are asking me to suggest how to craft that legislation (which really should be done at the state level anyway), it would be out of scope of the intention of my post - which is to suggest we find other ways to “solve sociatal issues” without the knee-jerk reaction to create even more federal-level taxation schemes than which already exists.
Renewable energy credits to encourage adoption of renewable energy, EV credits to encourage EV adoption, new market tax credits to encourage investment in disadvantaged communities, taxes on tobacco to discourage consumption, the list is nearly endless. The tax code is frequently used to drive socioeconomic policy, that’s why it’s the convoluted mess that it’s evolved into. Preventing Wall Street from monopolizing the single family housing market could certainly be done at the state level, but it would lead to a patchwork solution to a national problem, and it’s far more efficient to for example phase out the depreciation deduction above a certain number of units owned (so we aren’t subsidizing this behavior) and phase in a number of units owned income tax to force an exit from this market.
You made my point for me. We do not need to add to the convoluted mess that we now have. And since we are creative beings, I think we can craft legislation that does not add to such convolution. Thx.
PS - The U.S. is a “patchwork of states” by design. This is not a flaw, it is a strength for the states. It is only a flaw for the federal government when attempting to centralize control, like you are suggesting. Statists (aka: worshipers of the administrative state) love to centralize control. We need to go the opposite way. States need to worry about their own state issues and the federal govt needs to worry about very little else, aside from our borders and Constitution. Just because you define something as a “problem” in every state in the union, doesn’t make it become an issue to be solved at the federal level. I think you are equating the terms “federal” and “national” when they are not the same thing. (For example: every state in the Union can have “bad and outdated laws on the books” but just because it occurs nationally, you don’t assume to settle the problem by crafting Federal law to resolve it.) You should already know this. Perhaps you might be more supportive of your Constitution and its Framers, and the sovereign nature of states in that regard.
I agree that private owner-occupied dwellings should receive breaks. It isn’t right to work all your life for your home and lose it to taxes or healthcare costs. I do believe that billions in profits of some corporate landowners should more than cover any loss that individuals would be free of.
In addition, any foreign owned land should be seized. Only Americans should own land in America.
