It isn't done because it has overt pathological economic characteristics. This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option. This puts the asset permanently underwater by construction, which would crater asset values. The maths don't math. You can't just pick one side of a balanced equation and pretend the other side doesn't exist.
At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.
> It isn't done because it has overt pathological economic characteristics.
A secondary home over $1 million in value also has overt pathological economic characteristics. Especially if the taxes paid on it are tragically low.
> This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option.
Eminent domain already exists.
> without even collecting the offsetting risk premium
You get to have a second home, in New York, with a value of over $1 million.
Yes, I'm proposing taxation and regulation on top of that.
But, knowing this law exists, everyone gets to make the choice whether they want it or not.
We also have the legal mandate to institute taxes in the first place. You also did not collect an offsetting risk premium for that, and had no right to expect one.
> This puts the asset permanently underwater by construction
Eminent domain already did that. And you're saying "permanently," but I think you could fairly easily steel-man my proposal to say that the government has a certain number of days after property taxes are paid to declare their intention to collect. That's different from "permanently."
I'm not an expert, by any means.
But you also just described what buying a house in an HOA is like. You have no idea what future fees will be like. And you have very little control. And many HOAs can foreclose on your house, if you don't pay their fees. John Oliver did a whole segment on it. And something like 80% of new home construction is under an HOA.
So, why should I have an over-abundance of sympathy for people, with a secondary home, in NY City, worth over $1 million?
Maybe the whole concept of a secondary home over $1 million in value, in New York city, should just not exist?
Or, maybe it should exist, but the taxes should be pretty damn high, and they should be based off of a pretty damn fair assessment of value. I'm all open to counter-proposals of how to get a more equitable assessment of value.
A million dollars isn't even that much these days - it isn't dynastic wealth, it is owning your own home these days. It especially isn't much in New York City - a long notoriously expensive area. A million dollars today is only about 400K in say, 1991. The average Brownstone in Brooklyn in the 1990s was over that. Not an amount to sneeze at certainly but treating it like unimaginable wealth is a lot like treating your Starbucks Manager like a CEO.
People's brains have been utterly broken by envy and combining the 'M' word or the 'B' word as the magical milestone causes them to lose all sense of scale. One needs to be well-off to get in that situation without inheritance, but it is more 'doctor or lawyer' levels of money. Hardly a level reserved for an aristocratic elite.
For a second home? In NY City?
I think someone has to be fairly elite to have a secondary, or tertiary home, in NY City, worth over $1 million.
Regardless, the entire point of this discussion is that people who have a secondary home can probably afford to pay more in taxes than other people can. I don't call that envy.
That's just a frank discussion of tax policy.
If you think taxes should be lower, because some government programs should be reduced, that's a perfectly fine discussion to have.
If you think governments shouldn't have to worry about a balanced budget, and maybe they should default on their debt (which is an argument the current President has insanely floated), that's a fine discussion to have.
At present, we're talking about secondary homes with a value over $1 million, in New York City, having an additional 4% tax.
And I was lamenting that home valuations appear to be unbelievably low, which would dramatically reduce the tax income of this law, and I was trying to propose a fix, for those homes.
If you think the only reason to have that discussion is because of envy, then I think you're not being fair to other people's motivations.
When people start using financial terminology outside the natural context, it's either gish gallop or justifying antisocial behavior.
It is a good thing this is the natural context for this terminology then, being the literal domain for which the terminology exists. If someone doesn't understand the fundamental concepts being discussed then why should anyone give credence to their opinion?
Your "gish gallop" and "justifying antisocial behavior" dismissal is almost literally how creationists dismiss discussions of evolution.
> If someone doesn't understand the fundamental concepts being discussed then why should anyone give credence to their opinion?
Because we're a democracy, we vote, and we might vote for foolish policies unless you take the time to explain to us, in language we can understand, why they're a bad idea.
It sucks that the burden is on you. I don't deny that. But the burden is on me to explain why electronic voting (without a paper trail) is bad, that climate change is real, that vaccines are essentially miraculous, and wearing a mask during a deadly global pandemic is a good thing.
And there's certainly a lot of people willing to use fancy terms to defend cryptocurrencies, but honestly, that doesn't mean they're right.
We all have to do labor to keep the electorate informed.