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Fixed tax rate #9

Open codynhat opened 3 years ago

codynhat commented 3 years ago

Flat tax rate for all land parcels. What is the tax rate?

Vitalik + Radical Markets mentions the tax rate being equal to the chance per year that the property gets sold is optimal.

https://vitalik.ca/general/2018/04/20/radical_markets.html

codynhat commented 3 years ago

@gravenp Have you done much thinking about what the actual tax rate should be? Or a methodology for figuring out what it should be?

gravenp commented 3 years ago

The basic tradeoff to think about is investment efficiency vs. allocative efficiency. A 0% tax (today's world) leads to 100% investment efficiency. You invest in property and you can capture all the value by selling it for the new appreciated price. A 100% tax means no incentive to improve property (you have to raise your self-assessed price and get taxed 100%), but the property always goes to the individual willing to pay the highest tax this year (=allocation efficiency).

In Radical Markets, they propose 7% as a starting point for physical real estate. We're trying to reflect that market on the Geo Web (at least in ownership for the most part), so I figured we'd start there.

Two thoughts on why we might adjust that higher (after more rigorous study):

1) Investment in digital real estate isn't the same as physical real estate. Investments are going to be more mobile (they're digital), but not entirely reusable (e.g. integrated content designed for a physical space; the buyer is only getting the land, not the content). 2) Higher tax rates are more punitive for squatters and lead to a more liquid market.