I’ve been thinking about this perspective for a while now, so it’s good to see the topic raised in the mainstream media. If you compare a business investment or buying shares in Australian companies with investing in property, there is much greater value to society and positive flow-on effects from business investing.
A business can use the investment to hire staff, produce more goods / services for export, and growing revenues mean more tax revenue for the government.
With investment properties, the owner buys a property by outbidding someone who may have just wanted a home and they then proceed to charge that same group with a rent burden. No additional jobs are created from the investment property and a cost burden is placed on the renter, reducing their disposable income.As a society, we need to start thinking about investment properties in the way that we would think about fossil fuels. We know it is easy and it makes money, but it’s bad for future generations and we need to transition to alternatives.
“We know it is easy and it makes money, but it’s bad for future generations…”
Capitalists: “lol why the fuck should I care? It’S sTuPiD tO lEaVe MoNeY oN tHe TaBlE!”
The distinction is land vs capital. Plenty of economists talk about the problem you mention.
Completely agree. That property value grows over time in a fixed area is natural behaviour, as an area develops, density grows and demand increases. But that growth is not necessarily “productive”. The only time that value is productive is if it incentivises redevelopment into higher density dwellings to meet the demand in that area. However this has been perverted into property owners who have paid off their property to just sit on the valuable land and reap the capital gains.
Capital gains from land value really needs to be taxed in a special way as you suggest. I would propose two approaches:
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Adding land tax (and abolishing stamp duty on property) that’s not based on your property value but on the value of a property you’re on (so high density apartments would end up with minimal land tax
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increasing capital gains from land tax by either having a progressive taxation rate on capital gains due to land value (which would ignore increase property value from renovations etc) or capping it entirely (so gains above that are taxed at 100%).
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I’m not going to read this because it will just make me grumpy. I see you waleed.
You didn’t miss anything. The article could be summed up by its headline. He offers no insights or solutions. Merely asks this question in detail.
Another interesting fact is that coal and natural gas production makes up about a third of all the money coming into the Australian economy, yet it wants to claim being “net zero” by 2050. I say no way José!
Given that mining (all mining) has always made up less than 10% of Australia’s GDP, how are you coming up with that ‘about a third’ figure?
He’s talking about exports
https://en.m.wikipedia.org/wiki/List_of_exports_of_Australia
Ahh that makes a bit more sense, but still even using those figures, coal is 15% of exports and gas 7.7%. Less than a quarter combined, nowhere near a third.
We absolutely need to wean our economy off coal. I believe we can do it well before 2050.
There won’t be anyone to sell those resources to well before 2050, so we have no choice but to transition. Thankfully, we have an absurd amount of renewable resources and iron ore and rare earth minerals will still be needed. And we can do a lot of “value added” type work by not just exporting raw materials but at least building part of the final products.
Paywall irony
I mean this isn’t really surprising when there’s a policy structure in place that incentivises rent seeking. It’s interesting how all of these people are like shocked when they realise neoliberalism isn’t that great. Like what’s next, realising that Marx bloke might have made a few good points about capitalism.
