Gongol.com Archives: January 2024
January 7, 2024
If a policymaker wanted to maximize the proportional share of electric and hybrid vehicles on the road, it would make more sense to look for ways to encourage the mass production of $23,000 Toyota Corollas than to discourage the sale of $174,000 Maybachs with luxury taxes. ■ Yet in Chicago, which faces a variety of pressures on its municipal government (including chronic problems with crime and a notoriously difficult school budget), some activists are proposing to "fix" a housing shortage by raising a real-estate transfer tax on property sales of more than $1 million. ■ Luxury taxes, like other excise taxes, are almost always imposed with the intent of affecting behavior. The consequence is almost always to discourage the production of the particular good being taxed. ■ Chicago's problem isn't that it has too much high-value housing. Expensive housing drives property-tax revenues, and it's usually occupied by people who spend lots of money and who pay lots of other taxes. Rich people may be unsympathetic characters in a public debate, but they also pay for a lot of public goods and services. ■ Like many other cities, Chicago's problem is a shortage in the supply of clean, safe, dignified housing at an affordable price. The cost of housing isn't just a problem for those who are explicitly homeless -- even the advocates who say that homelessness affects 68,000 people in Chicago acknowledge that many of those people are scraping by via couch-surfing and other informal arrangements. ■ So many people suffer from housing stress all over the country that the policy needs are far-reaching. But it's ludicrous to approach it as anything other than a supply shortfall, which is often exacerbated (if not expressly caused) by local zoning and other regulations. We need creative designs and thoughtful legal reforms to encourage innovative approaches that would help to flood the market with Toyota Corolla-type housing. Efficient, mass-produced, reliable, and affordable (but still profitable to the builder). That's the only place durable solutions can be found.
