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SF’s proposed ‘empty house tax’ is proof King George was just a rank amateur
Dennis Wyatt new mug 2022
Dennis Wyatt

It’s too bad the Founding Fathers couldn’t have foreseen that one day America would have an authoritarian ruler that makes King George look like a Boy Scout when they were crafting the Fourth Amendment.

If they had anticipated the advent of the San Francisco Board of Supervisors they might have written the Fourth Amendment a tad differently.

The City by the Bay wants voters to give them the authority to slap a $2,000 to $5,000 tax on housing units unoccupied for six months.

The tax would exclude single-family homes as well as duplexes. It would apply to all multiple-family complexes of three units or more.

Some cities such as Oakland across the Bay and Vancouver – the San Francisco of British Columbia – include second homes and seasonal properties.

Vancouver instead of a flat tax penalizes owners of a vacant unit 3 percent of its property tax. That city’s so-called “Empty House Tax” has raised $231 million for regional housing plans between 2017 and 2020. A report indicated 800 more homes were either rented or sold during the four-year period in Vancouver.

Oakland’s tax in its first year raised $7 million in fund a commission on homeless as well as a mobile outreach team for the homeless.

The working theory in San Francisco is the tax will bring 4,500 “new units” into the rental market. There is also a bizarre assumption among some that it will lower rental prices.

Whoever opts to pay the tax instead of renting a unit obviously will pass the cost of the tax onto other tenants when the opportunity arises.

While it might not make sense to not rent out units, the property owners have their reasons.

The empty home tax is a nice work around to avoiding the issue as to whether the government can seize housing units which, for all practical purposes, is exactly what they are proposing to do in San Francisco.

Instead, they are simply taxing property owners to do the government’s will. This is on top of the one percent basic property tax in California. That means the owner of a three-unit multiple-family property in San Francisco that has a value of $1 million and, for whatever reason, opts to leave a unit vacant for six months will be paying a $5,000 empty house tax on top of a basic $10,000 annual property tax bill.

Such a move shouldn’t surprise you given it goes hand-in-hand with what the federal government did by effectively seizing property at the start of the pandemic by barring any landlord from evicting someone who is not paying rent.

Keep in mind it was Washington’s attempt at helping people who lost their jobs due to the government lockdown and not anyone who opted to stop paying rent even though they continued working.

Lo and behold, just like people who used the federal government largesse to walk away from debt obligation during the mortgage meltdown that sent jobless rates soaring without hurting their credit or paying taxes on the forgiven debt, there were those that could still make their mortgage payments who hoped on board.

Back in 2008 a good number of people who were underwater but still had the income to pay their mortgage walked away and bought similar or even better homes with less money out-of-pocket.

There were renters in the pandemic who could pay and opted not to do so.

The end result in 2008 and 2020 was a lot of people who played by the rules were hurt by essentially a government property seizure due to the absence of a requirement to demonstrate need.

The de facto property seizure in 2020 has contributed to housing inflation. Those who lost income – especially mom and pop landlords by being forced to accept situations where tenants regardless of need stopped paying rent or who opted not to file for government housing assistant to make their landlord whole – are now trying to recoup their losses.

The empty home tax is more of the same. It assumes the government can and will dictate the best use of private property. The reasoning of property owners for not renting their property be damned.

What makes the entire process disingenuous in Oakland’s case is the tax collected is not being used to expand the availability of more housing. Instead, it funds a bureaucratic commission dealing with the homeless and a mobile unit to take services to the homeless.

Wouldn’t it make sense to use the empty room tax collected to help non-profits build more affordable housing units? It could even help homeowners as allowed under Senate Bill 9 to convert and existing single-family homes to as many as four unit, do a legal garage conversion or build an auxiliary dwelling unit.

Then there is the issue of cities like San Francisco that are enamored with the economic disruption crowd that has allowed people with tons of tech money stick it to government regulated concerns such as hotels and taxi companies.

An outright ban on rentals of homes for less than 30 days such as can be done through Airbnb and others would likely free up more housing units for rent than an empty house tax.

It would also drive tourists and travelers back to hotels where it is easier to track room taxes. That is likely to capture more revenue for San Francisco than an empty house tax.

But why do that? Government’s first impulse is always to use taxes to inflict their will on the behavior of the public sector.

Besides an empty room tax requires the expansion of the bureaucracy to monitor the actions of the private sector. Instead of calling an empty room tax it should be dubbed “The Bureaucrat Full Employment Act.”

Little did the framers of the constitution know that as tyrants seizing private property even by de facto means or imposing burdensome taxes King George was a rank amateur.

 

This column is the opinion of Dennis Wyatt, and does not necessarily represent the opinion of The Ceres Courier or 209 Multimedia Corporation.