theonlyclutch wrote:
Seoul, Taipei, Hong Kong, and damn near every mainland Chinese city all have very expensive real estate markets so I don't think homogeneous, highly collectivist countries have this automatically figured out either. I think the real problem here is that with ZIRP for so long people/corporatioms nearly everywhere have started to treat real estate as an investible asset, which diverts capital from potentially going to more productive means, all the while devaluing savings from labor. What's likely needed to discourage this is likely significantly higher land/absentee taxes (to discourage B&H speculation and potentially improve housing stock liquidity) with the extra windfall corresponding to deductions in income taxes to incentivize labor over investment (esp. unproductive ones that RE can tend to be).
It's a possible solution except that what it will do is actually raise real estate prices and particularly the price for rental/low income housing which tends to be more investment/absentee owned rather than detached housing and therefore it is not solving the problem.
In the long run, lowering income taxes might help unemployment as people invest in more labor intensive business instead but, at least in the USA, a significant number of low income earners don't actually pay income taxes now even with the standard deduction so extra deductions won't help them (and making the tax code more complicated means even more people will not take advantage or not even file).
“Most people use statistics like a drunk man uses a lamppost; more for support than illumination,” Andrew Lang.
