(Joint with Nathan Lauster and cross-posted at HomeFreeSociology) TLDR We estimate the land value lost by lot subdivision restrictions in the RS (single-family) zoned lands of Vancouver. These restrictions, also known as the zoning tax, subsidize hoarding of land for the wealthy at the cost of those who wouldn’t mind sharing. We conservatively estimate the overall cost of preventing splitting of lots at $43 billion, or an average of 37% of existing lot land value.
Vancouver has low property taxes and high income taxes. Seattle is the opposite. What would it look like if British Columbia was more like Washington State? If we got rid of personal provincial income tax and recovered the revenue by raising the provincial portion of the residential property tax, a.k.a. the “school tax”. The tax policy of British Columbia, when compared to Washington, is sending the message that it’s a great place to come and invest in property with it’s low property tax rate, but not such a great place to live and work with it’s higher income tax rate.
One thing the extra school tax debate has brought to light is how challenging 8th grade math is for people, especially those living in homes valued over $3M. Journalists also seem to have trouble putting outrageously wrong statements into perspective, so here is a simple calculator on how much extra school tax people will owe depending on their home value, years until home is sold, expected changes in the real estate market, interest rates on deferred (through government program or second mortgage) taxes.
Last year we took a detailed look at Single Family teardowns in Vancouver, that is houses in RS or “Single Family” zoning that got torn down. We focused exclusively on those homes in RS zoning because these have to be replaced by another, often bigger, Single Family home. Using historical data we build a probabilistic model to predict future teardowns in Vancouver. If you haven’t taken the time yet to read through the data story, you probably should do that right now.
We have written about the extra school tax before, but in the meantime the discussion about the extra school tax has heated up considerably, cumulating in David Eby cancelling his town hall today. Over the years I also have been spending some time thinking about how people got to the privilege of paying the extra school tax, for example here and here. There is a slight dissonance with people claiming that their homes should not be taxed because they are their homes and not their investment.