Will the BIS go “Henry George” on us? Perhaps there is late recognition that houshold balance sheets outstripping household incomes is an eventual recipie for either a crash or long term moribund growth given that the liquidity contraints households come under as a result of long term debt servicing of ever increasing liabilities.
The BIS (Bank for International Settlements) does not explicitly mention a land tax. But their recent study on ‘non-interest policy tools’ to stabilise house prices yields that such a tax on the ‘location, location, location’ value of houses might, together with abolishing interest deductions, be what we need (emphasis added):
Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilising house prices and housing credit. In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods. Among the policies considered, a change in housing-related taxes is the only policy…
View original post 9 more words