June 26, 2020
I have long been a big fan of a vacant property tax. As the old saying goes, you tax what you want less of, and why would we want vacant properties. This is especially likely to be relevant in many high-priced cities where the demand for commercial real estate is likely to go through the floor due to an increase in telecommuting.
As cities mull many types of tax increases to deal with pandemic caused budget shortfalls, a vacant property tax should stand out as a productive alternative. The economy would be best served by having landlords quickly recognize that their property is not worth as much as it used to be, and therefore lower rents to keep it occupied. This will be good for keeping old businesses and supporting new ones since rent is the major expense for most businesses, especially small businesses.
At the end of the day, recognizing reality is likely to be good for landlords, since they don’t make money on vacant property. Of course, landlords are often not very good at economics. Both Donald Trump and Jared Kushner are major property owners.