Tuesday, February 25, 2020

“There might be some unintended consequences,” she added.

WSJ:
If two-thirds of voters approve the measure, San Francisco would become one of the first big U.S. cities to tax landlords for store vacancies when it goes into effect next year. Washington, D.C., imposed a similar tax in 2011, though it was on residential and commercial property vacancies, not just retail.

Predict the unintended consequences in the comments.
HT: Cramer

4 comments:

  1. While the article details an example of vacancy rates decreasing in Arlington, Mass. after a similar tax was enacted, the key is the change in effective rents. Landlords could just be leasing out the space at a lower rent so as not to incur the tax. Another unintended consequence is due to the fact that the proposed measure "won't tax landlords actively seeking a new tenant while renovating the space". Landlords will now probably be in a state a permanent renovation (real or stated) while a property is vacant so as to avoid the tax.

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  2. long run, one would expect higher costs from building and owning a retail store, so fewer retail stores, or maybe more mixed use storefronts.

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  3. This is a fast forward type of tax and should only be considered in the most advanced cities. There should be socio economic tests to see if a city qualifies.

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