Robert J. Samuelson’s column “Staggering Land Prices Make the Japanese Economy Less Than a Miracle at Home” (Op-Ed Page, Feb.13) highlights the relevancy of his assertions to California. It notes that prices of single family homes within 45 minutes commuting distance of downtown Tokyo are about $500,000. However, there are increasingly large portions of Los Angeles where $500,000 is insufficient to buy any kind of a home.
Samuelson refers to the fact that in 1988 land prices jumped 28% in Japan. But, in the last 25 years, even greater increases have occurred in Southern California. Samuelson notes that Japanese real estate taxes are low, making it easier for owners to hold on to their land, while profits are taxed heavily if they sell. He suggests that real estate taxes be raised and taxes on land sale profits be lowered to bring about affordable housing. But in California, taxes on real estate have been negligible since Prop. 13, while sellers not only have to pay substantial gains taxes, but are re-assessed at a much higher scale when they purchase replacement properties.
But higher taxes on buildings and other improvements will only further diminish the amount of available housing. To encourage a supply of affordable homes, only land taxes should be increased. Doing so would cause the price to drop and make land near the metropolitan core acquirable at a reasonable price, thus discouraging speculators from holding land out of use, preventing urban sprawl, and encouraging proper development of land generally.
MARION E. SAPIRO