First, on the surface, this sounds like a terrible idea. Almost all ideas that I see on HN about economics fail with even the tiniest amount of common sense.
As a counterpoint: Look at very high value goods, like jet engines and MRI machines. I went for an MRI the other day and wondered to myself (then asked an LLM) what the international MRI market looks like. They are vanishingly small number of manufacturers and are usually dominated by a few international players. How are you going to apply this tax to non-domiciled (international) companies? Also, companies like General Electric, Mitsubishi Heavy, and Seimens are enormous and incredibly diverse. This idea falls apart quickly.
Leaving aside your mistake, you raise a great point. Why are there so many empty lots in central Tokyo for sale? It makes no sense financially! Maybe they assume they can tear-down the existing structure and sell it faster than the tax penalty will hit?
This is a fair question. In short: Permissive. If you want to learn more, talk with any LLM about it. There are a bazillion YouTube videos and blog posts discussing the matter to no end.
My internal Brandolini's Law alarm is sounding loud and clear from this post.
If you think real investors should make 12-15%, you are essentially bankrupting the next generation. (Even 10% annualised would do it.) That is enormous intergenerational wealth transfer, ensuring the next generation cannot own a home before they are 50 years old or they rent forever.
Outside of central Tokyo (the most central ku's surrounded by Yamanote train loop line), there is almost no capital appreciation for homes (and apartments) because NIMBYism does not exist (quite literally through the national building code). As a result, they build enough for the demand, and home prices are relatively stable, roughly rising at the rate of inflation. France is pretty similar outside of central Paris. Before post-COVID inflation got out of control, Germany was also similar.
The center of Tokyo and Osaka are a bit special because they are the largest job centers in the whole country, and there is very (insanely?) high demand and not enough land to maintain low capital appreciation for homes. That said, there is still constant tear-down/rebuild projects in Tokyo to build denser housing. It is hard to walk 10 mins in central Tokyo and not see a tear-down/rebuild project. Fortunately, they have incredibly strict noise controls at construction sites, so you rarely hear it, but you see it.
> the houses in Japan are knocked down and rebuilt between essentially every occupant
This is absolutely untrue. This is a near-perfect Internet Brain/Terminally Online type of comment. Houses are normally only knocked down in Japan when they are 50+ years old. (The "30 year rule" from the 1980s just won't die on the non-Japanese Internet.) The stuff that I see knocked down looks like it is from the 1950s -- pure wood, rotted to the core, and paper-thin windows. It makes no sense to restore these homes when there is no legal restriction for tear-down/rebuild. There are lots and lots of second hand single family homes that change hands between owners. All of the people that I know who own single family homes bought them second hand. There is a whole segment of the real estate construction market that does home restoration. It is pretty common to buy a second-hand single family home, then do X currency amount of restoration. Sometimes, these companies buy the used homes themselves, do restoration, then sell at a price for profit. Apartments are similar in wider Tokyo area.
> they're pieces of garbage meant to last a decade or so
Again: Internet Brain/Terminally Online type of comment.
> So yeah, it's extremely rough when there's nothing valuable to invest your money in.
Have you seen the Nikkei 225 stock index in the last 10 years? (How does the total return compare to your country of residence?) Also, Japan does not enforce capital controls, so regular people are welcome to invest their money in foreign stock markets, such as the S&P 500 stock index. They can do so using numerous domestically-listed mutual funds and ETFs.
Agree, most homes have been built to strict codes since the 80s, due to earthquakes and typhoons, which means by default, they're not "rubbish". There are many places with a crap finish, poorly insulated etc, but as I said in another comment, they're not by default trash.
I totally agree about LA county. I don't think many people comprehend its size. It is fuckin' enormous, like the size of a small nation (it is one third the size of Belgium)!
> California is about the size of Japan with the same GDP.
On the surface, this is true, but it ignores taxation structure when comparing a federal state to a sovereign nation. It would be very hard to get state-level income tax rates above 15% in the US. That cannot compete against federal/national tax rates that normally approach 40% in US and Japan. In any nation, the vast majority of large mass transit project construction costs are paid for by the central/national gov't. I would characterise your comparison is disingenuous.
> They could pass their own funded project for public transportation.
They could not reasonably 100% self-fund large mass transit projects. They need federal dollars, a lot of them, and it is very competitive to get them. As an example, look at how long it has taken to raise necessary funds to build the Silicon Valley BART extension. There is tremendous support from the public for this project, but it takes a long time to raise necessary local funds. In parallel, they need to "win" federal support for the lion's share of construction costs.
You raise some very good points about the expansion of rail in Los Angeles basin. However, this part: "struggling to get a subway down Wilshire where it's obviously more needed". As I understand, it is incredibly complex to build subways in that part of LA basin due to natural gas deposits that make tunnelling dangerous and expensive.
> Consider John's Island, South Carolina. The highway that was supposed to go there has been delayed for 33 years.
I Googled about this issue. It looks like it is multi-factor: legal battles, lack of funding, and significant conflict over growth management vs. environmental concerns.
I know that you comment is midly off topic, but I am going through the same out of body experience each time I see a major project announces an opening date of 2030 or later.
As a counterpoint: Look at very high value goods, like jet engines and MRI machines. I went for an MRI the other day and wondered to myself (then asked an LLM) what the international MRI market looks like. They are vanishingly small number of manufacturers and are usually dominated by a few international players. How are you going to apply this tax to non-domiciled (international) companies? Also, companies like General Electric, Mitsubishi Heavy, and Seimens are enormous and incredibly diverse. This idea falls apart quickly.
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