Property owners are only going to assess their property for tax purposes at perceived market value if they’re ready to sell. Otherwise they’ll assess it higher, factoring in moving costs. The Harberger buyer is usually overpaying.
For this reason, I think most Harberger extortion is easily avoidable by adding a sufficient delay between sale time and transfer time. For example, for most categories of residential and commercial real estate, a reasonable expectation for compulsory sale would be perhaps 90 days between purchase and transfer. (This is already the custom for foreclosures, I think.) The compelled seller, having priced in moving costs, will have time to decide how to put their new liquidity to use and make the proper adjustments or sue to enjoin the transfer if maliciousness such as repeat harassment is suspected.
This leaves the problem of sudden price changes. One solution is to make compulsory sales begin as blind auctions. If someone submits a blind bid for your property at or above your self-assessed tax value, you get a short period of time to submit a reassessment, and if your bid is higher you pay back taxes on that reassessment within that tax year, otherwise they buy from you at their assessment. I think this scheme gets both bidders to bid their true rates, and discourages holdouts approximately the same amount? It makes the market slightly less efficient but keeps the same tax efficiency.
Property owners are only going to assess their property for tax purposes at perceived market value if they’re ready to sell. Otherwise they’ll assess it higher, factoring in moving costs. The Harberger buyer is usually overpaying.
For this reason, I think most Harberger extortion is easily avoidable by adding a sufficient delay between sale time and transfer time. For example, for most categories of residential and commercial real estate, a reasonable expectation for compulsory sale would be perhaps 90 days between purchase and transfer. (This is already the custom for foreclosures, I think.) The compelled seller, having priced in moving costs, will have time to decide how to put their new liquidity to use and make the proper adjustments or sue to enjoin the transfer if maliciousness such as repeat harassment is suspected.
This leaves the problem of sudden price changes. One solution is to make compulsory sales begin as blind auctions. If someone submits a blind bid for your property at or above your self-assessed tax value, you get a short period of time to submit a reassessment, and if your bid is higher you pay back taxes on that reassessment within that tax year, otherwise they buy from you at their assessment. I think this scheme gets both bidders to bid their true rates, and discourages holdouts approximately the same amount? It makes the market slightly less efficient but keeps the same tax efficiency.