If the insurers go insolvent, does the government default?
I would suggest a system where the government sells bonds linked to specific future tax revenues, and allow a property owner to buy the bond for their own property many years in advance, essentially prepaying the taxes at the current bond rate. If property values and taxes, or even just collections, crash, the bond holders take the loss.
If I were designing the system, the final fallback would STILL be that the tax is secured by the asset. Insurance is just a side-contract, and if the insurer doesn’t pay, you sue them. If they still don’t pay, then the owner pays. If nobody pays, the government takes the land. It’ll make a nice park, if they can’t auction it off for enough :)
This way, the tax rules are simple, and any insurance or smoothing deals are optional ways to make it more predictable for owners (and more costly overall).
Right. That’s a silly and unnecessary idea. Your liability is someone else’s asset. In this case, the government’s. There’s absolutely no way that the asset holder (be it the tax authority, or a lender) should or would let you turn their secured debt (you pay or we take the asset) into an unsecured one (you pay or we … ask again?).
You can’t generally transfer liability and you certainly can’t transfer or discharge FUTURE TAX liability.
Yeah, see
If the insurers go insolvent, does the government default?
I would suggest a system where the government sells bonds linked to specific future tax revenues, and allow a property owner to buy the bond for their own property many years in advance, essentially prepaying the taxes at the current bond rate. If property values and taxes, or even just collections, crash, the bond holders take the loss.
If I were designing the system, the final fallback would STILL be that the tax is secured by the asset. Insurance is just a side-contract, and if the insurer doesn’t pay, you sue them. If they still don’t pay, then the owner pays. If nobody pays, the government takes the land. It’ll make a nice park, if they can’t auction it off for enough :)
This way, the tax rules are simple, and any insurance or smoothing deals are optional ways to make it more predictable for owners (and more costly overall).
That’s entirely incompatible with the idea of selling the tax liability separately.
Right. That’s a silly and unnecessary idea. Your liability is someone else’s asset. In this case, the government’s. There’s absolutely no way that the asset holder (be it the tax authority, or a lender) should or would let you turn their secured debt (you pay or we take the asset) into an unsecured one (you pay or we … ask again?).
You can’t generally transfer liability and you certainly can’t transfer or discharge FUTURE TAX liability.
I guess I’d trust competition between private insurers to set better prices than a government agency.
I don’t know much about how insurers are regulated, but I think this system works alright?
Bidding on tax bonds would set equally efficient prices on them, since it would be the insurance companies’ people bidding on them.