Capital Gains Tax => Less Land Baroney

A lot of people have been complaining about land baroney. How about a simple solution based off a real life solution?

Have a capital gains tax of 25% for any property sold less than 4 weeks than it was purchased.

Most people won't be affected, and the only people who will be are land barons or people who desperately need to sell land quick.

This should rapidly normalize land prices and relieve a LOT of griping in SL.

Stipulation: it could not be just merely on sale price, because people would just trade money on the side. It'd have to be a set amount per parcel of land. Like in theory 25% of the going rate per meter squared, multiplied by meters squared.

-Hiro Pendragon
Serving SL from Varney 200,200

so your going to tax the guy that wins a land auction...then half way through the month finds out he can't hold it and has to sell it, he gets taxed on it and he gets hit with the tier fee?...as well it also could increase land prices so that the profits of those who sell land offten would stay the same, just my thoughts on it O.o seems a little silly to tax the crap of someone in a bad situation because of a few people in search of profit.

Very interesting idea, Hiro! A few questions though, and I'm not sure if I have the answers. In fact, if any of us had the answers to these problems, we'd probably be hired in a second by Linden Lab. Now where's my palantir?

My first query is: couldn't this drive up the prices higher by having people trying to cover this cost AND make the same profit margin? I am convinced that most people who buy and sell land are good folks, we just have a case of a few bad apples. Philip Linden gave the stat that land being resold is, on average, 14%-16% higher than the buy price. That's a reasonable profit margin, I think. What I find most objectionable are the people who are not honest, conning people, doubling the price, or leaving really ugly eye sore lag inducing stuff every where. I think this would affect the people who make a reasonable profit on land resale moreso than the con artists, who would just become more ruthless.

Second, why not just sit on the land for a few weeks?

I know the argument of supply and demand has been made lately, and many people have raised the point that when major land infusions have happened, prices have still gone up. However, another variable to consider is that these land infusions have happened within a week or two of MAJOR media coverage of SecondLife - the Reuters article on real estate specifcally comes to mind - which has probably pushed the demand higher due to increase in population even faster than the major land infusion has affected the supply status.

Perhaps trying to add SIMs 10% faster than the demand the population growth requires is a way to bring them down. The two are directly tied together; I can't tell you how many times in helping newcomers out after the Reuters article, the first question was, "How do I get land?" after the obligatory, "Hey, how are ya!" What do you think?

Either way, its an interesting idea. It might be worth giving a try in some form! As with many things in Second Life, I think some trial and error will happen as we are truly on a new frontier here!

Innovative ideas are what keep this place interesting, and I applaud you for providing one!

Regards,

-Flip

Anything... ANYTHING!

I haven't been able to play this game for months because of all the land barron/ GRIEFERS.

I do not think this would have the effect you want.

The true land barrons would have no problem holding the land for a month before selling. In other threads where the suggestion was that they must hold the land for a month, many of the land barrons outright said they would have no problem doing that. As long as they bought the land in a slow steady fashion the end result would be 1 month wait, and then back to normal business.

What that causes is less land to be available. The resellers still are buying the land but it will just sit there for a month unavailable for the people who would actually want to use it.

That would drive prices up, not down.

Another possibility is that the resellers will just tack on another 25% to the sell price (as mentioned above). If the price of crude oil goes up do gas companies lose money? No, gas prices go up and consumers lose money. If a state/country raises the taxes does the store lose money? No, infact most don't even include tax in the sticker price and are very upfront that *you* are going to pay whatever tax there might be on top of the price they want for the item.

Tacking on an extra fee to reselling land will not make the prices go down.

No tax upfront. It'd only be if people sell within the first month what I'm suggesting.

They should be more careful when they buy, then. Caution is a small price to reduce baroney.


Isn't that the point?
*coughs*
Yes, but there will be people who also get rid of land who have had it a while that sell it cheaper. Cost wins out.

Sure, but then you can't go through selling more than your tier worth per month. Say I have a 4km tier and I sell 1km plots, I'd only sell 4km during the month, instead of 16km, as if I sold them after a week each. Already profit is down 75% from barrons.

It looks like Linden Labs tries to... but look at the map and land for sale, there's LOTS sitting waiting to be purchased at any time. I think the supply is there. Perhaps you are correct to some extent.

Ama, yes, they could, but again - land barrons make their money because they sell every week or two - multiple times per month. This works in real life, and I think it could help in Second Life.

I can see this working however I do think people would just charge more for the land to cover the capital gains tax.

Why not just make it set so only so many auctions can be won per week? The issue seems to be that there is a oligopy of landowners that control the bulk of auctions.

The Lindens could also have land that must be sold for what it was purchased at. Kind of like controlled rent that some RL cities have in certain areas. I do not think this should hold true for all land but perhaps in a few sims.

I haven't been around too long but wasn't there taxation on land use before? Could there be some sort of middle ground with set land tiers at lower rates and taxes in addition? Maybe all land under (example) 2048 at land tier rates only. Anything above that has luxury taxes in addition. Exceptions should be private islands since those are private owned and cannot be sold.

The biggest change that needs to be made is people need to stop buying at the high rates. I recently sold land at $10/m and it sold quickly to the neighboring lot. I got back my money I paid and I know he is not going to chop it up and resell it (at least not for now). If people continue to buy at $15.m or whatever the growing rate is...people are going to keep selling at it. It's all about what the market will bear.

Rim

True one should be cautious when buying land but shit happens anyway(it happend to me I lost my job, had to sell off my land). Limiting them to home much land they can buy per week, or possibly even per month would be better I think, but then they could just create alt accounts to pick up the slack, then agian LL could prevent that too by limiting it to so much land bought per credit card number, that could create a bunch of problems too though...I'm all for finding a way to reduce land prices, now that I have a job agian I'd like to buy a nice slice but not at these prices it's nuts to charge 6000L$ for 512m of mature land.

No, what people are saying is that land speculators WOULD treat it as an up-front cost. Think like a land speculator: you buy a plot of land, but you can't sell it at your usual markup for a month, so rather than just hold onto it for a month, you add the 25% to the current rate and put it up for sale anyway. Who knows, maybe someone will pay that much in the interim! If not, they can either lower the price, or keep it at its current rate.

Now, the other possibility for a speculator to offload it within a month is for them to put the land up for sale, but at a much higher rate than what they're willing to accept. The speculator would have the buyer pay them directly, then would sell them the parcel for L$1.

any fee that gets attached to land barony will be passed on to the consumer. the land barons will not pay the tax, they'll simply incorporate it into their calculations.

of course the solution to all this crap is to simply eliminate lindens altogether. but that's a subject for another thread.

*edited to correct grammar

This is a nice idea Hiro.
Any debatable idea wich moves against land baroney, wich is the first plague of SL, should have to be taken in consideration by LL as soon as possible!

I would kill the land market if it was necessary. I understand that business is business, but SL is not only business, it is also a game and a ruined game, talking about land.
How could someone go for the 16k sqrmtrs land tier now, having to pay (if we asume to buy it at 10 l$ for mt, wich is a deal) something like 900 US$ for the land? I can remember the fairy times that land cost was at 1 or 2 linden for square meter, and not cause I have a good memory, but cause it was just two months ago! How much it will cost a meter of land in another couple of months? 20, 30 l$?

I love SL because of the fact that players create it, day by day. I enjoy the economy side of it also: build good stuff, or have a good event and you will earn lindens. But, here the biggest business possible is land speculation, wich is the last creative thing in the universe! By this point of view SL lacks of sense. Can the canvas be more valuable of the artist's picture? LL may just take in consideration to stop (or slow at least) this crazy run in some way and whoever likes to have business in SL will be forced to create contents.

The end of the free pure land speculation (wich offers no contents), means a more creative and enjoiable game.

People keep saying, "Oh, the tax would be passed on" and miss the point.

Land barons don't control all the land. They control a great deal. Let's, for argument's sake, say they control 50%.

If 50% of the land is 25% more expensive, won't the less expensive land be purchased?

The point is that land barrons will sell land once a week or every other week, and make money because they are able to sell multiple times in a month. By adding a fast resell tax, it'd slow that process down.

Maybe an alternate suggestion? How about it be taxed like such:
100% tax on day 1
96% tax on day 2
92% tax on day 3
...
50% tax on day 14
...
6% tax on day 27
0% tax on day 28+

That'd accomplish the same goal. Perhaps tax on day 0 could be 0%, so that people who are buying for friends, and doing transfers, could still do so unimpeded.

I hesitate to suggest putting a hard limit on trading but I think that a reasonable deterrant to land baroney can be established and not impede "regular" use.

-Hiro Pendragon

Adding complexity nearly always adds more loopholes.

We have to treat the source of the problem, not it's symptoms.

LL needs to release land more quickly, and people need to be encouraged to use the auctions to buy land instead of relying on the convenience of buying it in world.

what khamon said.

what would happen if l$ and people were paying in us$?

Do you know how expensive it already is to own land?

Land fees are basd on your peak ownership for the month.

If you bought 5000 meters, you would end up paying an extra $40 that month!!!

Using the L$ for land screen shows me that it costs L$80,000 for TAXES on that land.

How can you say that people aren't already being charged enough for their land???

We all know it's not really the physical land that's the issue anyway: it's the prims that the land provides. What it really comes down to is not that LAND is expensive, but that PRIMS are expensive. going back to 5000m of land, that's enough to support just over 1100 prims. In other words, for that 1100 prims worth of land, a user would have to pay $40 a month, on top of their monthly dues.

So to say that Linden isn't charging enough is just plain WRONG. The simple truth is, they're already charing more than enough. It might even be fair to say they're charging too much.

As SL grows, and revenues increase, the ratio of Citizens to Lindens will go down, allowing Linden to put a larger portion of our dues to servers. As faster and bigger servers come to market (for roughly the same money), more sims will be hosted on each server.

So the only TRUE solution to the land problem, even assuming there really is a problem, is to wait. In a year, assuming SL doesn't collapse into a singularity and dissapear, SL will easily be 4 times as big, but be running on only twice the hardware. The staff will probably number about 30 or so.

This means that the cost to own "property", which is really just hard drive space and CPU cycles, will go down. You just have to give it time.

The most basic, simple fact is this: the best solution is to get more people in to Second Life!! Cajole them, bribe them, offer them half your sign-up bonus if they join the game. Get people in to the game and paying their monthly dues. That, and nothing else, will fix the "problem".

well said Wraith, at the most I've paid 75$ a month in land fees when I owned a nice little niche of a sim, was going to build a nice little event hall on it, never happend had to sell it. At the time I barely broke even with the fees I had to pay on it but anway...it's very possible that this "problem"will sort itself out, taxes are a quick fix and possibly painful solution to it, a long term one is to well..stop buying yes believe it or not if there are no consumers there are no sellers, if no one pays 50$L K for like 5000m of land or something the barrons don't make money, prices are forced down till somone is tempted to buy, it's part of the cycle and it's how most markets work in general.

I'm curious: does anyone actually pay their land tier fees in lindens? And if so, why?

Using the current GOM rates, US$40 is equvalent to about L$8000; going the other way, L$80,000 is equivalent to US$400. Moving money through GOM might be a minor hassle -- but is it really enough hassle to justify paying (the equivalent of) an extra US$360 a month?

Such ideas only work in real life because all land sales are a mater of public record.

Make all land sales in Second Life a matter of public record and you won't even NEED such added complexities.

Or simplify by letting residents sell their land at auction. All land in one place. Public records. Open transactions. Prices set by the market and not by someone with a set profit margin to meet.

Don't you think land speculators will be a bit more nervous about auctioning land? If there are no "reserve prices" (and I sure hope there aren't) then they stand to lose as much as gain on every parcel they sell...

Land no longer reverting to public == No more land barony.

Simpler solution. Easier solution. Solution already being worked on.

Wraith, while your points are valid for us "don't own 1/2 a sim or more" people, most land barons are squarely in higher tiers, and just buy new land when old land sells.

For example, let's say I pay $200/month for 1 sim worth tier. Let's say I buy all land for $10L/m and sell for 20% profit. That's 65km*10*0.2 = 130kL. Let's say I have 3 turnovers per month of product, so that's 390kL. Let's round that to 400kL for simplicity sake, and round down the sale price of L$ to 1kL/$4US for simplicity sake. 400k*4/1000 = $1600

$1600 - $200 for the land tier is a net gain of $1400 cold hard US greenbacks. Now, most land I've seen barrons sell makes more than a 20% profit, and I imagine there are times when they get higher turnover than 3 times per month.

This is serious money, Wraith, and the land fee costs are pennies on the dollar for barrons' profits.

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Kensuke, I agree we also need to encourage people not to buy at such high prices.

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Tinker, exactly.

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Tiger, keeping things as public record is a good idea as well. I am skeptical how that will solve land barroney, though.

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Moleculor, that may also be a decent idea, but I seriously doubt it will make much of a dent into land baroney. Most people don't release land; they sell it. If they need to get rid of it fast they sell it cheap or they give it to a friend.

The problem that I see is that not enough people participate in the land auctions. And when people do bid against land barrons, they simply bid high to win and sell higher.


-- But that's just my opinion, I may be wrong.
-Hiro Pendragon
Serving SL from Varney 200,200