Also, she doesn't actually have the money. She has to live somewhere. Sure she could downsize, but I think it's considered pretty mean to make old people move house just because property prices got expensive around them.
This is trivially solved with a home equity loan. (If this proposal were broadened, non-recourse home equity loans for purposes of paying this tax would need to be expanded.)
I think it's worse to force somebody to sell chunks of the house to the bank, just so they can pay taxes on it, until eventually they don't own the property at all anymore. The bank then sells it to somebody else and you have nothing. You'd be better off downsizing and just avoid the tax.
> it's worse to force somebody to sell chunks of the house to the bank
You're selling part of the upside. That's the point of the land value tax. Someone who owns a $1mm house from a $100,000 purchase didn't do $900,000 of productive work. Those gains are rents, in the economic sense, not income. Giving those up--or downsizing, as you suggest--isn't ridiculous and is the point of the land value tax.
That's called inflation. Its not her fault that properties became so expensive. All she wants is a 3 bedroom house. Downsizing is not ridiculous no, but we do generally consider it unfair to push old people out of the houses they lived in their whole lives for ideological reasons.
I would rather we deflate house prices by making it unprofitable to own a home that you don't live in, and have a massive oversupply of new homes.
