It's a side effect of de-taxing land. The more land becomes an asset and the less it becomes a liability (e.g. by capping property taxes) , the greater incentive there is to hoard it and jealously guard its value with NIMBYism which leads to even less development, greater shortages and even higher prices on an upward spiral.
Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic systemic changes which brought us here and exculpates the people who deliberately fought for them to create this mess.
If land were closer to being in a liability in SF then the NIMBYism would be a pale imitation of what it is now and the land would be used much more efficiently and property wouldn't be as astronomically expensive.
However, land owners need an economic incentive to develop that requires them to lose money if they use land unproductively.
That means taxing the value of the land - preferably directly (via LVT) but failing that by raising property taxes.
Even if land were historically taxed at say NYC rates in SF the supply and demand problem would still rear its head. The problem is artificial supply constraints created first and foremost by zoning and secondly by a myriad of other regulation that infringed upon property rights and adds friction (time, money, risk, all of the above) that prevents people from exercising their property rights. Prop 13 (a monetary incentive to not sell) falls into this latter category. LVT would just be the revers of Prop 13. It's not going to solve a fundamental supply and demand problem that's created at a lower level. You'd have everything built out as much as the zoning allows for but the net result would still be inadequate because the zoning is too restrictive and the regulatory friction is going to still works its magic at the margin.
NIMBYism is a result of people who really want to protect the value of their land. Some of these people will be quite desperate to do this because they're highly leveraged. Negative equity is a good incentive to turn up to your local planning meetings and inhibit development.
I think NIMBYism only looks financially attractive because everyone who bought a square of land in a "city" since the 1970s or so and held for at least a decade has won big regardless of where. That doesn't mean that SF/SV isn't forgoing a lot of money in order to keep its NIMBY policy. Think about how much just the squares of land those single family homes and low rise buildings in SV are on would be worth if the SF was developed to NYC, Chicago or Boston levels.
I think the fundamental problem here is that the people of SV people do not believe in property rights (e.g. the right to develop property you own as you see fit) to such an extent that they are willing to put their money where their mouth is and codify it in the form of (restrictive zoning and other shenanigans that hinder development) even though this inhibits growth and limits their upside.
* People who have watched their property appreciate in value by 4-10x for basically doing... nothing.
* People who have taken out an eye watering loan for well over a million dollars and are kept up at night by the idea that theyll owe a million dollar loan on a $750,000 home.
Of course they're going to be conservative! Of course they're going to try to avoid anybody rocking the boat! Of course they'll be NIMBYs!
Why on earth would you think that the one thing that keeps them ludicrously wealthy - property rights - is the thing that they'd stop believing in??
I think you and your parent are not using "property rights" in the same way. You're talking about the right to own property in a sort of static sense, while the parent is talking about the right not only to own property, but build and develop on it as the owner sees fit.
SF homeowners of course believe in the kind of property rights you're talking about, but mostly do not believe in the latter. Most homeowners here want (and unfortunately mostly have) absolute veto right over any kind of construction or development that their neighbors want to engage in, whether it's as simple as reasonable cosmetic changes by a resident homeowner, or as complex as a denser rebuild by a housing developer.
(But I mostly agree with you in your characterization of the two types of SF homeowners. There also are some who are nominally in your second category but wouldn't be catastrophically financially impacted if their mortgages went under water, but they're definitely in the minority.)
I guess they "care about property rights" in the same sense that everyone right of die hard communists cares about property rights but that's kind of like saying it's a warm day out because it's 200-something degrees above absolute zero.
If they care so much about property rights then why is it so hard for people there to do build on their own property that increase the value of that property?
Saying SF cares about property rights is like when the person who creates drama says they don't like drama.
Yes and no, and this is a big part of the problem: young adults in the US are taught that their primary residence is/will be their biggest investment. So you get this weird set of fears that encompasses the worst of both.
The house-as-residence aspect makes them fearful that you won't make your mortgage payments, or your mortgage will end up under water, and the bank will foreclose on you and you'll be homeless. The house-as-investment aspect makes them fearful that they'll take a loss or even break even come sale time, and then their retirement nest egg will be weak.
So I agree that fundamentally yes, people are buying a house to live in, but it's a lot more loaded than that.
If housing costs were more reasonable, perhaps we could turn the tide against this "primary-home-as-investment" attitude, which I believe to be counterproductive.
I live in one of those sorts of cities. Detroit is their own doing because of local tax code. There's a decent amount of "there was a falling down commercial building here so we bulldozed it and then just let it sit" type of lots kicking around in other cities but the lots have still increased in value (i.e. inflation has happened) enough that mostly nobody is underwater and anyone looking to get out can do so without losing money.
> a myriad of other regulation that infringed upon property rights and adds friction (time, money, risk, all of the above) that prevents people from exercising their property rights. Prop 13 (a monetary incentive to not sell) falls into this latter category.
I think Prop 13's incentive not to redevelop is actually more significant here than its incentive not to sell.
Right. At least when you're old enough to be in retirement there are a bunch of ways (expanded this year) to sell and keep your old tax assessment on your new place. AFAIK redevelopment will always trigger a reassessment no matter what.
> Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic systemic changes which brought us here and exculpates the people who deliberately fought for them to create this mess.
I am happy to discuss all variables which inform the price, so long as we agree to give supply and demand top billing. We can even discuss the variables which inform supply if you like.
No but when figuring out what informs a price you want to look at supply and demand first. There’s room for other variables, but you normally start there.
EDIT: While I’m inside the edit window, let me throw in another big variable as an example. Costs are another factor that inform a price, and a big one. You could make a case that it deserves higher billing than supply and demand, but if your costs are $X but you can only sell your widget for $X-1, and not $X+>=0, then $X-1 is your price ceiling. Your business is unprofitable and losing money.
I’m trying to be careful with my words but I still seem to be leaving some people with the impression that I think supply and demand is the only variable that informs a price. It’s not, but it’s still incredibly important and often dismissed as a non-factor when discussing San Francisco rental and real estate prices with San Franciscans.
But property supply itself is a constrained effect of politics and the relative power of various social groups, not a unique and independent primary cause.
If landlords can make a killing by constraining supply politically, they will. So the primary cause is the incentive system and the political environment which makes it possible for them to do that.
It's all about how the reward functions are designed. So of course if you reward scarcity and profiteering that's what you get - as a secondary outcome, not a primary cause.
It depends on your definition of "landlord". If by landlord you mean the typical NIMBY homeowner then sure it's true. But in practice landlords can make more money off of building more units vs squeezing out more profit from a smaller amount of units. So if you were a politician and followed the advice of the greediest landlord you would not end up with scarcity. The political environment doesn't listen to the greediest landlord though. It primarily listens to the homeowner type of landlord.
That's not typical of California landlords because of Prop 13. The tax benefits entirely shifts the market towards the benefit of properties that have been in the same hands for a very long time. So building new units will be far less profitable than old buildings, long-held, without any significant renovation. It's very rare to find an existing property on the market that is profitable to rent out at current market prices, because there's a lot of anticipated value gains built in to current prices.
In cities with zoning constraints, developers are the only natural predators of landlords. They are entirely different skillsets, building new units requires managing an extremely difficult political process for permits, raising capital, working with contractors and labor, etc. Being a landlord requires very different analysis and skills.
There may be a few landlords with the capacity to cross over to development too, but it isn't many of them.
Political factors can also inform supply, it doesn’t change the fundamental calculus of supply and demand, merely shapes the supply.
If you have a bunch of left wing groups who are anti-development fighting to keep supply constrained even while complaining the rent is too damn high and the character of the City is changing and yadda yadda yadda, who are you[1], as a landlord, to take the wind out of their sails when you are profiting from their protests?
This is just wildly incorrect. Landlords are very strongly opposed to left wing groups in SF, based on political funding. Landlords are the number one target of progressive legislation. The most left wing supervisor is literally a tenants rights attorney who ran on protecting rent control and wrote the law banning evictions.
Land is a rivalrous good but housing isn't. Sprawl is just the most conflict free way of giving everyone what they want but it's not the only way. You can always build more housing on the same piece of land.
Supply and demand is pretty obvious because of the basic physics behind it. If you have a world with 10 houses and 20 people then 10 people will be without a house. It's not very difficult to see the problem and how to respond to it. We first have to establish that we want every human in our country to have shelter. That means what we don't want to happen is the allocation of housing to a subset of the population, be it via the free market, a lottery or an application process where you are vetted by an interviewer according to some criteria. We don't want any of that. So the obvious solution is to just build more housing, regardless of the economics.
Now lets just add a thin layer of economics.
It turns out that the free market has this interesting property that in the case of demand exceeding the supply the cost of housing increases until it becomes profitable to build more housing. It's a self balancing system if you make sure that it's not getting stuck somewhere.
Turns out if you make it really difficult to build more housing then people decide to pack up and leave because that's the only option left. For the sake of the argument 20 people can't live in 10 houses so 10 people will have to go build housing somewhere else.
Now here is the perverse thing. The same people who made it difficult to build more housing also made it so that they get to stay where they are by removing the pressure to leave the location. What we get is 10 people living in housing and 10 people living in misery. You don't need an economic resource allocation mechanism like the free market to cause misery. The misery already exists in the real world and the economics merely summarizes that misery as a price signal.
So why care about supply and demand? Because it's the closest thing to physical reality but what people fail to grasp is that you have to change physical reality to change the economics. No, messing around with prices via rent control or prop 13 does not solve the underlying problem.
Veblen goods are a special case that prove the concept. With a Veblen good the price paid is part of the demand: you want that Rolls Royce or Lamborghini or diamond ring because its expense signifies your social status. The demand curve then slopes upward: at higher price points consumers demand them more. You can still analyze them by supply & demand, but you just have to take into account the upward-sloping demand curve (which is not unlimited, BTW: Veblen goods still reach an equilibrium price point where supply reaches buyer's ability to pay, it's just higher).
But they are using land productively as they are making $3100 a month off of a small studio.
Also I doubt if raising taxes will result in anything more than them passing that cost on to the renters.
When people talk about "using land productively", they aren't talking about a single person's profit. It's more of a "collective productivity".
You can only pass on so many costs before demand drops because the price you're asking just isn't feasible.
Non-resident landlords in SF, to my knowledge, aren't really anti-development. They recognize that 2x the number of units on the same parcel of land won't cut the per-unit rent in half, so higher density is still a better deal.
The problem, from the individual landlord's perspective, is that they can't redevelop their own land without triggering a tax reassessment, which can easily turn any profit into a loss, even after adjusting rent for the newly-developed property. The landlords who are making out like bandits right now are the ones who have owned their properties for decades. I wouldn't buy a duplex or a quad-plex in SF right now with the intention to rent it out; the cost of the property, plus 2020-assessed property taxes, would mean I'd barely break even at market rates (pre-pandemic market rates; current market rates might be a solid operating loss).
Large developers that are coming in and wanting to build apartment or condo complexes essentially have to build so-called "luxury units", because the economics won't work out otherwise, when you take into account high initial property taxes and the high, drawn-out cost of just building in SF.
which is why i think property taxes are a stupid form of taxation. The property's income should be what's taxed - not the "value" of the property. And that income should be taxed at the marginal tax rate of the owner.
Land owners are not in the business of giving money away. That's precisely why increased taxes will not result in increased rents. After all, if they could increase rents and the market would clear it when there's a tax, why wouldn't they when there's no tax?
They're not selling at cost-plus, they're trying to maximize profit.
Because renting in SF trades off in part against buying in SF at the margins (and against renting nearby to SF and against moving out of SF entirely). If buying in SF becomes more expensive due to an LVT, then renting becomes more competitive on the margin.
I find it to be strangely magical thinking that land-value-taxes will precisely and surgically extract 100% of their value from landlords with no players in the game altering their behavior in any way that would result in the effects being shared across many participants in the real estate markets in a city.
The idea behind the LVT is not about making rent cheaper. It's to reward landlords for using land more efficiently. If the land costs a fixed amount you want to build as many units as possible and make each unit as attractive as possible.
Compare that to a conventional property tax where you have to pay more tax for each unit of housing you build. You also have to pay property taxes for home improvement meaning old properties won't be renovated ahead of time and therefore won't be rented them out. Instead the house will only be available for sale with the hope that the buyer will renovate the property.
Have LVT proponents ever considered augmenting it with tax credits on the LVT for property improvements? To really hammer home incentives towards development in especially supply-strained markets such as S.F.
Usually, the LVT on its own will be sufficient to provide an incentive to develop in an economically efficient manner. The real problem isn't that. The real problem is that people do not desire their neighbours to operate in an economically efficient manner. It is just risk aversion in a different sense except the asset is being paid for by someone else.
Imagine that the US government would buy you a bicycle, any bicycle, at any price, reallocating from things that you don't care about, so long as you tell it how important a bicycle is to you. You are likely to describe it as being a matter of life and death.
The amount any human would pay for a view is different from the amount they require someone else to pay to obscure the view. Economic efficiency is not a goal in any sense. And any incentives such as the ones you provide would be struck down in the court of popular opinion because it is the outcome that is not desired, not the process.
LVT is a tax only on the unimproved value of the land. Property improvements are not covered: the land owner gets to keep (or pass onto the renter) 100% of the value of such improvements. No tax credit is necessary; it's a natural consequence of how the tax is structured.
Right, I understand that property improvements aren’t considered in LVT, and are naturally incentivized through the application of the tax. I’m just speculating if specific development-adverse markets could use both LVT, and credits against LVT to really get the pro-development ball rolling.
Based on the one prior attempt at LVT in the U.S., landowners don’t seem to understand its intent:
There's a pretty big risk of market distortions then. I could easily see landowners adding whatever "improvements" the tax credit incentivizes, regardless of whether it benefits the tenant or increases the potential rent charged, and then passing the cost along to the tenant. Also see a booming cottage industry of contractors & paper-pushers to get the tax credit.
I do agree that an LVT has psychological issues when proposed to voters. It's a massive change to how we currently do things (that's the point!), and it preferences groups who don't currently have political power (future developers, tenants, future residents) over those who do (land speculators, retirees, existing homeowners). I think the most likely scenario for its adoption is in the aftermath of a cataclysmic war that destroys all the existing infrastructure and redraws political boundaries. Likely one successor polity might try it out (since everything's dead & destroyed anyway), and then their pro-development advantages would draw lots of displaced immigrants to them, and eventually they'd amass more power than their neighbors through that economic dynamism. Much like how the U.S. became the pre-eminent global power through an innovative politico-economic system + immigration friendly policies + near complete genocide of the native population.
> Much like how the U.S. became the pre-eminent global power through an innovative politico-economic system + immigration friendly policies + near complete genocide of the native population
It's also invaded a crap-load of countries and defacto taken their natural resources And slavery.
No, that's a facile understanding. The loot-and-plunder style colonialism has given way to a unique variant that the US practises. It's not quite "take their resources" like the British Empire and friends did.
See Japan, a de facto US vassal state after WW2 and what they've grown into. Similarly, Korea and Israel. Also, Germany and France. They are just smaller participants in an alliance.
United Fruit style things still happen but the dominant style of US hegemony is different from VOC or EIC style imperialism.
It sounds like GP understands that point and is positing a "what if the value of certain new improvements were taxed at a negative rate?" (rather than a zero rate)
The point of LVTs is precisely to alter participants' behavior in the market.
The value of LVTs is in aligning incentives so that landlords have an incentive to build more housing and use it more efficiently. It makes vacancy & speculation a money-losing endeavor (the same way that inflation makes holding cash a money-losing endeavor), and creates political pressure to repeal zoning laws and create smart public improvements, ones that will increase the value of the land more than their cost. Its value as a revenue source is secondary, and many proponents (of the geolibertarian sort) actually support lower tax receipts and smaller government.
> The point of LVTs is precisely to alter participants' behavior in the market.
Maybe this is the point to its proponents. However:
> Its value as a revenue source is secondary, and many proponents (of the geolibertarian sort) actually support lower tax receipts and smaller government.
Statements like this muddy tax discussions.
The primary reason for any tax at all, regardless of type or preference is to raise revenue for government. That fact shouldn’t be lost when discussing which kinds of taxes and what percent to raise them at is discussed, even when optimizing for political outcomes.
If the government were raising more tax than it needs for example, tax revenue is too high. If the government is spending more than it is collecting, then tax revenue is too low. Effects on market behavior are always secondary considerations.
That depends whether you're a politician or an economist. ;-) Through a politician's lens the goal of a tax is to raise revenue for government and tax policy exists to do that efficiently. Through an economist's lens efficient trade and alignment of incentives are fundamental and governments exist only incidentally to ensure those. There are various schools of economics that suggest limiting government's role only to the enforcement of private property rights and kneecapping its ability to do anything else.
It's much like how to a physicist, vectors are real objects that live in the abstract concept of a vector space, while to a mathematician vector spaces are fundamental axioms and the existence of vectors is just a consequence that falls out of these axioms.
You missed out an important perspective that is neither purely politician nor purely economist: taxpayer.
Taxes are paid on money earned, whether through labors, investments or rents. They are a taking, a legal one, of something that rightfully belongs to someone else, so if you are going to take it, then it had better go back to government services.
Economists have found ways to reinterpret taxes and exploit their second Order effects, but this does not change what a tax is or how it should properly be used, nor excuse the misuse of surplus revenues.
Now the reason I bring this up is because if a tax were enacted for the express purpose of shaping public behavior and the resulting revenue was greater than what the government needed, what ought to be done with the surplus revenue? Should the tax be lowered to match expected expenses? What if lowering it to that level negates the benefit of shaping public behavior? These are the conflicts I would expect to see come up.
This is one of the reasons why the discussions around taxes tend to fall along the lines of what is taxed, how much, and where the burden should proportionally fall. Leading with second order effects muddies the waters and hinders productive discussion.
> [taxes] are a taking, a legal one, of something that rightfully belongs to someone else
IMO a LVT holds up (relatively) well under this sort of moral reasoning. I'm sure many arguments can be made around what's fair, but it's intuitive that income from labor, investments, etc should naturally go to who performs the labor, who makes the investments etc.
The (unimproved) land itself is a bit different. It can't go to who created the land, since no one did. In the US, the closest thing is maybe who first took it from the Native Americans. The moral argument for strong property rights (on the land without improvements) to begin with seems weaker than the other cases, since there's no contribution to society tied to making the land (of course switching from one tax regime to another is another matter, since people certainly buy land that is valuable under our current system with their hard-earned money).
That also leads to its (relatively) small effects on incentives for a tax. Taxes on labor and investment income of course discourage labor and investment, but the amount of land does not decrease no matter how much it is taxed. Even a huge tax probably does not affect the monthly payments to use land very much (since the supply and demand still remain similar), it would probably just lead to lower land values and more of the monthly payment going to taxes instead of interest.
> Now the reason I bring this up is because if a tax were enacted for the express purpose of shaping public behavior and the resulting revenue was greater than what the government needed, what ought to be done with the surplus revenue?
I think this is an interesting question especially with things like carbon taxes being considered seriously. It seems like two natural things to do would be to either reduce other harmful taxes that exist only to raise revenue, or to distribute the funds to everyone equally. I could see an argument for the latter if the incentive-shaping tax was something that would raise living expenses for most people (for example, a carbon tax that increases electricity costs), since otherwise it would negatively affect people living off savings or others with low incomes.
I'm aware of the taxpayer perspective and it's a big problem with getting adoption for an LVT. It's the type of policy that makes most people better off but you can never really convince people to adopt, because it sounds worse than alternatives.
There's actually an economic theorem (the "Henry George Theorem", discovered by Joseph Stiglitz in 1977 [1]) that states that under conditions of democracy & perfect information an LVT will exactly "right size" the government, spurring investment in only those public goods that pay for themselves in increased citizen welfare. That's because the tax revenues from public good expenditures come back in the form of increased rents: a playground nearby, a subway stop, better schools, low crime, stable currency, a strong military, etc. all increase the amount of rent that a landlord can charge for a property within their jurisdiction. That rent then comes back to benefit the exact same people who are paying the tax, which removes the principal-agent problem inherent in most taxes (where you pay the taxes but it benefits your neighbor). Landlords have an incentive to raise taxes on themselves right up to the point where the public improvement fails to raise rents by more than its cost. Tenants have the same incentive - as long as the cost is less than the public benefit, they get to enjoy the benefit, their rent will raise by the cost (as landlords pass along the tax), and they end up better off. When costs rise more than benefits (as they seemingly have in SF), people leave the expensive jurisdiction and move to areas that have more smartly allocated their tax dollars.
The main problem in practice is that you can always direct people's attention to small problems that don't raise their welfare in aggregate much - saving the burrowing owls, for example, or banning abortion. The economist's answer is that this will eventually even out across many people and many municipalities, but I think we have pretty ample evidence that people are not necessarily rational beings, and an LVT isn't all that robust to irrationality.
> The primary reason for any tax at all, regardless of type or preference is to raise revenue for government. That fact shouldn’t be lost when discussing which kinds of taxes and what percent to raise them at is discussed, even when optimizing for political outcomes.
That's a political statement speculating at intentions. For instance, the number one purpose of a carbon tax is to disincentivize carbon emissions. This is exemplified by the fact that carbon tax proponents generally support returning the money to all taxpayers as a 'green dividend', i.e. it's a net-zero redistributive policy.
Raising government revenue isn't that important compared to the prime purpose of the carbon tax.
If the market will only bear $3100/mo for an apartment today, that's in part because some less desirable apartment is renting for $3000/mo and that might be the case because that landlord can break even on cashflow and bank on the appreciation.
Institute an LVT and those competing landlords may become cashflow negative, forcing some of those units off the rental market entirely (typically to sales to owner-occupants, sometimes to landlords with better financing or lower overheads, sometimes to short-term rentals or other higher cashflow uses).
An extra $100/mo of LVT may not result in an extra $100/mo of market-clearing rent, but it's far from obvious that it results in $0/mo change.
Thought experiment: if the LVT for that unit were $3500/mo, what do you think the offered rent would be? If that's the case for $3500/mo, what part of that doesn't hold for $3000/mo, $1000/mo, $350/mo, or $35/mo?
I don't think you could have a $3500 a month LVT for an apartment that rents for $3100/mo, because the land value is not fixed.
Put another way, I think the main thing that is going to take hit as the LVT % increases is not renters or landlords, but the land value itself.
A piece of land that rents for $3100/mo may have landlords willing to pay $2000/mo for the land so they can break even after construction, overhead, etc. Absent any taxes, maybe they could pay the whole $2000/mo in interest on a loan to buy the property. As the amount of land taxes increases, the budget to make the loan payments decreases, which should reduce the property value (since the same logic should apply to all the potential purchasers).
It gets more complex once you add land speculation but I think the core logic remains the same - instead of being willing to pay $2000/mo for the property the developer might be willing to pay $2200 anticipating a speculative land return (without LVT, so higher property values), but that shouldn't change in general the market rental rate or if construction is viable, so I think the main difference with or without LVT would still be the land values.
>Institute an LVT and those competing landlords may become cashflow negative, forcing some of those units off the rental market entirely (typically to sales to owner-occupants, sometimes to landlords with better financing or lower overheads, sometimes to short-term rentals or other higher cashflow uses).
Well, LVT is always meant to be a replacement for conventional property taxes so depending on how it is implemented it can be roughly the same as the previous property tax or it could be significantly lower because only the land is taxed and not the whole property.
Wouldn’t the rent be too prohibitively expensive at some point, and the landlord will be forced to shift their strategy for recouping the money lost from LVT from lowering rent, to redeveloping it to be a more effective money maker? Such as by building more units and increasing urban densification.
Now what if redevelopment is not possible? Maybe regulation stops it? Actually, if net value of land is negative what will happen to it? That is taxes are more than value and there is no legal way to extract more value...
The government could just guarantee housing for a fixed price. That fixed price becomes the upper bound and all private market participants would have to bid lower than this upper bound.
This doesn't happen because those who have a political say don't actually want more housing. My proposed idea would force the government to actually solve the problem after all. If there is not enough housing the government would be forced to build it as a last resort and if the government can't do so because of the laws it has enacted then it can change those laws but that's exactly what must be avoided at all costs if you were to ask existing homeowners.
This is a lot like Singapore's HBD, which builds lots of public housing. And you're right, it's the absolute nightmare of people in SF who say they want non-market housing, precisely because it means new housing and new buildings.
However, it's a generally popular idea, that if put to a majority vote could pass. It's individual small groups that would stop it, because city politics are highly undemocratic and controlled by small factions.
However, there's hope at the state level to make this possible. I'm hopeful that in the coming legislative session there will be some serious attempts at state-level public housing to alleviate our desperate shortage.
The $3100 is the result of rent-seeking, not of productive economic activity. SF landlords are leaches on the economic engine and wealth of the city, one of the rare things that both Adam Smith and Karl Marx would agree on.
> Also I doubt if raising taxes will result in anything more than them passing that cost on to the renters.
Only new buildings in SF pay substantial taxes, and only new buildings have rents that are close to their carrying costs. The landlords that are getting huge property tax subsidies due to Prop 13 are enjoying market rents that are far far above their carrying costs. This is why SF landlords are economic leaches, their profits come from a supply shortage not from productive activity.
If they coludn't afford to pay the tax, would rents have dropped? No, they would sell if they couldn't cover their costs with rent.
According to pretty much any economic model, the LVT can't be passed on to tenants. Having a hard time finding a concise, and to the point explanation of that, but maybe check out the answer here:
Saying "it's about supply and demand" is not technically wrong but it glosses over the toxic systemic changes which brought us here and exculpates the people who deliberately fought for them to create this mess.
If land were closer to being in a liability in SF then the NIMBYism would be a pale imitation of what it is now and the land would be used much more efficiently and property wouldn't be as astronomically expensive.
However, land owners need an economic incentive to develop that requires them to lose money if they use land unproductively.
That means taxing the value of the land - preferably directly (via LVT) but failing that by raising property taxes.