Yabby, I wasn't seriously suggesting that owning second existing properties should be illegal.
Although of course you could solve the problem of having the government own all rental properties - however I can't see that being too popular in this day and age.

And no, clearly not absolutely everyone is always going to be able to live within less than 30 minutes drive of family/friends etc., but mining operations are very much the exception - as you said, people don't set up there for life, it's largely a way to make a quick buck.

Ultimately it's not up to you (or me) to decide where people want to live and work. They all have their own various reasons for doing so, and make various trade-offs between property prices, travel distances, amenity availability etc. etc. Clearly if enough young families did all start to decide to live in regional towns or move out of cities, there would be no affordability issue. But at the moment there isn't sufficient incentive, and to be honest, I doubt there will be in the foreseeable future (it's conceivable that super advanced forms of personal transport and communication will eventually change this, but by then the world will be a very different place).

grputland ‘When economic models include at least two spatial dimensions and one time dimension, the undersigned "sparky" will take them seriously.’

Your comment tells me two things

With only 2 dimensional variables, you are obviously too easily pleased and hence too gullible to be able to construct reasoned argument in the area of differential taxation (as your post tends to prove).

I have, for my own business purposes, developed a housing investment (negative gearing) model

The adjustable variables which that model considers are (not exhaustively):

The investment buy price.

Mortgage Gearing ratio

The escalating sell price (annual % growth over time)

The holding time

The buy costs, stamp duty etc

The disposal costs

Income and Capital Gains Tax law

The investors individual marginal tax rates and tax circumstances.

Annual operating costs including interest, maintenance etc

Annual rental income based on a % of the annual escalating capital worth (including land) and offset by depreciation allowances.

Interest borrowing rate

Tax deductibility of buy costs

Calculated future value (determined from the expected capital growth rate)

Future CGT

The resultant IRR of the investment (so much more useful than NPV).

In simple words, a fiscally holistic approach to individual property investment over time.

More than 2 variables ha – ha. I count 15+ there (including a user elected time dimension) , that’s probably too many for you to encompass but then, I figure I am not talking to someone who has any real likelihood of ever being able to afford my skills, merely someone who wants to direct a tax bias, despite their complete absence of the implications evolving from differential taxation policy.

Elected governments generally act for the interests of the common denominator, hence the goal is lowest standard acceptable, rather than the best achievable.

I believe in a society where the individual is paramount and (small) government merely serves those individuals.

Small government and strong individual reliance always produces better societal outcomes than big, meddlesome and interfering government and weakened individual reliance, in every area of human endeavour.

Yabby Footscray is not a desirable area of Melbourne although moving the abattoirs out of Kensington has made it less smelly. The Goode Island toxic dump is still operational. However housing prices have risen and families move to new suburbs on the outskirts.

These new suburbs on the outskirts have to have schools, bus services, health centres and staff to operate them. Meanwhile the facilities in the inner suburbs are underutilised. The staff who live in the inner suburbs commute to the outer suburbs to work while the resides of the outer suburbs commute to the inner suburbs for work. Might sound OK in Perth but its unworkable in large cities like Melbourne, Sydney and Brisbane.

I think urban planners ought to be able to control the usage of land releases and in the City of Geelong vacant land is rated as though there is housing on the block to discourage land speculation.

Then there is the separate issue of taxation treatment of investment property. In the USA you pay capital gains tax on the family home.

Col Rouge wrote:

I believe in a society where the individual
is paramount and (small) government merely
serves those individuals.

Small government and strong individual reliance
always produces better societal outcomes than big,
meddlesome and interfering government and
weakened individual reliance, in every area of
human endeavour.

--end-of-quote--

It is time that this Big Lie, invented to serve the interests of the world's wealthy elite at everyone else's expense, was laid to rest, this time, permanently. It was thought to have been laid to rest following the world-wide catastrophe which began with the crash of 1929, but since 1947 a network of neo-liberal ideologues using abundant funds flowing from corporations managed to resurrect the tattered reputation of lassez-faire capitalism with catastrophic results for the world, as Gerge Monbiot has shown at http://www.monbiot.com/archives/2007/08/28/how-did-we-get-into-this-mess/ :

Their purpose was to develop the ideas and the language
which would mask the real intent of the programme - the
restoration of the power of the elite - and package it
as a proposal for the betterment of humankind.

--end-of-quote--

Naomi Klein's absolutely riveting as well as frightening "The Shock Doctrine" (RRP AU$32.95 see http://www.naomiklein.org/shock-doctrine http://www.naomiklein.org/shock-doctrine/reviews http://webdiary.com.au/cms/?q=node/2204 http://johnquiggin.com/index.php/archives/2007/10/29/monday-message-board-93/#comment-199501), published earlier this year, shows conclusively that wherever the extreme free market polices that Col Rouge advocates have been applied they have been a catastrophe for society at large and the environment: Chile, Argentina, Brazil, Uruguay, Bolivia, Poland, Russia, South Afica, China, the UK, Iraq, Sri Lanka, Canada, South Korea, Indonesia, Thailand, the US. etc. (In Australia we have only been cushioned from some of the worst effects of free market policies by our mineral export boom at the expense of future generations and the world's environment.)

See, also my post in response to the article "They're not really that poor" by Peter Saunders, another free market extremist, at http://forum.onlineopinion.com.au/thread.asp?article=6576#100775&page=all

Neither Peter Saunders nor Col Rouge have responded to this post.

"I believe in a society where the individual is paramount"

Um...then it's not a society. We already know you don't believe in society, but fortunately we have a democracy, and the vast majority of us recognise that humans are fundamentally social beings, and do best with a combination of individual enterprise, and the pooling resources to act collectively.

Yabby, I'm with you on this. People need to be a little open to opportunities. Even with mining, hardly all site are remote. Some of the more remote ones are even big enough to support large towns on an ongoing basis (eg Kalgoorlie). There are also lots of regional towns that are still pretty close to the big cities. Close enough for a day visit to family anyway. I'm afraid I am from good farming stock, and still have a dash of the old pioneering spirit about me, as have other family members. Of 6 kids that grew up on the farm, two have returned to take over the farm, 1 lives in the nearest town (still 45 mins away) and works as a professional, 1 lives 11hrs drive north, and 2 live several days drive west (1 farmer and 1 miner).

Funny but I bet the people who cant see that housing decisions are investment decisions would be the same ones who would jump up and down about farmers not treating their farms as businesses. The days when where we lived and what we did for a living were purely life-style based are well and truly gone. I have little sympathy for those that dont treat housing as an investment. Like everything else in life it is not a right. Yes, to "cash-in" so to speak you generally need to trade-down, but it shouldnt really be trading down, but seeking opportunity. If you are too lazy to seek opportunity then nothing I or anyone else can do is going to help you.

As for the inner-city market squeeze, the current impact of demand should show you that even if negative gearing were removed, the problem would not be solved. There is enough high-income in the inner-city that the result of the removal of negative greaing would simply result in higher rental prices. If you want to think of negative-gearing subsidising anything, it is subsidising rent levels.