Perhaps we should penalize home ownership?
[0] http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1197...
[1] http://www.iut.nu/Literature/2013/HomeOwnership_Unemployment...
This is on top of the fact that CGT applies to non primary residences in the UK and other countries (as rahimnathwani mentioned).
[0] http://www.npr.org/blogs/money/2012/06/14/154344781/why-does... [1] http://en.wikipedia.org/wiki/Home_mortgage_interest_deductio...
Especially as CGT is typically lower than income tax, so investors would prefer capital gains over rental profit. (And if their rentals are generating profit, might be tempted to buy more rentals that are not profitable but rising in capital value, so that their rental profit is lower but capital gains are higher).
You hear stories of investors who keep on acquiring and end up with dozens of buy-to-let properties and are leveraged up to the hilt.
Bradford & Bingley, which was the UK's buy-to-let mortgage specialist, was particularly hard hit by the GFC.
(Unless you're taxing carbon emissions, in which case burning the cash would obviously contribute to the problem.)
