But why tax property investors in the first place? They are not harming the market in the long run, only in the short run via speculation. Housing investors who rent out their property provide places to live for those who don't want to, or can't own property.
Many of those investors who are trying to buy and flip houses are renting their places out at a rate that is *LESS* than that of the mortgage. It is a bad investment decision, but if you are looking to rent, it is a major bonus.
In fact, right now the market is such that it is less expensive to rent than to buy. That is a certain sign of a bubble. The reason is that investors cannot hold on to "investments" that cause them to lose money over time. Taxation implies "punishment" of investors for providing housing, as opposed to encouraging people to create housing for those who need it.
Approximately 40% of the general population rents, by adding this tax on, the owners will be forced to pass this tax on to the actual tennants, because it is the consumer who pays all the taxes in the end, not the investor. Thus, this tax would increase rents for the renters, and, in the long run foister a punishment not on the investor with the extra property, but the poor renter just looking for a place to live. I personally don't think it is fair to create an incentive that makes the poor even less well off.