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To me, it's tackling the wrong problem. The issue with property is that they are being used as an investment opportunity, which undermines the purpose that mos

To me, it's tackling the wrong problem. The issue with property is that they are being used as an investment opportunity, which undermines the purpose that most people want property for, which is as an affordable place to live. What we want to discourage is people using property to invest, but without penalising those who want somewhere to live. Therefore, if we're going to have a land use tax it should be based on how someone uses it. If a property is your only home anywhere in the world, then it should be exempt, but anything outside your main home could be taxed. That should discourage those people who buy property but barely live there from driving up prices for the people who want to live there.

humanrebar 11y ago
So why not aggressively tax profits from property sales then? Tax-free primary residences causes at least two problems: 1. People want places to work and shop, too. 2. You end up having to regulate what counts as a primary residence so that Mr. O'Billionaire doesn't get an entire city block tax free. How does working from home affect your tax rate, etc.
- ZenoArrow 11y ago
  1. Taxes on companies could be adjusted to compensate for the introduction of a land use tax. 2. A primary residence is where you live most of the year. To have any property qualify you would need to spend more than 6 months in a year within a country, and would also need to specify which of the properties you own in that country is your primary residence. Problem solved.
  - jrs235 11y ago
    *2b and only .25 acres of land would be exempt. (Of some other generally agreed amount)
    - eru 11y ago
      No exemption necessary. Just eg pay out all the land value tax as a basic income. And automatically anyone sitting on less than the average amount of land (in terms of value, not size), will get a net income. People sitting on more, will make a net payment.
      - ZenoArrow 11y ago
        Let's not make it unnecessarily complicated. Basic income is a good idea on its own, but mix it with land use taxation and you get into all sorts of problems. For example, how do handle a rented block of flats, would your land usage tax/income vary depending on how many tenants were currently renting in that block of flats? Tax exemption for primary residences (under a certain size) + basic income is a far more flexible arrangement, and you lose none of the benefits of determining basic income on land use.
        eru 11y ago
        > [...] would your land usage tax/income vary depending on how many tenants were currently renting in that block of flats? It's a land value tax, not land usage tax. So it would be independent on what you do with the land. (Basically it would be driven by the opportunity costs of what someone else could be doing with the land instead.) > Tax exemption for primary residences (under a certain size) + basic income is a far more flexible arrangement, and you lose none of the benefits of determining basic income on land use. Why? That's much more complicated, and full of loopholes. I do agree that tying land value tax to financing basic income is only potentially a good idea, not necessarily.
  - humanrebar 11y ago
    But why not just tax profits from sales instead of fiddling around and implicitly creating special interest groups?
    - ZenoArrow 11y ago
      Taxing sales doesn't tackle the misuse of land that has already been sold.
      - humanrebar 11y ago
        Sure it does. It discourages using land for speculation. If the appreciation curve flattens out, some people buying property as an investment will look to other markets that don't impact the standard of living so directly.
        ZenoArrow 11y ago
        What about the land people already own?
- lmm 11y ago
  Taxing sales encourages people to hold onto property that they're not really using optimally any more, which is the opposite of what we want.
  - humanrebar 11y ago
    You're taxing profits, not sales. If the value of land more closely tracked inflation, people will look to other markets for growth. To put it another way, why don't people sit on their cash? They're taxed on most cash transactions, right?
    - lmm 11y ago
      > If the value of land more closely tracked inflation, people will look to other markets for growth. Sure, but as long as it can be used to extract rent at no cost, the value of land is going to keep going up. > why don't people sit on their cash? They're taxed on most cash transactions, right? Inflation is a de facto tax on holding cash. Without it people probably would sit on their cash.
loup-vaillant 11y ago
Remember that most people do not own their home. Land value tax or no, most landlords are going to price their rent as high as they can get away with. Tenants are effectively paying a land value tax (the rent), whose amount is determined by the market. Generalising land value tax effectively makes everyone a tenant —land property is abolished. This sounds revolutionary, but since this affects only a minority, I'm not sure how much of a change this would really be. I'm pretty sure for instance that it wouldn't rise the renting prices in big cities.
- ZenoArrow 11y ago
  Land property isn't abolished by taxing it. With regards to the rental market, people will only rent where they can afford, which is exactly the same as now, what it does change is the amount of profit that landlords can make from each property. If we have a land use tax I'd like to see it increase based on the number of properties you own, which would discourage people buying large numbers of properties just to rent them out. Again, the purpose of the tax should be to curb the demand for property as an investment. If you do that the increase in house prices should come down, and as a side benefit there's less incentive for companies to expand nationally, which would increase diversity in the marketplace.
- eru 11y ago
  Yes, you got the effects exactly right. The land value tax would have no direct effects on rent. That's why it's such an awesome tax: it does not distort economic activity. Unlike eg income tax which discourages working. Pro-forma the land will still be in private hands, thus encouraging people to improve it. (Remember: buildings are not taxed, only the land.) The government will be very interested in improving the value of land, eg by making saner infrastructure investments, because they automatically get more tax money to play with that way.
lmm 11y ago
That kind of restriction is easy to game, and creates perverse incentives. Imagine a billionaire with an enormous house: if they start renting out half of it to someone else, suddenly they have to pay more taxes? That's not right. Rental prices are already as high as the market will bear (people can't choose not to have a house, so demand is pretty inelastic). A land value tax does exactly what we want: it will keep the net rental price the same, but push down the ownership price. So we'd see a lot less buy-to-let, and more people able to buy homes. As a bonus, it would make it harder for corrupt foreigners to hold empty property as emergency funds, since someone would have to be paying the taxes on it.
- ZenoArrow 11y ago
  > "That kind of restriction is easy to game, and creates perverse incentives. Imagine a billionaire with an enormous house: if they start renting out half of it to someone else, suddenly they have to pay more taxes? That's not right." How is that creating a perverse incentive? If someone seeks to transform their primary residence from somewhere they live to somewhere they make money, then what's the problem in taxing them? Also, with regards to the rules of the proposed tax exemption, quoting jrs235... "*2b and only .25 acres of land would be exempt. (Of some other generally agreed amount)""
  - eru 11y ago
    The perverse incentive is: the billionaire would be wasting less space for himself and sharing it with other people---but the tax system would discourage that.
    - ZenoArrow 11y ago
      Based on the relatively small number of billionaires/rich people in the world, that's a compromise I'm willing to make. If the rich want to house the poor they can do so through a charitable foundation. Furthermore, as has been pointed out already, we could make it so that only properties that sit within a predetermined land mass size would be exempt from tax.

humanrebar 11y ago

So why not aggressively tax profits from property sales then? Tax-free primary residences causes at least two problems: 1. People want places to work and shop, too. 2. You end up having to regulate what counts as a primary residence so that Mr. O'Billionaire doesn't get an entire city block tax free. How does working from home affect your tax rate, etc.

ZenoArrow 11y ago
1. Taxes on companies could be adjusted to compensate for the introduction of a land use tax. 2. A primary residence is where you live most of the year. To have any property qualify you would need to spend more than 6 months in a year within a country, and would also need to specify which of the properties you own in that country is your primary residence. Problem solved.
- jrs235 11y ago
  *2b and only .25 acres of land would be exempt. (Of some other generally agreed amount)
  - eru 11y ago
    No exemption necessary. Just eg pay out all the land value tax as a basic income. And automatically anyone sitting on less than the average amount of land (in terms of value, not size), will get a net income. People sitting on more, will make a net payment.
    - ZenoArrow 11y ago
      Let's not make it unnecessarily complicated. Basic income is a good idea on its own, but mix it with land use taxation and you get into all sorts of problems. For example, how do handle a rented block of flats, would your land usage tax/income vary depending on how many tenants were currently renting in that block of flats? Tax exemption for primary residences (under a certain size) + basic income is a far more flexible arrangement, and you lose none of the benefits of determining basic income on land use.
      - eru 11y ago
        > [...] would your land usage tax/income vary depending on how many tenants were currently renting in that block of flats? It's a land value tax, not land usage tax. So it would be independent on what you do with the land. (Basically it would be driven by the opportunity costs of what someone else could be doing with the land instead.) > Tax exemption for primary residences (under a certain size) + basic income is a far more flexible arrangement, and you lose none of the benefits of determining basic income on land use. Why? That's much more complicated, and full of loopholes. I do agree that tying land value tax to financing basic income is only potentially a good idea, not necessarily.
- humanrebar 11y ago
  But why not just tax profits from sales instead of fiddling around and implicitly creating special interest groups?
  - ZenoArrow 11y ago
    Taxing sales doesn't tackle the misuse of land that has already been sold.
    - humanrebar 11y ago
      Sure it does. It discourages using land for speculation. If the appreciation curve flattens out, some people buying property as an investment will look to other markets that don't impact the standard of living so directly.
      - ZenoArrow 11y ago
        What about the land people already own?
lmm 11y ago
Taxing sales encourages people to hold onto property that they're not really using optimally any more, which is the opposite of what we want.
- humanrebar 11y ago
  You're taxing profits, not sales. If the value of land more closely tracked inflation, people will look to other markets for growth. To put it another way, why don't people sit on their cash? They're taxed on most cash transactions, right?
  - lmm 11y ago
    > If the value of land more closely tracked inflation, people will look to other markets for growth. Sure, but as long as it can be used to extract rent at no cost, the value of land is going to keep going up. > why don't people sit on their cash? They're taxed on most cash transactions, right? Inflation is a de facto tax on holding cash. Without it people probably would sit on their cash.

loup-vaillant 11y ago

Remember that most people do not own their home. Land value tax or no, most landlords are going to price their rent as high as they can get away with. Tenants are effectively paying a land value tax (the rent), whose amount is determined by the market. Generalising land value tax effectively makes everyone a tenant —land property is abolished. This sounds revolutionary, but since this affects only a minority, I'm not sure how much of a change this would really be. I'm pretty sure for instance that it wouldn't rise the renting prices in big cities.

ZenoArrow 11y ago
Land property isn't abolished by taxing it. With regards to the rental market, people will only rent where they can afford, which is exactly the same as now, what it does change is the amount of profit that landlords can make from each property. If we have a land use tax I'd like to see it increase based on the number of properties you own, which would discourage people buying large numbers of properties just to rent them out. Again, the purpose of the tax should be to curb the demand for property as an investment. If you do that the increase in house prices should come down, and as a side benefit there's less incentive for companies to expand nationally, which would increase diversity in the marketplace.
eru 11y ago
Yes, you got the effects exactly right. The land value tax would have no direct effects on rent. That's why it's such an awesome tax: it does not distort economic activity. Unlike eg income tax which discourages working. Pro-forma the land will still be in private hands, thus encouraging people to improve it. (Remember: buildings are not taxed, only the land.) The government will be very interested in improving the value of land, eg by making saner infrastructure investments, because they automatically get more tax money to play with that way.

lmm 11y ago

That kind of restriction is easy to game, and creates perverse incentives. Imagine a billionaire with an enormous house: if they start renting out half of it to someone else, suddenly they have to pay more taxes? That's not right. Rental prices are already as high as the market will bear (people can't choose not to have a house, so demand is pretty inelastic). A land value tax does exactly what we want: it will keep the net rental price the same, but push down the ownership price. So we'd see a lot less buy-to-let, and more people able to buy homes. As a bonus, it would make it harder for corrupt foreigners to hold empty property as emergency funds, since someone would have to be paying the taxes on it.

ZenoArrow 11y ago
> "That kind of restriction is easy to game, and creates perverse incentives. Imagine a billionaire with an enormous house: if they start renting out half of it to someone else, suddenly they have to pay more taxes? That's not right." How is that creating a perverse incentive? If someone seeks to transform their primary residence from somewhere they live to somewhere they make money, then what's the problem in taxing them? Also, with regards to the rules of the proposed tax exemption, quoting jrs235... "*2b and only .25 acres of land would be exempt. (Of some other generally agreed amount)""
- eru 11y ago
  The perverse incentive is: the billionaire would be wasting less space for himself and sharing it with other people---but the tax system would discourage that.
  - ZenoArrow 11y ago
    Based on the relatively small number of billionaires/rich people in the world, that's a compromise I'm willing to make. If the rich want to house the poor they can do so through a charitable foundation. Furthermore, as has been pointed out already, we could make it so that only properties that sit within a predetermined land mass size would be exempt from tax.