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Actually what happens is without land value tax, you get land speculation. In practice with Land tax, you'd have cheaper land than without it because there is n

Actually what happens is without land value tax, you get land speculation. In practice with Land tax, you'd have cheaper land than without it because there is no incentive to speculate and hold productive land out of use hoping its value will go up (which is where most of the price of real estate comes from -- it's a "safe bet" that land values increase as long as the area's population increases, so there is no incentive NOT to speculate and drive prices way up). An interesting phenomenon like this played out in EVE online where an economist independently re-discovered the land tax: http://www.gamasutra.com/blogs/RaminShokrizade/20130405/189984/How_I_Used_EVE_Online_to_Predict_the_Great_Recession.php http://www.gamasutra.com/blogs/RaminShokrizade/20130405/1899...

AnthonyMouse 11y ago
> there is no incentive to speculate and hold productive land out of use hoping its value will go up It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on (except insofar as it increases sprawl and therefore reduces city center land values) because the tax would be passed on to the renter(s). The reason people buy land in cities and then don't use it for anything is often because they own enough other property in the same city that withdrawing rental units from the market will increase the rents for the other units by enough that the strategy is net profitable. Which seems like it ought to be illegal, but anything nefarious that has the consequence of increasing property values tends to get overlooked "for some reason."
- deleted 11y ago
  [deleted]
- larsiusprime 11y ago
  > because the tax would be passed on to the renter(s). false: http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-rich-and-hurt-poor.html http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-ri...
  - AnthonyMouse 11y ago
    What your link is getting at is if you increase the tax on property/land value, it instantaneously reduces property values to account for the net present value of the future tax payments. So passing it is one-time very bad for current property owners. Because the housing market is extremely efficient. Rents are essentially property value * current interest rate + taxes + property maintenance costs. But rents are also set from the other side by what renters can afford to pay. So if you increase the tax, the property value goes down to compensate. Anyone who buys the property after the tax is already in place is unaffected. So there are two ways of looking at it. One is the renter pays the tax (i.e. the formula for rent has "the entire amount of taxes on the property" as a component) and the other is the tax is paid entirely by whoever owned the property when the tax was enacted, via a large reduction in property value. It depends which point in time you're looking at it, the moment when the tax is enacted or rent paid by tenants in the future as a percentage of then-present property values. But in any case the tax isn't paid by speculators who didn't already own the property in year zero of the tax being enacted.
- crdoconnor 11y ago
  >It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on If a georgist LVT were assessed accurately, the rental income of unimproved land would equal the tax. Thus there would be no point in speculation. If the land value went up so would the tax and vice versa.
  - AnthonyMouse 11y ago
    You almost make a good point, the problem with it is that if land use tax actually only assesses the value of the land, you'll still have speculators speculating on the value of the buildings increasing for the same reason that the land does. Because the value of the building is also dependent on the location. Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then? If it's anything the owners of the single family homes could afford then it wouldn't make the slightest dent in the rents collected by the owner of the apartment building. It's actually a very hard problem. Because in theory any of the home owners could build a large apartment building on their lot and be collecting large rents but if they all did that then rents in that area would crash. But the land is equivalent between the apartment buildings and single family homes, so they "should" all be assessed at the same value.
    - crdoconnor 11y ago
      >you'll still have speculators speculating on the value of the buildings Congratulations, you just defined "fighting over scraps". >Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then? The assessed value of the land of your next door neighbor will be similar to yours. If you're asking how it's calculated, check the wikipedia page (the answer is multivariate analysis using property sales).

AnthonyMouse 11y ago

> there is no incentive to speculate and hold productive land out of use hoping its value will go up It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on (except insofar as it increases sprawl and therefore reduces city center land values) because the tax would be passed on to the renter(s). The reason people buy land in cities and then don't use it for anything is often because they own enough other property in the same city that withdrawing rental units from the market will increase the rents for the other units by enough that the strategy is net profitable. Which seems like it ought to be illegal, but anything nefarious that has the consequence of increasing property values tends to get overlooked "for some reason."

deleted 11y ago
[deleted]
larsiusprime 11y ago
> because the tax would be passed on to the renter(s). false: http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-rich-and-hurt-poor.html http://kaalvtn.blogspot.co.uk/2013/01/g-lvt-would-benefit-ri...
- AnthonyMouse 11y ago
  What your link is getting at is if you increase the tax on property/land value, it instantaneously reduces property values to account for the net present value of the future tax payments. So passing it is one-time very bad for current property owners. Because the housing market is extremely efficient. Rents are essentially property value * current interest rate + taxes + property maintenance costs. But rents are also set from the other side by what renters can afford to pay. So if you increase the tax, the property value goes down to compensate. Anyone who buys the property after the tax is already in place is unaffected. So there are two ways of looking at it. One is the renter pays the tax (i.e. the formula for rent has "the entire amount of taxes on the property" as a component) and the other is the tax is paid entirely by whoever owned the property when the tax was enacted, via a large reduction in property value. It depends which point in time you're looking at it, the moment when the tax is enacted or rent paid by tenants in the future as a percentage of then-present property values. But in any case the tax isn't paid by speculators who didn't already own the property in year zero of the tax being enacted.
crdoconnor 11y ago
>It is possible to speculate without holding productive land out of use: You buy it and then rent it out. Which land value tax would presumably have little effect on If a georgist LVT were assessed accurately, the rental income of unimproved land would equal the tax. Thus there would be no point in speculation. If the land value went up so would the tax and vice versa.
- AnthonyMouse 11y ago
  You almost make a good point, the problem with it is that if land use tax actually only assesses the value of the land, you'll still have speculators speculating on the value of the buildings increasing for the same reason that the land does. Because the value of the building is also dependent on the location. Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then? If it's anything the owners of the single family homes could afford then it wouldn't make the slightest dent in the rents collected by the owner of the apartment building. It's actually a very hard problem. Because in theory any of the home owners could build a large apartment building on their lot and be collecting large rents but if they all did that then rents in that area would crash. But the land is equivalent between the apartment buildings and single family homes, so they "should" all be assessed at the same value.
  - crdoconnor 11y ago
    >you'll still have speculators speculating on the value of the buildings Congratulations, you just defined "fighting over scraps". >Which brings up a good question. There are plenty of places where there is a 50-unit ten-story apartment building on a lot of about the same size as the surrounding single family homes, e.g. because the houses have yards and the apartment building fills the entire lot. So what is the assessed value of the "land" supposed to be then? The assessed value of the land of your next door neighbor will be similar to yours. If you're asking how it's calculated, check the wikipedia page (the answer is multivariate analysis using property sales).