4 ms·

If you're going to ask me about what should be the case, I'd certainly want to move more towards a land value tax[0], which captures the rental value of the lan

If you're going to ask me about what should be the case, I'd certainly want to move more towards a land value tax[0], which captures the rental value of the land, but doesn't tax the improvements on top of it. It's agreed upon by many economists and ethicists to be fair, efficient, and consistent with sustainable urban planning and finance. It's arguably the most progressive tax. Prop 13, FWIW, is almost precisely the opposite of a LVT. It's been putting more of the burden of financing California onto income, sales taxes, etc, in order to subsidize landowners. [0] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

refurb 10y ago
How does that help in the situation of a homeowner not being able to afford their tax bill because their property increased in value?
- bufordsharkley 10y ago
  How does it help? By creating a competitive market in housing, it should ensure that the housing stock is full enough to create new affordable living for the person to move to. But... does that still mean people might be taxed out of their home? I hope it would be rare, because it is a bummer, but I am convinced that there is no sustainable system in which people wouldn't be "taxed out of their home" in some cases. However, consider that they'd still get a sizeable payout, and plenty of available options in their community. It's the sad truth about land-- if someone is using it inefficiently (which is the case with the single-family households having trouble with property taxes), it's a market signal that the land should be developed more densely...
  - throw_away 10y ago
    Would it not be possible to defer these taxes for people over a certain age and make it work like a lien on the house when it is sold and collected from their estate? Sure, it probably makes the income for the government less regular, but surely there could be some sort of financial instrument that could be created to smooth out these inflows, no?
    - bufordsharkley 10y ago
      Yes, some have outlined a deferement, roll-up option that would work to do this.[0] Another option would be a Community Land Trust[1], which would take the responsibility of land ownership away, and allow residents to have more stability at the cost of not directly being responsible for land stewardship. [0] http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.html#1 http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.htm... [1] https://en.wikipedia.org/wiki/Community_land_trust https://en.wikipedia.org/wiki/Community_land_trust
  - URSpider94 10y ago
    This. This. This. In both places I've lived in the Bay Area, there were vacant houses on the block. In the old town, apparently the house was owned by an old widow who is in a nursing home and who refuses to sell. In the new neighborhood, the house has fire damage. The owner apparently has several properties around the Bay, and just isn't in a hurry to do anything -- the house has been that way for five years or more. I hear from people living in Palo Alto that their neighborhoods are dotted with vacant homes owned by overseas investors. Meanwhile, people making $200k a year are commuting an hour each way because they can't afford to live any closer. Market rate property taxation would provide a strong incentive for these owners to either sell or rent out their properties.
    - dstainer 10y ago
      You can do (or I guess proposed to do) what Vancouver did, tax vacant properties. Foreign buyers would purchase homes and then let them sit, reducing inventory and raising prices. http://www.cbc.ca/news/canada/british-columbia/vancouver-vacant-home-tax-1.3761496 http://www.cbc.ca/news/canada/british-columbia/vancouver-vac...
      - bufordsharkley 10y ago
        This is certainly a low-hanging fruit to attack, but one can get to the point where land is inefficiently used, even if it's completely occupied.
  - deleted 10y ago
    [deleted]
  - HillaryBriss 10y ago
    > It's the sad truth about land-- if someone is using it inefficiently (which is the case with the single-family households having trouble with property taxes), it's a market signal that the land should be developed more densely... If the purpose of property taxes is to encourage or force efficient land use, what happens to local zoning laws? The taxes go up and the homeowner responds by trying to build, say, a 4 unit apartment where their single family dwelling was - but the city zoning does not allow it. Now what? Where's the increased efficiency of land use?
- true_religion 10y ago
  It doesn't, which is part of the fairness of it.
- newjersey 10y ago
  > How does that help in the situation of a homeowner not being able to afford their tax bill because their property increased in value? If you cant afford the tax, you should move out and sell/rent out. This whole premise is absurd. Sorry down voter. But this is a fact. We have property tax to discourage under utilization of scarce resources. If you can't afford the tax rate, you should you should find some way to increase your income. This is a prime example of why we don't need the 0.001% to screw over the rest of us. We the 99% are perfectly capable of screwing over ourselves! The "community" doesn't owe long time residents or new residents anything just because they decided to buy instead of renting. Let's be rational here.
  - andars 10y ago
    "If you cant afford the tax, you should move out and sell/rent out" This makes zero sense to me. Someone bought the property 50 years ago and now is the sole owner, but it is reasonable to force them off their property / out of their home? I get it, other people are willing to pay more for it, but it is the owner's property.
    - bufordsharkley 10y ago
      Taken to the full Georgist theory, a person is entitled to property in themselves, and in what they create, but not to land and other natural resources; they have no right to excludes others from natural resources without paying the rest of the community rent for its use.
      - gscott 10y ago
        This reminds me of an article posted on HN a few years ago (not California) but one state was increasing property taxes based upon the persons view the State increased his home value by over a hundred thousand dollars and his house was something like a cabin.
  - dstainer 10y ago
    Same argument can be made about buying in the bay area. If you can't afford it, move. My argument is just as unreasonable to make as telling someone to leave their home.
- ianburrell 10y ago
  Some states have property tax deferral programs where retired owner can borrow money for property tax which is paid off when property is sold or transferred on death. This would let fixed income residents stay in home but keeping fair property tax rates.
- eli_gottlieb 10y ago
  You can always just lock in low property taxes only for people on fixed incomes.

refurb 10y ago

How does that help in the situation of a homeowner not being able to afford their tax bill because their property increased in value?

bufordsharkley 10y ago
How does it help? By creating a competitive market in housing, it should ensure that the housing stock is full enough to create new affordable living for the person to move to. But... does that still mean people might be taxed out of their home? I hope it would be rare, because it is a bummer, but I am convinced that there is no sustainable system in which people wouldn't be "taxed out of their home" in some cases. However, consider that they'd still get a sizeable payout, and plenty of available options in their community. It's the sad truth about land-- if someone is using it inefficiently (which is the case with the single-family households having trouble with property taxes), it's a market signal that the land should be developed more densely...
- throw_away 10y ago
  Would it not be possible to defer these taxes for people over a certain age and make it work like a lien on the house when it is sold and collected from their estate? Sure, it probably makes the income for the government less regular, but surely there could be some sort of financial instrument that could be created to smooth out these inflows, no?
  - bufordsharkley 10y ago
    Yes, some have outlined a deferement, roll-up option that would work to do this.[0] Another option would be a Community Land Trust[1], which would take the responsibility of land ownership away, and allow residents to have more stability at the cost of not directly being responsible for land stewardship. [0] http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.html#1 http://kaalvtn.blogspot.co.uk/2013/01/a-poor-widow-bogey.htm... [1] https://en.wikipedia.org/wiki/Community_land_trust https://en.wikipedia.org/wiki/Community_land_trust
- URSpider94 10y ago
  This. This. This. In both places I've lived in the Bay Area, there were vacant houses on the block. In the old town, apparently the house was owned by an old widow who is in a nursing home and who refuses to sell. In the new neighborhood, the house has fire damage. The owner apparently has several properties around the Bay, and just isn't in a hurry to do anything -- the house has been that way for five years or more. I hear from people living in Palo Alto that their neighborhoods are dotted with vacant homes owned by overseas investors. Meanwhile, people making $200k a year are commuting an hour each way because they can't afford to live any closer. Market rate property taxation would provide a strong incentive for these owners to either sell or rent out their properties.
  - dstainer 10y ago
    You can do (or I guess proposed to do) what Vancouver did, tax vacant properties. Foreign buyers would purchase homes and then let them sit, reducing inventory and raising prices. http://www.cbc.ca/news/canada/british-columbia/vancouver-vacant-home-tax-1.3761496 http://www.cbc.ca/news/canada/british-columbia/vancouver-vac...
    - bufordsharkley 10y ago
      This is certainly a low-hanging fruit to attack, but one can get to the point where land is inefficiently used, even if it's completely occupied.
- deleted 10y ago
  [deleted]
- HillaryBriss 10y ago
  > It's the sad truth about land-- if someone is using it inefficiently (which is the case with the single-family households having trouble with property taxes), it's a market signal that the land should be developed more densely... If the purpose of property taxes is to encourage or force efficient land use, what happens to local zoning laws? The taxes go up and the homeowner responds by trying to build, say, a 4 unit apartment where their single family dwelling was - but the city zoning does not allow it. Now what? Where's the increased efficiency of land use?
true_religion 10y ago
It doesn't, which is part of the fairness of it.
newjersey 10y ago
> How does that help in the situation of a homeowner not being able to afford their tax bill because their property increased in value? If you cant afford the tax, you should move out and sell/rent out. This whole premise is absurd. Sorry down voter. But this is a fact. We have property tax to discourage under utilization of scarce resources. If you can't afford the tax rate, you should you should find some way to increase your income. This is a prime example of why we don't need the 0.001% to screw over the rest of us. We the 99% are perfectly capable of screwing over ourselves! The "community" doesn't owe long time residents or new residents anything just because they decided to buy instead of renting. Let's be rational here.
- andars 10y ago
  "If you cant afford the tax, you should move out and sell/rent out" This makes zero sense to me. Someone bought the property 50 years ago and now is the sole owner, but it is reasonable to force them off their property / out of their home? I get it, other people are willing to pay more for it, but it is the owner's property.
  - bufordsharkley 10y ago
    Taken to the full Georgist theory, a person is entitled to property in themselves, and in what they create, but not to land and other natural resources; they have no right to excludes others from natural resources without paying the rest of the community rent for its use.
    - gscott 10y ago
      This reminds me of an article posted on HN a few years ago (not California) but one state was increasing property taxes based upon the persons view the State increased his home value by over a hundred thousand dollars and his house was something like a cabin.
- dstainer 10y ago
  Same argument can be made about buying in the bay area. If you can't afford it, move. My argument is just as unreasonable to make as telling someone to leave their home.
ianburrell 10y ago
Some states have property tax deferral programs where retired owner can borrow money for property tax which is paid off when property is sold or transferred on death. This would let fixed income residents stay in home but keeping fair property tax rates.
eli_gottlieb 10y ago
You can always just lock in low property taxes only for people on fixed incomes.