5 ms·
I feel like there is a dangerous break even here that will only work in cities like NY, LA, SF, and DC. But none of those cities have "un-developed" land ( and
by theBuess 9y ago
I feel like there is a dangerous break even here that will only work in cities like NY, LA, SF, and DC. But none of those cities have "un-developed" land ( and they have very little under-developed land ).
Take this counter example:
City A implements a land tax to "encourage" developers to build units of affordable housing. Developers sitting on under-developed land start building units. Company A employs 10,000 people, most of them in the downtown region of City A. With the new land tax the next lease for Company A is higher enough due to this cost for them to consider a move to City B. City/State B offers them a nice tax break to move their jobs and headquarters and Company A does. Now out of 10,000 jobs, City A has many homes that are now available, units which were under development are no longer needed, prices drop, people can now afford housing but I cant imagine outside investment moving into the city. And this glosses over what happens to the developers, contractors, and others who will now be out of a large chunk of change due to the oversupply of housing and reluctant to re-invest into City A.
In the same vein, it would be hard to believe that any company looking for a "cheap" deal would consider City A if it did not already have a large pool of talent. If your a small to mid-size business do you take the risk of higher overhead regardless of property type to move to City A? If your a large company, why would you move your offices there just to pay much higher leasing costs?
While you have created more affordable housing, you have also created less desirable living and investment conditions.
At the end of the day, a cities desirability is mostly based on its ability to provide capital to its residents.
- bryanlarsen 9y agoYou might be able to make that argument about Manhattan, but LA, SF, DC and suburban NY have lots of under-developed land.
- bryanlarsen 9y agoAFAICT you've got it backwards. City A replaces its existing property tax with an LVT. So whereas previously crappy buildings paid less tax than nice buildings next door, they now pay the same tax. So the tax on nice buildings goes down, making the city more attractive to companies, incenting companies to move to City A and incenting capital to invest in properties in city A.
- theBuess 9y agoTwo practical and one theoretical issue with this: - This relies on a city's ability to repeal property tax. - There is a carrying capacity to a city and beyond that lies a housing market crash when supply is in large abundance and there isn't a backlog of buyers. Hurting current property owners even more. I would have to see some more detailed analysis that shows you can simultaneously set this rate at a point low enough to not kill current investors and high enough not create a huge budget hole for the city in question.
- cryptonector 9y agoThose cities have plenty of _under_developed land. Go far enough into the NYC boroughs and you'll find only small buildings. (And even parts of Manhattan have low-rise buildings, though mostly due to the ground below not supporting higher buildings cheaply. Even here an LVT might lead to higher density.) SF is full of small buildings. Ditto LA. As to the dynamic you present, it looks like self-balancing in that there's an implied assumption that people really prefer City A to City B for various reasons (density among them, no doubt). The great thing about all this is that we get to have 50 States, and many more cities altogether, experimenting (or not) with LVT, so we'll actually be able to measure the impact of LVT.