16 ms·

How Property Taxes Shape Our Cities

154 points by oftenwrong 8y ago

EddieRingle 8y ago
I'll take this opportunity to bring up Land Value taxation as an alternative: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Creates incentive to use land efficiently, coupled with fewer economic distortions.
- rcpt 8y ago
  Such a great system. I don't know why it's not used more often.
  - woolvalley 8y ago
    It becomes a tax increase on SFH, which is a powerful political block in many countries.
    - spollo 8y ago
      What does SFH stand for?
      - germinalphrase 8y ago
        Single family home (?)
        woolvalley 8y ago
        That is correct
  - munificent 8y ago
    One of the things I always find frustrating about economists and economic writing is how often it completely and deliberately disregards the humanity of the actors in the system. My hunch is that the people who are drawn to economics like it specifically because it attempts to offer a cleaner, more mechanical understanding of human behavior than humans actually demonstrate. But, of course, using that model to then derive policy is obviously flawed since your model doesn't accurately capture the essential features of the objects being modeled. If we let economists design furniture, every chair would be a miserably unpleasant cube whose dimensions match the median posterior. Land value tax does have a lot going for it, but it overlooks one critical component: Humans have a fundamental desire for stability, especially in where they live. I do not want my home to be a rectangle of maximum market efficiency. I want it to be a place where it's worth the effort to garden because I know I'll get to watch those plants grow over the coming years. I want it to be a calm respite, a sanctuary that I can rely on in the face of the chaos of the larger world. And, as I get older and my ability to generate revenue natural declines, I want some confidence that hard work I did when I was younger will enable me to live out the rest of my years with some degree of stability. Of course, our desire for stability needs to be weighed against the desires of the larger community. But you do that by balancing those desires, not by completely ignoring one half of the equation. I'm not sure what an ideal solution for housing is, but I'm certain it's not based on a slavish devotion to market efficiency.
    - germinalphrase 8y ago
      Why would land value tax undermine housing stability?
      - prutschman 8y ago
        The unimproved value of land is still a function of its proximity to other desirable things. Barring remodeling, it's not generally the value of the building on a piece of land that goes up over time.
      - supertrope 8y ago
        gentrification
    - yonran 8y ago
      There’s no insurmountable conflict between stability and efficiency. Just as landlords offer 10-year leases to commercial tenants who desire stability, the government can offer 10-year (or longer) insurance products against the risk of increased land value.
    - opportune 8y ago
      This is just “I got mine” as the economists. Meanwhile younger people who want to buy homes are unable to enjoy the way of life that you are, because you were able to buy a home before they had even graduated middle school Why should society have to slow down just to help you and your little old house? You can just move somewhere else with a garden. Everybody else is also trying to work and live their lives. This isn’t little house on the prairie, it’s quite selfish to buy a house in a city (an inherently dynamic landscape) and then expect the rest of the world to freeze in time
      - watwut 8y ago
        When an elderly person want to live nearby family and keep social ties they were building whole life, it is "go away I want to live here too your relationship and you don't matter at all. Just go elsewhere, living among strangers as you are getting weaker and older is totally the same and I dont care about you at all. It is totally our right to kick you out of your house because the place where it is suddenly became in demand." Simultaneously we are collectively complaining that people don't communicate or form bonds as they used to and how community died yadda yadda and people are lonely, especially men and how sad it all is yadda. Guess what, this attitude kills any kind of in-person bonds or willingness to invest into them way more then much maligned social networks.
  - crdoconnor 8y ago
    It's not a great move career-wise to recommend something like this as an economist. Lots of funding/jobs/prestige comes via wealthy interest groups who would absolutely loathe a land value tax. It was mooted in the UK last year and some of the newspapers (owned by wealthy landowners) went ballistic: http://www.dailymail.co.uk/news/article-4575382/How-Labour-garden-tax-hit-YOU.html http://www.dailymail.co.uk/news/article-4575382/How-Labour-g... https://www.telegraph.co.uk/news/2017/06/03/labours-garden-tax-hit-10million/ https://www.telegraph.co.uk/news/2017/06/03/labours-garden-t... The stock market would likely take a dive if this was implemented too, since a lot of company profits are predicated upon parasitic land value extraction (Trump's businesses are a good example). Politicians are usually wary of policies that might cause the stock market to take a dive because of the optics.
    - maxerickson 8y ago
      Trump's businesses are private and don't have much to do with the stock market. Or are you saying that he would be even more likely to default on loans and the banks would feel it hard?
  - maxerickson 8y ago
    Politics is corrupt and favors the few. Especially local politics.
- shados 8y ago
  Wow yeah, that's really cool. I hate how if I improve my property I'm penalized for it (unless I sell). People here end up living in cardboard boxes just to avoid paying high taxes.
  - supertrope 8y ago
    I have a strong hunch that urban sprawl, free parking loving Americans would never go for this.
- akvadrako 8y ago
  I feel the urge to upvote anybody who mentions LVT (or UBI) because these just seem like they have so much potential to make society better. Of course, some experiments are needed.
- colonelxc 8y ago
  I have some questions about LVT, as I don't really understand how it is practically different than regular property taxes. For instance, if housing is already at the zoning maximum for an area, would this tax be effectively the same as a property tax, because the best land value for this property would be the same amount of housing (assuming it is not completely run down) as currently exists? Interestingly, my area is zoned at X single family homes per acre. Lots are smaller than an acre, and recently a pair of lots was combined/split and 5 (close together) houses are being built there. Does the land value of the neighboring houses go down when the area hits peak zoned requirements? Like, they could have potentially built another house in the 'backyard' of the first one, but now they would run into zoning because of the next yard construction. So now is the land value lower (and thus lower tax?). People also say that they like LVT because they don't get taxed on improving their home. But wouldn't the LVT already factor in an improved home value (if the standard for the area was larger/improved homes)? Thus you're effectively penalized for not improving your home (ex: "The best value for this property is a 3000sqft home here, not a 1500sqft home"). I know the land value is supposed to 'avoid' improvements, but if we're taxing on what someone would pay for the land (if it was devoid of improvements), we would have to factor in what they would then build on it, which might be a much nicer, larger home than what currently exists. (Someone might value a piece of empty land highly if they expect to get a big payout by putting a large house on the property).
  - rcpt 8y ago
    The idea is that voters would be incentived to change zoning laws to allow more density in response to your listed situations. > Thus you're effectively penalized for not improving your home. This is good. If the area you own land in becomes valuable you should be incentivised to make the best possible use of your land.
markoman 8y ago
It was frustrating reading the captions to the photos because for each one it would mention that tax policy affected various features of the building. Except that, over and over, it mysteriously left out the why and how of tax policy affecting roofing or windows being bricked over. That is, why would tax policy cause windows to be bricked over? I just found it exhausting being teased over and over. I don't read to be teased. I read to be educated, yet I wasn't even sure that the read would have answered my questions. I gave up instead.
- mathgladiator 8y ago
  The paragraphs below explained. People were taxed on windows, so people removed windows to reduce the tax.
  - arethuza 8y ago
    We lived in the Edinburgh New Town and the buildings had quite a few bricked up windows - I had assumed as the buildings weren't that old (early 19th century) the Window Tax explanation was unlikely but it turns out it wasn't abolished until 1851: https://en.wikipedia.org/wiki/Window_tax https://en.wikipedia.org/wiki/Window_tax
- Spooky23 8y ago
  Paris taxed based in the number of floors up to the roofline. This was described in the article. The British taxed based on a count of windows.
- derekp7 8y ago
  The mansard roofs in Paris -- taxes were based on number of floors up to the roof line. Mansard roofs disguise the top floor as part of the roof. Narrow buildings -- these buildings were taxed based on the number of linear feet facing the canal. In the picture, the door in the middle is the door for a house that is only as wide as that door, "the skinniest house in the world". Covered / Bricked over windows -- buildings were taxed based on the number of windows. Building owners could save money simply by bricking over some windows.
- 8y ago
pimmen 8y ago
In Sweden we removed the property tax completely which has shaped our housing market a lot. People over consume living area and use their homes as retirements savings since it’s dift cheap to sit on it, contributing to the housing crisis we’ve had for the past decade.
- seanmcdirmid 8y ago
  China lacks a property tax, which is a big reason for their huge housing bubble.
  - tryonqc 8y ago
    You are correct. China only tax when you sell / buy property. The porperty tax "reform" should be in place by the end of 2019 though. I think house prices in china can't really be compared with other country for lots of reasons, eg: they don't own their homes (70y lease), very low interest on loans (1-2%), real estate is seen as a very good investment in china, etc.:)
    - seanmcdirmid 8y ago
      The 70 year leases are probably going to be renewed very cheaply/easily as happened in Wenzhou when the middle class made a huge fuss over the early (shorter term) leases ending. The central government had to step in and make the local government renew them for basically nothing. Also, China lacks very good investments (the stock market is still a joke), so real estate is seen as the only viable option to beat inflation. So even in hot markets like Beijing and Shanghai, lots of nice apartment buildings will have empty units, which are just being held as an asset and are not even renovated to be rented out. China is not really that unique from other countries, it’s real estate market is quite expected considering the factors that created it.
      - baybal2 8y ago
        Indeed, feel to be 1-to-1 parallel to property bubble in 200x Russia, except scaled to the size of China: Russian law effectively prevents people who can't pay for a personal financial lawyer to invest abroad, and for the short period of time the fun lasted people were investing in even crazier vanities than Chinese do now. I believe that "you can't invest abroad unless you have money for a legal counsel" applies to a lot of countries. Adding to you point on property taxes: Russian provinces with regional property taxes only saw, i think, 1/10th of the bubble in comparison to the rest of the country. At the time when an average private individual could buy 5 flats in 3 years in hopes of bubble growing faster than than interest on his loan, it will be pretty expensive to pay even 0.75% property tax, as it can easily be bigger than guy's annual income.
seanalltogether 8y ago
I remember someone claiming that property taxes in Greece only come into effect when a building in completed, and as a result there are lots of homes with unfinished roofs and whatnot. Any truth to this?
- Balero 8y ago
  As far as I understand there are tax incentives for being able to add another floor to a house, as opposed to expanding another way. So the rebar out the top is due to tax. I am fairly sure that you are not exempt from tax if you have an unfinished roof.
  - brazzy 8y ago
    It has absolutely nothing to do with taxation. It's simply easier (and cheaper) to add floors in the future that way.
    - Balero 8y ago
      I stand corrected! It's good to get the facts straight, there is a lot of misinformation about Greece and tax dodging (which, I imagine, is where I got the idea)
- deleted 8y ago
  [deleted]
- brazzy 8y ago
  Nope: https://skeptics.stackexchange.com/questions/27662/do-greeks-evade-taxes-by-not-finishing-their-houses https://skeptics.stackexchange.com/questions/27662/do-greeks...
- virmundi 8y ago
  Depending on how much you believe Quora, it looks like other municipalities follow a similar approach. https://www.quora.com/Why-are-there-so-many-unfinished-buildings-in-North-Cyprus https://www.quora.com/Why-are-there-so-many-unfinished-build...
h8trswana8 8y ago
Ehhm, San Francisco...
icantdrive55 8y ago
Yea--let's blame Prop 13? (I know there's a Prop coming up, and belive the rich boys playing Herbalife activism?) I guess history needs to repeat itself? I know most Millenials blame Prop 13 for their rediculious rent payments. At this point, I don't care. Let history repeat itself. Read the book, I'm Mad as Hell, by Howard Jarvis--or don't--I just don't care. Property taxes are an easy target if you didn't see your dad cry at the dinner table over a letter/bill. Plus you will see a lot of fake news (sorry, just tired old man. I never thought I would spew "Fake news" anywhere.) about the virtuosity/whatever of Property Taxes. I belive 1 percenter's/REIT's are "seeding" web chat forums? So--yes, if Prop 13 is defeated in California; your bosses will buy up that those bedroom homes, and rent it back to you at rediculious prices. Three will be no free college, or whatever. No nirvana-----, but belive what you are programmed to believe? Yes--they are controlling thought. They are controlling the economy. And your politicians will have War Chests to raid? Most of you were glints in daddy's eyes before Prop 13. Get rid of it, and and see what happens? It will be more ugly than before, but who cares? Looking up history is a bitch with that Internet? (Google Garry Giocamminni--Marin County--west Marin property taxes. Google his last interview before he died. It's at the end of the interview, he admits the rediculious of uncontrolled property taxes.)
novaRom 8y ago
In Germany we have extremely high property taxes (6% of purchase cost on new buy and 1.2% annual in my region). Plus very high transaction costs associated with real estate business (notary costs). It is interesting fact that more developed European countries, such as Switzerland (42%) or Germany (51%), tended to have a lower home ownership rate compared to less developed countries such as Lithuania (90%) or Romania (96%).
- rb808 8y ago
  6% of purchase price is nothing :). Welcome to the US North East where 2-3% of current value every year is now standard.
  - Rapzid 8y ago
    2.78 or so in Texas. Everyone gets to pay :D
    - lotsofpulp 8y ago
      At least TX doesn’t have state income tax. Northeast gets you with state income tax, state sales tax, property taxes, myriad hotel taxes, road tolls, vehicle registration fees, drivers license fees, court fees, etc. and everything keeps increasing every year as he unfunded defined benefit, healthcare benefit, and infrastructure debt comes due.
- vorpalhex 8y ago
  It's sort of an interesting tradeoff. On one hand, it's not desirable for most people to rent longterm, and owning property is an important way to store and grow wealth. On the other hand, you don't want a few well financed investors sweeping in and buying all the available housing just as a kind of depository for funds. Texas has an interesting setup. Property taxes are relatively high, but you can choose one house that you occupy to get a "Homestead exemption" that brings the taxes down quite a bit. This doesn't prevent you from owning say, a vacation home, but does make it quite a bit more expensive (which seems to be fair).
cletus 8y ago
So I've lived a few places now (Australia, USA, UK, Switzerland, Germany) so I've seen a few different systems. Australia has a horrible system called stamp duty, which is a tax paid on the purchase of a property based on a sliding scale of the property's purchase price. This was fine back when a house cost $100k (and you might pay $2-3k to the government). It hasn't scaled with massive housing inflation and state governments (who administer the tax) are now addicted to the revenue. The median house price in Sydney now is A$1.1m (last I checked). This seems to mean stamp duty of nearly A$50k. When household income may well be under $150k paying $50k after-tax to move is a huge barrier to moving and thus labour market flexibility. Want to move across the country for a new job? Enjoy the $100k in transaction costs for swapping houses. The US property tax system with almost no transaction taxes is far, far better (IMHO). There are exceptions (eg NYC has a "mansion tax" of 1% on properties over US$1M). Of course this will never happen in Australia because all the existing homeowners, who have already paid stamp duty (even if it was 40+ years ago), don't want to pay higher property taxes. Of course large parts of the US have voted themselves massive tax breaks for incumbents, the posterchild of which is Prop 13 in CA. All under the guise of "won't anybody think of the retirees?" (when you could individually give them tax breaks if you really wanted to). New York state has a series of property tax caps that greatly benefit established SFH dwellers (and SFH taxes are far, far lower than those on apartments/condos). The biggest downside to property in at least English speaking countries (and elsewhere no doubt) is rampant speculation. I kind of liked the Swiss system for this in many ways. Punitive taxes on short term capital gains. Also, in Switzerland, when you owned property outright, it's notional rent was deemed income. So there's no point having a property sit empty because you're being taxed on the "income" anyway.
- rayiner 8y ago
  > The US property tax system with almost no transaction taxes is far, far better Many U.S. states have real estate transaction taxes. In my county in Maryland, for example, recordation tax + transfer tax totals about 2.2% of purchase price.
- seanalltogether 8y ago
  Having moved from the US to the UK, I really hate stamp duty. I believe it actively discourages mobility which in turn limits housing supply and restricts job opportunities etc..
AtlasBarfed 8y ago
Sprawl taxes are badly needed for the environment. What needs to be financially incented is extremely dense urban population centers. As in Manhattan everywhere. IIRC Japan has density patterns like this. Basically, if an area adjacent to a high density population area wants to expand into the area, it accepts a very very high entry cost, either ongoing property tax or initial permit cost. That would force only very large and dense building development. Transportation could be exempted as could parks and certain low income housing which is basically government controlled anyway at this point. That might also incent vertical farms, although I haven't kept up with the viable economics of skyscraper-class vertical farming yet. One of the primary challenges of modern environmentalism is just sprawl: people driving too far, people spreading out too much, people buying too big of houses that are energy inefficient, people buying yards that they use 1% of the time
- swebs 8y ago
  >extremely dense urban population centers. As in Manhattan everywhere Sounds like hell to me.
  - droopyEyelids 8y ago
    The point is, one should pay enough that infrastructure maintenance of their location is possible. StrongTown's thesis (that isn't really in question) is that suburban sprawl is financed by handouts from the government, but nothing finances the maintenance of that sprawl after the initial build out. StrongTowns does a lot of analysis proving that densely occupied areas generate enough revenue to repair their gas, electricity, transportation, sewage etc- but less dense suburban areas do not. If dense population is hell, then you better pay enough money for repairs that happen on 30+ year cycles, or else you're looking at another type of bad situation.
    - claydavisss 8y ago
      Most of the US is sprawl and seems to be adequately handling maintenance. Density is not a necessary precondition for economical maintenance...NYC's subway system is in a shambles despite the highest density in the US, and mostly affluent residents. Only a few places in the US have both sprawl and very high labor costs. It would be a crisis if the entirety of the US resembled Palo Alto and had similar costs...but this isn't the case.
TangoTrotFox 8y ago
I wonder why we don't have a system where the norm is no property taxes on property that you designate as a personal residence which cannot be leased or otherwise monetized, and then a moderate property tax on properties beyond that. Ideally the goal of a property tax would be to discourage people from buying up immense amounts of land simply as a sort of naturally inflationary and stable wealth storage device, but as is the various rules seem to be really just all over the place.
- Vinnl 8y ago
  According to this comment Texas has that: https://news.ycombinator.com/item?id=17450640 https://news.ycombinator.com/item?id=17450640
  - vonmoltke 8y ago
    Texas has reduced taxes. In my case it worked out to about a 20% reduction in taxable value.
- hadrian82 8y ago
  Because then the government doesn't own your land and can't take it from you when you don't pay them off. Property "tax" is their way of forcing you into agreeing that they own your land and they sell it as giving you better schools in the area or some crap. And if people feel they REALLY own something and it can't be taken away from them then they will fight for it. We can't have people fighting for their land when the government comes to auction their house off to the highest bidder. We have been moving more and more toward a Capitalist Communism where the government owns everything and you are merely renting from them (this is just straight up how it is in China, they don't even pretend), but we still sell it as Capitalism because businesses aren't owned by the government. This is not the way life should be and all property taxes (i.e. government owned property rentals) should be outlawed.
  - Guvante 8y ago
    The government doesn't have to own something to tax it.
kindatrue 8y ago
This is a great time to call out California and its Prop 13 (1978) where property taxes are capped at 1%ish and can grow no more than 2% from time of purchase. As a result, a new homeowner in Silicon Valley ($1.5M median home price) will pay $16K this year. Meanwhile there's a homeowner in Atherton (where CEOs live) who has a $6M home and pays $3K a year (and their children inherit this rate.) Disney pays about $0.08/sqft in property tax on Disneyland. The new owner will pay about $7/sqft. Unsurprisingly, this has caused California schools to get about $9K/child in funding. About the same as Mississippi. But the cost of living/labor is 2x-10x. Warren Buffett was always amazed at how he paid more in property tax for his place in Omaha than in California - simply because he bought in the right year. https://www.sfgate.com/politics/article/Buffett-s-Prop-13-comments-cause-stir-2595878.php https://www.sfgate.com/politics/article/Buffett-s-Prop-13-co...
- rcpt 8y ago
  Oh God prop 13 - the destroyer of California. I recently learned that, after winning, Howard Jarvis made this supervillain-tier exclamation (read in the voice of Cobra Commander for maximum effect): > The most important thing in this country is not the school system, nor the police department nor the fire department. The right to have property in this country, the right to have a home in this country, that’s important.
  - crdoconnor 8y ago
    The ugliest thing about the Howard Jarvis Taxpayer Foundation's campaign was that it was almost entirely based upon the idea that old people shouldn't be priced out of their own home because of rising taxes. Now it has made a lot of very rich people even richer (not to mention driven elderly renters out of their homes) as well as caused a budgetary crisis in California. Jon Coupon's (current president) response to this budgetary crisis that they helped caused is to argue that California state pensions add up to too much of an unfunded liability and should be slashed.
  - claydavisss 8y ago
    Firefighters and police are doing just fine in California. Indeed, public employee compensation is driving the CalPERs fiasco which is even more dangerous to the state than Prop 13 ever was.
johnymontana 8y ago
I recently learned about the concept of Allodial Title, a form of ownership of real property that exempts the owner from property taxes. This could protect landholders in unincorporated areas from a huge surge in property tax when their land is then annexed into a city. Is Allodial Title common? I can't seem find many examples of it. https://en.wikipedia.org/wiki/Allodial_title https://en.wikipedia.org/wiki/Allodial_title
avyfain 8y ago
This is a point raised in James C. Scott's Seeing Like a State: > The shorthand formulas through which tax officials must apprehend reality are not mere tools of observation. By a kind of fiscal Heisenberg principle, they frequently have the power to transform the facts they take note of. > The door-and-window tax established in France under the Directory and abolished only in 1917 is a striking case in point. Its originator must have reasoned that the number of windows and doors in a dwelling was proportional to the dwelling's size. Thus a tax assessor need not enter the house or measure it but merely count the doors and windows. As a simple, workable formula, it was a brilliant stroke, but it was not without consequences. Peasant dwellings were subsequently designed or renovated with the formula in mind so as to have as few openings as possible. While the fiscal losses could be recouped by raising the tax per opening, the long-term effects on the health of the rural population lasted for more than a century.

154 points by oftenwrong 8y ago

I'll take this opportunity to bring up Land Value taxation as an alternative: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Creates incentive to use land efficiently, coupled with fewer economic distortions.

rcpt 8y ago
Such a great system. I don't know why it's not used more often.
- woolvalley 8y ago
  It becomes a tax increase on SFH, which is a powerful political block in many countries.
  - spollo 8y ago
    What does SFH stand for?
    - germinalphrase 8y ago
      Single family home (?)
      - woolvalley 8y ago
        That is correct
- munificent 8y ago
  One of the things I always find frustrating about economists and economic writing is how often it completely and deliberately disregards the humanity of the actors in the system. My hunch is that the people who are drawn to economics like it specifically because it attempts to offer a cleaner, more mechanical understanding of human behavior than humans actually demonstrate. But, of course, using that model to then derive policy is obviously flawed since your model doesn't accurately capture the essential features of the objects being modeled. If we let economists design furniture, every chair would be a miserably unpleasant cube whose dimensions match the median posterior. Land value tax does have a lot going for it, but it overlooks one critical component: Humans have a fundamental desire for stability, especially in where they live. I do not want my home to be a rectangle of maximum market efficiency. I want it to be a place where it's worth the effort to garden because I know I'll get to watch those plants grow over the coming years. I want it to be a calm respite, a sanctuary that I can rely on in the face of the chaos of the larger world. And, as I get older and my ability to generate revenue natural declines, I want some confidence that hard work I did when I was younger will enable me to live out the rest of my years with some degree of stability. Of course, our desire for stability needs to be weighed against the desires of the larger community. But you do that by balancing those desires, not by completely ignoring one half of the equation. I'm not sure what an ideal solution for housing is, but I'm certain it's not based on a slavish devotion to market efficiency.
  - germinalphrase 8y ago
    Why would land value tax undermine housing stability?
    - prutschman 8y ago
      The unimproved value of land is still a function of its proximity to other desirable things. Barring remodeling, it's not generally the value of the building on a piece of land that goes up over time.
    - supertrope 8y ago
      gentrification
  - yonran 8y ago
    There’s no insurmountable conflict between stability and efficiency. Just as landlords offer 10-year leases to commercial tenants who desire stability, the government can offer 10-year (or longer) insurance products against the risk of increased land value.
  - opportune 8y ago
    This is just “I got mine” as the economists. Meanwhile younger people who want to buy homes are unable to enjoy the way of life that you are, because you were able to buy a home before they had even graduated middle school Why should society have to slow down just to help you and your little old house? You can just move somewhere else with a garden. Everybody else is also trying to work and live their lives. This isn’t little house on the prairie, it’s quite selfish to buy a house in a city (an inherently dynamic landscape) and then expect the rest of the world to freeze in time
    - watwut 8y ago
      When an elderly person want to live nearby family and keep social ties they were building whole life, it is "go away I want to live here too your relationship and you don't matter at all. Just go elsewhere, living among strangers as you are getting weaker and older is totally the same and I dont care about you at all. It is totally our right to kick you out of your house because the place where it is suddenly became in demand." Simultaneously we are collectively complaining that people don't communicate or form bonds as they used to and how community died yadda yadda and people are lonely, especially men and how sad it all is yadda. Guess what, this attitude kills any kind of in-person bonds or willingness to invest into them way more then much maligned social networks.
- crdoconnor 8y ago
  It's not a great move career-wise to recommend something like this as an economist. Lots of funding/jobs/prestige comes via wealthy interest groups who would absolutely loathe a land value tax. It was mooted in the UK last year and some of the newspapers (owned by wealthy landowners) went ballistic: http://www.dailymail.co.uk/news/article-4575382/How-Labour-garden-tax-hit-YOU.html http://www.dailymail.co.uk/news/article-4575382/How-Labour-g... https://www.telegraph.co.uk/news/2017/06/03/labours-garden-tax-hit-10million/ https://www.telegraph.co.uk/news/2017/06/03/labours-garden-t... The stock market would likely take a dive if this was implemented too, since a lot of company profits are predicated upon parasitic land value extraction (Trump's businesses are a good example). Politicians are usually wary of policies that might cause the stock market to take a dive because of the optics.
  - maxerickson 8y ago
    Trump's businesses are private and don't have much to do with the stock market. Or are you saying that he would be even more likely to default on loans and the banks would feel it hard?
- maxerickson 8y ago
  Politics is corrupt and favors the few. Especially local politics.
shados 8y ago
Wow yeah, that's really cool. I hate how if I improve my property I'm penalized for it (unless I sell). People here end up living in cardboard boxes just to avoid paying high taxes.
- supertrope 8y ago
  I have a strong hunch that urban sprawl, free parking loving Americans would never go for this.
akvadrako 8y ago
I feel the urge to upvote anybody who mentions LVT (or UBI) because these just seem like they have so much potential to make society better. Of course, some experiments are needed.
colonelxc 8y ago
I have some questions about LVT, as I don't really understand how it is practically different than regular property taxes. For instance, if housing is already at the zoning maximum for an area, would this tax be effectively the same as a property tax, because the best land value for this property would be the same amount of housing (assuming it is not completely run down) as currently exists? Interestingly, my area is zoned at X single family homes per acre. Lots are smaller than an acre, and recently a pair of lots was combined/split and 5 (close together) houses are being built there. Does the land value of the neighboring houses go down when the area hits peak zoned requirements? Like, they could have potentially built another house in the 'backyard' of the first one, but now they would run into zoning because of the next yard construction. So now is the land value lower (and thus lower tax?). People also say that they like LVT because they don't get taxed on improving their home. But wouldn't the LVT already factor in an improved home value (if the standard for the area was larger/improved homes)? Thus you're effectively penalized for not improving your home (ex: "The best value for this property is a 3000sqft home here, not a 1500sqft home"). I know the land value is supposed to 'avoid' improvements, but if we're taxing on what someone would pay for the land (if it was devoid of improvements), we would have to factor in what they would then build on it, which might be a much nicer, larger home than what currently exists. (Someone might value a piece of empty land highly if they expect to get a big payout by putting a large house on the property).
- rcpt 8y ago
  The idea is that voters would be incentived to change zoning laws to allow more density in response to your listed situations. > Thus you're effectively penalized for not improving your home. This is good. If the area you own land in becomes valuable you should be incentivised to make the best possible use of your land.

markoman 8y ago

It was frustrating reading the captions to the photos because for each one it would mention that tax policy affected various features of the building. Except that, over and over, it mysteriously left out the why and how of tax policy affecting roofing or windows being bricked over. That is, why would tax policy cause windows to be bricked over? I just found it exhausting being teased over and over. I don't read to be teased. I read to be educated, yet I wasn't even sure that the read would have answered my questions. I gave up instead.

mathgladiator 8y ago
The paragraphs below explained. People were taxed on windows, so people removed windows to reduce the tax.
- arethuza 8y ago
  We lived in the Edinburgh New Town and the buildings had quite a few bricked up windows - I had assumed as the buildings weren't that old (early 19th century) the Window Tax explanation was unlikely but it turns out it wasn't abolished until 1851: https://en.wikipedia.org/wiki/Window_tax https://en.wikipedia.org/wiki/Window_tax
Spooky23 8y ago
Paris taxed based in the number of floors up to the roofline. This was described in the article. The British taxed based on a count of windows.
derekp7 8y ago
The mansard roofs in Paris -- taxes were based on number of floors up to the roof line. Mansard roofs disguise the top floor as part of the roof. Narrow buildings -- these buildings were taxed based on the number of linear feet facing the canal. In the picture, the door in the middle is the door for a house that is only as wide as that door, "the skinniest house in the world". Covered / Bricked over windows -- buildings were taxed based on the number of windows. Building owners could save money simply by bricking over some windows.
8y ago

pimmen 8y ago

In Sweden we removed the property tax completely which has shaped our housing market a lot. People over consume living area and use their homes as retirements savings since it’s dift cheap to sit on it, contributing to the housing crisis we’ve had for the past decade.

seanmcdirmid 8y ago
China lacks a property tax, which is a big reason for their huge housing bubble.
- tryonqc 8y ago
  You are correct. China only tax when you sell / buy property. The porperty tax "reform" should be in place by the end of 2019 though. I think house prices in china can't really be compared with other country for lots of reasons, eg: they don't own their homes (70y lease), very low interest on loans (1-2%), real estate is seen as a very good investment in china, etc.:)
  - seanmcdirmid 8y ago
    The 70 year leases are probably going to be renewed very cheaply/easily as happened in Wenzhou when the middle class made a huge fuss over the early (shorter term) leases ending. The central government had to step in and make the local government renew them for basically nothing. Also, China lacks very good investments (the stock market is still a joke), so real estate is seen as the only viable option to beat inflation. So even in hot markets like Beijing and Shanghai, lots of nice apartment buildings will have empty units, which are just being held as an asset and are not even renovated to be rented out. China is not really that unique from other countries, it’s real estate market is quite expected considering the factors that created it.
    - baybal2 8y ago
      Indeed, feel to be 1-to-1 parallel to property bubble in 200x Russia, except scaled to the size of China: Russian law effectively prevents people who can't pay for a personal financial lawyer to invest abroad, and for the short period of time the fun lasted people were investing in even crazier vanities than Chinese do now. I believe that "you can't invest abroad unless you have money for a legal counsel" applies to a lot of countries. Adding to you point on property taxes: Russian provinces with regional property taxes only saw, i think, 1/10th of the bubble in comparison to the rest of the country. At the time when an average private individual could buy 5 flats in 3 years in hopes of bubble growing faster than than interest on his loan, it will be pretty expensive to pay even 0.75% property tax, as it can easily be bigger than guy's annual income.

seanalltogether 8y ago

I remember someone claiming that property taxes in Greece only come into effect when a building in completed, and as a result there are lots of homes with unfinished roofs and whatnot. Any truth to this?

Balero 8y ago
As far as I understand there are tax incentives for being able to add another floor to a house, as opposed to expanding another way. So the rebar out the top is due to tax. I am fairly sure that you are not exempt from tax if you have an unfinished roof.
- brazzy 8y ago
  It has absolutely nothing to do with taxation. It's simply easier (and cheaper) to add floors in the future that way.
  - Balero 8y ago
    I stand corrected! It's good to get the facts straight, there is a lot of misinformation about Greece and tax dodging (which, I imagine, is where I got the idea)
deleted 8y ago
[deleted]
brazzy 8y ago
Nope: https://skeptics.stackexchange.com/questions/27662/do-greeks-evade-taxes-by-not-finishing-their-houses https://skeptics.stackexchange.com/questions/27662/do-greeks...
virmundi 8y ago
Depending on how much you believe Quora, it looks like other municipalities follow a similar approach. https://www.quora.com/Why-are-there-so-many-unfinished-buildings-in-North-Cyprus https://www.quora.com/Why-are-there-so-many-unfinished-build...

h8trswana8 8y ago

Ehhm, San Francisco...

icantdrive55 8y ago

Yea--let's blame Prop 13? (I know there's a Prop coming up, and belive the rich boys playing Herbalife activism?) I guess history needs to repeat itself? I know most Millenials blame Prop 13 for their rediculious rent payments. At this point, I don't care. Let history repeat itself. Read the book, I'm Mad as Hell, by Howard Jarvis--or don't--I just don't care. Property taxes are an easy target if you didn't see your dad cry at the dinner table over a letter/bill. Plus you will see a lot of fake news (sorry, just tired old man. I never thought I would spew "Fake news" anywhere.) about the virtuosity/whatever of Property Taxes. I belive 1 percenter's/REIT's are "seeding" web chat forums? So--yes, if Prop 13 is defeated in California; your bosses will buy up that those bedroom homes, and rent it back to you at rediculious prices. Three will be no free college, or whatever. No nirvana-----, but belive what you are programmed to believe? Yes--they are controlling thought. They are controlling the economy. And your politicians will have War Chests to raid? Most of you were glints in daddy's eyes before Prop 13. Get rid of it, and and see what happens? It will be more ugly than before, but who cares? Looking up history is a bitch with that Internet? (Google Garry Giocamminni--Marin County--west Marin property taxes. Google his last interview before he died. It's at the end of the interview, he admits the rediculious of uncontrolled property taxes.)

novaRom 8y ago

In Germany we have extremely high property taxes (6% of purchase cost on new buy and 1.2% annual in my region). Plus very high transaction costs associated with real estate business (notary costs). It is interesting fact that more developed European countries, such as Switzerland (42%) or Germany (51%), tended to have a lower home ownership rate compared to less developed countries such as Lithuania (90%) or Romania (96%).

rb808 8y ago
6% of purchase price is nothing :). Welcome to the US North East where 2-3% of current value every year is now standard.
- Rapzid 8y ago
  2.78 or so in Texas. Everyone gets to pay :D
  - lotsofpulp 8y ago
    At least TX doesn’t have state income tax. Northeast gets you with state income tax, state sales tax, property taxes, myriad hotel taxes, road tolls, vehicle registration fees, drivers license fees, court fees, etc. and everything keeps increasing every year as he unfunded defined benefit, healthcare benefit, and infrastructure debt comes due.
vorpalhex 8y ago
It's sort of an interesting tradeoff. On one hand, it's not desirable for most people to rent longterm, and owning property is an important way to store and grow wealth. On the other hand, you don't want a few well financed investors sweeping in and buying all the available housing just as a kind of depository for funds. Texas has an interesting setup. Property taxes are relatively high, but you can choose one house that you occupy to get a "Homestead exemption" that brings the taxes down quite a bit. This doesn't prevent you from owning say, a vacation home, but does make it quite a bit more expensive (which seems to be fair).

cletus 8y ago

So I've lived a few places now (Australia, USA, UK, Switzerland, Germany) so I've seen a few different systems. Australia has a horrible system called stamp duty, which is a tax paid on the purchase of a property based on a sliding scale of the property's purchase price. This was fine back when a house cost $100k (and you might pay $2-3k to the government). It hasn't scaled with massive housing inflation and state governments (who administer the tax) are now addicted to the revenue. The median house price in Sydney now is A$1.1m (last I checked). This seems to mean stamp duty of nearly A$50k. When household income may well be under $150k paying $50k after-tax to move is a huge barrier to moving and thus labour market flexibility. Want to move across the country for a new job? Enjoy the $100k in transaction costs for swapping houses. The US property tax system with almost no transaction taxes is far, far better (IMHO). There are exceptions (eg NYC has a "mansion tax" of 1% on properties over US$1M). Of course this will never happen in Australia because all the existing homeowners, who have already paid stamp duty (even if it was 40+ years ago), don't want to pay higher property taxes. Of course large parts of the US have voted themselves massive tax breaks for incumbents, the posterchild of which is Prop 13 in CA. All under the guise of "won't anybody think of the retirees?" (when you could individually give them tax breaks if you really wanted to). New York state has a series of property tax caps that greatly benefit established SFH dwellers (and SFH taxes are far, far lower than those on apartments/condos). The biggest downside to property in at least English speaking countries (and elsewhere no doubt) is rampant speculation. I kind of liked the Swiss system for this in many ways. Punitive taxes on short term capital gains. Also, in Switzerland, when you owned property outright, it's notional rent was deemed income. So there's no point having a property sit empty because you're being taxed on the "income" anyway.

rayiner 8y ago
> The US property tax system with almost no transaction taxes is far, far better Many U.S. states have real estate transaction taxes. In my county in Maryland, for example, recordation tax + transfer tax totals about 2.2% of purchase price.
seanalltogether 8y ago
Having moved from the US to the UK, I really hate stamp duty. I believe it actively discourages mobility which in turn limits housing supply and restricts job opportunities etc..

AtlasBarfed 8y ago

Sprawl taxes are badly needed for the environment. What needs to be financially incented is extremely dense urban population centers. As in Manhattan everywhere. IIRC Japan has density patterns like this. Basically, if an area adjacent to a high density population area wants to expand into the area, it accepts a very very high entry cost, either ongoing property tax or initial permit cost. That would force only very large and dense building development. Transportation could be exempted as could parks and certain low income housing which is basically government controlled anyway at this point. That might also incent vertical farms, although I haven't kept up with the viable economics of skyscraper-class vertical farming yet. One of the primary challenges of modern environmentalism is just sprawl: people driving too far, people spreading out too much, people buying too big of houses that are energy inefficient, people buying yards that they use 1% of the time

swebs 8y ago
>extremely dense urban population centers. As in Manhattan everywhere Sounds like hell to me.
- droopyEyelids 8y ago
  The point is, one should pay enough that infrastructure maintenance of their location is possible. StrongTown's thesis (that isn't really in question) is that suburban sprawl is financed by handouts from the government, but nothing finances the maintenance of that sprawl after the initial build out. StrongTowns does a lot of analysis proving that densely occupied areas generate enough revenue to repair their gas, electricity, transportation, sewage etc- but less dense suburban areas do not. If dense population is hell, then you better pay enough money for repairs that happen on 30+ year cycles, or else you're looking at another type of bad situation.
  - claydavisss 8y ago
    Most of the US is sprawl and seems to be adequately handling maintenance. Density is not a necessary precondition for economical maintenance...NYC's subway system is in a shambles despite the highest density in the US, and mostly affluent residents. Only a few places in the US have both sprawl and very high labor costs. It would be a crisis if the entirety of the US resembled Palo Alto and had similar costs...but this isn't the case.

TangoTrotFox 8y ago

I wonder why we don't have a system where the norm is no property taxes on property that you designate as a personal residence which cannot be leased or otherwise monetized, and then a moderate property tax on properties beyond that. Ideally the goal of a property tax would be to discourage people from buying up immense amounts of land simply as a sort of naturally inflationary and stable wealth storage device, but as is the various rules seem to be really just all over the place.

Vinnl 8y ago
According to this comment Texas has that: https://news.ycombinator.com/item?id=17450640 https://news.ycombinator.com/item?id=17450640
- vonmoltke 8y ago
  Texas has reduced taxes. In my case it worked out to about a 20% reduction in taxable value.
hadrian82 8y ago
Because then the government doesn't own your land and can't take it from you when you don't pay them off. Property "tax" is their way of forcing you into agreeing that they own your land and they sell it as giving you better schools in the area or some crap. And if people feel they REALLY own something and it can't be taken away from them then they will fight for it. We can't have people fighting for their land when the government comes to auction their house off to the highest bidder. We have been moving more and more toward a Capitalist Communism where the government owns everything and you are merely renting from them (this is just straight up how it is in China, they don't even pretend), but we still sell it as Capitalism because businesses aren't owned by the government. This is not the way life should be and all property taxes (i.e. government owned property rentals) should be outlawed.
- Guvante 8y ago
  The government doesn't have to own something to tax it.

kindatrue 8y ago

This is a great time to call out California and its Prop 13 (1978) where property taxes are capped at 1%ish and can grow no more than 2% from time of purchase. As a result, a new homeowner in Silicon Valley ($1.5M median home price) will pay $16K this year. Meanwhile there's a homeowner in Atherton (where CEOs live) who has a $6M home and pays $3K a year (and their children inherit this rate.) Disney pays about $0.08/sqft in property tax on Disneyland. The new owner will pay about $7/sqft. Unsurprisingly, this has caused California schools to get about $9K/child in funding. About the same as Mississippi. But the cost of living/labor is 2x-10x. Warren Buffett was always amazed at how he paid more in property tax for his place in Omaha than in California - simply because he bought in the right year. https://www.sfgate.com/politics/article/Buffett-s-Prop-13-comments-cause-stir-2595878.php https://www.sfgate.com/politics/article/Buffett-s-Prop-13-co...

rcpt 8y ago
Oh God prop 13 - the destroyer of California. I recently learned that, after winning, Howard Jarvis made this supervillain-tier exclamation (read in the voice of Cobra Commander for maximum effect): > The most important thing in this country is not the school system, nor the police department nor the fire department. The right to have property in this country, the right to have a home in this country, that’s important.
- crdoconnor 8y ago
  The ugliest thing about the Howard Jarvis Taxpayer Foundation's campaign was that it was almost entirely based upon the idea that old people shouldn't be priced out of their own home because of rising taxes. Now it has made a lot of very rich people even richer (not to mention driven elderly renters out of their homes) as well as caused a budgetary crisis in California. Jon Coupon's (current president) response to this budgetary crisis that they helped caused is to argue that California state pensions add up to too much of an unfunded liability and should be slashed.
- claydavisss 8y ago
  Firefighters and police are doing just fine in California. Indeed, public employee compensation is driving the CalPERs fiasco which is even more dangerous to the state than Prop 13 ever was.

johnymontana 8y ago

I recently learned about the concept of Allodial Title, a form of ownership of real property that exempts the owner from property taxes. This could protect landholders in unincorporated areas from a huge surge in property tax when their land is then annexed into a city. Is Allodial Title common? I can't seem find many examples of it. https://en.wikipedia.org/wiki/Allodial_title https://en.wikipedia.org/wiki/Allodial_title

avyfain 8y ago

This is a point raised in James C. Scott's Seeing Like a State: > The shorthand formulas through which tax officials must apprehend reality are not mere tools of observation. By a kind of fiscal Heisenberg principle, they frequently have the power to transform the facts they take note of. > The door-and-window tax established in France under the Directory and abolished only in 1917 is a striking case in point. Its originator must have reasoned that the number of windows and doors in a dwelling was proportional to the dwelling's size. Thus a tax assessor need not enter the house or measure it but merely count the doors and windows. As a simple, workable formula, it was a brilliant stroke, but it was not without consequences. Peasant dwellings were subsequently designed or renovated with the formula in mind so as to have as few openings as possible. While the fiscal losses could be recouped by raising the tax per opening, the long-term effects on the health of the rural population lasted for more than a century.