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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_va

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.

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.