3 ms·

Yes, but symmetrically, the amount that a third party is willing to pay presumably has already subtracted their expected cost of relocating into the new space.

• AnthonyMouse 8y ago
  > Yes, but symmetrically, the amount that a third party is willing to pay presumably has already subtracted their expected cost of relocating into the new space. Why should we privilege one valuation over the other? We're not. The buyer values the property at $120,000 but has to pay $20,000 to relocate, so won't pay more than $100,000. The seller values the property at $80,000 but has to pay $20,000 to relocate, so won't accept less than $100,000. The market value is the $100,000 that actually gets paid. This also has the extremely strong virtue of being a known quantity. > As a thought experiment, consider a custom-made many-billion dollar chemical factory that (due to IP or somesuch) can only be utilized by the current owner. Should the town be required to charge property tax as if it was unimproved land, or worse, as an unsaleable cleanup site? What the state is obviously going to try to do in that case is use the market value of the property as it would be if it were alienable. Try a different one. Suppose a communications company has built ground stations for a global communications network. The initial locations were somewhat arbitrary but had to be chosen specifically with respect to the other stations, so that once the network is built none of the locations can change. The value of each individual station is a million dollars but there are ten thousand stations and the overall network is worth billions. Selling off individual stations would compromise the entire network. Does that mean the operator has to pay property taxes on billions of dollars for every station across thousands of jurisdictions, because they wouldn't sell any of them individually? You also get all the trouble with having to distinguish between having this property and having a property. A company might be able to make a billion dollars as long as they have somewhere to operate, even if it's not anywhere in particular. That doesn't make any particular property especially valuable if there are a large number to choose from and not a lot of competing buyers. Suppose in your example that the billion dollar facility can operate out of the back of a large truck. The truck needs to be somewhere, but it doesn't need to be somewhere specific. And if you say the value inside the truck gets taxed, it's going to move down the road to where it isn't (or at least where the rate is lower). Which isn't what you wanted, because then you don't get anything. > Property tax on businesses feels like a negotiation to me, and I don't see why a town shouldn't be allowed to use whatever rules it wants. It seems like what you're after isn't really property tax. If you want to tax based on factory output or number of employees or sales within the jurisdiction, you can do that, but there is no need to pretend it's property tax. The actual problem is that everybody wants tax revenue and nobody wants to discourage any specific activity by taxing it, but that's how it works. People will try to move the thing you tax out of your jurisdiction. This is why the better taxes are the really broad ones, like VAT, because the broader the base the lower the rate for the same revenue.