4 ms·
A land value tax, where you pay for the value of the land. Society builds a new subway stations near you, and land increases 20%, you pay 20% more tax. Society
by isostatic 7y ago
A land value tax, where you pay for the value of the land. Society builds a new subway stations near you, and land increases 20%, you pay 20% more tax. Society puts a power plant on your doorstep, land drops 40%, and you pay 40% less tax.
What you do with that land is irrelevent - you pay the same whether you have a small house on a 15 story building on it.
- war1025 7y agoIsn't that exactly what property taxes currently are?
- deleted 7y ago[deleted]
- leetcrew 7y agono? if you renovate your house in a way that increases the value of the structure, you will pay more tax. under LVT, you only pay more tax when the land itself increases in value. that's how the tax gets its name.
- deleted 7y ago[deleted]
- war1025 7y agoMy property taxes are a combination of both land value and dwelling value. So property tax is a superset of land value tax (at least here in Iowa). My understanding is that this is all screwed up in California because there are restrictions on how much your taxes can go up each year. So it's not an issue of needing an additional tax, it's just a matter of needing to un-break California's property tax system.
- leetcrew 7y agoI personally don't know enough econ to know whether LVT is actually a good idea, but intuitively it makes sense to me. the basic objection to property tax as it currently exists is that it penalizes you for improving your property. at the margin, this creates a perverse incentive to let housing stock degrade or even leave whole lots unused. in general LVT advocates want it to replace traditional property taxes, no be added alongside them. the claim is that, for a target tax revenue, LVT can raise the funds much more efficiently. as for California, the problem with their tax system is outside the scope of LVT vs traditional property tax. they have land with massive valuations but get relatively little revenue out of it due to extremely low grandfathered rates.
- howard941 7y agoBut isn't it relevant when the use changes the need for public services? Aren't the external effects captured when fair market value is the value against which a millage rate's applied? I'm not seeing what's gained by ignoring the use.
- Breza 7y agoI agree with this objection. If I use my land for a business, it stresses the government more than if I live on my land. My customers need a place to park (my neighborhood has on-street parking), the local housing crunch is made worse because I have to find another place to sleep, etc. And what if my business has externalities like pollution?
- jefftk 7y agoIf you buy cheap land, build a subway out to it, and now the land is worth more, what should happen to your land value tax? (I talked about this some in https://www.jefftk.com/p/land-value-taxes-are-distortionary https://www.jefftk.com/p/land-value-taxes-are-distortionary , which I probably should have linked from the article)
- haihaibye 7y agoThe by far more common scenario is taxpayer dollars build infrastructure which is captured by private land holders. But thanks for coming up with an interesting thought experiment by inverting it. If the government is reasonable they should have exemptions for this: * Pay you back for infrastructure development * Have the government agree to treat the area as a whole (it was unimproved land til you improved it) then grandfather prices in as you subdivide If they are completely unreasonable I guess you are left with: * Don't subdivide instead rent out the parts of your unimproved superblock * Charge so much for a subway there is no consumer surplus and recoup your money that way
- lainga 7y agoThat's Georgism, which was very popular around the turn of the 20th century