5 ms·

LVT applies to the land value today. If the value increases because a commuter rail station opens, the value of the land goes up, so the price of the tax goes u

• harimau777 7y ago
  Presumably it would also be possible to take steps to adjust the LVT. For example, perhaps the first x thousand dollars of a family's primary home is untaxed.
  • cmcaine 7y ago
    But why? What problem would that rebate seek to solve? If the concern is that poor people might be unable to afford to stay in their homes, why not target poverty or house prices directly rather than adjusting the tax?
    • harimau777 7y ago
      Either would be fine as long as it works. I just meant that there are different ways that a LVT could be implemented.
      • iso947 7y ago
        If you want to avoid the cash flow problem you allow the tax to be levied as a charge on the land - collected at disposal
    • eru 7y ago
      Rebates for primary homes are especially annoying, because they get the government into the business of deciding what your primary home is.
• lend000 7y ago
  This is the problem -- who determines how much these things are worth? And if you risk other people pricing you out of property you currently hold a lease for (especially because they think the value is going up because of your investments in it) I can't imagine that would encourage any development at all. If LVT is subject to arbitrary changes outside of precise terms negotiated during the initial auction (which should cover the annual cost plus cost increase schedule). Ultimately, nothing will incentivize the improvement of the value of the property as much as owning the property. I think it's apparent that total infrastructure development would go down significantly under this system, even if there are other advantages. We can minimize risk by including length of lease in the auction, but if there is a maximum lease length, the end part of that lease will always be devoid of infrastructure improvements.
  • lmm 7y ago
    > This is the problem -- who determines how much these things are worth? There should be a much more active market in land (land would change hands much more frequently because it doesn't make sense to hold as an investment), which then makes it easy to assess land value. > And if you risk other people pricing you out of property you currently hold a lease for (especially because they think the value is going up because of your investments in it) I can't imagine that would encourage any development at all. You're discouraged from building more than you need on land you can barely afford, and in an area that's rapidly changing you're encouraged to build things that you can either easily move, or sell on to future buyer of the land. The intent isn't to encourage development for development's sake, and the result might be less development in areas that are rapidly changing.
  • dodobirdlord 7y ago
    > This is the problem -- who determines how much these things are worth? And if you risk other people pricing you out of property you currently hold a lease for (especially because they think the value is going up because of your investments in it) I can't imagine that would encourage any development at all. This concern is usually addressed by ditching the distorting effects of the periodic auction and of the incentive to try to "steal" capital improvements by abandoning the auction framework and just assessing a yearly property tax proportional to the value of the underlying land were it unimproved. Since ownership and sale of land would still exist in this system, the value of the land for assessing land value tax can be determined by the market value of the land.