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An acre of farmland might be worth $2500 or $5000, and that land has been improved by clearing, draining, fencing, etc. (improvements done by the current or an

by LVTfan 6y ago

An acre of farmland might be worth $2500 or $5000, and that land has been improved by clearing, draining, fencing, etc. (improvements done by the current or an earlier owner or his tenant). LVT is based on the UNIMPROVED value of the land, so if there were an as-yet-uncleared acre nearby, it and the acre of farmland would be assessed at the same value. An acre in midtown Manhattan might be worth $250 million to as much as $1.25 billion, before we look at the building that is on it. (An acre is a big lot in Manhattan -- a whole city block.) A tiny lot in Manhattan sells hundreds of thousands of dollars, due to its location, which the seller didn't create. The old building on it may be worth nothing. And the 100x100 lot with a new hotel on it and the 100x100 lot next door with just a parking lot, or maybe just a chain link fence, would be assessed identically. The unimproved value of the land. Farmers would pay little under LVT. In fact they'd be advantaged, because their buildings and equipment would not be taxed. The owners of sites in our major cities would pay in proportion to the value of their site. And frequently the land is already leased to someone who puts a building on it, which gives a sense of the value of the land at the time the lease was negotiated -- a value which is not always made public. And why would we want to tax wages, or sales, if we could obtain from the value of land much of the revenue we need, while providing a boost to the economy via removing the deadweight loss of dumb taxes?

free_rms 6y ago
So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense, but I feel like there are a million wrenches in the works that everyone's ignoring because the theory is so nice.
- jrs235 6y ago
  >On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? Yes. Desirability and infrastructure near land increases it's unimproved value.
  - Mirioron 6y ago
    So if I want my tax bill to be cheap I should be against everything that the government does that would improve life around my home? Won't this take NIMBYism to a whole new level?
    - epistasis 6y ago
      Georgism was proposed in a time before we invented zoning, which was a system explicitly motivated by racial and class segregation. The Supreme Court case that made it constitutional is explicit about wealthy land owners having the right to exclude the poor from living in apartments nearby. So we need additional correctives to the additional injustices that capitalism has invented since Henry George's time, like our NIMBY-promoting land use decision system. We could, for example, adopt something like Japan's more federal system.
    - tryptophan 6y ago
      This is why its such a great tax - if the government and others are shelling out money to improve an area; you won't get to free ride off it and get huge property values. If you want to pay less taxes, you move to an area that doesn't do this sort of investment. If you want nice stuff, you can move in and pay for it, and be content that people who are against improvement are kicked out by higher taxes.
    - scatters 6y ago
      Currently NIMBYs complain about changes that they perceive will lower the value of their real estate. Complaining instead about things that would increase the value of their property seems like a good change.
- LVTfan 6y ago
  The assessor's job is just to determine the value of the various sites. It is said that a group of locally knowledgeable people could sit around a table with a large map of the community, and they'd quickly reach a consensus about what is the most valuable site in the city. And then they could go block by block determining the relative value of the various neighborhoods. From that, a land value map could be derived, and likely it would get a few tweaks from the community. As Bushwick becomes popular, because of better transit, or community amenities or whatever, yes, the unimproved value of the sites served by them go up. A school develops an excellent reputation? Up go the land values. (Some say that in most suburban towns, the superintendent of schools is the highest paid employee, in part because s/he can influence "property values" -- more precisely, land values -- more than any other single person.) My first acquaintance with Elizabeth Warren came from a book she wrote about 2003, whose title was something like "The Two Income Trap: How Middle Class Parents are Going Broke" and in part it was from seeking the best public schools for their children, and paying a huge share of their income for it, seldom to be matched by single parents.
- CuriousSkeptic 6y ago
  I’m thinking that assessing is the wrong approach. If it could be baked into negotiations Instead the market could do it’s thing and find the proper price. Having auctions continuously or frequently might be a bit aggressive, otoh only doing negotiations when changing “owners” might be to slow and produce odd incnentives. Not sure what the middle ground is though, 10-year leases? Edit: Some of this is more or less what’s happening when buying a property based on a mortgage. The bank decides what the property might be worth, and what the new owner will be able to pay in rent. It must be possible to do slight adjustments in this scheme so that the rent ends up as tax instead.
- TheCoelacanth 6y ago
  That's the same assessments for property taxes work now except that they are looking at the value of improvements in addition to the value of the unimproved land.
  - nybble41 6y ago
    Sure, except that there is an objective standard for total value with improvements (the sale price) and there is no such standard for the "unimproved" value of the property. No one is going to tear down any existing improvements and leave the land untouched to revert back to nature for a century or so before putting it up for auction. The dividing line between "improved" and "unimproved" value is arbitrary, and biased against the property owner. What LVT proponents really want is some kind of oracle that will tell them just how much of the (estimated) market value of a property is due to the direct efforts of the past and present owners of the property and how much is external benefit from the actions of others. Two problems with this approach are (a) there is no such oracle and (b) the "unimproved" value includes external benefits property owners provide to their communities which are not included in the assessed value of any obvious material improvements to their own properties. There is something fundamentally self-defeating in any proposal which would result in taxing people extra for their contributions to the public good. The idea that land has any "unimproved value" to be taxed is flawed from the start. In fact land has no economic value until someone claims it and puts it to use. If you walled off a piece of land such that no one could reach it, even an otherwise choice parcel in the middle of Manhattan, it might as well not exist. All economic value is the result of human improvements, though they don't always take the form of physical changes to the property. LVT takes physical improvement as a proxy for improvements attributable to the property owner(s), but this is at best a lower bound and significantly understates the owners' own contributions to the property value.
  - joe_the_user 6y ago
    Sure, it's the same process ... but it's now putting a lot more weight something that's more nebulous - just the value of the land. Now, whether the final price of a property is the land or the improvements isn't important and so as long as an appraiser matches the market, they can be considered more or less right, whatever weight. The situation is almost tautological. I mean, suppose Amazon builds a giant shipping depot in the middle of nowhere. The land was worth nothing before. Without the depot, it would be worth nothing now. Then town arises around giant depot. Town tries to raise taxes on Amazon says "still worth nothing if we leave". Who's right?

by LVTfan 6y ago

free_rms 6y ago

So it's all on the assessor to decide the 'proper' unimproved land values to raise enough revenue while not driving the wrong people out of business? At a national scale? On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? I very much get where you guys are coming from in a philosophical sense, but I feel like there are a million wrenches in the works that everyone's ignoring because the theory is so nice.

jrs235 6y ago
>On that note, is the inherent land value of a lot in Bushwick way higher then 20 years ago now that they've gentrified? Is neighborhood desirability an 'unimproved' attribute? Yes. Desirability and infrastructure near land increases it's unimproved value.
- Mirioron 6y ago
  So if I want my tax bill to be cheap I should be against everything that the government does that would improve life around my home? Won't this take NIMBYism to a whole new level?
  - epistasis 6y ago
    Georgism was proposed in a time before we invented zoning, which was a system explicitly motivated by racial and class segregation. The Supreme Court case that made it constitutional is explicit about wealthy land owners having the right to exclude the poor from living in apartments nearby. So we need additional correctives to the additional injustices that capitalism has invented since Henry George's time, like our NIMBY-promoting land use decision system. We could, for example, adopt something like Japan's more federal system.
  - tryptophan 6y ago
    This is why its such a great tax - if the government and others are shelling out money to improve an area; you won't get to free ride off it and get huge property values. If you want to pay less taxes, you move to an area that doesn't do this sort of investment. If you want nice stuff, you can move in and pay for it, and be content that people who are against improvement are kicked out by higher taxes.
  - scatters 6y ago
    Currently NIMBYs complain about changes that they perceive will lower the value of their real estate. Complaining instead about things that would increase the value of their property seems like a good change.
LVTfan 6y ago
The assessor's job is just to determine the value of the various sites. It is said that a group of locally knowledgeable people could sit around a table with a large map of the community, and they'd quickly reach a consensus about what is the most valuable site in the city. And then they could go block by block determining the relative value of the various neighborhoods. From that, a land value map could be derived, and likely it would get a few tweaks from the community. As Bushwick becomes popular, because of better transit, or community amenities or whatever, yes, the unimproved value of the sites served by them go up. A school develops an excellent reputation? Up go the land values. (Some say that in most suburban towns, the superintendent of schools is the highest paid employee, in part because s/he can influence "property values" -- more precisely, land values -- more than any other single person.) My first acquaintance with Elizabeth Warren came from a book she wrote about 2003, whose title was something like "The Two Income Trap: How Middle Class Parents are Going Broke" and in part it was from seeking the best public schools for their children, and paying a huge share of their income for it, seldom to be matched by single parents.
CuriousSkeptic 6y ago
I’m thinking that assessing is the wrong approach. If it could be baked into negotiations Instead the market could do it’s thing and find the proper price. Having auctions continuously or frequently might be a bit aggressive, otoh only doing negotiations when changing “owners” might be to slow and produce odd incnentives. Not sure what the middle ground is though, 10-year leases? Edit: Some of this is more or less what’s happening when buying a property based on a mortgage. The bank decides what the property might be worth, and what the new owner will be able to pay in rent. It must be possible to do slight adjustments in this scheme so that the rent ends up as tax instead.
TheCoelacanth 6y ago
That's the same assessments for property taxes work now except that they are looking at the value of improvements in addition to the value of the unimproved land.
- nybble41 6y ago
  Sure, except that there is an objective standard for total value with improvements (the sale price) and there is no such standard for the "unimproved" value of the property. No one is going to tear down any existing improvements and leave the land untouched to revert back to nature for a century or so before putting it up for auction. The dividing line between "improved" and "unimproved" value is arbitrary, and biased against the property owner. What LVT proponents really want is some kind of oracle that will tell them just how much of the (estimated) market value of a property is due to the direct efforts of the past and present owners of the property and how much is external benefit from the actions of others. Two problems with this approach are (a) there is no such oracle and (b) the "unimproved" value includes external benefits property owners provide to their communities which are not included in the assessed value of any obvious material improvements to their own properties. There is something fundamentally self-defeating in any proposal which would result in taxing people extra for their contributions to the public good. The idea that land has any "unimproved value" to be taxed is flawed from the start. In fact land has no economic value until someone claims it and puts it to use. If you walled off a piece of land such that no one could reach it, even an otherwise choice parcel in the middle of Manhattan, it might as well not exist. All economic value is the result of human improvements, though they don't always take the form of physical changes to the property. LVT takes physical improvement as a proxy for improvements attributable to the property owner(s), but this is at best a lower bound and significantly understates the owners' own contributions to the property value.
- joe_the_user 6y ago
  Sure, it's the same process ... but it's now putting a lot more weight something that's more nebulous - just the value of the land. Now, whether the final price of a property is the land or the improvements isn't important and so as long as an appraiser matches the market, they can be considered more or less right, whatever weight. The situation is almost tautological. I mean, suppose Amazon builds a giant shipping depot in the middle of nowhere. The land was worth nothing before. Without the depot, it would be worth nothing now. Then town arises around giant depot. Town tries to raise taxes on Amazon says "still worth nothing if we leave". Who's right?