5 ms·

I reckon if you fix that, with say the LVT proposed by Henry George in SF during a similar explosion in wealth (and accompanying inequality), you’ll find UBI li

I reckon if you fix that, with say the LVT proposed by Henry George in SF during a similar explosion in wealth (and accompanying inequality), you’ll find UBI likely unnecessary. If it is still necessary, you’ll have overflowing public coffers to pay it out with, AND it won’t be eaten by landlords.

HPsquared 6y ago
Somewhere like SF, a land value tax would simply be another incentive to developers / landlords to build more units. The problem is not caused by a lack of incentives, as evidenced by the sky-high rents - landlords already have huge incentives to build more houses. Why aren't they? I would have to guess, restrictive planning laws are limiting the supply of new housing.
- ethanbond 6y ago
  Restrictive planning is one, but another reason you’d not build is speculation. LVT eliminates speculation.
  - mac01021 6y ago
    I'm dense. Can you explain "another reason you’d not build is speculation"?
    - ethanbond 6y ago
      You have land and are choosing not to utilize it (rent it out or sell it) in the belief that you will get a higher price for that same land tomorrow. Today, your tax liability is tiny when you do this. This incentivizes landlords in hot markets to keep their land off the market, thus making the market hotter, this further incentivizing speculation, etc. This is why you see empty storefronts or empty lots in incredibly expensive areas. The owner can sustain the cash flow loss today in exchange for higher prices tomorrow. LVT would mean your tax burden is the same (moderate to high) whether you rent it out or do not rent it out, thus making it infeasible to sit and wait for a higher price tomorrow. This would bring more units onto the market and more efficient uses, thus bringing prices down. Since LVT is often proposed as replacing other forms of taxation (or at least dramatically reducing them), the cost of actually building a dwelling or storefront also goes down — thus further incentivizing non-speculative behavior.
      - fastball 6y ago
        Yep, I'm definitely a supporter of LVT. My only issue is that you end up making the govt more of an arbiter of what "value" is than it already is, which can end up causing issues.
        ethanbond 6y ago
        Indeed! A few points just so people who haven’t heard of LVT before don’t walk with easily addressed misconceptions: 1. The government today assesses land value. It also must assess the value of far, far more nebulous things that can be hidden, transfigured, created/destroyed, or moved offshore. Yes more importance would be tied to this singular assessment, but this assessment is singularly easy to assess! 2. The price/value itself would be set by the market. The assessment of that value, of course, would be by the government and you are correct there is risk of differential here (though mitigated by point 1) 3. Lastly, because land cannot be created, destroyed, or moved, a tax upon it is uniquely unable to either incur inefficiencies (deadweight loss) or to be passed onto tenants/consumers. This is contrast to every other form of taxation, which incur inefficiencies then get passed onto the consumer in the form of price increases anyway.
      - nybble41 6y ago
        > This is why you see empty storefronts or empty lots in incredibly expensive areas. The reason why the speculator leaves the storefronts or lots empty is that putting them to use right now would prevent them from being used for something even more valuable in the future. If they could use the property for something productive now without impacting the expected future use they would happily do so and collect the extra income. Coercing them into putting the property to use immediately, via LVT or zoning rules or whatever, is thus inefficient and economically destructive. The speculation serves a useful purpose.
        snidane 6y ago
        Wrong. The "productive" activity for land holders under system without LVT is preventing others from utilizing it. Without LVT you only achieve massive resource underutilization and favoritism of the first who grabbed it.
  - HPsquared 6y ago
    Speculation affects housing prices only because of development restrictions. Because only a small fraction of land can legally be developed, it's possible to corner the market for new development. If all property can be developed, there would be orders of magnitude more competitors in the development space, and impossible for an individual or cartel to control.

HPsquared 6y ago

Somewhere like SF, a land value tax would simply be another incentive to developers / landlords to build more units. The problem is not caused by a lack of incentives, as evidenced by the sky-high rents - landlords already have huge incentives to build more houses. Why aren't they? I would have to guess, restrictive planning laws are limiting the supply of new housing.

ethanbond 6y ago
Restrictive planning is one, but another reason you’d not build is speculation. LVT eliminates speculation.
- mac01021 6y ago
  I'm dense. Can you explain "another reason you’d not build is speculation"?
  - ethanbond 6y ago
    You have land and are choosing not to utilize it (rent it out or sell it) in the belief that you will get a higher price for that same land tomorrow. Today, your tax liability is tiny when you do this. This incentivizes landlords in hot markets to keep their land off the market, thus making the market hotter, this further incentivizing speculation, etc. This is why you see empty storefronts or empty lots in incredibly expensive areas. The owner can sustain the cash flow loss today in exchange for higher prices tomorrow. LVT would mean your tax burden is the same (moderate to high) whether you rent it out or do not rent it out, thus making it infeasible to sit and wait for a higher price tomorrow. This would bring more units onto the market and more efficient uses, thus bringing prices down. Since LVT is often proposed as replacing other forms of taxation (or at least dramatically reducing them), the cost of actually building a dwelling or storefront also goes down — thus further incentivizing non-speculative behavior.
    - fastball 6y ago
      Yep, I'm definitely a supporter of LVT. My only issue is that you end up making the govt more of an arbiter of what "value" is than it already is, which can end up causing issues.
      - ethanbond 6y ago
        Indeed! A few points just so people who haven’t heard of LVT before don’t walk with easily addressed misconceptions: 1. The government today assesses land value. It also must assess the value of far, far more nebulous things that can be hidden, transfigured, created/destroyed, or moved offshore. Yes more importance would be tied to this singular assessment, but this assessment is singularly easy to assess! 2. The price/value itself would be set by the market. The assessment of that value, of course, would be by the government and you are correct there is risk of differential here (though mitigated by point 1) 3. Lastly, because land cannot be created, destroyed, or moved, a tax upon it is uniquely unable to either incur inefficiencies (deadweight loss) or to be passed onto tenants/consumers. This is contrast to every other form of taxation, which incur inefficiencies then get passed onto the consumer in the form of price increases anyway.
    - nybble41 6y ago
      > This is why you see empty storefronts or empty lots in incredibly expensive areas. The reason why the speculator leaves the storefronts or lots empty is that putting them to use right now would prevent them from being used for something even more valuable in the future. If they could use the property for something productive now without impacting the expected future use they would happily do so and collect the extra income. Coercing them into putting the property to use immediately, via LVT or zoning rules or whatever, is thus inefficient and economically destructive. The speculation serves a useful purpose.
      - snidane 6y ago
        Wrong. The "productive" activity for land holders under system without LVT is preventing others from utilizing it. Without LVT you only achieve massive resource underutilization and favoritism of the first who grabbed it.
- HPsquared 6y ago
  Speculation affects housing prices only because of development restrictions. Because only a small fraction of land can legally be developed, it's possible to corner the market for new development. If all property can be developed, there would be orders of magnitude more competitors in the development space, and impossible for an individual or cartel to control.