4 ms·

> For a $1m house in the Bay Area, only a quarter or a third of that value is the structure. So the first problem is zoning, but imagine if zoning is fixed. No

> For a $1m house in the Bay Area, only a quarter or a third of that value is the structure. So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself. The fact of the matter is single family suburbia is a scourge, and we need redevelopment not more development. We can subsidize affordable housing, or we can structure the taxes such that the only economical thing to do is massively denser buildings immediately. The latter is better because it is simpler and less subject to regulatory capture.

AnthonyMouse 6y ago
> So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself. Which is sort of the problem, right? You have an area which is, say, two story buildings, in an area where you really need an average of three story buildings to satisfy local demand. Implement LVT and everyone gets the bright idea to build twelve story buildings, because why wouldn't they? Three story buildings would have four times the tax per unit. But then you get the opposite problem. Real estate prices crash, because there are suddenly twelve story buildings going up everywhere and the prices need to fall to the level that building more of them isn't viable even against the tax advantage. Which is well before you're saturated with tall buildings. But now you have a thousand plots of land and 10% of them have new tall buildings while 90% have existing single family homes. Now the owners of the single family homes are paying a disproportionate amount of the taxes. They abandon their properties, which have already declined in value, because the tax is more than the newly lowered cost of buying space in one of the tall buildings. The government is now receiving no tax from 90% of the lots because they've been abandoned, so the land tax amount has to increase by ten fold per plot. But that makes it profitable to build 25 story buildings instead of twelve story ones, to amortize the tax over more units, and the cycle repeats. It seems obvious that this only works if the amount of the land tax isn't large enough to cause these behavioral changes.
- CyberDildonics 6y ago
  What are you basing your predictions here on? Do you have an example where this has happened?
  - AnthonyMouse 6y ago
    Do you have an example of where LVT was tried at scale anywhere at all ever? I'm just describing the incentives. Identify the flaw in the logic.
    - CyberDildonics 6y ago
      I'm not arguing for or against anything and I didn't write an elaborate prediction, I'm just asking what you are basing your predictions on.
      - throwaway201103 6y ago
        The fundamental problem is that the value of land is inexorably tied up in the things people do with the land to actually earn money. Vacant land has little value in that sense until it's improved. You can't separate the land value from the investment in the improvements made that actually generate income. It's not quite that simple because a vacant lot in a trendy area has more potential value than a lot in a run-down area. But only because of the improvements on other nearby properties. That's what makes the land valuable -- not anything intrinsic about the land itself.
    - loeg 6y ago
      You're describing a scenario starting with extreme zoning restrictions and then immediately lifting those restrictions. I don't think your predictions relate to a LVT at all — similar drastic development with varying height would happen in any desirable area with sudden change in zoning restriction. Imagine instead that zoning restrictions were relaxed gradually.
      - 6y ago

AnthonyMouse 6y ago

> So the first problem is zoning, but imagine if zoning is fixed. Now the taller the building is, the smaller the portion of the taxable value derives from the land itself. Which is sort of the problem, right? You have an area which is, say, two story buildings, in an area where you really need an average of three story buildings to satisfy local demand. Implement LVT and everyone gets the bright idea to build twelve story buildings, because why wouldn't they? Three story buildings would have four times the tax per unit. But then you get the opposite problem. Real estate prices crash, because there are suddenly twelve story buildings going up everywhere and the prices need to fall to the level that building more of them isn't viable even against the tax advantage. Which is well before you're saturated with tall buildings. But now you have a thousand plots of land and 10% of them have new tall buildings while 90% have existing single family homes. Now the owners of the single family homes are paying a disproportionate amount of the taxes. They abandon their properties, which have already declined in value, because the tax is more than the newly lowered cost of buying space in one of the tall buildings. The government is now receiving no tax from 90% of the lots because they've been abandoned, so the land tax amount has to increase by ten fold per plot. But that makes it profitable to build 25 story buildings instead of twelve story ones, to amortize the tax over more units, and the cycle repeats. It seems obvious that this only works if the amount of the land tax isn't large enough to cause these behavioral changes.

CyberDildonics 6y ago
What are you basing your predictions here on? Do you have an example where this has happened?
- AnthonyMouse 6y ago
  Do you have an example of where LVT was tried at scale anywhere at all ever? I'm just describing the incentives. Identify the flaw in the logic.
  - CyberDildonics 6y ago
    I'm not arguing for or against anything and I didn't write an elaborate prediction, I'm just asking what you are basing your predictions on.
    - throwaway201103 6y ago
      The fundamental problem is that the value of land is inexorably tied up in the things people do with the land to actually earn money. Vacant land has little value in that sense until it's improved. You can't separate the land value from the investment in the improvements made that actually generate income. It's not quite that simple because a vacant lot in a trendy area has more potential value than a lot in a run-down area. But only because of the improvements on other nearby properties. That's what makes the land valuable -- not anything intrinsic about the land itself.
  - loeg 6y ago
    You're describing a scenario starting with extreme zoning restrictions and then immediately lifting those restrictions. I don't think your predictions relate to a LVT at all — similar drastic development with varying height would happen in any desirable area with sudden change in zoning restriction. Imagine instead that zoning restrictions were relaxed gradually.
    - 6y ago