4 ms·

Land-value tax doesn't have huge inefficiencies like some other taxes. But the hard part is assessing "value". How should land value be decided? The book "Radic

Land-value tax doesn't have huge inefficiencies like some other taxes. But the hard part is assessing "value". How should land value be decided? The book "Radical Markets" has some good insights on how to find the value of every plot of land by using markets.

yenwodyah 6y ago
Most societies already levy property taxes on real estate, including on unimproved land. I don't know how they assess the value of that land, but they must have a working method for it.
- throwaway201103 6y ago
  Typically it's assessed value inferred from market sales data from similar properties.
Ericson2314 6y ago
The properties on adjacent lots affect the land value of your lot. It's only in trying to resist the above that the difficulties arise.
mullingitover 6y ago
> But the hard part is assessing "value" Insurers have no problems assessing land value and have been doing it for centuries.
- throwaway201103 6y ago
  Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.
  - mullingitover 6y ago
    Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.
    - paul_f 6y ago
      Actually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy
      - mullingitover 6y ago
        This still gives you something to work from, since the mortgage (or appraised value) - improvements = land value.
      - yellowapple 6y ago
        > Insurers make no valuation on the land, only on the improvements Well $PROPERTY_VALUE = $LAND_VALUE + $IMPROVEMENTS_VALUE Which means $LAND_VALUE = $PROPERTY_VALUE - $IMPROVEMENTS_VALUE $PROPERTY_VALUE is set by the market automatically, and we've already established that insurers are able to calculate $IMPROVEMENTS_VALUE, so - tada! - you've now got your $LAND_VALUE.
- dbcurtis 6y ago
  Not so much. Insurers don't insure land. The insure property built on land, crops grown on land, and they insure against various kinds of liability. None of my dirt is insured.
scarmig 6y ago
I'm curious what mechanisms it proposes. One of the funner ones I've heard of is that the owner and payer of the property tax performs the valuation of the land: it makes implementation pretty much free and uncontroversial! The only caveat is that whatever value the owner lists as the value is an amount they must accept for the land in a sale (plus some meaningful fee to drive off trolls). So, sure, you can list the value of the land of your Pac Heights mansion as $1 and pay a commensurate tax on that. If you do, though, someone can purchase it for $1 and start charging you a hefty use fee.
- willcipriano 6y ago
  I would not sell my home at the assessed value. As I would have to move my family, get a new mortgage, and change jobs and schools potentially. I live in a fairly expensive area and a home that meets my requirements (no hoa, not a townhouse) is hard to find. I may have to fork out twice as much to get something that meets those requirements. I don't see that as a great reason why I should pay taxes more than my neighbors.
  - scarmig 6y ago
    You're selling the land underneath your house, not your house. And you wouldn't have to move: you'd pay some use fee to the new owner (though there'd probably be some kind of option to revaluate after a bid to prevent a whole lot of churn).
    - willcipriano 6y ago
      My choice in buying the home was made for twofold reasons firstly to no longer be subject to the whims of a landlord, secondly to lock in my costs of housing against inflation. This would rob me of both those advantages. I don't see how you would get any homeowners to vote for a proposal like that.
      - yellowapple 6y ago
        > firstly to no longer be subject to the whims of a landlord Unless you have an allodial title (hint: you almost certainly do not), you are always subject to the whims of at least one landlord, specifically the state.
pyuser583 6y ago
For a LVT, the value is whatever it was purchased for.
- CincinnatiMan 6y ago
  Typically land is bundled with the improvements to said land though.
  - pyuser583 6y ago
    For LVT, structures are not considered. It would have to be improvement to the land itself.
nine_k 6y ago
British customs used to have a simple mechanism to bind declared value to market value. A captain could declare the value of the cargo whatever he sees fit, and pay the tax on that amount. The customs reserved the right to buy the entire cargo at the declared price, at their discretion. It's a bit harder to implement with large parcels of land, but should work well with home-sized lots.
- andreareina 6y ago
  This works for cargo because much of the point of cargo is to sell it. The point of a house is to reduce the buyer's risk against e.g. rent going up. Except now there's the risk of my house being bought out from under me unless I'm willing to pay above-market tax. Money is fungible, housing really isn't.

yenwodyah 6y ago

Most societies already levy property taxes on real estate, including on unimproved land. I don't know how they assess the value of that land, but they must have a working method for it.

throwaway201103 6y ago
Typically it's assessed value inferred from market sales data from similar properties.

Ericson2314 6y ago

The properties on adjacent lots affect the land value of your lot. It's only in trying to resist the above that the difficulties arise.

mullingitover 6y ago

> But the hard part is assessing "value" Insurers have no problems assessing land value and have been doing it for centuries.

throwaway201103 6y ago
Insurers assess improvement value. Land is not insured, because it really can't be destroyed. If you house burns down, the land is still there. The only thing you lost is the house.
- mullingitover 6y ago
  Exactly! So when you get a mortgage, you're paying for land plus house in the mortgage. Insurers have to know the value of the land alone so they can know the difference and insure just the house.
  - paul_f 6y ago
    Actually, no, they don't. Insurers make no valuation on the land, only on the improvements. There is no appraisal done when buying a homeowners or business insurance policy
    - mullingitover 6y ago
      This still gives you something to work from, since the mortgage (or appraised value) - improvements = land value.
    - yellowapple 6y ago
      > Insurers make no valuation on the land, only on the improvements Well $PROPERTY_VALUE = $LAND_VALUE + $IMPROVEMENTS_VALUE Which means $LAND_VALUE = $PROPERTY_VALUE - $IMPROVEMENTS_VALUE $PROPERTY_VALUE is set by the market automatically, and we've already established that insurers are able to calculate $IMPROVEMENTS_VALUE, so - tada! - you've now got your $LAND_VALUE.
dbcurtis 6y ago
Not so much. Insurers don't insure land. The insure property built on land, crops grown on land, and they insure against various kinds of liability. None of my dirt is insured.

scarmig 6y ago

I'm curious what mechanisms it proposes. One of the funner ones I've heard of is that the owner and payer of the property tax performs the valuation of the land: it makes implementation pretty much free and uncontroversial! The only caveat is that whatever value the owner lists as the value is an amount they must accept for the land in a sale (plus some meaningful fee to drive off trolls). So, sure, you can list the value of the land of your Pac Heights mansion as $1 and pay a commensurate tax on that. If you do, though, someone can purchase it for $1 and start charging you a hefty use fee.

willcipriano 6y ago
I would not sell my home at the assessed value. As I would have to move my family, get a new mortgage, and change jobs and schools potentially. I live in a fairly expensive area and a home that meets my requirements (no hoa, not a townhouse) is hard to find. I may have to fork out twice as much to get something that meets those requirements. I don't see that as a great reason why I should pay taxes more than my neighbors.
- scarmig 6y ago
  You're selling the land underneath your house, not your house. And you wouldn't have to move: you'd pay some use fee to the new owner (though there'd probably be some kind of option to revaluate after a bid to prevent a whole lot of churn).
  - willcipriano 6y ago
    My choice in buying the home was made for twofold reasons firstly to no longer be subject to the whims of a landlord, secondly to lock in my costs of housing against inflation. This would rob me of both those advantages. I don't see how you would get any homeowners to vote for a proposal like that.
    - yellowapple 6y ago
      > firstly to no longer be subject to the whims of a landlord Unless you have an allodial title (hint: you almost certainly do not), you are always subject to the whims of at least one landlord, specifically the state.

pyuser583 6y ago

For a LVT, the value is whatever it was purchased for.

CincinnatiMan 6y ago
Typically land is bundled with the improvements to said land though.
- pyuser583 6y ago
  For LVT, structures are not considered. It would have to be improvement to the land itself.

nine_k 6y ago

British customs used to have a simple mechanism to bind declared value to market value. A captain could declare the value of the cargo whatever he sees fit, and pay the tax on that amount. The customs reserved the right to buy the entire cargo at the declared price, at their discretion. It's a bit harder to implement with large parcels of land, but should work well with home-sized lots.

andreareina 6y ago
This works for cargo because much of the point of cargo is to sell it. The point of a house is to reduce the buyer's risk against e.g. rent going up. Except now there's the risk of my house being bought out from under me unless I'm willing to pay above-market tax. Money is fungible, housing really isn't.