11 ms·

Other comments have alluded to this; but land value tax is very different from property tax in what it incentivises! Property tax just says your house is worth

Other comments have alluded to this; but land value tax is very different from property tax in what it incentivises! Property tax just says your house is worth a lot, therefore you can obviously afford to pay a lot of tax, whereas land tax drives efficiency by encouraging density.

seoaeu 5y ago
Wouldn't a purely land value tax be even more punishing? The mere fact that you are in a desirable area and could build an expensive structure on your plot would mean that you have to pay high taxes.
- Ericson2314 5y ago
  If you live in an apartment in the tallest building around, you do just great. And that's the exact incentive we need.
margalabargala 5y ago
How is land value tax not just "your land could potentially produce a lot of value, therefore you can obviously afford to pay a lot of tax"? From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.
- elipsey 5y ago
  land value tax is not assessed on the basis of who is presumed able to afford it. it's assessed against the use of a public good --- the ability of more people to live and work in the city that perhaps makes the land more valuable than when the owner bought it. also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient.
  - Ericson2314 5y ago
    > also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient. In a time and place where we can deficit spend well, and more demand unlocks more growth, this should be the primary purpose of most taxation.
- throwaway6734 5y ago
  Land value tax doesn't punish development the way that property tax does. >From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same. They can sell the land and move
  - Ericson2314 5y ago
    And the new development will ~~i~~ensure there be cheap apartments they can move too.
    - PEJOE 5y ago
      Unless the new development is writing premiums as well, I suspect you mean to say that the new development would ensure that there are cheap apartments to move to.
      - Ericson2314 5y ago
        Yes, thanks :)
  - seoaeu 5y ago
    > Land value tax doesn't punish development the way that property tax does. If you can afford to pay 100% upfront for the cost of doing an addition to your house, then you can almost surely afford the ~1% per year additional taxes. This is technically a 'punishment' but it is a really minor one, and I doubt it actually impacts many people's decisions
    - corneliusphi2 5y ago
      Back when I worked at Google I got to walk past a decrepit shack next to the office everyday thanks to property taxes
      - rcpt 5y ago
        This one? https://www.theguardian.com/technology/2016/dec/15/google-campus-silicon-valley-farm-martinellis https://www.theguardian.com/technology/2016/dec/15/google-ca... My desk is right across the street. Used to see that shack every day before covid. Can't see to find it on http://www.taxfairnessproject.org http://www.taxfairnessproject.org though
- dcolkitt 5y ago
  If a retiree was sitting on highly valuable land, why couldn't they just get a reverse mortgage? High home equity plus short remaining life expectancy will support high monthly payments.
  - Ericson2314 5y ago
    LVT should be quite high to make that not work: you should have to sell your land to someone that will develop it to cash in, otherwise your cashing in isn't worth it to society.
    - rcpt 5y ago
      I don't think anyone's seriously advocating for a tax so high that you couldn't pay it with loans for a few years.
      - Ericson2314 5y ago
        They actually are. As LVT goes up, the price of ownership goes down as land becomes a bit of a "hot potato". That's actually fine: what we are left with in the extreme is all land is rented from the state, and there is no permanent ownership. That's great! You don't have to go that far, but it's good to know it's "safe" to do so. Land isn't produced so there's no "100 Laffer curve is 0" type problem in the slightest.
        epistasis 5y ago
        Even if you capture 100% of the increase in land value with land rents, that's only been about 5%-10% per year in hot markets. And even as you're taking out loans for last year, there's additional increases you can borrow more money from. So people that truly don't care about profiting from their land can handle it pretty much indefinitely. However, once you can no longer gain money from speculating on its increase in value, that also means that there's going to be a ton more land available for increased use. The coercive effect of a land value tax is balanced by the a reduction in people speculating.
  - 5y ago
- photojosh 5y ago
  Sibling comments have provided responses to other aspects, which all also seem right to me. The proposed land tax in my state has land tax for seniors accrue against the property and is paid upon sale or death. The objection to this is that it's a "death duty", to which the response is that you did absolutely nothing to help increase that land value. In fact, you worked against increasing efficiency by holding on when the land could be used for more productive purposes. That's why the Georgist land tax is such a good idea; it taxes you based on the gains that the rest of society generated for you. Whereas a property tax also taxes you for your own investments.
  - abstractbarista 5y ago
    I'd be fine with paying a tax "on the gains that the rest of society generated for you" upon me selling that land to someone else. Just like capital gains on equities. I don't pay until I realize. I'm happy to pay some property tax in the meantime to keep gov't services running in the area. But any other method is terrifying to me and makes me start thinking "What super rural state can I move to in retirement to buy a nice parcel and be seriously left alone these days?"
    - rcpt 5y ago
      With equities you're helping the economy by keeping your money invested in our companies. We need investors capital to remain competitive and we should incentivze you to stay invested as long as possible. With land you're continually depriving the local community of the space they need to live and work. Every hour spent commuting past your yard is an hour wasted. You should continually pay for the privilege of exclusive access to an in demand part of the nation.
      - sagarm 5y ago
        Or put more simply: land ownership is a form of consumption. Stock ownership is not.
  - jjav 5y ago
    > you did absolutely nothing to help increase that land value That's pretty unfair. People who lived a lifetime in that house did contribute their bit to making the area thrive and become more valuable by keeping the place nice, being good neighbors etc. If you think that doesn't contribute at all, consider the opposite. If they lived there for decades and let the house go to ruin and were belligerently antisocial all the time, that drives away nicer people and helps turn the neighborhood into a bad place.
- zip1234 5y ago
  California's property tax system is completely messed up to prevent that person from ever having to move or be impacted in any way. Why does that person get to be exempt from change when everyone else has to deal with it?
  - sagarm 5y ago
    They could just file for postponement or use a reverse mortgage/HELOC to pay their societal obligations. This idea that people should get to keep the entire windfall while shortchanging their communities is ridiculous.
  - majormajor 5y ago
    "The person causing change should pay for it" seems equally reasonable as a starting point. Perpetual growth has problems of its own. California's mistake may be ONLY protecting homeowners from newcomers bringing change, and leaving renters out to dry.
    - epistasis 5y ago
      I don't think "perpetual growth," is really what people complain about. what they really mean is that they want to shortchange everyone who does not already have housing. There are a finite number of people with finite needs. Growing the housing stock to house this finite number of people is not "perpetual growth" and it's downright offensive to say that when we camps of homeless people, camps of people in RVs without other housing, camps of people in their cars, people working full time but only able to afford overcrowded housing, and at the same time enormous wealth within miles. A society that allows such destitution while others have enormous wealth is not one that is running well. It shortchanges us all, economically.

seoaeu 5y ago

Wouldn't a purely land value tax be even more punishing? The mere fact that you are in a desirable area and could build an expensive structure on your plot would mean that you have to pay high taxes.

Ericson2314 5y ago
If you live in an apartment in the tallest building around, you do just great. And that's the exact incentive we need.

margalabargala 5y ago

How is land value tax not just "your land could potentially produce a lot of value, therefore you can obviously afford to pay a lot of tax"? From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same.

elipsey 5y ago
land value tax is not assessed on the basis of who is presumed able to afford it. it's assessed against the use of a public good --- the ability of more people to live and work in the city that perhaps makes the land more valuable than when the owner bought it. also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient.
- Ericson2314 5y ago
  > also observe that the purpose of the tax is not strictly to raise revenue, but to address what would otherwise be an externalized cost and make the housing market more efficient. In a time and place where we can deficit spend well, and more demand unlocks more growth, this should be the primary purpose of most taxation.
throwaway6734 5y ago
Land value tax doesn't punish development the way that property tax does. >From the perspective of the retired person on a fixed income who's lived on the same plot for 50 years while a city sprang up around them, the result is functionally the same. They can sell the land and move
- Ericson2314 5y ago
  And the new development will ~~i~~ensure there be cheap apartments they can move too.
  - PEJOE 5y ago
    Unless the new development is writing premiums as well, I suspect you mean to say that the new development would ensure that there are cheap apartments to move to.
    - Ericson2314 5y ago
      Yes, thanks :)
- seoaeu 5y ago
  > Land value tax doesn't punish development the way that property tax does. If you can afford to pay 100% upfront for the cost of doing an addition to your house, then you can almost surely afford the ~1% per year additional taxes. This is technically a 'punishment' but it is a really minor one, and I doubt it actually impacts many people's decisions
  - corneliusphi2 5y ago
    Back when I worked at Google I got to walk past a decrepit shack next to the office everyday thanks to property taxes
    - rcpt 5y ago
      This one? https://www.theguardian.com/technology/2016/dec/15/google-campus-silicon-valley-farm-martinellis https://www.theguardian.com/technology/2016/dec/15/google-ca... My desk is right across the street. Used to see that shack every day before covid. Can't see to find it on http://www.taxfairnessproject.org http://www.taxfairnessproject.org though
dcolkitt 5y ago
If a retiree was sitting on highly valuable land, why couldn't they just get a reverse mortgage? High home equity plus short remaining life expectancy will support high monthly payments.
- Ericson2314 5y ago
  LVT should be quite high to make that not work: you should have to sell your land to someone that will develop it to cash in, otherwise your cashing in isn't worth it to society.
  - rcpt 5y ago
    I don't think anyone's seriously advocating for a tax so high that you couldn't pay it with loans for a few years.
    - Ericson2314 5y ago
      They actually are. As LVT goes up, the price of ownership goes down as land becomes a bit of a "hot potato". That's actually fine: what we are left with in the extreme is all land is rented from the state, and there is no permanent ownership. That's great! You don't have to go that far, but it's good to know it's "safe" to do so. Land isn't produced so there's no "100 Laffer curve is 0" type problem in the slightest.
      - epistasis 5y ago
        Even if you capture 100% of the increase in land value with land rents, that's only been about 5%-10% per year in hot markets. And even as you're taking out loans for last year, there's additional increases you can borrow more money from. So people that truly don't care about profiting from their land can handle it pretty much indefinitely. However, once you can no longer gain money from speculating on its increase in value, that also means that there's going to be a ton more land available for increased use. The coercive effect of a land value tax is balanced by the a reduction in people speculating.
- 5y ago
photojosh 5y ago
Sibling comments have provided responses to other aspects, which all also seem right to me. The proposed land tax in my state has land tax for seniors accrue against the property and is paid upon sale or death. The objection to this is that it's a "death duty", to which the response is that you did absolutely nothing to help increase that land value. In fact, you worked against increasing efficiency by holding on when the land could be used for more productive purposes. That's why the Georgist land tax is such a good idea; it taxes you based on the gains that the rest of society generated for you. Whereas a property tax also taxes you for your own investments.
- abstractbarista 5y ago
  I'd be fine with paying a tax "on the gains that the rest of society generated for you" upon me selling that land to someone else. Just like capital gains on equities. I don't pay until I realize. I'm happy to pay some property tax in the meantime to keep gov't services running in the area. But any other method is terrifying to me and makes me start thinking "What super rural state can I move to in retirement to buy a nice parcel and be seriously left alone these days?"
  - rcpt 5y ago
    With equities you're helping the economy by keeping your money invested in our companies. We need investors capital to remain competitive and we should incentivze you to stay invested as long as possible. With land you're continually depriving the local community of the space they need to live and work. Every hour spent commuting past your yard is an hour wasted. You should continually pay for the privilege of exclusive access to an in demand part of the nation.
    - sagarm 5y ago
      Or put more simply: land ownership is a form of consumption. Stock ownership is not.
- jjav 5y ago
  > you did absolutely nothing to help increase that land value That's pretty unfair. People who lived a lifetime in that house did contribute their bit to making the area thrive and become more valuable by keeping the place nice, being good neighbors etc. If you think that doesn't contribute at all, consider the opposite. If they lived there for decades and let the house go to ruin and were belligerently antisocial all the time, that drives away nicer people and helps turn the neighborhood into a bad place.
zip1234 5y ago
California's property tax system is completely messed up to prevent that person from ever having to move or be impacted in any way. Why does that person get to be exempt from change when everyone else has to deal with it?
- sagarm 5y ago
  They could just file for postponement or use a reverse mortgage/HELOC to pay their societal obligations. This idea that people should get to keep the entire windfall while shortchanging their communities is ridiculous.
- majormajor 5y ago
  "The person causing change should pay for it" seems equally reasonable as a starting point. Perpetual growth has problems of its own. California's mistake may be ONLY protecting homeowners from newcomers bringing change, and leaving renters out to dry.
  - epistasis 5y ago
    I don't think "perpetual growth," is really what people complain about. what they really mean is that they want to shortchange everyone who does not already have housing. There are a finite number of people with finite needs. Growing the housing stock to house this finite number of people is not "perpetual growth" and it's downright offensive to say that when we camps of homeless people, camps of people in RVs without other housing, camps of people in their cars, people working full time but only able to afford overcrowded housing, and at the same time enormous wealth within miles. A society that allows such destitution while others have enormous wealth is not one that is running well. It shortchanges us all, economically.