5 ms·

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

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
  - seoaeu 5y ago
    Can you really call the results of Proposition 13 "property taxes"? If an owner is currently paying next to nothing in taxes on their O($10M) plot of land, then practically any sane tax scheme is going to be better. I'd argue actually charging the owner of the shack $100,000/year in property taxes (~1%) wouldn't have a radically different effect than charging them a 2% land value tax.
    - sagarm 5y ago
      Under the property tax, they'd be penalized for developing the land. Their fallowing of the land would be effectively subsidized. Under an LVT, the landowner contributes the same amount to their community regardless of their use of the land -- empty plot, slum, or well maintained building. This is good for the community overall. So in your example the speculator sitting on an empty plot would see their carrying costs double. How could that not affect their behavior?
      - seoaeu 5y ago
        I'm arguing that a 10x increase in property taxes (or whatever 100k/year works out to) would already be enough to trigger the current owner to sell. Once the property is sold, a developer will find that their profit from constructing a building is roughly proportional to the floor area regardless of whether there is a 1% property tax or not. This is because the profit they earn per-sqft is more than the resulting net present value of future property taxes on it. Therefore they maximize the density as allowed under zoning and we end up with an efficient use of the land. (Of course dumb zoning laws messes everything up, but that's a whole separate topic...)
- zip1234 5y ago
  Property tax itself is not the issue. The issue is caps on property tax increases that are meant to protect those poor fixed income people. Essentially, people do not make any change that would require the property to be reassessed, which may massively increase the taxes to where they should be. Hence people not doing some minor addition.
  - seoaeu 5y ago
    But those rules are specific to California? I'm confused why people seem to be suggesting that a land value tax is the only possible solution, when an alternative would be to just make taxes in that state work the same as elsewhere.
    - zip1234 5y ago
      California is not unique in capping property tax increases in that way. Other states do it. California has a uniquely bad law though since the capped prices can be passed on to family. I agree that LVT is not the only way to fix those issues but LVT has some other benefits as well (such as discouraging empty lots).
lend000 5y ago
I thought the whole point was that they don't own the land, only lease it.
- photojosh 5y ago
  Yes. Henry George basically said it's too hard (utopian?) to just switch to everyone leasing their land, so a land value tax is a pragmatic approximation that still allows for the traditional sense of property ownership.

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
- seoaeu 5y ago
  Can you really call the results of Proposition 13 "property taxes"? If an owner is currently paying next to nothing in taxes on their O($10M) plot of land, then practically any sane tax scheme is going to be better. I'd argue actually charging the owner of the shack $100,000/year in property taxes (~1%) wouldn't have a radically different effect than charging them a 2% land value tax.
  - sagarm 5y ago
    Under the property tax, they'd be penalized for developing the land. Their fallowing of the land would be effectively subsidized. Under an LVT, the landowner contributes the same amount to their community regardless of their use of the land -- empty plot, slum, or well maintained building. This is good for the community overall. So in your example the speculator sitting on an empty plot would see their carrying costs double. How could that not affect their behavior?
    - seoaeu 5y ago
      I'm arguing that a 10x increase in property taxes (or whatever 100k/year works out to) would already be enough to trigger the current owner to sell. Once the property is sold, a developer will find that their profit from constructing a building is roughly proportional to the floor area regardless of whether there is a 1% property tax or not. This is because the profit they earn per-sqft is more than the resulting net present value of future property taxes on it. Therefore they maximize the density as allowed under zoning and we end up with an efficient use of the land. (Of course dumb zoning laws messes everything up, but that's a whole separate topic...)
zip1234 5y ago
Property tax itself is not the issue. The issue is caps on property tax increases that are meant to protect those poor fixed income people. Essentially, people do not make any change that would require the property to be reassessed, which may massively increase the taxes to where they should be. Hence people not doing some minor addition.
- seoaeu 5y ago
  But those rules are specific to California? I'm confused why people seem to be suggesting that a land value tax is the only possible solution, when an alternative would be to just make taxes in that state work the same as elsewhere.
  - zip1234 5y ago
    California is not unique in capping property tax increases in that way. Other states do it. California has a uniquely bad law though since the capped prices can be passed on to family. I agree that LVT is not the only way to fix those issues but LVT has some other benefits as well (such as discouraging empty lots).

lend000 5y ago

I thought the whole point was that they don't own the land, only lease it.

photojosh 5y ago
Yes. Henry George basically said it's too hard (utopian?) to just switch to everyone leasing their land, so a land value tax is a pragmatic approximation that still allows for the traditional sense of property ownership.