5 ms·

Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highl

Land taxes are based on the value of the land, not the size of the land. The property tax system already performs land value assessments. Land taxes are highly progressive. Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use.

pbourke 5y ago
How much land does Google use vs the most successful farmer in a given county? What’s the value of the land that Google uses?
- tristanj 5y ago
  Google owns more than $50B of real estate...
- claudiulodro 5y ago
  The value of the land that Google uses is tremendous because the Google offices are located on it!
  - edgyquant 5y ago
    But an LVT isn’t a tax on the infrastructure it is a tax on the value of the underlying land.
    - larsiusprime 5y ago
      It's the proximity to Google's economic activity that makes the land valuable. A plot of land right next to the Googleplex that has nothing on it is immensely more valuable than an equally sized plot of land in the middle of the Nevada desert.
      - edgyquant 5y ago
        Sure this is true, but this also one of things Georgism seeks fix (land speculation.) A georgist LVT appraises land based on the intrinsic value of the resources it contains and not what is build on it. In fact it seeks to fix “land hoarding” to incentivize productive land. Under a proper LVT it would be really expensive for e.g. one person to own 100 acres of land they aren’t utilizing to it’s true economic potential.
- Ericson2314 5y ago
  Urban office land is easily more expensive. I say the land value tax (LVT) is best grouped with Pigouvian taxes; as PP says, normal property tax relatively incentivizes holding undeveloped land, which is like charging a higher carbon tax if your car has a better MPG. One one hand, we can also do a VAT in developed countries --- perhaps more feasible than in the 19th century and making more sense if we are no longer rapidly developing and reliant on private investment to foster those changes --- on the other hand in big closed economies we can also just print money quite safely, so Henry George is quite right to focus Pigouvian taxes when "taxation for the revenue" is far less important than curbing bad material outcomes. (I only suggest VAT with a UBI to make it no longer regressive.)
tzs 5y ago
> Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use. Doesn't it incentivize them to put land to the use that generates the most revenue? I don't see how that is necessarily the "best" use. There will almost always be a way that a yard or garden could make more revenue, for example, such as by letting a bunch of advertisers put up billboards on it or letting someone use it for storage. Is it really best to make it so that only the wealthy can afford to use land in a way that they enjoy rather than as an asset to be exploited for maximal revenue?
- klipt 5y ago
  Do you think that's a problem with existing property taxes? The main difference between property and land tax is that with a land tax, the structure isn't taxed. So you can build up "for free" wrt taxes, which encourages more density on the most valuable land. E.g. land in the middle of downtown San Francisco that's currently rented out as a flat parking lot, could instead be built up into multi level parking or housing instead. Whereas the current tax structure would punish such developments by increasing the tax (which is why it's still a flat parking lot).
  - MrPowers 5y ago
    San Francisco is an interesting case cause they used to have a land tax and economists argued that's what cause San Fran to be quickly rebuilt after it was burned to the ground in 1906. Land owners were still taxed the same, even though their building was gone. They'd have to either sell or rebuild. Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to zero (taxes based on the property value, not the land value). This incentivized property owners to wait and see if their neighbors would rebuild rather than take immediate action.
    - oblio 5y ago
      That's works only if you're an investor. You're going to rebuild your home immediately, finance optimizations be damned.
PragmaticPulp 5y ago
> Land taxes are highly progressive. Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme. It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation. An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades. Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.
- presentation 5y ago
  The presence of skyscrapers indicates a strong economic region, which makes the value of the underlying land orders of magnitude more valuable - the taxes would increase under LVT. Not sure if enough to account for the discrepancy in productivity, however.
- yourapostasy 5y ago
  > Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy. This is basically saying real estate isn't relevant to a modern economy for tax policy. Broadly true in 19th century United Kingdom in the midst of the Industrial Revolution [1]. Disputed by many millionaires today in the US [2]. Another way to track the relative weighting of land in wealthy portfolios is by aggregate measures. The wealth of the US 1% grew 2.22X from 2005-2020 [3]. During the same period, the value of land held by the US 1% grew from $3,176,274 million to $4,607,729 million, 1.45X [4]. Not a proportional tracking of wealth increase, but I wouldn't call it "not relevant"; this is hardly rounding error territory where I would dismiss it for tax policy purposes. The sample period is also during an ahistorical secular trend when held across decades when securities were and are quite strong compared to real estate assets, so I don't know what a broader and more granular analysis would reveal, but my cursory glance across a one-generation span would make me hesitate to strongly take the "aren't relevant to a modern economy" position with our current set of policies. The global urban real estate market so severely punishing younger generations for so long with such high prices relative to income and income precarity indicates some severe secular rent-seeking / gatekeeping taking place at an ahistorically wide scale, scope and duration. I have no dog in that hunt; I was purely lucky by timing to not live in that cohort, but I share their hostility to the status quo. If you favor the "modern economy making real estate not relevant" position, then tax, monetary, finance, social and industrial policies like LVT (though LVT is not without its challenges [5] [6]) that disincentivize such rent-seeking and favor a more efficient allocation of limited capital away from real estate towards such modern industries would be welcome, to the point that aggregate measures show little to no correlation between wealth concentration and real estate instead of our current situation. I'm personally in favor of more metropolitan transit authorities consciously and deliberately using public transportation corridors as part and parcel of an explicit industrial policy that drives down residential costs over time. Residential development is planned more along Singaporean public housing lines with a goal of ever-decreasing DTI ratios (possible with more modern construction techniques like Lstiburek'ean Perfect Walls and Passive Net Zero in structures that last centuries, and co-operative financial organizational structures), than open market operations in the US. This doesn't have to come at the expense of open market operations; they're free to syndicate their own transit networks and monetize those networks. I'm advocating the free market advocates in US real estate becoming even stronger in the global market by practicing true free markets instead of relying upon the crutches of publicly-funded infrastructure to break the capital ground in front of them. [1] https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb2a-44cc-9314-0307fd5ca43e.pdf https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb... [2] https://www.cnbc.com/2019/10/01/real-estate-is-still-the-best-investment-you-can-make-today-millionaires-say.html https://www.cnbc.com/2019/10/01/real-estate-is-still-the-bes... [3] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:2005.4,2020.4;quarter:125;series:Net%20worth;demographic:networth;population:1;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... [4] https://fred.stlouisfed.org/series/WFRBLT01002 https://fred.stlouisfed.org/series/WFRBLT01002 [5] https://www.lincolninst.edu/publications/articles/land-value-issues-taiwan-korea-japan https://www.lincolninst.edu/publications/articles/land-value... [6] https://www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf https://www.lincolninst.edu/sites/default/files/pubfiles/ass...

pbourke 5y ago

How much land does Google use vs the most successful farmer in a given county? What’s the value of the land that Google uses?

tristanj 5y ago
Google owns more than $50B of real estate...
claudiulodro 5y ago
The value of the land that Google uses is tremendous because the Google offices are located on it!
- edgyquant 5y ago
  But an LVT isn’t a tax on the infrastructure it is a tax on the value of the underlying land.
  - larsiusprime 5y ago
    It's the proximity to Google's economic activity that makes the land valuable. A plot of land right next to the Googleplex that has nothing on it is immensely more valuable than an equally sized plot of land in the middle of the Nevada desert.
    - edgyquant 5y ago
      Sure this is true, but this also one of things Georgism seeks fix (land speculation.) A georgist LVT appraises land based on the intrinsic value of the resources it contains and not what is build on it. In fact it seeks to fix “land hoarding” to incentivize productive land. Under a proper LVT it would be really expensive for e.g. one person to own 100 acres of land they aren’t utilizing to it’s true economic potential.
Ericson2314 5y ago
Urban office land is easily more expensive. I say the land value tax (LVT) is best grouped with Pigouvian taxes; as PP says, normal property tax relatively incentivizes holding undeveloped land, which is like charging a higher carbon tax if your car has a better MPG. One one hand, we can also do a VAT in developed countries --- perhaps more feasible than in the 19th century and making more sense if we are no longer rapidly developing and reliant on private investment to foster those changes --- on the other hand in big closed economies we can also just print money quite safely, so Henry George is quite right to focus Pigouvian taxes when "taxation for the revenue" is far less important than curbing bad material outcomes. (I only suggest VAT with a UBI to make it no longer regressive.)

tzs 5y ago

> Note that land taxes are only assessed on the value of the land, not the value of any buildings on the land. This incentivizes land owners to put the land to its highest and best use. Doesn't it incentivize them to put land to the use that generates the most revenue? I don't see how that is necessarily the "best" use. There will almost always be a way that a yard or garden could make more revenue, for example, such as by letting a bunch of advertisers put up billboards on it or letting someone use it for storage. Is it really best to make it so that only the wealthy can afford to use land in a way that they enjoy rather than as an asset to be exploited for maximal revenue?

klipt 5y ago
Do you think that's a problem with existing property taxes? The main difference between property and land tax is that with a land tax, the structure isn't taxed. So you can build up "for free" wrt taxes, which encourages more density on the most valuable land. E.g. land in the middle of downtown San Francisco that's currently rented out as a flat parking lot, could instead be built up into multi level parking or housing instead. Whereas the current tax structure would punish such developments by increasing the tax (which is why it's still a flat parking lot).
- MrPowers 5y ago
  San Francisco is an interesting case cause they used to have a land tax and economists argued that's what cause San Fran to be quickly rebuilt after it was burned to the ground in 1906. Land owners were still taxed the same, even though their building was gone. They'd have to either sell or rebuild. Contrast that with New Orleans after Hurricane Katrina. Property owners had their buildings destroyed, so taxes went to zero (taxes based on the property value, not the land value). This incentivized property owners to wait and see if their neighbors would rebuild rather than take immediate action.
  - oblio 5y ago
    That's works only if you're an investor. You're going to rebuild your home immediately, finance optimizations be damned.

PragmaticPulp 5y ago

> Land taxes are highly progressive. Maybe in the 19th century, where this idea originated. Economics of business have changed too significantly to use it as a one size fits all taxation scheme. It may have made sense when revenue was somewhat proportional to the amount of land a business occupied, but that no longer holds true in the age of skyscrapers and digital revenue generation. An internet company in a 10-story building would love this scheme, though, because they could generate billions in revenue but be taxed at the same rate as a local neighborhood of people who owned their homes for a few decades. Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy.

presentation 5y ago
The presence of skyscrapers indicates a strong economic region, which makes the value of the underlying land orders of magnitude more valuable - the taxes would increase under LVT. Not sure if enough to account for the discrepancy in productivity, however.
yourapostasy 5y ago
> Land-only taxes may have been an interesting idea in the 19th century, but they aren’t relevant to a modern economy. This is basically saying real estate isn't relevant to a modern economy for tax policy. Broadly true in 19th century United Kingdom in the midst of the Industrial Revolution [1]. Disputed by many millionaires today in the US [2]. Another way to track the relative weighting of land in wealthy portfolios is by aggregate measures. The wealth of the US 1% grew 2.22X from 2005-2020 [3]. During the same period, the value of land held by the US 1% grew from $3,176,274 million to $4,607,729 million, 1.45X [4]. Not a proportional tracking of wealth increase, but I wouldn't call it "not relevant"; this is hardly rounding error territory where I would dismiss it for tax policy purposes. The sample period is also during an ahistorical secular trend when held across decades when securities were and are quite strong compared to real estate assets, so I don't know what a broader and more granular analysis would reveal, but my cursory glance across a one-generation span would make me hesitate to strongly take the "aren't relevant to a modern economy" position with our current set of policies. The global urban real estate market so severely punishing younger generations for so long with such high prices relative to income and income precarity indicates some severe secular rent-seeking / gatekeeping taking place at an ahistorically wide scale, scope and duration. I have no dog in that hunt; I was purely lucky by timing to not live in that cohort, but I share their hostility to the status quo. If you favor the "modern economy making real estate not relevant" position, then tax, monetary, finance, social and industrial policies like LVT (though LVT is not without its challenges [5] [6]) that disincentivize such rent-seeking and favor a more efficient allocation of limited capital away from real estate towards such modern industries would be welcome, to the point that aggregate measures show little to no correlation between wealth concentration and real estate instead of our current situation. I'm personally in favor of more metropolitan transit authorities consciously and deliberately using public transportation corridors as part and parcel of an explicit industrial policy that drives down residential costs over time. Residential development is planned more along Singaporean public housing lines with a goal of ever-decreasing DTI ratios (possible with more modern construction techniques like Lstiburek'ean Perfect Walls and Passive Net Zero in structures that last centuries, and co-operative financial organizational structures), than open market operations in the US. This doesn't have to come at the expense of open market operations; they're free to syndicate their own transit networks and monetize those networks. I'm advocating the free market advocates in US real estate becoming even stronger in the global market by practicing true free markets instead of relying upon the crutches of publicly-funded infrastructure to break the capital ground in front of them. [1] https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb2a-44cc-9314-0307fd5ca43e.pdf https://www.hbs.edu/ris/Publication%20Files/Land_e202c898-eb... [2] https://www.cnbc.com/2019/10/01/real-estate-is-still-the-best-investment-you-can-make-today-millionaires-say.html https://www.cnbc.com/2019/10/01/real-estate-is-still-the-bes... [3] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:2005.4,2020.4;quarter:125;series:Net%20worth;demographic:networth;population:1;units:levels https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... [4] https://fred.stlouisfed.org/series/WFRBLT01002 https://fred.stlouisfed.org/series/WFRBLT01002 [5] https://www.lincolninst.edu/publications/articles/land-value-issues-taiwan-korea-japan https://www.lincolninst.edu/publications/articles/land-value... [6] https://www.lincolninst.edu/sites/default/files/pubfiles/assessing-theory-practice-land-value-taxation-full_0.pdf https://www.lincolninst.edu/sites/default/files/pubfiles/ass...