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https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax We need this reform yesterday. It is absurd how much you get taxed on

https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax We need this reform yesterday. It is absurd how much you get taxed on actual work, but so little on land speculation and rent extraction.

RhysU 5y ago
Land speculation is less taxed than, say, equities gains because of 1031 exchanges and forgiveness of the first $X of capital gains on a home sale. I don't see how "rent extraction" is less taxed relative to other activities aside from depreciation, net income, etc. which is not unique to renting. Why is rent extraction favored in the tax code? Actual work has little risk. If I don't show up in the office today they won't pay me for today. If I own property, in contrast, it can go down in value. Also, I probably have to pay to maintain it.
- tryptophan 5y ago
  >Why is rent extraction favored in the tax code? Renting is considered a business. You can deduct interest, maintenance expenses, etc... Individuals cannot do that. >Actual work has little risk. So does waiting for prices to go up in a city. And this is the key - you just wait. You don't do any work whatsoever. You just wait for economic conditions nearby to improve and then take your share of it by charging higher and higher rents just because you have monopolized the usage of your land. You don't have to contribute literally anything to the nearby economy, but can still benefit from it. >If I own property, in contrast, it can go down in value. Property = land + buildings. This is a tax on the land, not the building value. In a LVT scheme, the value of the land goes towards 0, and the share of the property value due to the building increases. > Also, I probably have to pay to maintain it. You maintain the building, not the land. Making profits on building would not change. https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... Is a good review of these ideas.
  - Dracophoenix 5y ago
    As I've said quite a few times before, with no straight answer given: How does one assess the value of land? Was is the basis or seed value for a given figure?
    - erentz 5y ago
      This already happens. Look into how cities and states both in the US and around the world already value land separately from capital (or improvements) value as part of property tax.
      - erichocean 5y ago
        Yeah, but GP thought his question was a killer retort that would end the argument in his favor, while simultaneously demonstrating brilliance to the Hacker News crowd. Did you really have to take away all that with a pithy explanation of reality? Why not just let him have his day in the sun?
        Dracophoenix 5y ago
        I'm here to get an answer. Not to win an imaginary argument. But I guess it takes one to know one if you think the latter is what I'm here for.
      - Dracophoenix 5y ago
        I already have. Most of them are black boxes. For example, the county assessor will put the assessed value of a house at $2,000,000 when it was $800,000 five years ago. Where are they pulling this number from? All of this seems like speculation. Another thing to point out is that some states/localities use a mill rate. They'll set tax at x dollars per thousand of assessed value on the house. Where are they getting the x from? What's the difference between the assessed value and the purchase price and why should there be a difference? With land, the issue is the same. Even though improvements aren't factored in to the value the same way they are with property tax, what makes one parcel land more valuable than the other? Such a value isn't determined by a linear relationship. So where would one get the number from? Here is the last conversation I had about the topic. https://news.ycombinator.com/item?id=27032163 https://news.ycombinator.com/item?id=27032163
- 8note 5y ago
  Is there much risk of it going down? There's a fair amount of effort on the part of the government to ensure that the price continues to rise
  - erichocean 5y ago
    Rising asset prices are literally Federal policy. I think the official goal recommended by the IMF is 3% annually.
intricatedetail 5y ago
Modern slavery in a supposedly left wing state. You cannot make this up!
dzhiurgis 5y ago
That immediately fires back at the poorest who can only afford to rent - good chunk of the tax will be passed onto them.
- zzzzzzzza 5y ago
  this is wrong, because land is inelastic. you can tax land value at 100% and there will be no less land.
- erichocean 5y ago
  Think of the poor! If that hasn’t convinced you, think of the children! If I can identify even one person who might be marginally worse off by a particular policy, we definitely can’t do it. That’s what the founding fathers would want! /s
- imtringued 5y ago
  It doesn't work like that. Landlords already charge the highest possible rent. If they didn't, you wouldn't be allowed to complain about high rents because current rent prices are artificially held down by landlords. The tax is cutting into profits of landlords that were derived from the value of the land. They still end up charging the same rent.
musicale 5y ago
Is there a way to prevent people being taxed out of their homes?
- erentz 5y ago
  For those that cannot afford it an option to defer some amount of the taxes until sale is one common proposal. Myself I don’t favor this option and think if you can’t afford the land tax on your property then you’re making very poor use of that land and the tax is working exactly as intended if it either encourages you to downsize to another place or redevelop your property into multiple units (for example). You can also take a loan on your property to pay the tax that is repaid from sale of the property when you do decide to move or your pass away. I don’t think people should get special favorable treatment just because they got somewhere first, it’s awfully discriminatory.
  - opportune 5y ago
    Yeah, the mindset behind a (georgist, i.e. high) LVT is that land is a public good with an opportunity cost. It is a pigouvian tax against speculation, hoarding, and underutilization. Humans are sentimental creatures though and "grandma has to sell her home" is a powerful image. I think a good compromise, that would also allow Prop 13 to be phased out for good, is to allow primary residences below a certain value to deduct taxes against the home value up to the limit (ie defer payment until the person dies, then the estate settles the debt, most likely out of selling the home) and at that point not owe more. That way grandma never has to leave her home prematurely, society still captures the lost value of underutilized land somewhat, and there is no ridiculousness with commercial properties, inheritances, very wealthy people paying no taxes, etc.
    - imtringued 5y ago
      For some reason when there is a bailout for everyone from the poorest grandma to the richest investors on the planet, people worry about grandma the most. We can always arrange a bailout for vulnerable people, that's not the problem but everyone who can afford the taxes insists that they should get low property taxes because grandma cant afford them.

RhysU 5y ago

Land speculation is less taxed than, say, equities gains because of 1031 exchanges and forgiveness of the first $X of capital gains on a home sale. I don't see how "rent extraction" is less taxed relative to other activities aside from depreciation, net income, etc. which is not unique to renting. Why is rent extraction favored in the tax code? Actual work has little risk. If I don't show up in the office today they won't pay me for today. If I own property, in contrast, it can go down in value. Also, I probably have to pay to maintain it.

tryptophan 5y ago
>Why is rent extraction favored in the tax code? Renting is considered a business. You can deduct interest, maintenance expenses, etc... Individuals cannot do that. >Actual work has little risk. So does waiting for prices to go up in a city. And this is the key - you just wait. You don't do any work whatsoever. You just wait for economic conditions nearby to improve and then take your share of it by charging higher and higher rents just because you have monopolized the usage of your land. You don't have to contribute literally anything to the nearby economy, but can still benefit from it. >If I own property, in contrast, it can go down in value. Property = land + buildings. This is a tax on the land, not the building value. In a LVT scheme, the value of the land goes towards 0, and the share of the property value due to the building increases. > Also, I probably have to pay to maintain it. You maintain the building, not the land. Making profits on building would not change. https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... Is a good review of these ideas.
- Dracophoenix 5y ago
  As I've said quite a few times before, with no straight answer given: How does one assess the value of land? Was is the basis or seed value for a given figure?
  - erentz 5y ago
    This already happens. Look into how cities and states both in the US and around the world already value land separately from capital (or improvements) value as part of property tax.
    - erichocean 5y ago
      Yeah, but GP thought his question was a killer retort that would end the argument in his favor, while simultaneously demonstrating brilliance to the Hacker News crowd. Did you really have to take away all that with a pithy explanation of reality? Why not just let him have his day in the sun?
      - Dracophoenix 5y ago
        I'm here to get an answer. Not to win an imaginary argument. But I guess it takes one to know one if you think the latter is what I'm here for.
    - Dracophoenix 5y ago
      I already have. Most of them are black boxes. For example, the county assessor will put the assessed value of a house at $2,000,000 when it was $800,000 five years ago. Where are they pulling this number from? All of this seems like speculation. Another thing to point out is that some states/localities use a mill rate. They'll set tax at x dollars per thousand of assessed value on the house. Where are they getting the x from? What's the difference between the assessed value and the purchase price and why should there be a difference? With land, the issue is the same. Even though improvements aren't factored in to the value the same way they are with property tax, what makes one parcel land more valuable than the other? Such a value isn't determined by a linear relationship. So where would one get the number from? Here is the last conversation I had about the topic. https://news.ycombinator.com/item?id=27032163 https://news.ycombinator.com/item?id=27032163
8note 5y ago
Is there much risk of it going down? There's a fair amount of effort on the part of the government to ensure that the price continues to rise
- erichocean 5y ago
  Rising asset prices are literally Federal policy. I think the official goal recommended by the IMF is 3% annually.

intricatedetail 5y ago

Modern slavery in a supposedly left wing state. You cannot make this up!

dzhiurgis 5y ago

That immediately fires back at the poorest who can only afford to rent - good chunk of the tax will be passed onto them.

zzzzzzzza 5y ago
this is wrong, because land is inelastic. you can tax land value at 100% and there will be no less land.
erichocean 5y ago
Think of the poor! If that hasn’t convinced you, think of the children! If I can identify even one person who might be marginally worse off by a particular policy, we definitely can’t do it. That’s what the founding fathers would want! /s
imtringued 5y ago
It doesn't work like that. Landlords already charge the highest possible rent. If they didn't, you wouldn't be allowed to complain about high rents because current rent prices are artificially held down by landlords. The tax is cutting into profits of landlords that were derived from the value of the land. They still end up charging the same rent.

musicale 5y ago

Is there a way to prevent people being taxed out of their homes?

erentz 5y ago
For those that cannot afford it an option to defer some amount of the taxes until sale is one common proposal. Myself I don’t favor this option and think if you can’t afford the land tax on your property then you’re making very poor use of that land and the tax is working exactly as intended if it either encourages you to downsize to another place or redevelop your property into multiple units (for example). You can also take a loan on your property to pay the tax that is repaid from sale of the property when you do decide to move or your pass away. I don’t think people should get special favorable treatment just because they got somewhere first, it’s awfully discriminatory.
- opportune 5y ago
  Yeah, the mindset behind a (georgist, i.e. high) LVT is that land is a public good with an opportunity cost. It is a pigouvian tax against speculation, hoarding, and underutilization. Humans are sentimental creatures though and "grandma has to sell her home" is a powerful image. I think a good compromise, that would also allow Prop 13 to be phased out for good, is to allow primary residences below a certain value to deduct taxes against the home value up to the limit (ie defer payment until the person dies, then the estate settles the debt, most likely out of selling the home) and at that point not owe more. That way grandma never has to leave her home prematurely, society still captures the lost value of underutilized land somewhat, and there is no ridiculousness with commercial properties, inheritances, very wealthy people paying no taxes, etc.
  - imtringued 5y ago
    For some reason when there is a bailout for everyone from the poorest grandma to the richest investors on the planet, people worry about grandma the most. We can always arrange a bailout for vulnerable people, that's not the problem but everyone who can afford the taxes insists that they should get low property taxes because grandma cant afford them.