4 ms·

Low tax rates for existing landowners are not the goal here; low rents for young people are what you want. One makes the city grow and thrive, the other just a

Low tax rates for existing landowners are not the goal here; low rents for young people are what you want. One makes the city grow and thrive, the other just allows old or rich people to have big piles of money. I said high quality housing, not crappy housing. No need to relax regulations or fiddle with zoning.

luckylion 5y ago
No, I meant tax rates in general. Berlin levies lower business taxes compared to other German cities, complains that it has less tax income and gets subsidized by the other German states while still complaining about being poor. It's an act, they could just raise taxes, but prefer not to. > I said high quality housing, not crappy housing. Okay, so what services should be cut to pay for high quality housing and then rent it out below cost? Schools? Fire fighters? Social programs? And since zoning should not be a concern, do they just build over parks?
- fallingfrog 5y ago
  You raise property taxes to pay for it, you don’t cut anything. You build it in zoning that is designated for housing.
  - luckylion 5y ago
    > You raise property taxes to pay for it, you don’t cut anything. But that's my point. Berlin is not raising taxes and there's absolutely no indication that they will change that. If they wanted to spend more money, they'd either have to raise taxes (not going to happen) or get even more subsidies from the other German states (unlikely, because they're already getting billions per year, and those who have to pay aren't too happy about Berlin's wastefulness). > You build it in zoning that is designated for housing. They don't have enough areas zoned for housing, and they aren't even issuing enough building permits for the required amount of apartments that need to be built right now. How would that be changed? Do we just clap twice and voila, government suddenly works efficiently and the red tape gets cut back to reasonable levels? The problem is that people want more housing, but they don't want denser cities, they don't want construction sites, and they don't want parks and open spaces to be converted into housing zones. Especially in Berlin, people are extremely against new development, see Tempelhofer Feld.
    - pomian 5y ago
      But if you raise property taxes, then the rental rates must go up, to pay for those taxes. That's one of the problems in many North American cities, where yearly rising local city taxes can make housing unaffordable.
      - luckylion 5y ago
        Absolutely, property taxes are pretty much always "passed on" in Germany as well. Berlin still has plenty of rope in business tax though, which is a significant part of local funding in Germany. Their strategy has been to undercut comparable cities by a good margin to attract businesses that might move to Berlin, while at the same time complaining about not having enough tax revenue and needing financial support from both the German federal government and the other German states. But since they benefit from the current setup, there's no incentive for them to change it.
      - dredmorbius 5y ago
        False. Real estate (land) has an inelastic supply. It's not possible to bring more to the market. It is possible to utilise existing real estate more intensively, by building more densely, most often by building up. Each storey added to a building multiplies the available land intensity accordingly. (Modulo a small exception for staircases, elevators, and some building utilities.) If you tax the unimproved value of land, you make lower levels of utilisation comparatively more expensive. Rents cannot increase, as people effectively pay the value gained by holding the property --- in the simple case, earning potential. So higher land value tax -> same rents -> less profit to landlords. Landlords and property holders can increase their returns by adding more units (intensifying land use). Which then increases the housing supply. The counterintuitive result is that housing is something you get more of with higher taxation rates, so long as those apply to the value of the land itself, and not improvements to the property.

luckylion 5y ago

No, I meant tax rates in general. Berlin levies lower business taxes compared to other German cities, complains that it has less tax income and gets subsidized by the other German states while still complaining about being poor. It's an act, they could just raise taxes, but prefer not to. > I said high quality housing, not crappy housing. Okay, so what services should be cut to pay for high quality housing and then rent it out below cost? Schools? Fire fighters? Social programs? And since zoning should not be a concern, do they just build over parks?

fallingfrog 5y ago
You raise property taxes to pay for it, you don’t cut anything. You build it in zoning that is designated for housing.
- luckylion 5y ago
  > You raise property taxes to pay for it, you don’t cut anything. But that's my point. Berlin is not raising taxes and there's absolutely no indication that they will change that. If they wanted to spend more money, they'd either have to raise taxes (not going to happen) or get even more subsidies from the other German states (unlikely, because they're already getting billions per year, and those who have to pay aren't too happy about Berlin's wastefulness). > You build it in zoning that is designated for housing. They don't have enough areas zoned for housing, and they aren't even issuing enough building permits for the required amount of apartments that need to be built right now. How would that be changed? Do we just clap twice and voila, government suddenly works efficiently and the red tape gets cut back to reasonable levels? The problem is that people want more housing, but they don't want denser cities, they don't want construction sites, and they don't want parks and open spaces to be converted into housing zones. Especially in Berlin, people are extremely against new development, see Tempelhofer Feld.
  - pomian 5y ago
    But if you raise property taxes, then the rental rates must go up, to pay for those taxes. That's one of the problems in many North American cities, where yearly rising local city taxes can make housing unaffordable.
    - luckylion 5y ago
      Absolutely, property taxes are pretty much always "passed on" in Germany as well. Berlin still has plenty of rope in business tax though, which is a significant part of local funding in Germany. Their strategy has been to undercut comparable cities by a good margin to attract businesses that might move to Berlin, while at the same time complaining about not having enough tax revenue and needing financial support from both the German federal government and the other German states. But since they benefit from the current setup, there's no incentive for them to change it.
    - dredmorbius 5y ago
      False. Real estate (land) has an inelastic supply. It's not possible to bring more to the market. It is possible to utilise existing real estate more intensively, by building more densely, most often by building up. Each storey added to a building multiplies the available land intensity accordingly. (Modulo a small exception for staircases, elevators, and some building utilities.) If you tax the unimproved value of land, you make lower levels of utilisation comparatively more expensive. Rents cannot increase, as people effectively pay the value gained by holding the property --- in the simple case, earning potential. So higher land value tax -> same rents -> less profit to landlords. Landlords and property holders can increase their returns by adding more units (intensifying land use). Which then increases the housing supply. The counterintuitive result is that housing is something you get more of with higher taxation rates, so long as those apply to the value of the land itself, and not improvements to the property.