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This is exactly why a UBI funded through a Land Value Tax is such a good idea. A land value tax taxes the land such that the market cost of the home is equal to

This is exactly why a UBI funded through a Land Value Tax is such a good idea. A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. The land tax will put the land to best use, and that will drive up the supply of housing units, which means the cost to rent will go down. All of this while the average person sees lower tax rates and the person who sits on an empty lot sees much higher tax rates. The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI.

dragonwriter 5y ago
> A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. To do that, an LVT would have to be calibrated so that it was enough to bring the market price of unimproved land to zero, plus (or minus, in certain market conditions) an additional amount needed compensate for dynamic supply and demand effects (lots of people wanting to move in plus building lag driving prices up above expected long-term equilibrium, lots of people moving out doing the opposite.) > The land tax will put the land to best use, Perhaps, but if so... > and that will drive up the supply of housing units ...then not if housing units aren't the most profitable use of land in the local area it won't. > All of this while the average person sees lower tax rates Confiscatory (and the level of LVT you suggest is exactly that) taxes on land don't reduce tax rates for the average person in a country with a nearly 65% pre-policy homeownership rate. > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. No, even if that were true pre-policy it couldn't after you enacted it, because you are ignoring dynamic effects. Confiscatory taxation on land will catastrophically drive down land value.
- ItsMonkk 5y ago
  > unimproved land to zero Yep! > dynamic supply and demand effects Yep! > ...then not if housing units aren't the most profitable use of land in the local area it won't. Agree. But they almost always are. > Confiscatory Housing can either be an investment or it can be affordable long-term, it can not be both. Therefore the Land Value Tax is the only correct rate. And a UBI for at least a decent portion of it nullifies any potential regressive nature of it. > don't reduce tax rates for the average person It does, over time, as housing supply improves and the entire economy gets out of the mud. The wealthy own the most expensive land. > catastrophically drive down land value The tax is based on the rental value of the land, that is, the flow. You could see it as the neutralization of the capture of the positive externalities of your neighbors. As in your first example where an empty lot will settle at $0 market price, that would not mean it has a $0 tax. It would still have whatever tax it would have. You determine that tax based on market rates, and it is a set cost based on that particular property - it's not some percentage of the market rates as we do today. I agree that in the short-term, with most people having most of their networth in their home, this would be a bad thing. We can transition to this process slowly, and only increase as the incentives improve the economy and allow us to improve. The best way to start is to have a net zero change where we remove taxes on improvements and instead to tax the land. Making better use of the city land would in fact drive the overall land flow value up hugely in value. SF has much more room to improve than NYC, NYC makes pretty good use of it's land. But so can CT and NJ, and the rise in supply of non-NYC land outside of NYC will drive more value into NYC.
  - jjav 5y ago
    > Housing can either be an investment or it can be affordable long-term, it can not be both. While this is one of the most often cut&pasted comments on HN, I haven't seen a thorough discussion of what it actually means in practice. Any references with substantial analysis of proposals to achieve this and what the unintended consequences could be? You seem to advocating for an immense increase in property taxes. This line from the previous comment: > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. suggests that the increase in taxes would be quite enourmous indeed. That would certainly make housing a bad investment. Nobody would want to own any if the recurring property taxes are that high. But of course it doesn't make property affordable either, if the tax rates are sky high.
    - ItsMonkk 5y ago
      Pennsylvania has a few cities that have implemented a partial LVT. Here's[0] a Strong Towns article on the topic. They show exactly what I mentioned earlier - overall taxes are up, most peoples taxes are down. Business is booming. It's not Silicon Valley, but they are doing better than the cities around them that do not have the LVT. The best introductions are Lars excellent book and blog articles[1] over on Scott Alexander's blog. > Nobody would want to own any if the recurring property taxes are that high. But of course it doesn't make property affordable either, if the tax rates are sky high. The tax rates are set by the market, so they are by definition affordable. You are taxed on the land alone, what capital you put on top of it is entirely yours to earn. [0]: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g... [1]: https://astralcodexten.substack.com/p/does-georgism-work-is-land-really https://astralcodexten.substack.com/p/does-georgism-work-is-...

dragonwriter 5y ago

> A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. To do that, an LVT would have to be calibrated so that it was enough to bring the market price of unimproved land to zero, plus (or minus, in certain market conditions) an additional amount needed compensate for dynamic supply and demand effects (lots of people wanting to move in plus building lag driving prices up above expected long-term equilibrium, lots of people moving out doing the opposite.) > The land tax will put the land to best use, Perhaps, but if so... > and that will drive up the supply of housing units ...then not if housing units aren't the most profitable use of land in the local area it won't. > All of this while the average person sees lower tax rates Confiscatory (and the level of LVT you suggest is exactly that) taxes on land don't reduce tax rates for the average person in a country with a nearly 65% pre-policy homeownership rate. > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. No, even if that were true pre-policy it couldn't after you enacted it, because you are ignoring dynamic effects. Confiscatory taxation on land will catastrophically drive down land value.

ItsMonkk 5y ago
> unimproved land to zero Yep! > dynamic supply and demand effects Yep! > ...then not if housing units aren't the most profitable use of land in the local area it won't. Agree. But they almost always are. > Confiscatory Housing can either be an investment or it can be affordable long-term, it can not be both. Therefore the Land Value Tax is the only correct rate. And a UBI for at least a decent portion of it nullifies any potential regressive nature of it. > don't reduce tax rates for the average person It does, over time, as housing supply improves and the entire economy gets out of the mud. The wealthy own the most expensive land. > catastrophically drive down land value The tax is based on the rental value of the land, that is, the flow. You could see it as the neutralization of the capture of the positive externalities of your neighbors. As in your first example where an empty lot will settle at $0 market price, that would not mean it has a $0 tax. It would still have whatever tax it would have. You determine that tax based on market rates, and it is a set cost based on that particular property - it's not some percentage of the market rates as we do today. I agree that in the short-term, with most people having most of their networth in their home, this would be a bad thing. We can transition to this process slowly, and only increase as the incentives improve the economy and allow us to improve. The best way to start is to have a net zero change where we remove taxes on improvements and instead to tax the land. Making better use of the city land would in fact drive the overall land flow value up hugely in value. SF has much more room to improve than NYC, NYC makes pretty good use of it's land. But so can CT and NJ, and the rise in supply of non-NYC land outside of NYC will drive more value into NYC.
- jjav 5y ago
  > Housing can either be an investment or it can be affordable long-term, it can not be both. While this is one of the most often cut&pasted comments on HN, I haven't seen a thorough discussion of what it actually means in practice. Any references with substantial analysis of proposals to achieve this and what the unintended consequences could be? You seem to advocating for an immense increase in property taxes. This line from the previous comment: > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. suggests that the increase in taxes would be quite enourmous indeed. That would certainly make housing a bad investment. Nobody would want to own any if the recurring property taxes are that high. But of course it doesn't make property affordable either, if the tax rates are sky high.
  - ItsMonkk 5y ago
    Pennsylvania has a few cities that have implemented a partial LVT. Here's[0] a Strong Towns article on the topic. They show exactly what I mentioned earlier - overall taxes are up, most peoples taxes are down. Business is booming. It's not Silicon Valley, but they are doing better than the cities around them that do not have the LVT. The best introductions are Lars excellent book and blog articles[1] over on Scott Alexander's blog. > Nobody would want to own any if the recurring property taxes are that high. But of course it doesn't make property affordable either, if the tax rates are sky high. The tax rates are set by the market, so they are by definition affordable. You are taxed on the land alone, what capital you put on top of it is entirely yours to earn. [0]: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-gains-the-pennsylvania-land-tax-experiment https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g... [1]: https://astralcodexten.substack.com/p/does-georgism-work-is-land-really https://astralcodexten.substack.com/p/does-georgism-work-is-...