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Redfin Economist says land value tax will fix the economy

67 points by geocon 4y ago

geocon 4y ago
Daryl Fairweather is the chief economist at Redfin, a major housing and real estate company (competitor to Zillow). Seems she's pretty bullish on LVT.
- dna_polymerase 4y ago
  I wouldn't say Redfin is a direct competitor to Zillow. Sure, there is overlap, but Redfin has agents on the selling property on their behalf, whereas Zillow is mostly a web platform.
- AnimalMuppet 4y ago
  Maybe so. But why do I care what Redfin's chief economist thinks? She works for a real estate company and she has ideas, and she's an economist. That's all cool, but none of it tells me that she actually knows whether or not Georgism would work as advertised.
  - zip1234 4y ago
    There are actual places where it has been used and is in use. Some even in the US.
- yellowapple 4y ago
  Which is surprising, since LVT is pretty antithetical to Redfin's and Zillow's business model. The real estate industry typically revolves around the land rather than the buildings on that land, and the buying and selling of land is exactly the thing LVT seeks to obsolesce.
  - larsiusprime 4y ago
    I'm not so sure. In the interview, we asked her about this specifically, and Daryl says that Redfin would rather have more customers than charge each customer a higher amount. They're a real estate broker, so they presumably would have plenty of business to do in facilitating transactions and connecting buyers and sellers regardless of how expensive the underlying assets were.
willbobaggins 4y ago
Nice!
pyradius 4y ago
Where economic efficiency and economic justice meet, and where a tax isn't really a tax. Good stuff!
stevenalowe 4y ago
Land and property improvements are already taxed (at least everywhere I’ve lived in the USA); I see no logical cause and effect relationships between the additional tax proposal and the alleged problems (nimby-ism) it is supposed to address.
- larsiusprime 4y ago
  Here's some empirical research for you then: http://gameofrent.com/content/is-land-a-big-deal http://gameofrent.com/content/is-land-a-big-deal Additionally, property tax rates vary massively from state to state and there's pretty strong correlation between property tax rates and housing supply and housing affordability. The legacy of California's Proposition 13 and its effects on housing supply are very well studied. Property tax still has inefficiencies (it can punish someone who builds relative to someone who holds an empty lot), and Land Value tax would be more efficient in aligning incentives properly.
  - stevenalowe 4y ago
    Thanks for the link! Here’s an equally wordy refutation of Georgism https://dailyanarchist.com/2012/06/12/what-is-georgism-followed-by-a-refutation-part-i/ https://dailyanarchist.com/2012/06/12/what-is-georgism-follo...
    - brightly-salty 4y ago
      I read through it and didn't see any refutation, just a description of the historical movement. At least to my understanding, mutualists like Benjamin Tucker have historically agreed with Georgist philosophy to a great extent, including breaking the monopoly on land.
      - geocon 4y ago
        I think he's talking about the second part, which I found linked wayyyyy at the bottom: https://dailyanarchist.com/2012/06/21/the-single-tax-a-refutation/comment-page-1/ https://dailyanarchist.com/2012/06/21/the-single-tax-a-refut... That said I don't find this to be particularly convincing, given that they have mixed up labor and land, as well as failing to remember that Georgists are concerned with the benefit of land ownership (that is, rents) not the thing itself. The remainder is standard anarchist criticism of the state, which is fine I suppose if you are an anarchist but I don't think will convince anyone else (and I am not an anarchist)
uberman 4y ago
I guess I am skeptical that LVT would do anything for most of non-dense urban America. I would be happy to swap out my property, school, state, and income taxes for one where I paid what it would cost to lease the land I currently own. It would reduce my tax burden by 99% I know because my neighbor leases a large parcel (several times my lot size) from the federal government. I would be delighted to swap my current property, school, state and income taxes for what he pays for what he leases. I fear that if people like me don't pay these taxes, things like public schools and municipal services will simply fail where I live. It seems great to cash in on high demand until you look at the flip side and consider what happens when there is no demand. From my perspective LVT just looks like an expensive urban cash grab that utterly breaks down when demand softens.
- bitshiftfaced 4y ago
  The nominal value of each parcel of land doesn't matter when calculating a landowner's tax burden. You just need to compare each piece of land relative to one another and scale the tax burden accordingly.
  - uberman 4y ago
    That is how traditional property tax works. However (as I understand it) a LVT that replaces property tax (potentially all other taxes as the one true tax) is based solely on the yearly cost to lease a parcel of land. Your tax is just that, the cost to lease. With a LVT there is no "here is your % of the district tax burden apportioned by what you own" only a "here is what we estimate it would cost to lease this property for a year".
    - dragonwriter 4y ago
      Note that an LVT of that form is isomorphic to public confiscation of land, which is leased back to the nominal “owner”.
      - jeffbee 4y ago
WalterBright 4y ago
Want to fix the economy? Stop punishing people for being productive. Stop paying people to fail. Want something to tax? Tax pollution.
- spywaregorilla 4y ago
  Land value tax is, in a sense, punishing people for not being productive. So there's that.
  - throwaway894345 4y ago
    It's punishing people for being not productive in a very specific, narrow sense--productivity per unit land. Moreover (for clarity's sake), the parent said "stop punishing people for being productive" not "start punishing people for being unproductive" which sound similar but are very different statements.
    - spywaregorilla 4y ago
      shrug. rent seeking landowners are the greatest threat to a healthy economy.
      - throwaway894345 4y ago
        I genuinely don’t know anything about economics. Is this widely accepted among economists or is it more of an ideological/political axiom?
        WalterBright 4y ago
        Ideology.
        spywaregorilla 4y ago
        > https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent Economic rent isn't the same as just paying landlords rent, though it's related. Economic rent is basically you profiting from owning stuff and doing nothing. It's a pure wealth transfer https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking Rent seeking behavior is when you try to acquire more wealth without creating more wealth. This would include behaviors like regulatory capture, or raising housing rents or other necessary goods to whatever the populace is capable of paying because they have either little alternatives or switching costs are prohibitive. Monopolies, IP law (and abuse thereof), and cases like Apple prohibiting other app stores are all examples of rent seeking behavior as well. A nice quote from the first article on Land Value Taxes and why this is directly relevant. > "Henry George, best known for his proposal for a single tax on land, defines rent as "the part of the produce that accrues to the owners of land (or other natural capabilities) by virtue of ownership" and as "the share of wealth given to landowners because they have an exclusive right to the use of those natural capabilities." It is a generally agreed upon problem, going all the way back to adam smith. It's not possible to have a self consistent economic ideology that does otherwise. You get some radical free market capitalists who think otherwise, but if it were up to them we'd all be living in the United States of Standard Oil by now. They're safe to ignore. The solution to this problem is not clear at all and varies dramatically by ideologies.
hash872 4y ago
A very high LVT is a politically unserious proposition, because it would involve drastically raising taxes on the people who actually vote & hold political power in society- the middle class, upper middle class, and wealthy in suburbs and low-density urban areas. All of the alleged 'efficiency' gains you hear Georgists claim really mean 'middle class homeowners forced to sell their single family home to developers due to crushing tax increases'. Every day the evening news and social media would carry a new, tearful story of a family forced to sell their home. The white-hot rage of millions of taxpayers whose taxes drastically rise overnight would be enough to create bottled fusion- I suppose it would be good for the US in that you could finally find an issue that unites the most leftward Democrat and the most rightward Republican. 'Forcing everyone in the suburbs to sell their home to an apartment building developer due to ruinously high taxes' is the single most politically unrealistic idea ever proposed. LVT is certainly a clever way to make sure land is used efficiently, and probably a good idea in the abstract, and perhaps we could enact it when we colonize Mars. But implementing it on a country where many of the voters are living in 'inefficient' SFHs now is not ever going to happen
- Wowfunhappy 4y ago
  Could you start small? Just a minor LVT to begin with, which could potentially be raised over time. Possibly implemented by a single city instead of nationwide.
  - newaccount2021 4y ago
    then that city would die and everything around it would flourish
    - Wowfunhappy 4y ago
      Isn't the idea that a LVT would improve the use of land? If that premise is correct, it could cause the city to flourish and grow ahead of its neighbors. Implementing the change more narrowly would allow you to test that assumption.
sudden_dystopia 4y ago
Disagree. We should go the other way, abolish all primary residence property taxes and replace with value added taxes. Other lands for secondary and commercial properties can still be taxed. Otherwise you are really just leasing land from the government. On a somewhat absurd tangent, I’ve been toying with the idea of something I call a “land dividend” to solve homelessness. If every US citizen had by birthright, a small parcel of land with no taxes owed, they would always have somewhere to go. Even if they lived in a tent. And land is one thing the government has in surplus and divvying it up could could both decrease expenses while also solving a problem without creating new tax burdens.
- Stevvo 4y ago
  Homeless people can already go camp on BLM or other public lands, but generally they don't because living in the middle of nowhere isn't going to get you out of that situation.
- dlp211 4y ago
  > If every US citizen had by birthright, a small parcel of land with no taxes owed, they would always have somewhere to go. I'm sorry, but if you can't see the numerous problems with this high school level idea about solving homelessness, maybe housing policy isn't something you should opine about.
- akira2501 4y ago
  You're presuming that the homeless you see on the streets already "don't have somewhere to go." For the majority of them, this is not true. They choose to live where they can easily get drugs or avoid their mental health issues. Most of them have homes or families that they could otherwise return to. From ground level, access to property does not seem to be any part of the problem here. Plus, you'd want that property to be somewhere close to jobs and services or you're just going to be pushing problems from the downtown core to wherever you manage to build these homes.
- sosull 4y ago
  I think the idea runs into the problems experienced by newly-developed rural properties. Small, privately held parcels of land are absurdly expensive to service. Power, water, communications, sewage, food, waste etc. are easier to provide to people who live close together. And then there’s the problem of a social hierarchy of needs. People need someone to turn to in an emergency, input into their immediate environment, and focal points. In that sense land can be cheap, but places are innately costly, not just financially, but socially and historically.
newaccount2021 4y ago
anonymouse008 4y ago
9 times out of 10 the issue with housing isn't that housing is truly in short supply - it's housing within a reasonable travel time of desired locations that is in short supply. To view the solution myopically as we must change people to allow more housing in their backyard, is only one frame - and not even the most effective one. Innovating the urban -> rural transport chain is the most challenging, but its implications are paramount.
- myself248 4y ago
  Or improving rural broadband access so more people can WFH forever. Hint, fiber is cheaper than roads.
- zip1234 4y ago
  Or we could just do the completely free thing that is removing rules preventing construction of homes where they are desired...
  - foogazi 4y ago
    What if there are already homes there ?
myself248 4y ago
Revoking the religious tax exemption would fix it quicker. Better yet, do both.
scld 4y ago
When you're right, you're right.
goethes_kind 4y ago
The best way to fix the housing crisis, at the state/federal level is to create incentives for employers to move to less densely populated areas. But what makes it a bit more complex is that, ideally, one would, try to relocate entire technological hubs. But I do not see why it shouldn't be possible.
- doktorhladnjak 4y ago
  There are already many incentives for sprawl. It's not clear to me how encouraging more of it solves these problems.
- nemothekid 4y ago
  So just move the housing crisis to various pockets of the country every few years?
hardwaresofton 4y ago
It doesn't have to be this complicated. We don't need a land value tax. The most straight forward way to make people avoid speculating is to heavily tax all non-primary residence homes. Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) to and set a baseline on the taxes required and make the math for building property empire bleak (absolute destruction of the housing-as-a-financial-asset model). If you want people to buy homes to live in them, and not as a store of value or speculative instruments, we can disincentivize that behavior directly. It encourages productivity instead of rent-seeking and restores housing stock to people who are trying to live in a place, rather than extract value and it puts more taxes in government coffers from the likes of companies like BlackRock and REITs. It's simple. Tax people who buy homes they don't plan to live in heavily.
- InefficientRed 4y ago
  > Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).
  - hardwaresofton 4y ago
    > Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Ah thanks for this criticism, the amount of loop holes would be pretty staggering/annoying. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes). LGTM, ship it.
motohagiography 4y ago
I personally advocate things like urban density, mixed use zoning, walkable cities, human sized homes, urban forestry, but I don't think LVT's are the right tool. I live in a city with "market value assessment" for property taxes, and it profoundly lacks transparency, and is a very dodgy regime altogether. The main thing a LVT creates is constant churn as (retired) people cease to be able to afford to live in their homes, incentivizes being a landlord, and punishes family wealth creation via home ownership (which is a barrier to class mobility), as if you own property, you now need to generate revenue from the land to pay the taxes on it. The LVT isn't for services either, it's punitive by definition. Sure, it would get rid of some vacant buildings, and we do need a way to discourage land and property banking that turns hot money into high prices for home buyers, but taxes are what you impose when you have a policy that nobody would win re-election on voting for. It's literally what nobody wants. Nudging taxes are inferior back door policymaking by regulators (in their own interest) who can't get the political traction for an actual policy. Who is nimby'ism a problem for? Arguably, people who want to impose unwanted experimental policy, and in-effect loot the wealth that cohesive local communities and their cultures invested in and built. Nimby'ism as concept is a slur that makes a villain of anyone with a home and investment in their local community, and who may be skeptical of centralized policymaking. I'd question the underlying values behind advocating an LVT, as they tend to be within a degree of some other very technocratic impositions that mainly benefit their administrators.
- xxpor 4y ago
  >who may be skeptical of centralized policymaking. Oh, we're talking about zoning? >The main thing a LVT creates is constant churn as (retired) people cease to be able to afford to live in their homes, incentivizes being a landlord, and punishes family wealth creation via home ownership (which is a barrier to class mobility) Yes, this is in fact literally the point. You can't have a growing population, and then depend on land ownership to generate wealth in perpetuity. There's only so much land. The class mobility point is especially hilarious. Yeah, Joe the Waiter is really going to be able to afford the $1.5 million 2000 sq ft house in Seattle to move his family up the ladder.
  - 4y ago
throw0101a 4y ago
Also interviewed on the Odd Lots podcast a little while ago: > Housing in the US is a constant source of frustration. On the way up, prospective homebuyers worry that they're missing out on their chance to jump on the housing ladder. On the way down, homeowners worry about losing their equity and their nest egg. So is there a better way? Is there a way to make housing more equitable, and to separate the investment component from the shelter component? On this episode we speak with Daryl Fairweather, the chief economist at Redfin, about a land value tax and how it could help us reposition housing so that it's less of a financial asset that spirals people higher, and blocks so many people out. * https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb0014c5901 https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb... * https://podcasts.apple.com/us/podcast/daryl-fairweather-on-the-tax-that-could-solve-the/id1056200096?i=1000566205455 https://podcasts.apple.com/us/podcast/daryl-fairweather-on-t... * https://open.spotify.com/episode/6tIIjEet2Byi8kSWkmoQEt https://open.spotify.com/episode/6tIIjEet2Byi8kSWkmoQEt * https://podbay.fm/p/odd-lots/e/1655107200 https://podbay.fm/p/odd-lots/e/1655107200
fleddr 4y ago
I find it disappointing that solutions to the housing problem are so stuck in 20th century thinking. It has this "one more lane of highway" vibe. Extra supply in already dense/popular areas is fighting symptoms, an uphill battle that will always lag behind actual relief. Doesn't mean you shouldn't try that, I'm just saying to include a wider framework of ideas. For example, can we rethink how and where we work and how we commute to it? I know this is easier said than done, but I find it bizarre that the number one reason for urbanization, work, is just not included into the thinking. At all. Further, plan for the boomer exit rather than calling them names. In my country, the Netherlands, many boomers would love to scale down in housing. But those units don't exist. Up to the 90s, we'd have communal living for the elderly where they have small private housing with shared facilities and care, but now most of this is gone. So they have nowhere to go. You can call them names, tax them (whilst most have no liquid income), none of this is a solution. I'm not saying to pity them, I'm saying a rational and intelligent plan needs to include them whether you like it or not.
chrsw 4y ago
I'm probably like many other people who live in an expensive city: stuck in the middle income wasteland. Fair market housing is too expensive for me (unless I'm ok with roommates and eating canned beans every day) and I earn too much to qualify for "rent controlled" housing. Honestly, this whole industry feels just like a huge scam and I'm thinking of moving back in with my parents, even though I have a decent tech job. At least, I think it's decent.
JaceLightning 4y ago
Every state I have lived in has had a land value tax: you are assessed on the building and on the land and you pay tax on both.
robocat 4y ago
We have a sort of LVT in New Zealand: council rates are ~0.6% of the land+house value where I live in Christchurch. * Major issue: LVT is related to valuation, but valuation depends on mortgage rates. House valuations are mostly driven by interest repayments, not scarcity. This was demonstrated in Christchurch because there were homes going for say 30% of “value”, even though housing was in short supply due to the 2010 earthquake. A property could not be insured so buyers could not get a mortgage, and without a mortgage properties were going very cheaply. I bought a uninsurable home for ~$200k that would have sold for about $600k if it was insurable. Insurance was unavailable because the floor was out of level by 60mm due to land movement - but the home was fine. I see friends buy a house based on how much they can afford to pay on the mortgage: the housing market value is not related to what houses are worth but mostly to what people can afford. Mostly a zero-sum game where buyers bid against each other for how much they can pay, and the bank wins. * An LVT is expensive for retirees. An average home in Christchurch is $750000 which has rates (LVT) ~$5000, a single retiree gets about $21k. There is a rebate of up to $665 from the government for low earners (like retirees). Forcing people to move from their home is pretty shitty - I would like to be able to retire in fair comfort without being forced into a shitty retirement home. * The NZ government introduced a bipartisan law to force allow infill housing without NIMBY constraints in all cities - overriding almost all city district rules. Housing density will go up, a lot. https://bonded.co.nz/news/what-do-the-new-medium-density-housing-laws-mean-for-me-nz/ https://bonded.co.nz/news/what-do-the-new-medium-density-hou... * Locals complain about farming land being wasted for residential subdivision. This is bollox. Land around Christchurch is low value for farming unless you can get irrigation - water is the resource limitation therefore land is not being wasted. I see similar nonsense reasoning supporting an LVT. * After the 2010 Christchurch earthquake, about 8000 homes were permanently removed (redzoned[1]). Thousands of new sections were created on existing farmland (greenfield sections) but new housing requires infrastructure that takes many years to build[2]. There are between 100k and 200k homes in Christchurch (depending on when and how you count). * Saying that LVT is only land value and not the house, is crappy misdirection. Land value is related to the value of the surrounding properties, which depends on the developed value of the surrounding properties. This really shows in Christchurch where a home in a good suburb pays far more rates (LVT) than a similar home in a bad suburb. Land gets revalued by the government, but the figures are kind of made-up. [1] https://en.wikipedia.org/wiki/Residential_red_zone https://en.wikipedia.org/wiki/Residential_red_zone [2] https://www.stuff.co.nz/the-press/news/70270288/5000-greenfield-sections-in-christchurch-granted-consent-for-housing https://www.stuff.co.nz/the-press/news/70270288/5000-greenfi...
eleog 4y ago
The housing capacity of neighborhoods can be greatly increased w/o destroying their character. Seattle is now permitting additional dwelling units, e.g. "mother-in-law"s and tiny houses, on existing properties and I can assure you that they are being built. The rents on them are well below what a developer of the density buildings, (which steal the views and charm of existing homes and transfer that value to developers and to realtors like Redfin), would charge. LVT is a good idea. If it convinces neighborhoods to accept re-zoning then fine. If not then just use the tax dollars to promote housing. One good use would be improving transit to help neighborhoods handle more residents and to reduce the need for cars. Fewer cars could mean fewer garages, which in turn could become more auxiliary dwelling units.
eleog 4y ago
Why stop at an LVT? Let's punitively tax housing that is unoccupied for a long time. Even in Seattle, where housing is notoriously pricey, there are a great many houses sitting empty. If the cost of keeping them went up then they'd likely be rented or sold.

67 points by geocon 4y ago

Daryl Fairweather is the chief economist at Redfin, a major housing and real estate company (competitor to Zillow). Seems she's pretty bullish on LVT.

dna_polymerase 4y ago
I wouldn't say Redfin is a direct competitor to Zillow. Sure, there is overlap, but Redfin has agents on the selling property on their behalf, whereas Zillow is mostly a web platform.
AnimalMuppet 4y ago
Maybe so. But why do I care what Redfin's chief economist thinks? She works for a real estate company and she has ideas, and she's an economist. That's all cool, but none of it tells me that she actually knows whether or not Georgism would work as advertised.
- zip1234 4y ago
  There are actual places where it has been used and is in use. Some even in the US.
yellowapple 4y ago
Which is surprising, since LVT is pretty antithetical to Redfin's and Zillow's business model. The real estate industry typically revolves around the land rather than the buildings on that land, and the buying and selling of land is exactly the thing LVT seeks to obsolesce.
- larsiusprime 4y ago
  I'm not so sure. In the interview, we asked her about this specifically, and Daryl says that Redfin would rather have more customers than charge each customer a higher amount. They're a real estate broker, so they presumably would have plenty of business to do in facilitating transactions and connecting buyers and sellers regardless of how expensive the underlying assets were.

willbobaggins 4y ago

Nice!

pyradius 4y ago

Where economic efficiency and economic justice meet, and where a tax isn't really a tax. Good stuff!

stevenalowe 4y ago

Land and property improvements are already taxed (at least everywhere I’ve lived in the USA); I see no logical cause and effect relationships between the additional tax proposal and the alleged problems (nimby-ism) it is supposed to address.

larsiusprime 4y ago
Here's some empirical research for you then: http://gameofrent.com/content/is-land-a-big-deal http://gameofrent.com/content/is-land-a-big-deal Additionally, property tax rates vary massively from state to state and there's pretty strong correlation between property tax rates and housing supply and housing affordability. The legacy of California's Proposition 13 and its effects on housing supply are very well studied. Property tax still has inefficiencies (it can punish someone who builds relative to someone who holds an empty lot), and Land Value tax would be more efficient in aligning incentives properly.
- stevenalowe 4y ago
  Thanks for the link! Here’s an equally wordy refutation of Georgism https://dailyanarchist.com/2012/06/12/what-is-georgism-followed-by-a-refutation-part-i/ https://dailyanarchist.com/2012/06/12/what-is-georgism-follo...
  - brightly-salty 4y ago
    I read through it and didn't see any refutation, just a description of the historical movement. At least to my understanding, mutualists like Benjamin Tucker have historically agreed with Georgist philosophy to a great extent, including breaking the monopoly on land.
    - geocon 4y ago
      I think he's talking about the second part, which I found linked wayyyyy at the bottom: https://dailyanarchist.com/2012/06/21/the-single-tax-a-refutation/comment-page-1/ https://dailyanarchist.com/2012/06/21/the-single-tax-a-refut... That said I don't find this to be particularly convincing, given that they have mixed up labor and land, as well as failing to remember that Georgists are concerned with the benefit of land ownership (that is, rents) not the thing itself. The remainder is standard anarchist criticism of the state, which is fine I suppose if you are an anarchist but I don't think will convince anyone else (and I am not an anarchist)

uberman 4y ago

I guess I am skeptical that LVT would do anything for most of non-dense urban America. I would be happy to swap out my property, school, state, and income taxes for one where I paid what it would cost to lease the land I currently own. It would reduce my tax burden by 99% I know because my neighbor leases a large parcel (several times my lot size) from the federal government. I would be delighted to swap my current property, school, state and income taxes for what he pays for what he leases. I fear that if people like me don't pay these taxes, things like public schools and municipal services will simply fail where I live. It seems great to cash in on high demand until you look at the flip side and consider what happens when there is no demand. From my perspective LVT just looks like an expensive urban cash grab that utterly breaks down when demand softens.

bitshiftfaced 4y ago
The nominal value of each parcel of land doesn't matter when calculating a landowner's tax burden. You just need to compare each piece of land relative to one another and scale the tax burden accordingly.
- uberman 4y ago
  That is how traditional property tax works. However (as I understand it) a LVT that replaces property tax (potentially all other taxes as the one true tax) is based solely on the yearly cost to lease a parcel of land. Your tax is just that, the cost to lease. With a LVT there is no "here is your % of the district tax burden apportioned by what you own" only a "here is what we estimate it would cost to lease this property for a year".
  - dragonwriter 4y ago
    Note that an LVT of that form is isomorphic to public confiscation of land, which is leased back to the nominal “owner”.
    - jeffbee 4y ago

WalterBright 4y ago

Want to fix the economy? Stop punishing people for being productive. Stop paying people to fail. Want something to tax? Tax pollution.

spywaregorilla 4y ago
Land value tax is, in a sense, punishing people for not being productive. So there's that.
- throwaway894345 4y ago
  It's punishing people for being not productive in a very specific, narrow sense--productivity per unit land. Moreover (for clarity's sake), the parent said "stop punishing people for being productive" not "start punishing people for being unproductive" which sound similar but are very different statements.
  - spywaregorilla 4y ago
    shrug. rent seeking landowners are the greatest threat to a healthy economy.
    - throwaway894345 4y ago
      I genuinely don’t know anything about economics. Is this widely accepted among economists or is it more of an ideological/political axiom?
      - WalterBright 4y ago
        Ideology.
      - spywaregorilla 4y ago
        > https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent Economic rent isn't the same as just paying landlords rent, though it's related. Economic rent is basically you profiting from owning stuff and doing nothing. It's a pure wealth transfer https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking Rent seeking behavior is when you try to acquire more wealth without creating more wealth. This would include behaviors like regulatory capture, or raising housing rents or other necessary goods to whatever the populace is capable of paying because they have either little alternatives or switching costs are prohibitive. Monopolies, IP law (and abuse thereof), and cases like Apple prohibiting other app stores are all examples of rent seeking behavior as well. A nice quote from the first article on Land Value Taxes and why this is directly relevant. > "Henry George, best known for his proposal for a single tax on land, defines rent as "the part of the produce that accrues to the owners of land (or other natural capabilities) by virtue of ownership" and as "the share of wealth given to landowners because they have an exclusive right to the use of those natural capabilities." It is a generally agreed upon problem, going all the way back to adam smith. It's not possible to have a self consistent economic ideology that does otherwise. You get some radical free market capitalists who think otherwise, but if it were up to them we'd all be living in the United States of Standard Oil by now. They're safe to ignore. The solution to this problem is not clear at all and varies dramatically by ideologies.

hash872 4y ago

A very high LVT is a politically unserious proposition, because it would involve drastically raising taxes on the people who actually vote & hold political power in society- the middle class, upper middle class, and wealthy in suburbs and low-density urban areas. All of the alleged 'efficiency' gains you hear Georgists claim really mean 'middle class homeowners forced to sell their single family home to developers due to crushing tax increases'. Every day the evening news and social media would carry a new, tearful story of a family forced to sell their home. The white-hot rage of millions of taxpayers whose taxes drastically rise overnight would be enough to create bottled fusion- I suppose it would be good for the US in that you could finally find an issue that unites the most leftward Democrat and the most rightward Republican. 'Forcing everyone in the suburbs to sell their home to an apartment building developer due to ruinously high taxes' is the single most politically unrealistic idea ever proposed. LVT is certainly a clever way to make sure land is used efficiently, and probably a good idea in the abstract, and perhaps we could enact it when we colonize Mars. But implementing it on a country where many of the voters are living in 'inefficient' SFHs now is not ever going to happen

Wowfunhappy 4y ago
Could you start small? Just a minor LVT to begin with, which could potentially be raised over time. Possibly implemented by a single city instead of nationwide.
- newaccount2021 4y ago
  then that city would die and everything around it would flourish
  - Wowfunhappy 4y ago
    Isn't the idea that a LVT would improve the use of land? If that premise is correct, it could cause the city to flourish and grow ahead of its neighbors. Implementing the change more narrowly would allow you to test that assumption.

sudden_dystopia 4y ago

Disagree. We should go the other way, abolish all primary residence property taxes and replace with value added taxes. Other lands for secondary and commercial properties can still be taxed. Otherwise you are really just leasing land from the government. On a somewhat absurd tangent, I’ve been toying with the idea of something I call a “land dividend” to solve homelessness. If every US citizen had by birthright, a small parcel of land with no taxes owed, they would always have somewhere to go. Even if they lived in a tent. And land is one thing the government has in surplus and divvying it up could could both decrease expenses while also solving a problem without creating new tax burdens.

Stevvo 4y ago
Homeless people can already go camp on BLM or other public lands, but generally they don't because living in the middle of nowhere isn't going to get you out of that situation.
dlp211 4y ago
> If every US citizen had by birthright, a small parcel of land with no taxes owed, they would always have somewhere to go. I'm sorry, but if you can't see the numerous problems with this high school level idea about solving homelessness, maybe housing policy isn't something you should opine about.
akira2501 4y ago
You're presuming that the homeless you see on the streets already "don't have somewhere to go." For the majority of them, this is not true. They choose to live where they can easily get drugs or avoid their mental health issues. Most of them have homes or families that they could otherwise return to. From ground level, access to property does not seem to be any part of the problem here. Plus, you'd want that property to be somewhere close to jobs and services or you're just going to be pushing problems from the downtown core to wherever you manage to build these homes.
sosull 4y ago
I think the idea runs into the problems experienced by newly-developed rural properties. Small, privately held parcels of land are absurdly expensive to service. Power, water, communications, sewage, food, waste etc. are easier to provide to people who live close together. And then there’s the problem of a social hierarchy of needs. People need someone to turn to in an emergency, input into their immediate environment, and focal points. In that sense land can be cheap, but places are innately costly, not just financially, but socially and historically.

newaccount2021 4y ago

anonymouse008 4y ago

9 times out of 10 the issue with housing isn't that housing is truly in short supply - it's housing within a reasonable travel time of desired locations that is in short supply. To view the solution myopically as we must change people to allow more housing in their backyard, is only one frame - and not even the most effective one. Innovating the urban -> rural transport chain is the most challenging, but its implications are paramount.

myself248 4y ago
Or improving rural broadband access so more people can WFH forever. Hint, fiber is cheaper than roads.
zip1234 4y ago
Or we could just do the completely free thing that is removing rules preventing construction of homes where they are desired...
- foogazi 4y ago
  What if there are already homes there ?

myself248 4y ago

Revoking the religious tax exemption would fix it quicker. Better yet, do both.

scld 4y ago

When you're right, you're right.

goethes_kind 4y ago

The best way to fix the housing crisis, at the state/federal level is to create incentives for employers to move to less densely populated areas. But what makes it a bit more complex is that, ideally, one would, try to relocate entire technological hubs. But I do not see why it shouldn't be possible.

doktorhladnjak 4y ago
There are already many incentives for sprawl. It's not clear to me how encouraging more of it solves these problems.
nemothekid 4y ago
So just move the housing crisis to various pockets of the country every few years?

hardwaresofton 4y ago

It doesn't have to be this complicated. We don't need a land value tax. The most straight forward way to make people avoid speculating is to heavily tax all non-primary residence homes. Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) to and set a baseline on the taxes required and make the math for building property empire bleak (absolute destruction of the housing-as-a-financial-asset model). If you want people to buy homes to live in them, and not as a store of value or speculative instruments, we can disincentivize that behavior directly. It encourages productivity instead of rent-seeking and restores housing stock to people who are trying to live in a place, rather than extract value and it puts more taxes in government coffers from the likes of companies like BlackRock and REITs. It's simple. Tax people who buy homes they don't plan to live in heavily.

InefficientRed 4y ago
> Cap the amount people can charge in rent to some %s of purchase value (incentive to have high purchase value) Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes).
- hardwaresofton 4y ago
  > Landlords will figure out how to setup wash sales, or as close to a wash sale as they can legally get, or trade property between entities owned by the same real people, or engage in swapping behavior with other large holders in a cartel-like fashion, etc. Closing all the loop-holes would be difficult. Ah thanks for this criticism, the amount of loop holes would be pretty staggering/annoying. > Tax the net proceeds of rental properties at 90% and slap a 100% capital gains tax on any property that is not owner-occupied. Also, simply rule out renting for huge swathes of property (especially single family homes). LGTM, ship it.

motohagiography 4y ago

I personally advocate things like urban density, mixed use zoning, walkable cities, human sized homes, urban forestry, but I don't think LVT's are the right tool. I live in a city with "market value assessment" for property taxes, and it profoundly lacks transparency, and is a very dodgy regime altogether. The main thing a LVT creates is constant churn as (retired) people cease to be able to afford to live in their homes, incentivizes being a landlord, and punishes family wealth creation via home ownership (which is a barrier to class mobility), as if you own property, you now need to generate revenue from the land to pay the taxes on it. The LVT isn't for services either, it's punitive by definition. Sure, it would get rid of some vacant buildings, and we do need a way to discourage land and property banking that turns hot money into high prices for home buyers, but taxes are what you impose when you have a policy that nobody would win re-election on voting for. It's literally what nobody wants. Nudging taxes are inferior back door policymaking by regulators (in their own interest) who can't get the political traction for an actual policy. Who is nimby'ism a problem for? Arguably, people who want to impose unwanted experimental policy, and in-effect loot the wealth that cohesive local communities and their cultures invested in and built. Nimby'ism as concept is a slur that makes a villain of anyone with a home and investment in their local community, and who may be skeptical of centralized policymaking. I'd question the underlying values behind advocating an LVT, as they tend to be within a degree of some other very technocratic impositions that mainly benefit their administrators.

xxpor 4y ago
>who may be skeptical of centralized policymaking. Oh, we're talking about zoning? >The main thing a LVT creates is constant churn as (retired) people cease to be able to afford to live in their homes, incentivizes being a landlord, and punishes family wealth creation via home ownership (which is a barrier to class mobility) Yes, this is in fact literally the point. You can't have a growing population, and then depend on land ownership to generate wealth in perpetuity. There's only so much land. The class mobility point is especially hilarious. Yeah, Joe the Waiter is really going to be able to afford the $1.5 million 2000 sq ft house in Seattle to move his family up the ladder.
- 4y ago

throw0101a 4y ago

Also interviewed on the Odd Lots podcast a little while ago: > Housing in the US is a constant source of frustration. On the way up, prospective homebuyers worry that they're missing out on their chance to jump on the housing ladder. On the way down, homeowners worry about losing their equity and their nest egg. So is there a better way? Is there a way to make housing more equitable, and to separate the investment component from the shelter component? On this episode we speak with Daryl Fairweather, the chief economist at Redfin, about a land value tax and how it could help us reposition housing so that it's less of a financial asset that spirals people higher, and blocks so many people out. * https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb0014c5901 https://play.acast.com/s/oddlots/2f88bd35-04b5-4956-b770-aeb... * https://podcasts.apple.com/us/podcast/daryl-fairweather-on-the-tax-that-could-solve-the/id1056200096?i=1000566205455 https://podcasts.apple.com/us/podcast/daryl-fairweather-on-t... * https://open.spotify.com/episode/6tIIjEet2Byi8kSWkmoQEt https://open.spotify.com/episode/6tIIjEet2Byi8kSWkmoQEt * https://podbay.fm/p/odd-lots/e/1655107200 https://podbay.fm/p/odd-lots/e/1655107200

fleddr 4y ago

I find it disappointing that solutions to the housing problem are so stuck in 20th century thinking. It has this "one more lane of highway" vibe. Extra supply in already dense/popular areas is fighting symptoms, an uphill battle that will always lag behind actual relief. Doesn't mean you shouldn't try that, I'm just saying to include a wider framework of ideas. For example, can we rethink how and where we work and how we commute to it? I know this is easier said than done, but I find it bizarre that the number one reason for urbanization, work, is just not included into the thinking. At all. Further, plan for the boomer exit rather than calling them names. In my country, the Netherlands, many boomers would love to scale down in housing. But those units don't exist. Up to the 90s, we'd have communal living for the elderly where they have small private housing with shared facilities and care, but now most of this is gone. So they have nowhere to go. You can call them names, tax them (whilst most have no liquid income), none of this is a solution. I'm not saying to pity them, I'm saying a rational and intelligent plan needs to include them whether you like it or not.

chrsw 4y ago

I'm probably like many other people who live in an expensive city: stuck in the middle income wasteland. Fair market housing is too expensive for me (unless I'm ok with roommates and eating canned beans every day) and I earn too much to qualify for "rent controlled" housing. Honestly, this whole industry feels just like a huge scam and I'm thinking of moving back in with my parents, even though I have a decent tech job. At least, I think it's decent.

JaceLightning 4y ago

Every state I have lived in has had a land value tax: you are assessed on the building and on the land and you pay tax on both.

robocat 4y ago

We have a sort of LVT in New Zealand: council rates are ~0.6% of the land+house value where I live in Christchurch. * Major issue: LVT is related to valuation, but valuation depends on mortgage rates. House valuations are mostly driven by interest repayments, not scarcity. This was demonstrated in Christchurch because there were homes going for say 30% of “value”, even though housing was in short supply due to the 2010 earthquake. A property could not be insured so buyers could not get a mortgage, and without a mortgage properties were going very cheaply. I bought a uninsurable home for ~$200k that would have sold for about $600k if it was insurable. Insurance was unavailable because the floor was out of level by 60mm due to land movement - but the home was fine. I see friends buy a house based on how much they can afford to pay on the mortgage: the housing market value is not related to what houses are worth but mostly to what people can afford. Mostly a zero-sum game where buyers bid against each other for how much they can pay, and the bank wins. * An LVT is expensive for retirees. An average home in Christchurch is $750000 which has rates (LVT) ~$5000, a single retiree gets about $21k. There is a rebate of up to $665 from the government for low earners (like retirees). Forcing people to move from their home is pretty shitty - I would like to be able to retire in fair comfort without being forced into a shitty retirement home. * The NZ government introduced a bipartisan law to force allow infill housing without NIMBY constraints in all cities - overriding almost all city district rules. Housing density will go up, a lot. https://bonded.co.nz/news/what-do-the-new-medium-density-housing-laws-mean-for-me-nz/ https://bonded.co.nz/news/what-do-the-new-medium-density-hou... * Locals complain about farming land being wasted for residential subdivision. This is bollox. Land around Christchurch is low value for farming unless you can get irrigation - water is the resource limitation therefore land is not being wasted. I see similar nonsense reasoning supporting an LVT. * After the 2010 Christchurch earthquake, about 8000 homes were permanently removed (redzoned[1]). Thousands of new sections were created on existing farmland (greenfield sections) but new housing requires infrastructure that takes many years to build[2]. There are between 100k and 200k homes in Christchurch (depending on when and how you count). * Saying that LVT is only land value and not the house, is crappy misdirection. Land value is related to the value of the surrounding properties, which depends on the developed value of the surrounding properties. This really shows in Christchurch where a home in a good suburb pays far more rates (LVT) than a similar home in a bad suburb. Land gets revalued by the government, but the figures are kind of made-up. [1] https://en.wikipedia.org/wiki/Residential_red_zone https://en.wikipedia.org/wiki/Residential_red_zone [2] https://www.stuff.co.nz/the-press/news/70270288/5000-greenfield-sections-in-christchurch-granted-consent-for-housing https://www.stuff.co.nz/the-press/news/70270288/5000-greenfi...

eleog 4y ago

The housing capacity of neighborhoods can be greatly increased w/o destroying their character. Seattle is now permitting additional dwelling units, e.g. "mother-in-law"s and tiny houses, on existing properties and I can assure you that they are being built. The rents on them are well below what a developer of the density buildings, (which steal the views and charm of existing homes and transfer that value to developers and to realtors like Redfin), would charge. LVT is a good idea. If it convinces neighborhoods to accept re-zoning then fine. If not then just use the tax dollars to promote housing. One good use would be improving transit to help neighborhoods handle more residents and to reduce the need for cars. Fewer cars could mean fewer garages, which in turn could become more auxiliary dwelling units.

eleog 4y ago

Why stop at an LVT? Let's punitively tax housing that is unoccupied for a long time. Even in Seattle, where housing is notoriously pricey, there are a great many houses sitting empty. If the cost of keeping them went up then they'd likely be rented or sold.