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A very high LVT is a politically unserious proposition, because it would involve drastically raising taxes on the people who actually vote & hold political powe

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.
    - SllX 4y ago
      That’s optimistic. You’re reframing tax-policy to shape landowner behavior towards your desired outcome on the presumption that this will be an improvement of the land by increasing the cost of owning it by fiat. Sin taxes exist for a similar reason and have similar problems. Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct, but recognized as what they are sold as: a levy to provide revenue for an unprofitable but necessary organization (“the government”) to raise revenue in order to service its obligations to society. To the extent that this shapes behavior, it is as an unavoidable side effect. When you treat the side effect as the goal, you lose sight of the fact that regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.
      - zip1234 4y ago
        Like it or not, property taxes already exist and are not going away. LVT is considered to be vastly more efficient than taxing based on improved values of properties. Where LVTs have been introduced they have decreased taxes for most residents: 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...
        SllX 4y ago
        I did not write an argument against property taxes. I wrote one against abusing the properties of taxes to achieve goals beyond the primary purpose of taxation. I will read your link this evening.
      - Wowfunhappy 4y ago
        > Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct Why? If taxes are going to have side effects anyway, I think we should try to make those effects positive instead of negative. > Regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all. I don't think I agree with that. For example, I also think we should have a (revenue neutral) carbon tax. Part of the tax's purpose would indeed be to fund the government, but the other purpose would be to make people pay for the actual social cost of emitting carbon into the atmosphere, as opposed to passing them on to the broader public. This would allow the free market actually work properly.
  - yellowapple 4y ago
    The precise opposite would happen.
- SllX 4y ago
  So, boil the middle class rather than setting them on fire? I won’t call it unprecedented.
- dlp211 4y ago
  Allentown, PA instituted a LVT in the mid 90's.
- Originami 4y ago
  Better to just offer a 10% reduction in LVT per person (including children) living there, if at least one of the people was the owner. A family of four would then have an inherent tax advantage against Blackrock etc. accumulating family housing.
  - Wowfunhappy 4y ago
    At first blush, my concern would be discriminating against renters vs homeowners.
- harpersealtako 4y ago
  That's one of the big appeals of LVT: in theory it works incrementally. You try e.g. a 5% LVT and you should notice 5% of the effects.
  - forum_ghost 4y ago
    so shouldn't we have already noticed some of this? Property tax isn't THAT different, and one component of it is a tax on land. Are we seeing the LVT effects in locales with high property taxes?
    - larsiusprime 4y ago
      Yes. One of the big reasons that housing is (currently) more affordable in Texas compared to California is that Texas has relatively high property taxes and California has much lower property taxes, especially for Proposition 13 homes. That may not last long if the Texas GOP continues to emulate California housing policies by seeking to repeal property taxes; if they do that they will soon start to also imitate the California-style housing crisis.
      - burlesona 4y ago
        Hey Lars, came here to post nearly the same thing. Kudos :)
gruez 4y ago
>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. This seems trivially fixable by making the tax revenue neutral (ie. every additional dollar collected by the LVT is counterbalanced by one less dollar in taxes collected elsewhere).
- johntb86 4y ago
  The evening news doesn't care about balance, it cares about stories. Taxes that aren't collected aren't stories (at any one time, everyone is not paying an infinite number of potential taxes). A person being forced to move from their home is a story.
- UncleOxidant 4y ago
  I'm assuming you mean a reduction in income taxes to offset the increase in property tax. This would still negatively effect retirees and others who don't make a lot of income and thus wouldn't have much income tax to offset.
  - yellowapple 4y ago
    That's where UBI (or "citizens' dividend", in Georgist parlance) comes in. Unless Grandma's living in a SFH in SoMa, she's probably gonna end up getting more in dividends and other public services than she'd pay in LVT.
    - deleted 4y ago
      [deleted]
- AnimalMuppet 4y ago
  1. That might help some, but it won't fix it. Wherever else taxes are cut won't be on property, therefore the "land value tax plus some other tax cuts" will work out worse for property owners. That's kind of the point. But it's also, as hash872 says, the thing that makes it politically impossible. 2. Make it revenue neutral? Who's going to do that? Some legislature somewhere? Are they actually going to do it? Or are they going to say "Yay, more money!" and find new things to spend it on? I have zero confidence that a Georgist tax would be revenue neutral, no matter what theory says should happen, and no matter what promises are made.
Retric 4y ago
High but realistic LVT at say 2% wouldn’t force people to sell, it would however tank the value of ultra expensive land. Fewer people could afford 2% of land value + mortgage costs + insurance + … at current prices which means there are fewer buyers at those prices. That price drop scales with the LVT so at 10% you would pay more than at 2%, just nowhere close to 5x as much.
- ericmay 4y ago
  > it would however tank the value of ultra expensive land. Well it would depend on why the land is expensive. What it would do (at least in theory which I do agree with) is force the expensive land to be developed for a useful economic purpose instead of just sitting there. For single-family homes and such a LVT is likely to be neutral or slightly positive b/c a lot of those homes weren't built on particularly valuable or useful land (which is why it was cheap in the first place). I really like the idea of focusing taxes on more of a "what am I actually paying for in my community" which LVT and variations of that tend to support, but it'll never happen in the US.
  - Retric 4y ago
    LVT’s don’t cover the cost of education, roads, police, etc that scale with population. What they tax is proximity to places people want to live or resources to be extracted etc. This tends to minimize the distance people travel to work, but it’s hardly go to force a billionaire to sell land they want to keep.
    - ericmay 4y ago
      It depends on the implementation, but generally it actually would cover these things.
      - Retric 4y ago
        If the land tax is identical between an apartment complex with 1,000 people and one across the street in a different school district with 10,000 people then it can’t.
throwaway6734 4y ago
In a lot of places land is already taxed. We could start shifting the distribution of property tax from improvements more towards land
- zip1234 4y ago
  This alone would have a positive impact. Do a ten year phase in or immediate upon a sale and most people wouldn't even notice.
xt00 4y ago
LVT would be reasonable if presently home values were very low compared to wages so the impact to people would be minor, then over time it would encourage a certain behavior -- essentially a way to make more money with your land, rather than punishing people who currently have high land / home prices (like now). A much more realistic idea as others have noted would be to try this in an area where currently the impact to people would be negligible -- so the state could say "we will use X city as a test -- we will make it so these people no longer pay state property taxes at all, but will pay LVT instead".
bko 4y ago
If I understand it correctly, LVT would allow people to state what they think their property is worth and pay taxes accordingly. They could put down any value but anyone could buy it from them at that value. And this is supposed to be good? Forget politics, who thinks its a good idea to force people into economic transactions? I could see a whole new line of blackmail, akin to patent trolls, looking for people who under-priced their property or really don't want to move. It sounds terrible. Any billionaire could kick you out of your home in a moments notice. Sure you get paid, but you probably don't want to move. How could you even say the property is yours? People get upset with government forces them to sell their property using eminent domain. This strikes me as a hundred times worse.
- strongpigeon 4y ago
  I’m not sure why LVT would be assessed this way? I’m pretty sure the idea would be to keep the same assessment mechanisms, but tax only land, not improvements.
- ethanbond 4y ago
  This is not what LVT is. This is one potential mechanism to find the price of assets so they can be taxed.
- scld 4y ago
  You don't understand correctly. LVT is basically just property tax that doesn't assess the structure that's built on the land. So, land near a subway stop or bus terminal or downtown offices would be taxed higher as compared to land in the outskirts of town or in suburbs. You are thinking more of something like Glen Weyl's Radical Markets proposals.
  - bko 4y ago
    Guess I got some terms mixed up. Thanks for clearing that up. My taxes are assessed as land and property, with the majority of the valuation coming from the land. Is LVT a big departure from what we currently have in most US states?
strongpigeon 4y ago
One way to solve the issue of people being taxed out of their property would be to give the option to put a lien on the property if they’re earning less than a certain income (or over a certain age). This way, the owner gets to stay in their home, but the city is (eventually) getting the taxes it’s owed. I haven’t fully thought through all the incentives it brings though. However, it seems like a better solution than telling people to reverse mortgage their houses. Especially given how predatory that industry seems to be.
- doktorhladnjak 4y ago
  This sort of approach exists in several states https://dor.wa.gov/sites/default/files/2022-02/PTDeferral_SeniorsDisabilities.pdf?uid=62ac9fd331bea https://dor.wa.gov/sites/default/files/2022-02/PTDeferral_Se...
  - strongpigeon 4y ago
    Interesting. Thanks for sharing.
onlyrealcuzzo 4y ago
A LVT can be implemented while other taxes are reduced to make up for it. If income tax drops by X% and a LVT of Y% is implemented to, theoretically, keep the same revenues - some people will win and some will lose. The idea that all of the middle class, upper class, and wealthy will lose seems absurd. Some people seem poised for a loss - all the people living in SFH in the middle of a city where lots are worth $2M. All the parking lot operators, etc. And that's kind of the point... Perversely, it's easy to imagine a poorly implemented LVT that incentives the opposite of what proponents want - it reduces overall tax burdens on suburbs because the "land" is less valuable than the cut land - driving people to leave the city and live in the suburbs. It all comes down to implementation. Blanket statements seem out of touch
- colinmhayes 4y ago
  The upper middle class is largely defined by having a large amount of their wealth in their single family home. They would absolutely be crushed by a LVT, since discouraging single family homes on expensive land is pretty much the whole point. Hurting the people with the most political power is not a successful political strategy.
  - onlyrealcuzzo 4y ago
    Sure - if that's how you define upper middle class - then by definition, it is true. I'm not sure that's actually what the upper middle class is. The US is >50% urban. Wealth MASSIVELY skews urban. Home values massively skew urban. I would not be surprised if >50% of the "upper middle class" does not own an expensive SFH in the suburbs. And, again, this is beside the point. If income tax is reduced by 50% for the average upper middle class family, and then a LVT makes up the difference - there is no change. You're just incentivizing different behaviors. It comes down to implementation.
    - colinmhayes 4y ago
      > US is >50% urban Source? My understanding is that most Americans live in suburban areas. I live in Chicago, where the suburbs have 3x as many people as the city. The city population is largely split between the poorest in the region and richest, most white collar workers live in the suburbs. Seems to be true to a lesser extent in NYC, and it's hard to say there's any urban area in LA, the whole place is suburban.
InefficientRed 4y ago
On the other side of that is the also white-hot rage of the under-housed. We live on a street with a bunch of single family homes, almost all of which are rented out. There was a (literal) screaming match between a couple (one of whom is an MD) who couldn't afford the rent increase and a broker who was showing their apartment. Renters are close to out-numbering non-renters by double digits. Those are incredibly new phenomena. It's hard to over-state how different things are now compared to even 5 years ago. I will be surprised if there isn't an open electoral revolt against land owners in my community over the next 10 years. And not just pro-housing policy, but policy explicitly designed to punish. I don't have an opinion on LVT, but the idea that home owners are the primary organized electoral power base is, I think, shifting quickly in many communities. Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%.
- jemen 4y ago
  > Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%. I would say they already are disempowered. It is unfortunately pretty hard to organize anything when you have to worry about high rent, not losing your job or having to move every few years. What we have seen in the last decades is that it is now hard to do much at all through organizing unless you can somehow affect the economy. Which you can't if you risk getting fired or evicted doing so. Look at Japan, South Korea, Singapore, Hong Kong etc. for the results.
- notahacker 4y ago
  Can't speak for your jurisdiction, but I live in the UK where houses are (i) infamously unaffordable and (ii) 65% of the population owns a home, generally sitting on its own plot of land which in much of the country represents a large fraction of the value of the house, and generally representing something that will [have] take[n] a couple of decades to pay off. The remaining 35% obviously skews towards politically uninfluential groups (the young, the poor, the immigrant, those not tied to particular place) and of course people that want to buy a house to set them up for life asap. Home ownership is falling, but not to the extent that the government doesn't see keeping house prices rising as one of its highest political priorities.
zip1234 4y ago
Who said anything about a very high LVT? Where LVTs have been implemented, they phase them in and can make the taxes about the same as before. It will certainly increase taxes on people that are holding an empty lot in the center of town though.
- yellowapple 4y ago
  A 100% LVT is the endgoal (since that represents full compensation for the externalities produced by excluding others from land), but I don't know of anyone proposing it as an immediate target; usually the idea is to ramp it up gradually while phasing out other taxes.
deleted 4y ago
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hash872 4y ago
Like here, just to make the point, here is a quote I saved from a Scott Alexander Substack discussion of Georgism. I liked this so much I saved it in Notion, sorry I don't have the commenter's name. If you read a lot of Georgism stuff, you'll notice that they call literally everything 'speculation'- if you want to, you know, live in your home, that's greedy 'speculation' that an LVT will stamp out: "A greedy land speculator (middle class home owner) refuses to develop a vacant parking lot (refuses to sell to a McMansion developer) because he can let land appreciation pay for his refusal to develop (let him stay in his home). Since the villainous speculator and the heroic homeowner are economically the same, any consistent LVT has to essentially force the home sale. That is the entire point of the LVT"
- lukasb 4y ago
  And? This is basically an argument for preserving the status quo of housing. The status quo sucks.
- dwater 4y ago
  That's a strawman. The difference in the taxes paid by a middle class homeowner under standard property tax schemes and LVT is much less than the difference in taxes paid by the parking lot owner. In practice LVT is usually set up so that a typical single family home owner pays about the same amount under either scheme. The person who will pay a significantly higher rate under LVT is the parking lot owner, who has a much less emotional argument for retaining their property, and at the expense of that one rentier the entire community benefits from encouraging more productive use of that land.
  - hash872 4y ago
    I don't think that this is a correct model of how a high LVT would work. But more importantly, let's say it did- now you don't get any of the supposed 'efficiency' gains. I think LVTs are a great idea for a brand new society, and they certainly would work- by making land too valuable for SFHs, so that it has to be used for its highest & best usage. But if you're not forcing homeowners to do that, you're not capturing any of the efficiency gains, so LVT just becomes another tax. It's either forcing landowners to develop apartment buildings on valuable land or it isn't- you have to pick one
pyradius 4y ago
Getting to a 'very high LVT' is not something proposed to happen overnight. Mortgage debt also has to be considered since this is simply 'capitalized future rents'. Additionally, the process would include a tax shift, that is the reduction of other taxes as the tax on land is raised. Only after a revenue-neutral tax shift was concluded would further increases in land value taxation occur. Given the fact that renters (who generally have less income than homeowners) can manage to pay the annual land rent every year, homeowners will manage just fine. "Furthermore, as we discuss in more detail in our paper, the number of net winners from this reform would far exceed the number of net losers, who, if necessary, could be exempted or compensated at little budgetary cost." https://voxeu.org/article/post-corona-balanced-budget-fiscal-stimulus-case-shifting-taxes-land https://voxeu.org/article/post-corona-balanced-budget-fiscal...
- abakker 4y ago
  Homeowners already pay "rent" in the form of property tax. Depending on where you are, this might be quite a high payment already. For a mortgage holder with property tax, a great deal of that payment is fees and taxes already.
  - pyradius 4y ago
    Property tax falls on both the land and improvements. Inasmuch as they pay a 'property tax on land', they paid a reduced price to purchase said land. If there had been no tax on land, they would have simply paid that much more in lump sum for their fee simple ownership. The premise behind a land value tax is to take an increasing amount of the land rent in taxation, which at the extreme end would reduce the selling price of land to $0. The objective is both to make the land markets work better and one of distributive justice. It isn't to punish homeowners. It is to redirect the privatization of land rent and return it to the rightful recipients (those who are excluded from using a location with the public acting on their behalf). In other words, if the Georgist solution had been in place, the price of land would have been close to $0. I can assure you this is nowhere near the case. In fact, here in Salt Lake City, the land share of real estate value is around 70%. Of course, transitions can be challenging. The prior owners of the land got away with legalized theft and you can trace this back in time from each former landowner capturing the land rent from the next buyer. This is what Georgists aim to stop.
toss1 4y ago
We already have some Land Value Tax in many areas, although some of it is inverse to the proposal. By putting a conservation easement on some land, you can preserve it for wildlife and have a minimal tax. >>So it’s kind of just basically a shorthand for I think, being kind of selfish. valuing your property value, your view, your neighborhood character that you want more than building a neighborhood that is welcome for all people or for more people. To be able to afford and live in. So, unfortunately, nimbyism, it’s like a consequence of, I think incentives. It is not a consequence of incentives, it is a consequence of the fact that when someone moves to a place with a particular quality of life, pays more, and then pays high taxes and high maintenance costs for decades, they themselves have paid for decades to build that quality of life. To say that oh, your neighbor can randomly decide to make a major construction project literally in your backyard and convert a wetlands housing endangered species into a several hundred unit high-density living complex, with years of construction and two orders of magnitude greater traffic on your street forever - yeah, you can expect people to object. (this literally happened to me, and in a matter of weeks we got 10x the largest crowd to show up at a planning board meeting and we gave a presentation to shut it down; not yet permanently, but...) And rightly so - the developer is literally stealing all the value that you and your neighbors and town created over the past few decades, and then profit from the buyers also. Now, if you are talking about areas that are already cities and have such high density that there is effectively no wildlife, then it might be different, but again the value of walkable neighborhoods vs random massive development is not to be overlooked. So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote.
- InefficientRed 4y ago
  But of course destroying wetlands to build your house was entirely reasonable. > So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote. In other words, "let them eat cake". The "anyone under 45 doesn't deserve to afford shelter" attitude strikes me as a "fuck around and find out" situation.
throw0101a 4y ago
> Every day the evening news and social media would carry a new, tearful story of a family forced to sell their home. The same things were said with market value assessment was in introduced in Ontario, Canada: * https://en.wikipedia.org/wiki/Municipal_Property_Assessment_Corporation https://en.wikipedia.org/wiki/Municipal_Property_Assessment_... Municipalities were forced to used the market value, but could determine rates themselves. Not much happened IIRC.
yellowapple 4y ago
> 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'. Not if it's paired with a citizen's dividend or other form of UBI, which is what most Georgists (myself included) advocate. The idea is that if you're occupying your equal share of land value, then at a 100% LVT rate the tax you pay should be equal to what you're getting back in dividends + public services. LVT+UBI therefore represents a tax savings for everyone except the wealthiest of land owners.
- forum_ghost 4y ago
  >your equal share of land value what's an equal share? land is not fungible.
  - geocon 4y ago
    Land isn't, but land value (in dollars) is
    - forum_ghost 4y ago
      dollar value is only one part of valuation. a ranch somewhere vs a shoebox in the middle of manhattan quite likely will not be considered "equal" by prospective owners, even if the dollar valuation is exactly the same.
warriormonk5 4y ago
I would argue the lack of atmosphere and high cost of shipping materials is a LVT in and of itself. You only build things that are useful on Mars.
forum_ghost 4y ago
What's a "very high LVT"? Estonia has an LVT of 0.1—2.5%. https://www.emta.ee/en/private-client/taxes-and-payment/other-taxes/land-tax https://www.emta.ee/en/private-client/taxes-and-payment/othe...

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.
  - SllX 4y ago
    That’s optimistic. You’re reframing tax-policy to shape landowner behavior towards your desired outcome on the presumption that this will be an improvement of the land by increasing the cost of owning it by fiat. Sin taxes exist for a similar reason and have similar problems. Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct, but recognized as what they are sold as: a levy to provide revenue for an unprofitable but necessary organization (“the government”) to raise revenue in order to service its obligations to society. To the extent that this shapes behavior, it is as an unavoidable side effect. When you treat the side effect as the goal, you lose sight of the fact that regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all.
    - zip1234 4y ago
      Like it or not, property taxes already exist and are not going away. LVT is considered to be vastly more efficient than taxing based on improved values of properties. Where LVTs have been introduced they have decreased taxes for most residents: 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...
      - SllX 4y ago
        I did not write an argument against property taxes. I wrote one against abusing the properties of taxes to achieve goals beyond the primary purpose of taxation. I will read your link this evening.
    - Wowfunhappy 4y ago
      > Taxes should not be conceded as an instrument of power to reorient society into a form viewed by a subset of society as correct Why? If taxes are going to have side effects anyway, I think we should try to make those effects positive instead of negative. > Regardless of reason, taxation is a taking of assets from its owners, and this is a moral compromise we tolerate in service of having a government at all. I don't think I agree with that. For example, I also think we should have a (revenue neutral) carbon tax. Part of the tax's purpose would indeed be to fund the government, but the other purpose would be to make people pay for the actual social cost of emitting carbon into the atmosphere, as opposed to passing them on to the broader public. This would allow the free market actually work properly.
- yellowapple 4y ago
  The precise opposite would happen.
SllX 4y ago
So, boil the middle class rather than setting them on fire? I won’t call it unprecedented.
dlp211 4y ago
Allentown, PA instituted a LVT in the mid 90's.
Originami 4y ago
Better to just offer a 10% reduction in LVT per person (including children) living there, if at least one of the people was the owner. A family of four would then have an inherent tax advantage against Blackrock etc. accumulating family housing.
- Wowfunhappy 4y ago
  At first blush, my concern would be discriminating against renters vs homeowners.
harpersealtako 4y ago
That's one of the big appeals of LVT: in theory it works incrementally. You try e.g. a 5% LVT and you should notice 5% of the effects.
- forum_ghost 4y ago
  so shouldn't we have already noticed some of this? Property tax isn't THAT different, and one component of it is a tax on land. Are we seeing the LVT effects in locales with high property taxes?
  - larsiusprime 4y ago
    Yes. One of the big reasons that housing is (currently) more affordable in Texas compared to California is that Texas has relatively high property taxes and California has much lower property taxes, especially for Proposition 13 homes. That may not last long if the Texas GOP continues to emulate California housing policies by seeking to repeal property taxes; if they do that they will soon start to also imitate the California-style housing crisis.
    - burlesona 4y ago
      Hey Lars, came here to post nearly the same thing. Kudos :)

gruez 4y ago

>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. This seems trivially fixable by making the tax revenue neutral (ie. every additional dollar collected by the LVT is counterbalanced by one less dollar in taxes collected elsewhere).

johntb86 4y ago
The evening news doesn't care about balance, it cares about stories. Taxes that aren't collected aren't stories (at any one time, everyone is not paying an infinite number of potential taxes). A person being forced to move from their home is a story.
UncleOxidant 4y ago
I'm assuming you mean a reduction in income taxes to offset the increase in property tax. This would still negatively effect retirees and others who don't make a lot of income and thus wouldn't have much income tax to offset.
- yellowapple 4y ago
  That's where UBI (or "citizens' dividend", in Georgist parlance) comes in. Unless Grandma's living in a SFH in SoMa, she's probably gonna end up getting more in dividends and other public services than she'd pay in LVT.
  - deleted 4y ago
    [deleted]
AnimalMuppet 4y ago
1. That might help some, but it won't fix it. Wherever else taxes are cut won't be on property, therefore the "land value tax plus some other tax cuts" will work out worse for property owners. That's kind of the point. But it's also, as hash872 says, the thing that makes it politically impossible. 2. Make it revenue neutral? Who's going to do that? Some legislature somewhere? Are they actually going to do it? Or are they going to say "Yay, more money!" and find new things to spend it on? I have zero confidence that a Georgist tax would be revenue neutral, no matter what theory says should happen, and no matter what promises are made.

Retric 4y ago

High but realistic LVT at say 2% wouldn’t force people to sell, it would however tank the value of ultra expensive land. Fewer people could afford 2% of land value + mortgage costs + insurance + … at current prices which means there are fewer buyers at those prices. That price drop scales with the LVT so at 10% you would pay more than at 2%, just nowhere close to 5x as much.

ericmay 4y ago
> it would however tank the value of ultra expensive land. Well it would depend on why the land is expensive. What it would do (at least in theory which I do agree with) is force the expensive land to be developed for a useful economic purpose instead of just sitting there. For single-family homes and such a LVT is likely to be neutral or slightly positive b/c a lot of those homes weren't built on particularly valuable or useful land (which is why it was cheap in the first place). I really like the idea of focusing taxes on more of a "what am I actually paying for in my community" which LVT and variations of that tend to support, but it'll never happen in the US.
- Retric 4y ago
  LVT’s don’t cover the cost of education, roads, police, etc that scale with population. What they tax is proximity to places people want to live or resources to be extracted etc. This tends to minimize the distance people travel to work, but it’s hardly go to force a billionaire to sell land they want to keep.
  - ericmay 4y ago
    It depends on the implementation, but generally it actually would cover these things.
    - Retric 4y ago
      If the land tax is identical between an apartment complex with 1,000 people and one across the street in a different school district with 10,000 people then it can’t.

throwaway6734 4y ago

In a lot of places land is already taxed. We could start shifting the distribution of property tax from improvements more towards land

zip1234 4y ago
This alone would have a positive impact. Do a ten year phase in or immediate upon a sale and most people wouldn't even notice.

xt00 4y ago

LVT would be reasonable if presently home values were very low compared to wages so the impact to people would be minor, then over time it would encourage a certain behavior -- essentially a way to make more money with your land, rather than punishing people who currently have high land / home prices (like now). A much more realistic idea as others have noted would be to try this in an area where currently the impact to people would be negligible -- so the state could say "we will use X city as a test -- we will make it so these people no longer pay state property taxes at all, but will pay LVT instead".

bko 4y ago

If I understand it correctly, LVT would allow people to state what they think their property is worth and pay taxes accordingly. They could put down any value but anyone could buy it from them at that value. And this is supposed to be good? Forget politics, who thinks its a good idea to force people into economic transactions? I could see a whole new line of blackmail, akin to patent trolls, looking for people who under-priced their property or really don't want to move. It sounds terrible. Any billionaire could kick you out of your home in a moments notice. Sure you get paid, but you probably don't want to move. How could you even say the property is yours? People get upset with government forces them to sell their property using eminent domain. This strikes me as a hundred times worse.

strongpigeon 4y ago
I’m not sure why LVT would be assessed this way? I’m pretty sure the idea would be to keep the same assessment mechanisms, but tax only land, not improvements.
ethanbond 4y ago
This is not what LVT is. This is one potential mechanism to find the price of assets so they can be taxed.
scld 4y ago
You don't understand correctly. LVT is basically just property tax that doesn't assess the structure that's built on the land. So, land near a subway stop or bus terminal or downtown offices would be taxed higher as compared to land in the outskirts of town or in suburbs. You are thinking more of something like Glen Weyl's Radical Markets proposals.
- bko 4y ago
  Guess I got some terms mixed up. Thanks for clearing that up. My taxes are assessed as land and property, with the majority of the valuation coming from the land. Is LVT a big departure from what we currently have in most US states?

strongpigeon 4y ago

One way to solve the issue of people being taxed out of their property would be to give the option to put a lien on the property if they’re earning less than a certain income (or over a certain age). This way, the owner gets to stay in their home, but the city is (eventually) getting the taxes it’s owed. I haven’t fully thought through all the incentives it brings though. However, it seems like a better solution than telling people to reverse mortgage their houses. Especially given how predatory that industry seems to be.

doktorhladnjak 4y ago
This sort of approach exists in several states https://dor.wa.gov/sites/default/files/2022-02/PTDeferral_SeniorsDisabilities.pdf?uid=62ac9fd331bea https://dor.wa.gov/sites/default/files/2022-02/PTDeferral_Se...
- strongpigeon 4y ago
  Interesting. Thanks for sharing.

onlyrealcuzzo 4y ago

A LVT can be implemented while other taxes are reduced to make up for it. If income tax drops by X% and a LVT of Y% is implemented to, theoretically, keep the same revenues - some people will win and some will lose. The idea that all of the middle class, upper class, and wealthy will lose seems absurd. Some people seem poised for a loss - all the people living in SFH in the middle of a city where lots are worth $2M. All the parking lot operators, etc. And that's kind of the point... Perversely, it's easy to imagine a poorly implemented LVT that incentives the opposite of what proponents want - it reduces overall tax burdens on suburbs because the "land" is less valuable than the cut land - driving people to leave the city and live in the suburbs. It all comes down to implementation. Blanket statements seem out of touch

colinmhayes 4y ago
The upper middle class is largely defined by having a large amount of their wealth in their single family home. They would absolutely be crushed by a LVT, since discouraging single family homes on expensive land is pretty much the whole point. Hurting the people with the most political power is not a successful political strategy.
- onlyrealcuzzo 4y ago
  Sure - if that's how you define upper middle class - then by definition, it is true. I'm not sure that's actually what the upper middle class is. The US is >50% urban. Wealth MASSIVELY skews urban. Home values massively skew urban. I would not be surprised if >50% of the "upper middle class" does not own an expensive SFH in the suburbs. And, again, this is beside the point. If income tax is reduced by 50% for the average upper middle class family, and then a LVT makes up the difference - there is no change. You're just incentivizing different behaviors. It comes down to implementation.
  - colinmhayes 4y ago
    > US is >50% urban Source? My understanding is that most Americans live in suburban areas. I live in Chicago, where the suburbs have 3x as many people as the city. The city population is largely split between the poorest in the region and richest, most white collar workers live in the suburbs. Seems to be true to a lesser extent in NYC, and it's hard to say there's any urban area in LA, the whole place is suburban.

InefficientRed 4y ago

On the other side of that is the also white-hot rage of the under-housed. We live on a street with a bunch of single family homes, almost all of which are rented out. There was a (literal) screaming match between a couple (one of whom is an MD) who couldn't afford the rent increase and a broker who was showing their apartment. Renters are close to out-numbering non-renters by double digits. Those are incredibly new phenomena. It's hard to over-state how different things are now compared to even 5 years ago. I will be surprised if there isn't an open electoral revolt against land owners in my community over the next 10 years. And not just pro-housing policy, but policy explicitly designed to punish. I don't have an opinion on LVT, but the idea that home owners are the primary organized electoral power base is, I think, shifting quickly in many communities. Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%.

jemen 4y ago
> Landowners, I think, I have two options: find ways to fracture/disempower the rent base in the communities where they invest or else find a way to keep the number of non-renters well over 50%. I would say they already are disempowered. It is unfortunately pretty hard to organize anything when you have to worry about high rent, not losing your job or having to move every few years. What we have seen in the last decades is that it is now hard to do much at all through organizing unless you can somehow affect the economy. Which you can't if you risk getting fired or evicted doing so. Look at Japan, South Korea, Singapore, Hong Kong etc. for the results.
notahacker 4y ago
Can't speak for your jurisdiction, but I live in the UK where houses are (i) infamously unaffordable and (ii) 65% of the population owns a home, generally sitting on its own plot of land which in much of the country represents a large fraction of the value of the house, and generally representing something that will [have] take[n] a couple of decades to pay off. The remaining 35% obviously skews towards politically uninfluential groups (the young, the poor, the immigrant, those not tied to particular place) and of course people that want to buy a house to set them up for life asap. Home ownership is falling, but not to the extent that the government doesn't see keeping house prices rising as one of its highest political priorities.

zip1234 4y ago

Who said anything about a very high LVT? Where LVTs have been implemented, they phase them in and can make the taxes about the same as before. It will certainly increase taxes on people that are holding an empty lot in the center of town though.

yellowapple 4y ago
A 100% LVT is the endgoal (since that represents full compensation for the externalities produced by excluding others from land), but I don't know of anyone proposing it as an immediate target; usually the idea is to ramp it up gradually while phasing out other taxes.

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hash872 4y ago

Like here, just to make the point, here is a quote I saved from a Scott Alexander Substack discussion of Georgism. I liked this so much I saved it in Notion, sorry I don't have the commenter's name. If you read a lot of Georgism stuff, you'll notice that they call literally everything 'speculation'- if you want to, you know, live in your home, that's greedy 'speculation' that an LVT will stamp out: "A greedy land speculator (middle class home owner) refuses to develop a vacant parking lot (refuses to sell to a McMansion developer) because he can let land appreciation pay for his refusal to develop (let him stay in his home). Since the villainous speculator and the heroic homeowner are economically the same, any consistent LVT has to essentially force the home sale. That is the entire point of the LVT"

lukasb 4y ago
And? This is basically an argument for preserving the status quo of housing. The status quo sucks.
dwater 4y ago
That's a strawman. The difference in the taxes paid by a middle class homeowner under standard property tax schemes and LVT is much less than the difference in taxes paid by the parking lot owner. In practice LVT is usually set up so that a typical single family home owner pays about the same amount under either scheme. The person who will pay a significantly higher rate under LVT is the parking lot owner, who has a much less emotional argument for retaining their property, and at the expense of that one rentier the entire community benefits from encouraging more productive use of that land.
- hash872 4y ago
  I don't think that this is a correct model of how a high LVT would work. But more importantly, let's say it did- now you don't get any of the supposed 'efficiency' gains. I think LVTs are a great idea for a brand new society, and they certainly would work- by making land too valuable for SFHs, so that it has to be used for its highest & best usage. But if you're not forcing homeowners to do that, you're not capturing any of the efficiency gains, so LVT just becomes another tax. It's either forcing landowners to develop apartment buildings on valuable land or it isn't- you have to pick one

pyradius 4y ago

Getting to a 'very high LVT' is not something proposed to happen overnight. Mortgage debt also has to be considered since this is simply 'capitalized future rents'. Additionally, the process would include a tax shift, that is the reduction of other taxes as the tax on land is raised. Only after a revenue-neutral tax shift was concluded would further increases in land value taxation occur. Given the fact that renters (who generally have less income than homeowners) can manage to pay the annual land rent every year, homeowners will manage just fine. "Furthermore, as we discuss in more detail in our paper, the number of net winners from this reform would far exceed the number of net losers, who, if necessary, could be exempted or compensated at little budgetary cost." https://voxeu.org/article/post-corona-balanced-budget-fiscal-stimulus-case-shifting-taxes-land https://voxeu.org/article/post-corona-balanced-budget-fiscal...

abakker 4y ago
Homeowners already pay "rent" in the form of property tax. Depending on where you are, this might be quite a high payment already. For a mortgage holder with property tax, a great deal of that payment is fees and taxes already.
- pyradius 4y ago
  Property tax falls on both the land and improvements. Inasmuch as they pay a 'property tax on land', they paid a reduced price to purchase said land. If there had been no tax on land, they would have simply paid that much more in lump sum for their fee simple ownership. The premise behind a land value tax is to take an increasing amount of the land rent in taxation, which at the extreme end would reduce the selling price of land to $0. The objective is both to make the land markets work better and one of distributive justice. It isn't to punish homeowners. It is to redirect the privatization of land rent and return it to the rightful recipients (those who are excluded from using a location with the public acting on their behalf). In other words, if the Georgist solution had been in place, the price of land would have been close to $0. I can assure you this is nowhere near the case. In fact, here in Salt Lake City, the land share of real estate value is around 70%. Of course, transitions can be challenging. The prior owners of the land got away with legalized theft and you can trace this back in time from each former landowner capturing the land rent from the next buyer. This is what Georgists aim to stop.

toss1 4y ago

We already have some Land Value Tax in many areas, although some of it is inverse to the proposal. By putting a conservation easement on some land, you can preserve it for wildlife and have a minimal tax. >>So it’s kind of just basically a shorthand for I think, being kind of selfish. valuing your property value, your view, your neighborhood character that you want more than building a neighborhood that is welcome for all people or for more people. To be able to afford and live in. So, unfortunately, nimbyism, it’s like a consequence of, I think incentives. It is not a consequence of incentives, it is a consequence of the fact that when someone moves to a place with a particular quality of life, pays more, and then pays high taxes and high maintenance costs for decades, they themselves have paid for decades to build that quality of life. To say that oh, your neighbor can randomly decide to make a major construction project literally in your backyard and convert a wetlands housing endangered species into a several hundred unit high-density living complex, with years of construction and two orders of magnitude greater traffic on your street forever - yeah, you can expect people to object. (this literally happened to me, and in a matter of weeks we got 10x the largest crowd to show up at a planning board meeting and we gave a presentation to shut it down; not yet permanently, but...) And rightly so - the developer is literally stealing all the value that you and your neighbors and town created over the past few decades, and then profit from the buyers also. Now, if you are talking about areas that are already cities and have such high density that there is effectively no wildlife, then it might be different, but again the value of walkable neighborhoods vs random massive development is not to be overlooked. So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote.

InefficientRed 4y ago
But of course destroying wetlands to build your house was entirely reasonable. > So, no this proposal is preposterous, aside from being a nonstarter. Young people who might want it are great at making noisy protests and notoriously bad at bothering to vote - the one thing that matters, while older people, and especially those who own property, tend to reliably vote. In other words, "let them eat cake". The "anyone under 45 doesn't deserve to afford shelter" attitude strikes me as a "fuck around and find out" situation.

throw0101a 4y ago

> Every day the evening news and social media would carry a new, tearful story of a family forced to sell their home. The same things were said with market value assessment was in introduced in Ontario, Canada: * https://en.wikipedia.org/wiki/Municipal_Property_Assessment_Corporation https://en.wikipedia.org/wiki/Municipal_Property_Assessment_... Municipalities were forced to used the market value, but could determine rates themselves. Not much happened IIRC.

yellowapple 4y ago

> 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'. Not if it's paired with a citizen's dividend or other form of UBI, which is what most Georgists (myself included) advocate. The idea is that if you're occupying your equal share of land value, then at a 100% LVT rate the tax you pay should be equal to what you're getting back in dividends + public services. LVT+UBI therefore represents a tax savings for everyone except the wealthiest of land owners.

forum_ghost 4y ago
>your equal share of land value what's an equal share? land is not fungible.
- geocon 4y ago
  Land isn't, but land value (in dollars) is
  - forum_ghost 4y ago
    dollar value is only one part of valuation. a ranch somewhere vs a shoebox in the middle of manhattan quite likely will not be considered "equal" by prospective owners, even if the dollar valuation is exactly the same.

warriormonk5 4y ago

I would argue the lack of atmosphere and high cost of shipping materials is a LVT in and of itself. You only build things that are useful on Mars.

forum_ghost 4y ago

What's a "very high LVT"? Estonia has an LVT of 0.1—2.5%. https://www.emta.ee/en/private-client/taxes-and-payment/other-taxes/land-tax https://www.emta.ee/en/private-client/taxes-and-payment/othe...