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Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential lan

Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents.

conductr 4y ago
> A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents Zoning usually dictates what's allowed and is indifferent to tax rates
- theluketaylor 4y ago
  One of the many reasons exclusionary zoning needs to die in a fire. The urban housing crisis has been allowed to grow for decades, so we're long past any single solution, but I'm increasingly convinced no combination of fixes can succeed while exclusionary zoning still exists. Japanese-style inclusionary zoning splits the difference nicely between making sure people don't live next to loud, potentially dangerous industry and allowing lots of mixed-use, human scale developments of varying density. http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
  - staringback 4y ago
    US home ownership: 65% Japan home ownership: 61% Yet there is such a housing crisis in the states due to the "zoning" bogeyman
    - dpe82 4y ago
      I'm not sure what your point is? Does development policy not affect the supply and location of housing?
- yellowapple 4y ago
  Exclusionary zoning exists because of NIMBYism. NIMBYism exists because of the financial incentive to raise land values. That financial incentive exists because of a lack of taxation on land value.
  - conductr 4y ago
    Not sure I agree. Or doesn't fit with my experience/city/state. All zoning is exclusionary to my knowledge. That's the entire point. It's not necessary but it exists because it exists. And, it's sticky. It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could decide where you wanted to build that BY. Once you have developed the land, raised family, lived in a house for decade(s), and the city around you develops and changes. Now, your property maybe better utilized as a multifamily complex or a nuclear reactor, or anything really. But, it's your home and you shouldn't be taxed out of it. Rezoning as a process is may difficult and probably should be. There's a lot of stakeholders/neighbors who are impacted by a change. They should have some say. It just so happens that those people who bought a single family house in a single family neighborhood tend to prefer it to stay that way so they get called NIMBY but it's a completely rational perspective to have if you were in their shoes. Thus, an introduction of this tax only serves to displace the current owners who can not afford the new tax bill and does nothing to change the actual zoning. So the result is, richer people with bigger tax-bill budgets move in and your even further into the NIMBYism trap not even realizing you're in a zoning trap. If you open up the zoning (and perhaps the building restrictions), the best and highest uses can actually prevail.
    - imtringued 4y ago
      A lot of zoning in sane countries is hierarchical which means it doesn't exclude, it gives permission.
    - lmm 4y ago
      > It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could decide where you wanted to build that BY. That's not really true. Zoning was usually set up later. Often the existing buildings wouldn't be permitted by the zoning rules but were "grandfathered in". (If we made this practice illegal and insisted that you have to demolish anything that doesn't fit the new zoning laws, that might be one way to keep zoning laws sane). Even if the final state of those people's buildings is legal, often the process by which they were built wouldn't be. > Once you have developed the land, raised family, lived in a house for decade(s), and the city around you develops and changes. Now, your property maybe better utilized as a multifamily complex or a nuclear reactor, or anything really. But, it's your home and you shouldn't be taxed out of it. Rezoning as a process is may difficult and probably should be. There's a lot of stakeholders/neighbors who are impacted by a change. They should have some say. It just so happens that those people who bought a single family house in a single family neighborhood tend to prefer it to stay that way so they get called NIMBY but it's a completely rational perspective to have if you were in their shoes. Guess they should've had the foresight to get born earlier? It seems absurdly unfair to say that zoning set up for a population that was half the size should bind the current generation. I get that it's individually rational to want to pull the ladder up behind you, but it's disgusting. (And for the "people shouldn't be forced out of their home" crowd: my generation gets forced out of our homes every 2-3 years because we can't afford to own and have to rent. So I won't shed any tears for boomers getting forced out of their home once in several decades)
- AmVess 4y ago
  There is zoning, and then also the cost of development. Here, the reason why no starter homes are being built is because the cost to develop a subdivision is so high that no one can make a profit selling inexpensive homes.
  - dpe82 4y ago
    Where is "here"?
beefman 4y ago
Almost all property people buy and sell is productively used, and separating the value of land and improvements is practically impossible. Edit: As a weird example, subtracting what it would cost to build my California house from its current market value gives a value for the lot far lower than the actual market price of an empty lot in this location. This isn't just due to the depreciation of the construction (2012) but to market inefficiencies. It's actually the norm in our town. Only developers with economies of scale can really afford to build here, modulo a few wealthy families who are building their dream home without concern for ROI.
- kspacewalk2 4y ago
  >separating the value of land and improvements is practically impossible. is routinely done in countries in which variants of land value tax are implemented.
  - beefman 4y ago
    It's routinely done in appraisals where I live too. Doesn't mean it's in any way accurate, as required to make the mechanism in the grandparent comment work.
    - zip1234 4y ago
      Valuing a building+land is already done and used for property tax purposes. Why do you think it would be worse or less accurate to just remove building part?
- JumpCrisscross 4y ago
  > gives a value for the lot far lower than the actual market price of an empty lot in this location Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.
  - 4y ago
havblue 4y ago
This would certainly impact people with older houses disproportionately relative to the wealthier folks doing the teardowns, though. Probably a political downside.
- zip1234 4y ago
  Where they implement such taxes, people with homes often get lower taxes because the tax on vacant or underutilized properties makes up for it.
Retric 4y ago
I don’t think that’s a meaningful difference. It would take an extreme property tax to actually incentivize an empty field over productive use of that space. It might in theory make a difference when considering replacing a 40 story building with a 42 story one, but in practice you really don’t see that kind of construction project. In that context pushing for larger jumps before replacement might actually be economically and environmentally beneficial.
- xhxhsjjsjsnz 4y ago
  It’s not just empty fields. It’s also empty buildings. A grocery store sized unit sat vacant in my San Francisco neighborhood for over a decade. Cheap property tax due to Prop 13. Owners wanted to wait for the “right offer” to develop it.
  - zip1234 4y ago
    Many of the abandoned houses in Detroit are owned by speculators who will do nothing with it but wait for land prices to increase.
    - sudden_dystopia 4y ago
      And that’s worse than them just being abandoned how? Nobody else wanted them, nearly anybody could have bought dilapidated houses in poverty stricken neighborhoods extremely cheaply.
      - zip1234 4y ago
        They are still abandoned. They are instead now owned by people that have the means, but no intention of making them better. It has been shown that LVT reduces blight: https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2017/03/07/can-extra-taxes-on-vacant-land-cure-city-blight https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
        4y ago
kashkhan 4y ago
property taxes are terrible for old people. you should be able to buy a reasonable amount of land tax free. USA has about 2.5 billion acres. 1/4 acre per person in an average area tax free is reasonable.
- CrazyStat 4y ago
  Sure, I'll happily give you a quarter acre in rural Nevada tax free. A quarter acre in Palo Alto, though?
- dwater 4y ago
  The way people in the US plan for old age and retirement, and the way they are treated by society, is terrible and property taxes are aspect of that. But the only way you should be able to own land tax free is if there are no government services provided on that land. No utilities, no public road, no emergency services, no municipal services. I don't know of anywhere in the US where that is an option. Unless you're saying you want that funding to come from a different source, which would mean a total restructuring of the tax system in the majority of localities.
  - kashkhan 4y ago
    The traditional (neoclassical economics) view is that taxes pay for services, but that's not how it really works. The federal government buys these services with money it creates, and then only later does it tax it back. For state an local governments this is mostly true but even there the federal government helps out. What you want is for the wealthy to pay for the poor and old and those without much wealth or income.
    - zdragnar 4y ago
      State and local governments in the US cannot create money. They either tax it first or run a debt by selling bonds.
  - sudden_dystopia 4y ago
    Yes, get rid of property taxes and completely overhaul the tax system. You could easily replace property taxes with a VAT which I would find much preferable because it’s more flexible. Illinois property taxes robbed my family of a farm that had been in our family for 200 years. My grandparents simply couldn’t afford $20k in taxes every damn year. Patently absurd.
jwarden 4y ago
The advantages of a land-value tax is the central idea of Georgism/Distributism. There have been some interesting discussions about this on HN. Recently: https://news.ycombinator.com/item?id=29493005 https://news.ycombinator.com/item?id=29493005
Dracophoenix 4y ago
What's the difference between the two in reality? Theoretically, with a land value tax, "improvements" (however that's defined) aren't added to the final tax calculation. However better-looking homes are then a signal that drive up demand for (and therefore price of) land so ultimately it seems LVT does punish improvements if only indirectly.
- JumpCrisscross 4y ago
  > What's the difference between the two in reality? Land value tax incentivises turning a single-family home into a multi-unit building. Property tax explicitly discourages that.
  - Dracophoenix 4y ago
    Instead, I see LVT incentivizing the production and purchase of mobile homes, RVs, and hotels. You could live tax free if you don't have a permanent abode.
    - epistasis 4y ago
      The tax is still paid, just indirectly. The only way to avoid it is to move to areas where land is valueless. Why does a tailor on Saville Row in London charge $10k while the tailor in southern Italy charge $1k for a bespoke suit? Land values and land rents: https://twitter.com/dieworkwear/status/1549648048426344448?s=21&t=WYvyafqePtjf6gGMVOHIOw https://twitter.com/dieworkwear/status/1549648048426344448?s...
  - indecisive_user 4y ago
    If everyone on the block turns their homes into multiplexes or high rises, this would attract businesses/restaurants to cater to the new residents which would ultimately increase the value of the land and the corresponding taxes, so I'm confused how it's different than property taxes in that regard
    - JumpCrisscross 4y ago
chadash 4y ago
The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments that use LVT in practice [1]? What do they do? [1] In practice and as a primary means of property taxation. For example, proponents of wealth taxes talk about Switzerland, but the percentage of wealth that gets taxed there is quite small and nowhere near what proposals for wealth taxes in the US are aiming for. In other words, what's a good country to look at to see LVT used effectively?
- amanaplanacanal 4y ago
  Wikipedia has some examples of places where it is used: https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
  - chadash 4y ago
    I looked there and a bunch of the examples show places where it used to be used (which is probably a good indication of how hard it is in practice). The rest have very vague details and none of the examples there really go into any depth on the details of how they value land in practice. So I'm wondering if anyone knows which country has a good model to look further into.
    - bobthepanda 4y ago
      Based on the examples listed, I would imagine that it would probably easiest to look up those Australian states like Victoria.
- bbatha 4y ago
  Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".
naasking 4y ago
I'm not clear on how land value taxes would incentivize the right kinds of units. For instance, would a land value tax incentivize the creation of tiny bachelor apartments, or larger apartments that families can use? We need incentives for both, and larger units are not very common these days.
- tptacek 4y ago
  Why does tax policy need to directly influence the mix of 1bdr and 3bdr apartments? Renters who need 3bdr apartments have enormous influence over the market already.
  - naasking 4y ago
    If tax policy is not designed with these considerations in mind, then it will incentivize an improper mix and deteriorate the livability of the city. For instance, where I live the city core has been abandoned by families because no family-sized units have been built in something like 40 years. So families move out of the cities and then commute which causes all sorts of traffic problems, wastes their time in these commutes, creates more pollution and carbon emissions, and so on.
    - deleted 4y ago
      [deleted]
    - tptacek 4y ago
      Why is that necessarily the case? The market has much better information about the demand for 3bdr apartments than cities and counties do. Mostly we have the opposite problem: top-down policy from local governments impedes the construction of 3bdr apartments.
      - naasking 4y ago
        It's a mistake to assume that builders are responding to demand. All actors in a market have only partial information. To take my city as an example, the housing market started heating up, so builders started constructing condos and tried to pack as many units into their building as possible, thus improving supply. This created a vibrant urban centre for young people who live on their own in modest apartments and drove up demand among that cohort even further, thus incentivising further construction of those same units, creating a self-reinforcing cycle. But young people aren't the only ones who need to be downtown, as I said, and families were driven out to the suburbs for suitable housing. They have to commute instead, which has caused all sorts of gridlock and the usual problems with urban sprawl. If the right incentives existed for mixed housing, tax incentives included, then this wouldn't happen, and people of all ages could afford to live closer to where they work, thus alleviating many of those issues and creating more livable cities. Here in Canada we already do this in one sense by mixing government housing among more affluent neighbourhoods. This has prevented the formation of ghettos, but this same approach hasn't been applied to create an appropriate mix of housing for all different living arrangements. So given a land value tax incentivises certain kinds of land use, my question is whether it would incentivise using land to make urban centres more livable for all types of people, rather than only certain kinds of people or lifestyles.
dominotw 4y ago
> disincentive to making the land more productive. Isn't that like saying income tax disincentives people from making more money.
- imtringued 4y ago
  A land value tax discourages people from owning land and an income tax discourages people from working.
- BirdieNZ 4y ago
  It disincentivises labour, yes.
seanmcdirmid 4y ago
> Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. I could get on board with this if cost to build and demolish were considered. We have a lot of SFHs that don't make sense to turn into town homes yet because the value of the home on property + demolition costs + cost to build new townhomes on property is greater than what those townhomes could sell for. More to the point, a blind land value tax could create a lot of waste through otherwise unproductive land repurposing (only productive because the tax makes it so).
- awillen 4y ago
  That seems like the point, though - the land tax makes it so that it is productive to add more density. We want people to demolish that SFH and turn it into a townhome because we need more housing, so that's a feature of the tax, not a bug.
  - seanmcdirmid 4y ago
    > That seems like the point, though - the land tax makes it so that it is productive to add more density. It will still force density eventually as the home's structure value depreciates (demo costs are the same no matter how much the home is worth). Any new structures will be pushed into higher value uses. BUT let's say we instituted a blind land value tax tomorrow: many people would be forced out of their homes AND could not sell the home for what it was worth: a buyer would still have to either live in the house and pay the higher land value tax or tear down the structure and build something more profitable...the haircut they would otherwise have to take in either case would be reflected in just paying less for the house in the first place (assuming they've done their homework). This could even happen after the land tax is implemented. That the land value rises above the point of its use but below the point of where the land could be re-developed into the higher value use case. Then....you are kind of stuck in a bad spot until your situation changes or you go bankrupt. We actually already see this in the market: land with a tear down will cost less than land that is completely clear. The costs to develop are just less in the latter case. Also, people are forced by the construction market to settle for less valuable structures on high value land because there is just a shortage of material and talent to redevelop everything that we want redeveloped already.
kuang_eleven 4y ago
Land value taxes are not functionally different than just regular property taxes in the places where it matters. In all of the areas that are in the worst of the housing crisis, property value is already dominated by land value; LVT doesn't really change much. The problem, just like the source says, is that the tax is too low, not mention the absolute disaster that is Prop 13 in California.
glitchinc 4y ago
Not in all cases. I live in a Resource Conservation area where no lot less than 10 acres in size can be subdivided per zoning laws. The zoning is set as it is to preserve watersheds, wildlife, etc. There are limits (by ratio to land area) that dictate structure density, amount of impervious substrate that can exist within the perimeter of my property, etc. Just because I own over 10 acres doesn't mean I can sell my property to a developer so that they can build four high rise apartment buildings and turn a rural area into a burgeoning metropolitan hub (while destroying a large swath of forest in the process). We pay high property taxes (which are split value taxes, by the way) relative to other rural areas in the region. That is, we are taxed for the virtue of owning relatively large plots of land (for our area) that come with the protections afforded by the zoning laws--even though our sparsely-developed properties and the characteristics thereof provide benefit to all in our area, including city dwellers (e.g. readily available and clean drinking water, maintaining a healthy ecosystem), for which a value could be assessed that would result in lowering our taxes. That said, I purchased the property specifically for the Resource Conservation zoning protections, as did my neighbors--and we'd have the zoning laws set no other way regardless of the cost of doing so. Trying to jam more people into the same finite amount of space is not a sustainable solution (here's looking at you, Bay Area). A byproduct of the recent pandemic was that a significant number of people beta tested relying on technology to get their job done independent of where they were physically located. I would argue it generally worked quite well (though not in all cases). Though a more ambitious plan than merely increasing taxes and hoping that more housing is developed, why not incentivize people to move to less populated area with the intent of promoting a more-even distribution of population density over time; incentivize medium and large businesses to either permit remote work or establish and maintain local/regional offices if remote work is not conducive to their lines of business or their corporate culture; and fund timely development of new and improvement of existing infrastructure that would make previous two goals achievable?
bergenty 4y ago
No, I hate it. It’s a tax on just living and we don’t need to do this in the US where we have more land than we know what to do with.
fuzzfactor 4y ago
The original purpose of the tax is to reclaim the land if the possessor can not make enough money off the land, or prosper some other way, to pay the tax. A mortgage acts like this too and if the tax was insignificant by comparison it would seem so fair but at least a mortgage can eventually be paid off in full. Then the bank no longer has an interest but the taxman never stops. Taxes always go up but economic fortunes do not, when these become out-of-phase the original purpose is fulfilled. This is what makes people demolish perfectly good buildings to reduce the taxable value of their property while they try to hold on to the land during a downturn. Mortgages don't make people act like this. For the greatest prosperity of the average citizens in a sustainable system, you tax nothing but commerce. The purpose of taxing the income or property of average citizens is to repress opportunity for the majority. This is by design.

conductr 4y ago

> A land value tax would incentivize residential landowners to build more units which provides more supply and would lower rents Zoning usually dictates what's allowed and is indifferent to tax rates

theluketaylor 4y ago
One of the many reasons exclusionary zoning needs to die in a fire. The urban housing crisis has been allowed to grow for decades, so we're long past any single solution, but I'm increasingly convinced no combination of fixes can succeed while exclusionary zoning still exists. Japanese-style inclusionary zoning splits the difference nicely between making sure people don't live next to loud, potentially dangerous industry and allowing lots of mixed-use, human scale developments of varying density. http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
- staringback 4y ago
  US home ownership: 65% Japan home ownership: 61% Yet there is such a housing crisis in the states due to the "zoning" bogeyman
  - dpe82 4y ago
    I'm not sure what your point is? Does development policy not affect the supply and location of housing?
yellowapple 4y ago
Exclusionary zoning exists because of NIMBYism. NIMBYism exists because of the financial incentive to raise land values. That financial incentive exists because of a lack of taxation on land value.
- conductr 4y ago
  Not sure I agree. Or doesn't fit with my experience/city/state. All zoning is exclusionary to my knowledge. That's the entire point. It's not necessary but it exists because it exists. And, it's sticky. It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could decide where you wanted to build that BY. Once you have developed the land, raised family, lived in a house for decade(s), and the city around you develops and changes. Now, your property maybe better utilized as a multifamily complex or a nuclear reactor, or anything really. But, it's your home and you shouldn't be taxed out of it. Rezoning as a process is may difficult and probably should be. There's a lot of stakeholders/neighbors who are impacted by a change. They should have some say. It just so happens that those people who bought a single family house in a single family neighborhood tend to prefer it to stay that way so they get called NIMBY but it's a completely rational perspective to have if you were in their shoes. Thus, an introduction of this tax only serves to displace the current owners who can not afford the new tax bill and does nothing to change the actual zoning. So the result is, richer people with bigger tax-bill budgets move in and your even further into the NIMBYism trap not even realizing you're in a zoning trap. If you open up the zoning (and perhaps the building restrictions), the best and highest uses can actually prevail.
  - imtringued 4y ago
    A lot of zoning in sane countries is hierarchical which means it doesn't exclude, it gives permission.
  - lmm 4y ago
    > It was established most likely when the entire city was raw land and undeveloped; so it served as a plan for development. There was no NIMBY because people were building their BY. Because there was a plan, you could decide where you wanted to build that BY. That's not really true. Zoning was usually set up later. Often the existing buildings wouldn't be permitted by the zoning rules but were "grandfathered in". (If we made this practice illegal and insisted that you have to demolish anything that doesn't fit the new zoning laws, that might be one way to keep zoning laws sane). Even if the final state of those people's buildings is legal, often the process by which they were built wouldn't be. > Once you have developed the land, raised family, lived in a house for decade(s), and the city around you develops and changes. Now, your property maybe better utilized as a multifamily complex or a nuclear reactor, or anything really. But, it's your home and you shouldn't be taxed out of it. Rezoning as a process is may difficult and probably should be. There's a lot of stakeholders/neighbors who are impacted by a change. They should have some say. It just so happens that those people who bought a single family house in a single family neighborhood tend to prefer it to stay that way so they get called NIMBY but it's a completely rational perspective to have if you were in their shoes. Guess they should've had the foresight to get born earlier? It seems absurdly unfair to say that zoning set up for a population that was half the size should bind the current generation. I get that it's individually rational to want to pull the ladder up behind you, but it's disgusting. (And for the "people shouldn't be forced out of their home" crowd: my generation gets forced out of our homes every 2-3 years because we can't afford to own and have to rent. So I won't shed any tears for boomers getting forced out of their home once in several decades)
AmVess 4y ago
There is zoning, and then also the cost of development. Here, the reason why no starter homes are being built is because the cost to develop a subdivision is so high that no one can make a profit selling inexpensive homes.
- dpe82 4y ago
  Where is "here"?

beefman 4y ago

Almost all property people buy and sell is productively used, and separating the value of land and improvements is practically impossible. Edit: As a weird example, subtracting what it would cost to build my California house from its current market value gives a value for the lot far lower than the actual market price of an empty lot in this location. This isn't just due to the depreciation of the construction (2012) but to market inefficiencies. It's actually the norm in our town. Only developers with economies of scale can really afford to build here, modulo a few wealthy families who are building their dream home without concern for ROI.

kspacewalk2 4y ago
>separating the value of land and improvements is practically impossible. is routinely done in countries in which variants of land value tax are implemented.
- beefman 4y ago
  It's routinely done in appraisals where I live too. Doesn't mean it's in any way accurate, as required to make the mechanism in the grandparent comment work.
  - zip1234 4y ago
    Valuing a building+land is already done and used for property tax purposes. Why do you think it would be worse or less accurate to just remove building part?
JumpCrisscross 4y ago
> gives a value for the lot far lower than the actual market price of an empty lot in this location Retrofitting or tearing down a house in California is expensive. Particularly if it's an old house where there could be e.g. lead or asbestos. Clean lots (presuming it wasn't previously a laundromat) command a value from the baggage they clearly don't bring.
- 4y ago

havblue 4y ago

This would certainly impact people with older houses disproportionately relative to the wealthier folks doing the teardowns, though. Probably a political downside.

zip1234 4y ago
Where they implement such taxes, people with homes often get lower taxes because the tax on vacant or underutilized properties makes up for it.

Retric 4y ago

I don’t think that’s a meaningful difference. It would take an extreme property tax to actually incentivize an empty field over productive use of that space. It might in theory make a difference when considering replacing a 40 story building with a 42 story one, but in practice you really don’t see that kind of construction project. In that context pushing for larger jumps before replacement might actually be economically and environmentally beneficial.

xhxhsjjsjsnz 4y ago
It’s not just empty fields. It’s also empty buildings. A grocery store sized unit sat vacant in my San Francisco neighborhood for over a decade. Cheap property tax due to Prop 13. Owners wanted to wait for the “right offer” to develop it.
- zip1234 4y ago
  Many of the abandoned houses in Detroit are owned by speculators who will do nothing with it but wait for land prices to increase.
  - sudden_dystopia 4y ago
    And that’s worse than them just being abandoned how? Nobody else wanted them, nearly anybody could have bought dilapidated houses in poverty stricken neighborhoods extremely cheaply.
    - zip1234 4y ago
      They are still abandoned. They are instead now owned by people that have the means, but no intention of making them better. It has been shown that LVT reduces blight: https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2017/03/07/can-extra-taxes-on-vacant-land-cure-city-blight https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
      - 4y ago

kashkhan 4y ago

property taxes are terrible for old people. you should be able to buy a reasonable amount of land tax free. USA has about 2.5 billion acres. 1/4 acre per person in an average area tax free is reasonable.

CrazyStat 4y ago
Sure, I'll happily give you a quarter acre in rural Nevada tax free. A quarter acre in Palo Alto, though?
dwater 4y ago
The way people in the US plan for old age and retirement, and the way they are treated by society, is terrible and property taxes are aspect of that. But the only way you should be able to own land tax free is if there are no government services provided on that land. No utilities, no public road, no emergency services, no municipal services. I don't know of anywhere in the US where that is an option. Unless you're saying you want that funding to come from a different source, which would mean a total restructuring of the tax system in the majority of localities.
- kashkhan 4y ago
  The traditional (neoclassical economics) view is that taxes pay for services, but that's not how it really works. The federal government buys these services with money it creates, and then only later does it tax it back. For state an local governments this is mostly true but even there the federal government helps out. What you want is for the wealthy to pay for the poor and old and those without much wealth or income.
  - zdragnar 4y ago
    State and local governments in the US cannot create money. They either tax it first or run a debt by selling bonds.
- sudden_dystopia 4y ago
  Yes, get rid of property taxes and completely overhaul the tax system. You could easily replace property taxes with a VAT which I would find much preferable because it’s more flexible. Illinois property taxes robbed my family of a farm that had been in our family for 200 years. My grandparents simply couldn’t afford $20k in taxes every damn year. Patently absurd.

jwarden 4y ago

The advantages of a land-value tax is the central idea of Georgism/Distributism. There have been some interesting discussions about this on HN. Recently: https://news.ycombinator.com/item?id=29493005 https://news.ycombinator.com/item?id=29493005

Dracophoenix 4y ago

What's the difference between the two in reality? Theoretically, with a land value tax, "improvements" (however that's defined) aren't added to the final tax calculation. However better-looking homes are then a signal that drive up demand for (and therefore price of) land so ultimately it seems LVT does punish improvements if only indirectly.

JumpCrisscross 4y ago
> What's the difference between the two in reality? Land value tax incentivises turning a single-family home into a multi-unit building. Property tax explicitly discourages that.
- Dracophoenix 4y ago
  Instead, I see LVT incentivizing the production and purchase of mobile homes, RVs, and hotels. You could live tax free if you don't have a permanent abode.
  - epistasis 4y ago
    The tax is still paid, just indirectly. The only way to avoid it is to move to areas where land is valueless. Why does a tailor on Saville Row in London charge $10k while the tailor in southern Italy charge $1k for a bespoke suit? Land values and land rents: https://twitter.com/dieworkwear/status/1549648048426344448?s=21&t=WYvyafqePtjf6gGMVOHIOw https://twitter.com/dieworkwear/status/1549648048426344448?s...
- indecisive_user 4y ago
  If everyone on the block turns their homes into multiplexes or high rises, this would attract businesses/restaurants to cater to the new residents which would ultimately increase the value of the land and the corresponding taxes, so I'm confused how it's different than property taxes in that regard
  - JumpCrisscross 4y ago

chadash 4y ago

The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments that use LVT in practice [1]? What do they do? [1] In practice and as a primary means of property taxation. For example, proponents of wealth taxes talk about Switzerland, but the percentage of wealth that gets taxed there is quite small and nowhere near what proposals for wealth taxes in the US are aiming for. In other words, what's a good country to look at to see LVT used effectively?

amanaplanacanal 4y ago
Wikipedia has some examples of places where it is used: https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
- chadash 4y ago
  I looked there and a bunch of the examples show places where it used to be used (which is probably a good indication of how hard it is in practice). The rest have very vague details and none of the examples there really go into any depth on the details of how they value land in practice. So I'm wondering if anyone knows which country has a good model to look further into.
  - bobthepanda 4y ago
    Based on the examples listed, I would imagine that it would probably easiest to look up those Australian states like Victoria.
bbatha 4y ago
Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".

naasking 4y ago

I'm not clear on how land value taxes would incentivize the right kinds of units. For instance, would a land value tax incentivize the creation of tiny bachelor apartments, or larger apartments that families can use? We need incentives for both, and larger units are not very common these days.

tptacek 4y ago
Why does tax policy need to directly influence the mix of 1bdr and 3bdr apartments? Renters who need 3bdr apartments have enormous influence over the market already.
- naasking 4y ago
  If tax policy is not designed with these considerations in mind, then it will incentivize an improper mix and deteriorate the livability of the city. For instance, where I live the city core has been abandoned by families because no family-sized units have been built in something like 40 years. So families move out of the cities and then commute which causes all sorts of traffic problems, wastes their time in these commutes, creates more pollution and carbon emissions, and so on.
  - deleted 4y ago
    [deleted]
  - tptacek 4y ago
    Why is that necessarily the case? The market has much better information about the demand for 3bdr apartments than cities and counties do. Mostly we have the opposite problem: top-down policy from local governments impedes the construction of 3bdr apartments.
    - naasking 4y ago
      It's a mistake to assume that builders are responding to demand. All actors in a market have only partial information. To take my city as an example, the housing market started heating up, so builders started constructing condos and tried to pack as many units into their building as possible, thus improving supply. This created a vibrant urban centre for young people who live on their own in modest apartments and drove up demand among that cohort even further, thus incentivising further construction of those same units, creating a self-reinforcing cycle. But young people aren't the only ones who need to be downtown, as I said, and families were driven out to the suburbs for suitable housing. They have to commute instead, which has caused all sorts of gridlock and the usual problems with urban sprawl. If the right incentives existed for mixed housing, tax incentives included, then this wouldn't happen, and people of all ages could afford to live closer to where they work, thus alleviating many of those issues and creating more livable cities. Here in Canada we already do this in one sense by mixing government housing among more affluent neighbourhoods. This has prevented the formation of ghettos, but this same approach hasn't been applied to create an appropriate mix of housing for all different living arrangements. So given a land value tax incentivises certain kinds of land use, my question is whether it would incentivise using land to make urban centres more livable for all types of people, rather than only certain kinds of people or lifestyles.

dominotw 4y ago

> disincentive to making the land more productive. Isn't that like saying income tax disincentives people from making more money.

imtringued 4y ago
A land value tax discourages people from owning land and an income tax discourages people from working.
BirdieNZ 4y ago
It disincentivises labour, yes.

seanmcdirmid 4y ago

> Land value taxes are even better. Property taxes provide a disincentive to making the land more productive. I could get on board with this if cost to build and demolish were considered. We have a lot of SFHs that don't make sense to turn into town homes yet because the value of the home on property + demolition costs + cost to build new townhomes on property is greater than what those townhomes could sell for. More to the point, a blind land value tax could create a lot of waste through otherwise unproductive land repurposing (only productive because the tax makes it so).

awillen 4y ago
That seems like the point, though - the land tax makes it so that it is productive to add more density. We want people to demolish that SFH and turn it into a townhome because we need more housing, so that's a feature of the tax, not a bug.
- seanmcdirmid 4y ago
  > That seems like the point, though - the land tax makes it so that it is productive to add more density. It will still force density eventually as the home's structure value depreciates (demo costs are the same no matter how much the home is worth). Any new structures will be pushed into higher value uses. BUT let's say we instituted a blind land value tax tomorrow: many people would be forced out of their homes AND could not sell the home for what it was worth: a buyer would still have to either live in the house and pay the higher land value tax or tear down the structure and build something more profitable...the haircut they would otherwise have to take in either case would be reflected in just paying less for the house in the first place (assuming they've done their homework). This could even happen after the land tax is implemented. That the land value rises above the point of its use but below the point of where the land could be re-developed into the higher value use case. Then....you are kind of stuck in a bad spot until your situation changes or you go bankrupt. We actually already see this in the market: land with a tear down will cost less than land that is completely clear. The costs to develop are just less in the latter case. Also, people are forced by the construction market to settle for less valuable structures on high value land because there is just a shortage of material and talent to redevelop everything that we want redeveloped already.

kuang_eleven 4y ago

Land value taxes are not functionally different than just regular property taxes in the places where it matters. In all of the areas that are in the worst of the housing crisis, property value is already dominated by land value; LVT doesn't really change much. The problem, just like the source says, is that the tax is too low, not mention the absolute disaster that is Prop 13 in California.

glitchinc 4y ago

Not in all cases. I live in a Resource Conservation area where no lot less than 10 acres in size can be subdivided per zoning laws. The zoning is set as it is to preserve watersheds, wildlife, etc. There are limits (by ratio to land area) that dictate structure density, amount of impervious substrate that can exist within the perimeter of my property, etc. Just because I own over 10 acres doesn't mean I can sell my property to a developer so that they can build four high rise apartment buildings and turn a rural area into a burgeoning metropolitan hub (while destroying a large swath of forest in the process). We pay high property taxes (which are split value taxes, by the way) relative to other rural areas in the region. That is, we are taxed for the virtue of owning relatively large plots of land (for our area) that come with the protections afforded by the zoning laws--even though our sparsely-developed properties and the characteristics thereof provide benefit to all in our area, including city dwellers (e.g. readily available and clean drinking water, maintaining a healthy ecosystem), for which a value could be assessed that would result in lowering our taxes. That said, I purchased the property specifically for the Resource Conservation zoning protections, as did my neighbors--and we'd have the zoning laws set no other way regardless of the cost of doing so. Trying to jam more people into the same finite amount of space is not a sustainable solution (here's looking at you, Bay Area). A byproduct of the recent pandemic was that a significant number of people beta tested relying on technology to get their job done independent of where they were physically located. I would argue it generally worked quite well (though not in all cases). Though a more ambitious plan than merely increasing taxes and hoping that more housing is developed, why not incentivize people to move to less populated area with the intent of promoting a more-even distribution of population density over time; incentivize medium and large businesses to either permit remote work or establish and maintain local/regional offices if remote work is not conducive to their lines of business or their corporate culture; and fund timely development of new and improvement of existing infrastructure that would make previous two goals achievable?

bergenty 4y ago

No, I hate it. It’s a tax on just living and we don’t need to do this in the US where we have more land than we know what to do with.

fuzzfactor 4y ago

The original purpose of the tax is to reclaim the land if the possessor can not make enough money off the land, or prosper some other way, to pay the tax. A mortgage acts like this too and if the tax was insignificant by comparison it would seem so fair but at least a mortgage can eventually be paid off in full. Then the bank no longer has an interest but the taxman never stops. Taxes always go up but economic fortunes do not, when these become out-of-phase the original purpose is fulfilled. This is what makes people demolish perfectly good buildings to reduce the taxable value of their property while they try to hold on to the land during a downturn. Mortgages don't make people act like this. For the greatest prosperity of the average citizens in a sustainable system, you tax nothing but commerce. The purpose of taxing the income or property of average citizens is to repress opportunity for the majority. This is by design.