9 ms·
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 $
by 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 agoWikipedia 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 agoI 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 agoBased on the examples listed, I would imagine that it would probably easiest to look up those Australian states like Victoria.
- bbatha 4y agoOutside 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".
- hammock 4y agoDifference without a meaningful distinction. Houses are bought on credit, that credit isn’t approved without an appraisal that supports the price being paid, and that appraisal is done using comps similar to a tax assessment.
- TimPC 4y agoMy city assesses land and structure value separately as part of property taxes so having them assess just land instead seems like less work not more.
- googlryas 4y agoMine does that too, but the process is clearly flawed because you can't buy land for the assessed price, and you can't build a structure on that land for the assessed value.
- TimPC 4y agoJust because it’s not possible to separately buy the structure or the land doesn’t mean the numbers are wrong. The point still stands that taxing land disincentivizes nothing while taxing structures discourages building them. Many towns in Pennsylvania had a pretty good track record with this. They implemented a mixed tax system that focused more taxes on land and less on structures because they wanted to make people sitting on empty land and not using it pay more. They also didn’t want to penalize people for upgrading their home. The system was extremely successful in its aims.
- aidenn0 4y agoRebuild cost and current value are different, given that new construction is worth a premium
- chadash 4y agoIt works because they just need to come up with a total value and how it divides between land and house doesn’t matter much. My property taxes also separate out land and it puts the land at like 25% of the total value, but in reality someone would easily pay >50% for my land just to demolish the house and rebuild.
- raldi 4y agoJust let property owners declare a value for their land, and give anyone the right to buy it for 120% of that value at any time, with the existing owner given a grace period where they can restate their estimate.
- bko 4y agoThat sounds awful. Imagine being forced to move every few years or giving people with money that much power over you. Seems crazy that this idea is so popular. I'm guessing the people who like this idea are very young and mobile. Imagine telling grandma she has to move and sell her house and have police show up at the door when she doesn't want to. It's basically the abuses of eminent domain except done privately.
- turbinerneiter 4y agoWhat makes you think this idea is popular? I don't even think the author is fully behind it, seemed more like a thought experiment as a reply to grandparent. Regarding grandma: I don't want to kick her out of the house. But there is a real issue here: young families can't find affordable places, while old families live in places, that are too big for them because the kids left. If they rent, they also pay significantly less than the younger family, since they are on older contracts. Once new people move in, rent is raised to the new level. The older people don't want to move out, because they would have to pay more for their new, smaller place, than the old, bigger place. Meanwhile the young family also has to finance the pensions for that old family. Noone is being evil here, but ... it sucks. And every idea to work on it is shut down as being unfair to the people who already own houses. Even building new houses is usually opposed by the people who already have houses in the area. If I never get the chance ever to own one, I don't really feel like I have to protect the interest of house owners.
- jelliclesfarm 4y agoMultigenerational families are the answer. Move in with grandma. Problem solved.
- rcpt 4y agohttps://astralcodexten.substack.com/p/does-georgism-work-part-3-can-unimproved?utm_source=url https://astralcodexten.substack.com/p/does-georgism-work-par... Had a good summary of land valuation problems
- somethoughts 4y agoIt will be interesting to see if Texas ends up with some sort of Proposition 13 equivalent given property values and property taxes have been increasing a pretty significant rate. Fight over increased property taxes in Texas becoming political https://www.youtube.com/watch?v=gzUwoFVUc_I https://www.youtube.com/watch?v=gzUwoFVUc_I Texas voters to decide on 2 propositions that could impact property taxes https://www.youtube.com/watch?v=Nz67VXkjRfg https://www.youtube.com/watch?v=Nz67VXkjRfg It seems like the Texas Homestead Exemption Act is starting to morph into something analogous to Prop 13. Perhaps if there's enough growth in tech jobs (and more billionaires start hiding out there) they'll end up with an income tax like California and New York.
- cryptonector 4y agoTexas already has a homestead exemption.
- jamiek88 4y agoHaving lived in Texas for 20 years I find that hard to foresee as no state income tax is such an often used flex there but stranger shifts have happened. I moved from an ostensibly low tax state, Texas, to one with an income tax but my overall burden for state costs is pretty much the same or slightly lower as property taxes are low and there is no sales tax (8%+ in Texas). I was paying over $1500 month in property taxes in Houston burbs. They’ll get you somehow!
- enaaem 4y agoProposed mechanism: You declare the value of your land, but the government can buy it at the declared price if they want to. This also makes land acquisition for infrastructure straightforward and transparant. There is a risk that the government will increase taxes such that people can't declare high land prices, which allows the government to buy up land for cheap. I haven't found a mechanism for that yet.
- buzzdenver 4y agoHow would that work if you build a house on your land that you cannot just move to a different lot?
- ccooffee 4y agoThis mechanism would just get gamified. Some oligarch is gonna claim the property is worth nothing, and use their expensive legal team to prevent any attempts to purchase the property. It'll also allow the government to bully anyone they want by evicting them, even if the price were fair. Local reporter digs up dirt on city council? Well, the city council just reviewed property tax claims, and decided that the reporter's house is "undervalued".
- brigandish 4y ago> I understand the benefits of LVT, but how do you solve this? Georgism[1], which I'm fascinated by. One way to organise it is to ask people how much tax they're willing to pay, from which the land value can be derived (as that's the real point of assessing land value for someone who isn't willing to sell that's the real order of things). However, if someone bids on the land for that price you must sell. > Are there any good examples of governments that use LVT in practice? I thought there were only one or two places using LVT but it appears there are quite a few[2], but it's rarely pure LVT. [1] https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism [2] https://en.wikipedia.org/wiki/Land_value_tax#Implementation https://en.wikipedia.org/wiki/Land_value_tax#Implementation
- mlyle 4y ago> However, if someone bids on the land for that price you must sell. But surely you have improvements on the land and friction from moving... I like LVTs, but there's some significant devils in the implementation details.
- brigandish 4y agoI agree, I often think about such things and wonder if they'd work as this hasn't been tried. I'm wary of taking the road to Hell with my "good" intentions/ideas. For the improvements on the land bit, you could project at the beginning of the year what you think the land will be worth by the end of the year, due to planned improvements. That locks in the value for the year. I can see problems with that too, but the real question is would those problems be worse or better than the problems we have now?
- mlyle 4y agoBut the idea with a land value tax is you tax the value of the land, and not any property on it. So it's not just improvements added in a year, but any improvements residing on the property. If the land is worth $100, and your house is worth $200-- it's worth $300 to you. But a LVT should just be taxing that $100.