4 ms·

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

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.
      - tptacek 4y ago
        The premise of a market is that everybody is acting with partial information, and the market aggregates and allocates over time. I'm no anti-government squish, but there is no evidence, and a lot of countervailing evidence, that local governments can effectively (or even non-harmfully) make policy to influence the housing mix. When it comes to housing construction and tax incentives, what they need to do is (1) set tax incentives to discourage egregious misuse and encourage density, and (2) get out of the way. As someone living in the middle of one of these debates right now, the idea that we need to carefully control the mix of 1bdr apartments vs 3bdr apartments is... risible? The frontline of this issue is SFZ, not what kind of apartments we build.
        naasking 4y ago
        > I'm no anti-government squish, but there is no evidence, and a lot of countervailing evidence, that local governments can effectively (or even non-harmfully) make policy to influence the housing mix. I disagree. No planning has lead to many ghettos. The planning we've done here has avoided ghettos. I think the data is very clear on that. > When it comes to housing construction and tax incentives, what they need to do is (1) set tax incentives to discourage egregious misuse and encourage density, and (2) get out of the way. Except as I've been saying, if you encourage too much density your cities become unlivable for families, and you encourage urban sprawl and all of it's subsequent problems. > the idea that we need to carefully control the mix of 1bdr apartments vs 3bdr apartments is... risible? Who said anything about "carefully controlling" anything? Certainly not me.
        tptacek 4y ago
        I see no evidence at all that increased density is a livability problem for families, and plenty of --- in fact, overwhelming --- that inadequate density is a bar for access to communities in the first place. So, no, I reject this argument outright.
        frumper 4y ago
- landryraccoon 4y ago
  Can you say more about the influence of renters? It seems to me to be the opposite. The mortgage interest tax deduction is a massive regressive government subsidy for homeowners, and penalizes younger people who rent or cannot afford to buy a home. So I’m curious what suggests to you that renters have political power. To me it seems the opposite - tax policy massively prefers owners over renters.
  - tptacek 4y ago
    I agree with you about the mortgage interest deduction. I'm not saying renters have outsized political power; they have, more likely, undersized political power. I'm saying very narrowly that in the market for multifamily building construction, people that need more bedrooms are an important market force, one the market has to pay attention to. The whole 1bdr vs. 3bdr thing is a total sideshow; the actual issue, again, is SFZ.
  - sokoloff 4y ago
    Renters are overwhelmingly living in properties that have mortgages against them and commercial loans are always deductible. The deduction for mortgages on owner-occupied property serves to put prospective owners (including current renters) on a more equal footing when bidding against landlords for property.
    - tptacek 4y ago
      It is an immense giveway to the top income quintiles, which receive between 70-80% of the benefit, and giving "prospective owners" preference over "landlords" practically by definition reduces density and thus affordability.
      - sokoloff 4y ago
        It's not about giving preference to owner-occupants; it's about neutralizing the preference to landlords that would otherwise result.
        4y ago
colinmhayes 4y ago
The only thing land value tax incentives is raising the building value to land value ratio. It says nothing about what kind of building is optimal.
- naasking 4y ago
  It doesn't explicitly say anything no, but what does an LVT entail given how humans tend to value property? For instance, in NYC would it incentivize building a bunch of shoeboxes or actual livable space?
  - colinmhayes 4y ago
    It would incentivize building a comparatively more expensive building that maximizes the developers profit. Whether that means shoeboxes or livable space depends on how much those things cost to build and how much people are willing to pay for them. If you just want single family homes with a big lawn you probably shouldn’t be living in Manhattan, which is the point of lvt.
    - naasking 4y ago
      > It would incentivize building a comparatively more expensive building that maximizes the developers profit. Whether that means shoeboxes or livable space depends on how much those things cost to build and how much people are willing to pay for them. Yes, exactly. And my point is that a city shouldn't optimize along one direction like this, because families work in urban centres too. There should be a mix of housing for single people and families in the same urban areas, or you drive the families out of the city and encourage commuting and urban sprawl.
imtringued 4y ago
It doesn't, the only thing it does is remove the tax per apartment which means building more apartments on the same lot becomes cheaper per apartment.
- naasking 4y ago
  It doesn't what? Yes it becomes cheaper per apartment, but as I've explained elsewhere, you don't want an incentive for only one sized apartment because urban centers need a diverse set of living spaces suitable for families and bachelors alike. They all work in the city after all.
YmiYugy 4y ago
This could have extremely negative side effects. A really expensive house on cheap land in some exurb would be comparatively cheap, thus encouraging sprawl. Old, cheap high density housing in desirable cities would all of a sudden become really expensive, hence massively acceleration gentrification.
lmm 4y ago
The LVT is meant to stay neutral and let the market figure it out. That would probably mean more density compared to today (where lots of traditional houses take up massive amounts of space while paying artificially low tax), but if people are willing to pay a fair price for a big place then that's what will get built.
- naasking 4y ago
  What "let the market figure it out" with LVT means is what I'm asking about. As I've explained elsewhere, if that means packing as many tiny units together in an urban core rather than a mix of bachelor pads and family-suitable living spaces, than that drives families out of urban centers and encourages urban sprawl, which creates terrible commutes and traffic and all subsequent problems.
  - lmm 4y ago
    > What "let the market figure it out" with LVT means is what I'm asking about. Part of the point is to very deliberately say: we don't know, we'll let each neighbourhood build what works for that neighbourhood rather than trying to figure out ahead of time. > As I've explained elsewhere, if that means packing as many tiny units together in an urban core rather than a mix of bachelor pads and family-suitable living spaces, than that drives families out of urban centers and encourages urban sprawl, which creates terrible commutes and traffic and all subsequent problems. How do you figure that? For a fixed population, the larger the proportion of workers in the center, the shorter the average commute and the less bad the traffic. So 4 bachelors in the urban core and 1 family in the suburbs is much better than vice versa. (Now of course what tends to happen is if you make the city better then you attract a bigger population. But that shouldn't be seen as a failure. Fixing traffic or commute times is essentially impossible, because as soon as you add capacity more people will move to the area or commute from further away. But what you can do is, for a given sane commute time, maximise the number of people and jobs within that range)

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.
    - tptacek 4y ago
      The premise of a market is that everybody is acting with partial information, and the market aggregates and allocates over time. I'm no anti-government squish, but there is no evidence, and a lot of countervailing evidence, that local governments can effectively (or even non-harmfully) make policy to influence the housing mix. When it comes to housing construction and tax incentives, what they need to do is (1) set tax incentives to discourage egregious misuse and encourage density, and (2) get out of the way. As someone living in the middle of one of these debates right now, the idea that we need to carefully control the mix of 1bdr apartments vs 3bdr apartments is... risible? The frontline of this issue is SFZ, not what kind of apartments we build.
      - naasking 4y ago
        > I'm no anti-government squish, but there is no evidence, and a lot of countervailing evidence, that local governments can effectively (or even non-harmfully) make policy to influence the housing mix. I disagree. No planning has lead to many ghettos. The planning we've done here has avoided ghettos. I think the data is very clear on that. > When it comes to housing construction and tax incentives, what they need to do is (1) set tax incentives to discourage egregious misuse and encourage density, and (2) get out of the way. Except as I've been saying, if you encourage too much density your cities become unlivable for families, and you encourage urban sprawl and all of it's subsequent problems. > the idea that we need to carefully control the mix of 1bdr apartments vs 3bdr apartments is... risible? Who said anything about "carefully controlling" anything? Certainly not me.
        tptacek 4y ago
        I see no evidence at all that increased density is a livability problem for families, and plenty of --- in fact, overwhelming --- that inadequate density is a bar for access to communities in the first place. So, no, I reject this argument outright.
        frumper 4y ago
landryraccoon 4y ago
Can you say more about the influence of renters? It seems to me to be the opposite. The mortgage interest tax deduction is a massive regressive government subsidy for homeowners, and penalizes younger people who rent or cannot afford to buy a home. So I’m curious what suggests to you that renters have political power. To me it seems the opposite - tax policy massively prefers owners over renters.
- tptacek 4y ago
  I agree with you about the mortgage interest deduction. I'm not saying renters have outsized political power; they have, more likely, undersized political power. I'm saying very narrowly that in the market for multifamily building construction, people that need more bedrooms are an important market force, one the market has to pay attention to. The whole 1bdr vs. 3bdr thing is a total sideshow; the actual issue, again, is SFZ.
- sokoloff 4y ago
  Renters are overwhelmingly living in properties that have mortgages against them and commercial loans are always deductible. The deduction for mortgages on owner-occupied property serves to put prospective owners (including current renters) on a more equal footing when bidding against landlords for property.
  - tptacek 4y ago
    It is an immense giveway to the top income quintiles, which receive between 70-80% of the benefit, and giving "prospective owners" preference over "landlords" practically by definition reduces density and thus affordability.
    - sokoloff 4y ago
      It's not about giving preference to owner-occupants; it's about neutralizing the preference to landlords that would otherwise result.
      - 4y ago

colinmhayes 4y ago

The only thing land value tax incentives is raising the building value to land value ratio. It says nothing about what kind of building is optimal.

naasking 4y ago
It doesn't explicitly say anything no, but what does an LVT entail given how humans tend to value property? For instance, in NYC would it incentivize building a bunch of shoeboxes or actual livable space?
- colinmhayes 4y ago
  It would incentivize building a comparatively more expensive building that maximizes the developers profit. Whether that means shoeboxes or livable space depends on how much those things cost to build and how much people are willing to pay for them. If you just want single family homes with a big lawn you probably shouldn’t be living in Manhattan, which is the point of lvt.
  - naasking 4y ago
    > It would incentivize building a comparatively more expensive building that maximizes the developers profit. Whether that means shoeboxes or livable space depends on how much those things cost to build and how much people are willing to pay for them. Yes, exactly. And my point is that a city shouldn't optimize along one direction like this, because families work in urban centres too. There should be a mix of housing for single people and families in the same urban areas, or you drive the families out of the city and encourage commuting and urban sprawl.

imtringued 4y ago

It doesn't, the only thing it does is remove the tax per apartment which means building more apartments on the same lot becomes cheaper per apartment.

naasking 4y ago
It doesn't what? Yes it becomes cheaper per apartment, but as I've explained elsewhere, you don't want an incentive for only one sized apartment because urban centers need a diverse set of living spaces suitable for families and bachelors alike. They all work in the city after all.

YmiYugy 4y ago

This could have extremely negative side effects. A really expensive house on cheap land in some exurb would be comparatively cheap, thus encouraging sprawl. Old, cheap high density housing in desirable cities would all of a sudden become really expensive, hence massively acceleration gentrification.

lmm 4y ago

The LVT is meant to stay neutral and let the market figure it out. That would probably mean more density compared to today (where lots of traditional houses take up massive amounts of space while paying artificially low tax), but if people are willing to pay a fair price for a big place then that's what will get built.

naasking 4y ago
What "let the market figure it out" with LVT means is what I'm asking about. As I've explained elsewhere, if that means packing as many tiny units together in an urban core rather than a mix of bachelor pads and family-suitable living spaces, than that drives families out of urban centers and encourages urban sprawl, which creates terrible commutes and traffic and all subsequent problems.
- lmm 4y ago
  > What "let the market figure it out" with LVT means is what I'm asking about. Part of the point is to very deliberately say: we don't know, we'll let each neighbourhood build what works for that neighbourhood rather than trying to figure out ahead of time. > As I've explained elsewhere, if that means packing as many tiny units together in an urban core rather than a mix of bachelor pads and family-suitable living spaces, than that drives families out of urban centers and encourages urban sprawl, which creates terrible commutes and traffic and all subsequent problems. How do you figure that? For a fixed population, the larger the proportion of workers in the center, the shorter the average commute and the less bad the traffic. So 4 bachelors in the urban core and 1 family in the suburbs is much better than vice versa. (Now of course what tends to happen is if you make the city better then you attract a bigger population. But that shouldn't be seen as a failure. Fixing traffic or commute times is essentially impossible, because as soon as you add capacity more people will move to the area or commute from further away. But what you can do is, for a given sane commute time, maximise the number of people and jobs within that range)