5 ms·

> 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'

> 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 ago
  I 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 ago
    But 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.
    - brigandish 4y ago
      There are two kinds of improvements, those of the land itself (like a new road or a water pipe etc) and those like houses or businesses. LVT directly includes the former, as they would be included in anyone's assessment of value (whether that be a government assessor or the owner). However, the value of the land is also indirectly linked to the improvements like houses. If you make a piece of land more productive by building on it then the land itself becomes more valuable, as will nearby land. So with either kind of improvement the tax can go up, but LVT still encourages development compared to property tax as undeveloped land will still attract a greater proportion of tax than it would under a property tax.
      - mlyle 4y ago
        I think you're missing my point. We're in a subthread where you floated the idea of a bidding-based scheme as a way to set LVT land values. If you set the tax rate by having owners bid a price they're bound to sell their property for... that's going to include improvements like dwellings, since the owner can't take their dwelling with them and doesn't want to just sell the property with their dwelling for the land value alone. In turn, this fails at setting the rate for a LVT, because it captures the value of improvements like houses in the taxed amount.
        brigandish 4y ago
        In Japan it's reasonably common for someone to own the land while someone else (e.g. a homeowner) owns the buildings on the land and has certain rights to live there that the landlord can't ignore (and hence can't just turf them out suddenly). Flats in the UK are leasehold, which means you can buy (part of) a property and still not own the land. It's entirely possible to separate the two.
        mlyle 4y ago
        It's possible to separate the two, but not in a way that gives a meaningful true market value for land alone in the short term-- rather just values for land in long-term option value after other rights are considered. That is, that leaseholder you can't turf is enjoying a lot of the value of the land, and it may not be correlated to past payments or transactions. In turn, lots of the benefits of a LVT evaporate if the taxable value (of landowner's eventual rights) is so decorrelated from the present value of land uses. That's the problem here: valuing the land alone is hard. Separating rights, adding more owners and options and preferences --- doesn't make valuing the land alone easier.
TheMechanist 4y ago
> 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. Some people have very strange misconceptions about LVT & Georgism.
- brigandish 4y ago
  Go on, I'm happy to be corrected, less so for people to make unhelpful asides.
  - TheMechanist 4y ago
    I think you should start by reading Progress and Poverty - here is a short review: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... The land with the highest value is city land. Most of city land and the buildings on that land are private property so they cannot be auctioned “every year”. Singapore and Taiwan lease blocks of state-owned land for (high-rise) residence buildings for a duration of 99 years. This land is auctioned to developers, who then build houses and high rises, then sell them to individuals. The land lease ends after 99 years, so the land can be reused. This obviously does not capture the increase in the value of land over 99 years, but the value of land at the time of the sale. So both states have taxes on land - a property tax in Singapore and a tax on the increment in the value of land in Taiwan, showing that it’s feasible to estimate the value of land and tax that (value of land = total value - value of improvements).

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 ago
I 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 ago
  But 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.
  - brigandish 4y ago
    There are two kinds of improvements, those of the land itself (like a new road or a water pipe etc) and those like houses or businesses. LVT directly includes the former, as they would be included in anyone's assessment of value (whether that be a government assessor or the owner). However, the value of the land is also indirectly linked to the improvements like houses. If you make a piece of land more productive by building on it then the land itself becomes more valuable, as will nearby land. So with either kind of improvement the tax can go up, but LVT still encourages development compared to property tax as undeveloped land will still attract a greater proportion of tax than it would under a property tax.
    - mlyle 4y ago
      I think you're missing my point. We're in a subthread where you floated the idea of a bidding-based scheme as a way to set LVT land values. If you set the tax rate by having owners bid a price they're bound to sell their property for... that's going to include improvements like dwellings, since the owner can't take their dwelling with them and doesn't want to just sell the property with their dwelling for the land value alone. In turn, this fails at setting the rate for a LVT, because it captures the value of improvements like houses in the taxed amount.
      - brigandish 4y ago
        In Japan it's reasonably common for someone to own the land while someone else (e.g. a homeowner) owns the buildings on the land and has certain rights to live there that the landlord can't ignore (and hence can't just turf them out suddenly). Flats in the UK are leasehold, which means you can buy (part of) a property and still not own the land. It's entirely possible to separate the two.
        mlyle 4y ago
        It's possible to separate the two, but not in a way that gives a meaningful true market value for land alone in the short term-- rather just values for land in long-term option value after other rights are considered. That is, that leaseholder you can't turf is enjoying a lot of the value of the land, and it may not be correlated to past payments or transactions. In turn, lots of the benefits of a LVT evaporate if the taxable value (of landowner's eventual rights) is so decorrelated from the present value of land uses. That's the problem here: valuing the land alone is hard. Separating rights, adding more owners and options and preferences --- doesn't make valuing the land alone easier.

TheMechanist 4y ago

> 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. Some people have very strange misconceptions about LVT & Georgism.

brigandish 4y ago
Go on, I'm happy to be corrected, less so for people to make unhelpful asides.
- TheMechanist 4y ago
  I think you should start by reading Progress and Poverty - here is a short review: https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty https://astralcodexten.substack.com/p/your-book-review-progr... The land with the highest value is city land. Most of city land and the buildings on that land are private property so they cannot be auctioned “every year”. Singapore and Taiwan lease blocks of state-owned land for (high-rise) residence buildings for a duration of 99 years. This land is auctioned to developers, who then build houses and high rises, then sell them to individuals. The land lease ends after 99 years, so the land can be reused. This obviously does not capture the increase in the value of land over 99 years, but the value of land at the time of the sale. So both states have taxes on land - a property tax in Singapore and a tax on the increment in the value of land in Taiwan, showing that it’s feasible to estimate the value of land and tax that (value of land = total value - value of improvements).