5 ms·

Land value tax which is free if you live in an owner occupied property, without the ability to sublet. Higher if rented out, and then make a linear increasing p

by vasco 4y ago

Land value tax which is free if you live in an owner occupied property, without the ability to sublet. Higher if rented out, and then make a linear increasing penalty percentage with the number of properties owned. So if you own one house and live there, zero tax. If you own 5 properties, you pay zero on the one you live in, then regular tax on the second, tax+penalty on the third, tax+higher penalty on the fourth, etc. It would not make any sense to create real estate ETFs under this world for example because the tax penalty would be extremely high.

rgrieselhuber 4y ago
This is much better. Why tax families who live in their homes the same way as landlords with large holdings?
- sokoloff 4y ago
  That depends on what the purpose of the tax. If it’s to pay for local government services (fire, police, trash removal, schools), then why would you tax them differently? If taxes are mostly punitive means to shape behavior, then sure.
- rcpt 4y ago
  Family of renters here. Why should we have our labor taxed to support a different families idle wealth accumulation?
- BirdieNZ 4y ago
  Both are benefiting from the labour and value created by the rest of society, outsized to their contributions. Land receives its value due to all the infrastructure, people, businesses, and so on that are around the land, and everyone who owns land benefits from this as their land value increases. Owner-occupiers benefit just as much as landlords (they are, in fact, lords of their land too, but their tenant is themselves). They should return to society the value that society created for them, in the form of a land value tax. This should of course be offset by a reduction in other taxes, but it is a supremely just and efficient tax and far preferred to most other taxes.
  - rgrieselhuber 4y ago
    That’s a lot of assertions but one could also make the argument that vacant spaces have far lower land value because there aren’t large numbers of families living there. If this is true, it seems questionable that the people living there are benefiting only in a one-way manner.
    - BirdieNZ 4y ago
      Yes, everyone contributes to society in some way, hence "outsized to their contributions." If you sit on a piece of land and wait 10 years in my city, you might have made $500,000 of tax-free land value gains, but without needing to contribute anything to achieve it. In fact, if you do nothing but sit on the land, you're a net negative on society because you deny access to that land from everyone else.
      - rgrieselhuber 4y ago
        I just don’t see the “outsized to their contributions” part. The bureaucracy is built off the tax dollars of the people who first decided to settle there but you could probably reduce that tax burden and bureaucracy by a large percentage and the people living there, as long as they felt a good reason to do so, would continue to create a decent quality of lives for themselves. Either way, we’re basically just debating ideology at this point.
        BirdieNZ 4y ago
        The easiest way to compare is to look at what a family of renters get vs a family of landowners. In a city with growing land values, the renters get nothing but the landowners get a lot, yet their contributions as "families contributing to society" would be equivalent.
dzdt 4y ago
Or make a progressive tax on property value: low tax rates for the first $500k or $1m of value and higher after, for "natural person" (i.e. non corporate) landowners. Let corporate land owners pay the higher tax on all value. The problem with any of this is with elected government and privately funded campaigns, elected officials are mostly responsive to the needs of the donor class. So good luck getting passed any legislation that benefits the masses over the campaign donors.
- scarface74 4y ago
  So how do you think it will help anyone if it costs more to build more rental units. Every single response so far is going into moral outrage about JPM buying up existing home inventory didn’t even bother to read the bullet points > The companies plan to acquire up to $1 billion in build-to-rent properties, starting in Atlanta.
  - scythe 4y ago
    The point is that it would incentivize them to sell condos instead, which are then tax-privileged.
    - scarface74 4y ago
      And how does that help people who don’t want to commit to buying a house? The end goal should be affordable housing not home ownership. Buying and selling a house has high transactional costs and definitely shouldn’t be the go to. If you need to change jobs, it’s much harder to move if you own a home. Besides, “owning” a condo when you still have all of the issues of being in an apartment is not ideal. You are still dependent on the condo association to fix common parts of the building , it needs to be a well run association, you have to deal with neighbors and shared walls etc.
      - vasco 4y ago
        Regarding the "owning a condo not being ideal", it's actually the norm in many countries, assuming by "condo" you mean a flat in a shared building with many houses - where I'm from, condominium is the name you give the association of neighbors, not the structure. Almost 50% of the EU residents live in flats[0]and have to indeed communicate with their neighbors and solve common issues together through a management company or directly through the owners association, depending on the building. I think you're making it out to be more complex than it is. [0] https://www.weforum.org/agenda/2021/07/flats-houses-types-housing-europe/ https://www.weforum.org/agenda/2021/07/flats-houses-types-ho...
Aunche 4y ago
So you want to punish developers building apartment complexes in high-demand cities, while billionaires can enjoy their hundred million dollars tax free? NIMBYs tend to be private homeowners, so this would defeat much of the purpose of the LVT.
- consp 4y ago
  > So you want to punish developers building apartment complexes in high-demand cities I don't know about the US but in other places you can actually buy an apartment which would solve that problem.
- californical 4y ago
  You could develop a giant complex and sell the units to individuals instead of renting! Or there could also be a different tax rate depending on density. Single family home would be taxed the highest. Lower taxes for townhomes. Lower still for apartments. The rate would still increase with number of units that a single entity owns, but by a smaller amount for more-dense housing.
  - impossiblefork 4y ago
    This is the system we have in Sweden, although it has a problem in that it sometimes happens that developers saddle the resulting condominium association with debts, which are sometimes substantial.
- zirgs 4y ago
  Developers can sell apartments to private citizens or other corporations. They don't have to rent out apartments themselves.
geocon 4y ago
This is very inferior to just a regular land value tax if you understand the incentive structure
- vasco 4y ago
  "I'd tell you why you're wrong but I'm busy" can be said to anyone about anything. Care to expand?
  - geocon 4y ago
    The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. This doesn't change based on who it is that is using the land or what they are using it for. Take a $20 million plot of land in LA; it makes no sense to exempt a person with a mansion there from paying a tax and penalizing a developer who builds a huge apartment building that can house 50 families! By keeping the LVT flat and not exempting particular uses, you avoid distorting the market and- in the case of a homestead exemption- punishing people who build apartments over single family homes, etc.
    - vasco 4y ago
      > The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. I'd say an additional point should be to try and not make it so that the path of least resistance for the system of taxes being for a few corporations to accumulate all the available real estate. From what you say you're fine with one company owning all the land as long as they pay the tax. What I'm proposing is similar except the tax gets more and more prohibitive the more you own, instead of being a flat rate.
    - rrrrrrrrrrrryan 4y ago
      A heavy, mostly-flat LVT should be the end goal, but would have to be phased in over a generation to be politically viable and not cause tremendous social disruption. Nobody's going to get behind a law that kicks grandma out of the house she's been living in for 50 years. You have to start with residential properties owned by investing companies first, then phase it into nonprimary residences owned by individuals, then primary residences over a certain dollar amount for people under 65, etc. Then you slowly ramp up land value taxes and dial back traditional property taxes until they're entirely replaced.

by vasco 4y ago

rgrieselhuber 4y ago

This is much better. Why tax families who live in their homes the same way as landlords with large holdings?

sokoloff 4y ago
That depends on what the purpose of the tax. If it’s to pay for local government services (fire, police, trash removal, schools), then why would you tax them differently? If taxes are mostly punitive means to shape behavior, then sure.
rcpt 4y ago
Family of renters here. Why should we have our labor taxed to support a different families idle wealth accumulation?
BirdieNZ 4y ago
Both are benefiting from the labour and value created by the rest of society, outsized to their contributions. Land receives its value due to all the infrastructure, people, businesses, and so on that are around the land, and everyone who owns land benefits from this as their land value increases. Owner-occupiers benefit just as much as landlords (they are, in fact, lords of their land too, but their tenant is themselves). They should return to society the value that society created for them, in the form of a land value tax. This should of course be offset by a reduction in other taxes, but it is a supremely just and efficient tax and far preferred to most other taxes.
- rgrieselhuber 4y ago
  That’s a lot of assertions but one could also make the argument that vacant spaces have far lower land value because there aren’t large numbers of families living there. If this is true, it seems questionable that the people living there are benefiting only in a one-way manner.
  - BirdieNZ 4y ago
    Yes, everyone contributes to society in some way, hence "outsized to their contributions." If you sit on a piece of land and wait 10 years in my city, you might have made $500,000 of tax-free land value gains, but without needing to contribute anything to achieve it. In fact, if you do nothing but sit on the land, you're a net negative on society because you deny access to that land from everyone else.
    - rgrieselhuber 4y ago
      I just don’t see the “outsized to their contributions” part. The bureaucracy is built off the tax dollars of the people who first decided to settle there but you could probably reduce that tax burden and bureaucracy by a large percentage and the people living there, as long as they felt a good reason to do so, would continue to create a decent quality of lives for themselves. Either way, we’re basically just debating ideology at this point.
      - BirdieNZ 4y ago
        The easiest way to compare is to look at what a family of renters get vs a family of landowners. In a city with growing land values, the renters get nothing but the landowners get a lot, yet their contributions as "families contributing to society" would be equivalent.

dzdt 4y ago

Or make a progressive tax on property value: low tax rates for the first $500k or $1m of value and higher after, for "natural person" (i.e. non corporate) landowners. Let corporate land owners pay the higher tax on all value. The problem with any of this is with elected government and privately funded campaigns, elected officials are mostly responsive to the needs of the donor class. So good luck getting passed any legislation that benefits the masses over the campaign donors.

scarface74 4y ago
So how do you think it will help anyone if it costs more to build more rental units. Every single response so far is going into moral outrage about JPM buying up existing home inventory didn’t even bother to read the bullet points > The companies plan to acquire up to $1 billion in build-to-rent properties, starting in Atlanta.
- scythe 4y ago
  The point is that it would incentivize them to sell condos instead, which are then tax-privileged.
  - scarface74 4y ago
    And how does that help people who don’t want to commit to buying a house? The end goal should be affordable housing not home ownership. Buying and selling a house has high transactional costs and definitely shouldn’t be the go to. If you need to change jobs, it’s much harder to move if you own a home. Besides, “owning” a condo when you still have all of the issues of being in an apartment is not ideal. You are still dependent on the condo association to fix common parts of the building , it needs to be a well run association, you have to deal with neighbors and shared walls etc.
    - vasco 4y ago
      Regarding the "owning a condo not being ideal", it's actually the norm in many countries, assuming by "condo" you mean a flat in a shared building with many houses - where I'm from, condominium is the name you give the association of neighbors, not the structure. Almost 50% of the EU residents live in flats[0]and have to indeed communicate with their neighbors and solve common issues together through a management company or directly through the owners association, depending on the building. I think you're making it out to be more complex than it is. [0] https://www.weforum.org/agenda/2021/07/flats-houses-types-housing-europe/ https://www.weforum.org/agenda/2021/07/flats-houses-types-ho...

Aunche 4y ago

So you want to punish developers building apartment complexes in high-demand cities, while billionaires can enjoy their hundred million dollars tax free? NIMBYs tend to be private homeowners, so this would defeat much of the purpose of the LVT.

consp 4y ago
> So you want to punish developers building apartment complexes in high-demand cities I don't know about the US but in other places you can actually buy an apartment which would solve that problem.
californical 4y ago
You could develop a giant complex and sell the units to individuals instead of renting! Or there could also be a different tax rate depending on density. Single family home would be taxed the highest. Lower taxes for townhomes. Lower still for apartments. The rate would still increase with number of units that a single entity owns, but by a smaller amount for more-dense housing.
- impossiblefork 4y ago
  This is the system we have in Sweden, although it has a problem in that it sometimes happens that developers saddle the resulting condominium association with debts, which are sometimes substantial.
zirgs 4y ago
Developers can sell apartments to private citizens or other corporations. They don't have to rent out apartments themselves.

geocon 4y ago

This is very inferior to just a regular land value tax if you understand the incentive structure

vasco 4y ago
"I'd tell you why you're wrong but I'm busy" can be said to anyone about anything. Care to expand?
- geocon 4y ago
  The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. This doesn't change based on who it is that is using the land or what they are using it for. Take a $20 million plot of land in LA; it makes no sense to exempt a person with a mansion there from paying a tax and penalizing a developer who builds a huge apartment building that can house 50 families! By keeping the LVT flat and not exempting particular uses, you avoid distorting the market and- in the case of a homestead exemption- punishing people who build apartments over single family homes, etc.
  - vasco 4y ago
    > The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. I'd say an additional point should be to try and not make it so that the path of least resistance for the system of taxes being for a few corporations to accumulate all the available real estate. From what you say you're fine with one company owning all the land as long as they pay the tax. What I'm proposing is similar except the tax gets more and more prohibitive the more you own, instead of being a flat rate.
  - rrrrrrrrrrrryan 4y ago
    A heavy, mostly-flat LVT should be the end goal, but would have to be phased in over a generation to be politically viable and not cause tremendous social disruption. Nobody's going to get behind a law that kicks grandma out of the house she's been living in for 50 years. You have to start with residential properties owned by investing companies first, then phase it into nonprimary residences owned by individuals, then primary residences over a certain dollar amount for people under 65, etc. Then you slowly ramp up land value taxes and dial back traditional property taxes until they're entirely replaced.