3 ms·

Wouldn't that be a bit of an issue for low income people, to make it flat?

adastra22 4y ago
The core underlying problem is that economic rents are extremely distorting. It is at the root of why we end up with hideous suburban sprawl with no affordable housing, and no walkable downtowns that nobody wants to live in. Taxing land value flips the incentives around and makes it more likely that we get nice, walkable, affordable cities. Because the ideal cost-minimizing strategy is to have clusters of nice high density housing near public transit and mixed-use urban markets, which is largely what people want. But not if you offer exemptions. If you offer exemptions the winning strategy is to build tons of spread out, cramped, single- or two-story residences with most of their land value exempted. But how will people pay their land value tax? Well for the most part, low income people will pay it the same way they currently do: rent. It's the landlord that pays the tax. (And preemptively: no, studies have shown that higher taxes aren't just passed back to the renter. So they'll pay the same rent even if the land value increases.) For other small homeowners, (1) there is expected to be a lot of disparity in land value in an 85% LVT regime. People in desirable places pay high LVT. People on the outskirts pay close to $0 because their land is valued close to $0 (compared to today, at least). And (2) there could be other social welfare programs (e.g. basic income, or unemployment LVT forbearance) which help those in need.
Spooky23 4y ago
Usually the explanation is that big high rises with cheap rent will magically appear, and landlords will be unable to raise rents, because LVT magic. So the promise is a scenario like 1970s Bronx. The real answer, which the GOP was able to test the waters on with the SALT cap, is for the federal government to slowly back away from supporting mortgages. 0% down mortgages with rates linked to T-Bills depend on the policy to back mortgages. As the country gets poorer, that is less relevant.

The core underlying problem is that economic rents are extremely distorting. It is at the root of why we end up with hideous suburban sprawl with no affordable housing, and no walkable downtowns that nobody wants to live in. Taxing land value flips the incentives around and makes it more likely that we get nice, walkable, affordable cities. Because the ideal cost-minimizing strategy is to have clusters of nice high density housing near public transit and mixed-use urban markets, which is largely what people want. But not if you offer exemptions. If you offer exemptions the winning strategy is to build tons of spread out, cramped, single- or two-story residences with most of their land value exempted. But how will people pay their land value tax? Well for the most part, low income people will pay it the same way they currently do: rent. It's the landlord that pays the tax. (And preemptively: no, studies have shown that higher taxes aren't just passed back to the renter. So they'll pay the same rent even if the land value increases.) For other small homeowners, (1) there is expected to be a lot of disparity in land value in an 85% LVT regime. People in desirable places pay high LVT. People on the outskirts pay close to $0 because their land is valued close to $0 (compared to today, at least). And (2) there could be other social welfare programs (e.g. basic income, or unemployment LVT forbearance) which help those in need.

Spooky23 4y ago

Usually the explanation is that big high rises with cheap rent will magically appear, and landlords will be unable to raise rents, because LVT magic. So the promise is a scenario like 1970s Bronx. The real answer, which the GOP was able to test the waters on with the SALT cap, is for the federal government to slowly back away from supporting mortgages. 0% down mortgages with rates linked to T-Bills depend on the policy to back mortgages. As the country gets poorer, that is less relevant.