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Remember the Tax is just on the Land Value. You should be getting rent proportional to the builds and other improvement on the property. Thats half the point of

by slyall 4y ago

Remember the Tax is just on the Land Value. You should be getting rent proportional to the builds and other improvement on the property. Thats half the point of a Land tax. It encourages you to build. 1% is typically the value most people talk about for a land tax. If anything often it is less. This makes it similar to other property taxes that are already out there. I have no idea where you live but in many countries it is common for taxes to be introduced, raised and lowered as different political parties get in power. Also the assumption is that income and other taxes will be reduced as land taxes are introduced to the amount the government makes would be about the same. It would just mean those with property would pay more while those earning wages would pay less.

robocat 4y ago
The average home price in New Zealand is nearly $1 million. Let’s say that $500k of that is land. So you are proposing to increase average taxes by $5000, and you appear to talk about that as though that is some trivial amount the average New Zealander can afford. A land tax as you propose is an absolutely massive taxation increase. Say that a land tax takes 50% of all rental income (a large amount) in New Zealand and puts that into the government - how can you believe that is equitable for renters or owners? The point of a land tax is to take the land profits from private owners, and put it into government coffers. Note that it doesn’t change the amount that renters pay. You think that it would correct rent prices in New Zealand? $1 million of land is not extreme wealth - it is only 2 or 3 times an average home. Where do you live that $10000 after tax is not a huge amount of money annually? Edit: I mean, people talk about land tax as though: 1: empty land is abundant and a problem that needs fixing. Ummmm, empty valuable land is rare because there is already a massive holding cost - either a mortgage or the opportunity cost of what you could invest the money in, if you sold. The point of a land tax is to penalise the owner, but owners are already very significantly penalised! 2: a LVT will fix the problem that developers are just sitting on properties without densification. That is a NIMBY problem, or a zoning problem. LVT doesn’t fix 1 or 2 above. QED.
- 988747 4y ago
  Maybe I'm misunderstanding something but I think the point of Land Value Tax is that it is set based on the value of the things that could be built on that land, not ones that currently are located there. So, you have a lot of land with a single family home, but you are taxed for it as if 20-unit apartment building was standing there. Which, in the long run, incentivizes you to sell your home to some developer that would actually build such building. Now you can discuss if that's fair approach, or just a way to force people out of their homes.
  - robocat 4y ago
    > Land Value Tax is that it is set based on the value of the things that could be built on that land, not ones that currently are located there Everything I have read just uses nearby property prices. Very similar to GV valuations as we currently do in New Zealand with our council rates (just use that figure rather than another). As market prices shift, your Capital Value remains relatively constant (maybe inflation less depreciation), and the Land Value shifts to meet market value (usually upwards, whenever your property rating is updated). In New Zealand we currently have a partial land-value-tax called rates, although they are usually far below LVT suggested taxation rates. Rates are low, but still a significant drain. Mortgages are also similar to a LVT - your mortgage has to pay the land value - and that is certainly more than suggested LVT. Apparently the point of an LVT is not to get revenues, so I don’t quite understand how that works. An incentive that is less than a mortgage already is - hmmmmmm - how can that help? Ironically house prices are set by people bidding against each other for how big their mortgage can be - See: https://news.ycombinator.com/item?id=34097478 https://news.ycombinator.com/item?id=34097478 Because of the above, a LVT perhaps won’t shift house prices, just shift money from private equity to government? The arguments I have read are usually so vague and seem to always miss critical details. I am not a property or economics specialist, yet I see glaring problems and omissions in well received blogs: that doesn’t bode well for the idea IMHO.

by slyall 4y ago

robocat 4y ago

The average home price in New Zealand is nearly $1 million. Let’s say that $500k of that is land. So you are proposing to increase average taxes by $5000, and you appear to talk about that as though that is some trivial amount the average New Zealander can afford. A land tax as you propose is an absolutely massive taxation increase. Say that a land tax takes 50% of all rental income (a large amount) in New Zealand and puts that into the government - how can you believe that is equitable for renters or owners? The point of a land tax is to take the land profits from private owners, and put it into government coffers. Note that it doesn’t change the amount that renters pay. You think that it would correct rent prices in New Zealand? $1 million of land is not extreme wealth - it is only 2 or 3 times an average home. Where do you live that $10000 after tax is not a huge amount of money annually? Edit: I mean, people talk about land tax as though: 1: empty land is abundant and a problem that needs fixing. Ummmm, empty valuable land is rare because there is already a massive holding cost - either a mortgage or the opportunity cost of what you could invest the money in, if you sold. The point of a land tax is to penalise the owner, but owners are already very significantly penalised! 2: a LVT will fix the problem that developers are just sitting on properties without densification. That is a NIMBY problem, or a zoning problem. LVT doesn’t fix 1 or 2 above. QED.

988747 4y ago
Maybe I'm misunderstanding something but I think the point of Land Value Tax is that it is set based on the value of the things that could be built on that land, not ones that currently are located there. So, you have a lot of land with a single family home, but you are taxed for it as if 20-unit apartment building was standing there. Which, in the long run, incentivizes you to sell your home to some developer that would actually build such building. Now you can discuss if that's fair approach, or just a way to force people out of their homes.
- robocat 4y ago
  > Land Value Tax is that it is set based on the value of the things that could be built on that land, not ones that currently are located there Everything I have read just uses nearby property prices. Very similar to GV valuations as we currently do in New Zealand with our council rates (just use that figure rather than another). As market prices shift, your Capital Value remains relatively constant (maybe inflation less depreciation), and the Land Value shifts to meet market value (usually upwards, whenever your property rating is updated). In New Zealand we currently have a partial land-value-tax called rates, although they are usually far below LVT suggested taxation rates. Rates are low, but still a significant drain. Mortgages are also similar to a LVT - your mortgage has to pay the land value - and that is certainly more than suggested LVT. Apparently the point of an LVT is not to get revenues, so I don’t quite understand how that works. An incentive that is less than a mortgage already is - hmmmmmm - how can that help? Ironically house prices are set by people bidding against each other for how big their mortgage can be - See: https://news.ycombinator.com/item?id=34097478 https://news.ycombinator.com/item?id=34097478 Because of the above, a LVT perhaps won’t shift house prices, just shift money from private equity to government? The arguments I have read are usually so vague and seem to always miss critical details. I am not a property or economics specialist, yet I see glaring problems and omissions in well received blogs: that doesn’t bode well for the idea IMHO.