3 ms·

I’d be fine with them just building more housing and taxing either land value or empty units.

dheera 4y ago
Taxing empty units -- yes, 100% Taxing land value -- this unfortunately leads to them passing on the taxes to renters, and rental housing becomes ever more unaffordable
- adgjlsfhk1 4y ago
  the advantage of taxing land value is that you can pass on less tax for higher density which means higher density housing gets higher returns for landlords incentivizing construction.
- 0xcde4c3db 4y ago
  LVT is usually meant to be paired with abolition of parking minimums and single-family zoning, so that the impact of the tax can be spread out among more people.
- medvezhenok 4y ago
  It's very hard for landlords to pass on LVT completely - they are locked in (location-wise), where as renters are mobile... Also, as other comments said, it incentivizes increased density.
- Nevermark 4y ago
  If you tax land value, but not development value, that incentivizes greatest productive use of land, and penalizes unproductive use of land. It incentivizes multi-unit construction, as the more productive the land is, the less onerous the land taxes become. (Wheres currently, developing land normally increases the property tax.) Increasing units per land both provides more housing, and reduces the tax/renter pass through. It disincentivizes holding unproductive land as an investment, since unproductive land gets taxed as highly as productive land. Removing the dysfunctional use of land as a store of value asset, would greatly reduce land and rent prices. Removing the store of value aspect, would also better align landlords incentives with their renters. As their business model would now purely revolve around their paying customers, without the subsidy of land prices going up due to investment mania. And improving rental properties would be cheaper, without the tax increases that entails today. All these benefits probably accrue from good economic alignment, because a land tax, instead of total property value tax, reflects that it is land, not its development, which is the finite resource. Land is finite, yet we all absolutely need land, along with food, air, and water. (Finite in a soft way, given different land is more or less usable). We only "own" land in passing. So those holding it shouldn't be lightly excluding better uses of an absolutely necessary resource. Land taxes are also morally well aligned. It is land (not development) that is a joint inheritance to us all. Land owners share a bit of that inheritance value with all of us, while still being allowed to manage it according to self-interest, opportunity and competition. Finally, property tax is part land tax, part wealth (development value) tax. Only taxing land eliminates a wealth tax. Upgrading your home won't increase your taxes. The humanitarian and economic benefits of properly aligned land taxes would directly accrue to everyone in society from the bottom to the top. It would improve overall economic efficiency and equality. It would eliminate a lot of local and national political conflicts.
  - carlosjobim 4y ago
    This would be a disaster for the ruling class. If there was any risk of such a tax reform coming to pass, they would nuke the whole country long before any such thing could happen.
    - axus 4y ago
      How much of the "ruling class" actually get most of their power from the land they control? I get that price of property affects a lot of people, but I also think the "landlords" are a fraction of the political and economic power.
      - pixl97 4y ago
        You seem to be forgetting that over here in the US we're all a bunch of "temporarily depressed millionaires", the wealthy landowners have and will continue to convince the voting public that any of the above rules would be detrimental to the not currently a millionaire class, and such rules should be prevented at all costs, less the dreams of them being rich will be permanently dashed.
- kilotaras 4y ago
  > this unfortunately leads to them passing on the taxes to renters No, this is not how this works. Rent is set by demand and (very insufficient) supply. If landlord could increase rent by $X - they would have increased it already (software in TFA speeds up the process, but doesn't set market clearing price). A simple thought experiment would be something akin "98% tax on rental income". "Pass it to renter" would imply 50x increase in rent to preserve existing income. Bottom line: make it easier to build more housing. it doesn't have to be subsidized/affordable/below market rate[0]. Any addition of units has downward effect on rent across all range of prices. [0] > [In Helsinki] The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. From "City-wide effects of new housing supply: Evidence from moving chains" https://ideas.repec.org/p/fer/wpaper/146.html https://ideas.repec.org/p/fer/wpaper/146.html
  - runnerup 4y ago
    > software in TFA speeds up the process, but doesn't set market clearing price This software can affect the market price beyond just accelerating the speed at which it reaches equilibrium. The software can help create an inefficient market where suppliers of housing are no longer competing against each other and instead all, together, take a 5-20% hit on "volume" for a larger increase in price that more than offsets the rate of empty units. Similar to OPEC when OPEC was overwhelmingly dominant (before shale oil/shale gas explosion in USA/Russia). In a competitive market without this software, each individual player would try harder to reach 0% vacancy because each marginal unit sold would be nearly pure profit, and this could drive prices lower than leaving any units empty.
    - kilotaras 4y ago
      > software can help create an inefficient market where ... suppliers of housing take a 5-20% hit on "volume" for a larger increase in price that more than offsets the rate of empty units. Right, if one can get majority of the landlords to collude and government doesn't crack on collusion - this software would create such market. Until we're in such dire situation: software is expediting price discovery, discovered prices are high because we don't build enough, we don't build enough because there's ridiculous amount of red tape, and doing anything that doesn't lead to more housing being built is spending time and effort on wrong problem.

Taxing empty units -- yes, 100% Taxing land value -- this unfortunately leads to them passing on the taxes to renters, and rental housing becomes ever more unaffordable

adgjlsfhk1 4y ago
the advantage of taxing land value is that you can pass on less tax for higher density which means higher density housing gets higher returns for landlords incentivizing construction.
0xcde4c3db 4y ago
LVT is usually meant to be paired with abolition of parking minimums and single-family zoning, so that the impact of the tax can be spread out among more people.
medvezhenok 4y ago
It's very hard for landlords to pass on LVT completely - they are locked in (location-wise), where as renters are mobile... Also, as other comments said, it incentivizes increased density.
Nevermark 4y ago
If you tax land value, but not development value, that incentivizes greatest productive use of land, and penalizes unproductive use of land. It incentivizes multi-unit construction, as the more productive the land is, the less onerous the land taxes become. (Wheres currently, developing land normally increases the property tax.) Increasing units per land both provides more housing, and reduces the tax/renter pass through. It disincentivizes holding unproductive land as an investment, since unproductive land gets taxed as highly as productive land. Removing the dysfunctional use of land as a store of value asset, would greatly reduce land and rent prices. Removing the store of value aspect, would also better align landlords incentives with their renters. As their business model would now purely revolve around their paying customers, without the subsidy of land prices going up due to investment mania. And improving rental properties would be cheaper, without the tax increases that entails today. All these benefits probably accrue from good economic alignment, because a land tax, instead of total property value tax, reflects that it is land, not its development, which is the finite resource. Land is finite, yet we all absolutely need land, along with food, air, and water. (Finite in a soft way, given different land is more or less usable). We only "own" land in passing. So those holding it shouldn't be lightly excluding better uses of an absolutely necessary resource. Land taxes are also morally well aligned. It is land (not development) that is a joint inheritance to us all. Land owners share a bit of that inheritance value with all of us, while still being allowed to manage it according to self-interest, opportunity and competition. Finally, property tax is part land tax, part wealth (development value) tax. Only taxing land eliminates a wealth tax. Upgrading your home won't increase your taxes. The humanitarian and economic benefits of properly aligned land taxes would directly accrue to everyone in society from the bottom to the top. It would improve overall economic efficiency and equality. It would eliminate a lot of local and national political conflicts.
- carlosjobim 4y ago
  This would be a disaster for the ruling class. If there was any risk of such a tax reform coming to pass, they would nuke the whole country long before any such thing could happen.
  - axus 4y ago
    How much of the "ruling class" actually get most of their power from the land they control? I get that price of property affects a lot of people, but I also think the "landlords" are a fraction of the political and economic power.
    - pixl97 4y ago
      You seem to be forgetting that over here in the US we're all a bunch of "temporarily depressed millionaires", the wealthy landowners have and will continue to convince the voting public that any of the above rules would be detrimental to the not currently a millionaire class, and such rules should be prevented at all costs, less the dreams of them being rich will be permanently dashed.
kilotaras 4y ago
> this unfortunately leads to them passing on the taxes to renters No, this is not how this works. Rent is set by demand and (very insufficient) supply. If landlord could increase rent by $X - they would have increased it already (software in TFA speeds up the process, but doesn't set market clearing price). A simple thought experiment would be something akin "98% tax on rental income". "Pass it to renter" would imply 50x increase in rent to preserve existing income. Bottom line: make it easier to build more housing. it doesn't have to be subsidized/affordable/below market rate[0]. Any addition of units has downward effect on rent across all range of prices. [0] > [In Helsinki] The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. From "City-wide effects of new housing supply: Evidence from moving chains" https://ideas.repec.org/p/fer/wpaper/146.html https://ideas.repec.org/p/fer/wpaper/146.html
- runnerup 4y ago
  > software in TFA speeds up the process, but doesn't set market clearing price This software can affect the market price beyond just accelerating the speed at which it reaches equilibrium. The software can help create an inefficient market where suppliers of housing are no longer competing against each other and instead all, together, take a 5-20% hit on "volume" for a larger increase in price that more than offsets the rate of empty units. Similar to OPEC when OPEC was overwhelmingly dominant (before shale oil/shale gas explosion in USA/Russia). In a competitive market without this software, each individual player would try harder to reach 0% vacancy because each marginal unit sold would be nearly pure profit, and this could drive prices lower than leaving any units empty.
  - kilotaras 4y ago
    > software can help create an inefficient market where ... suppliers of housing take a 5-20% hit on "volume" for a larger increase in price that more than offsets the rate of empty units. Right, if one can get majority of the landlords to collude and government doesn't crack on collusion - this software would create such market. Until we're in such dire situation: software is expediting price discovery, discovered prices are high because we don't build enough, we don't build enough because there's ridiculous amount of red tape, and doing anything that doesn't lead to more housing being built is spending time and effort on wrong problem.