26 ms·
Detroit wants to be the first big American city to tax land value
- r721 3y agohttps://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- rconti 3y agoFascinating. First I've heard of this. I can see the obvious advantages, though I'm sure there are disadvantages I'm missing.
- deleted 3y ago[deleted]
- bitshiftfaced 3y agoThe main disadvantage I see is that, despite being able to absorb all tax requirements, politicians and voters wouldn't be able to resist tacking on other types of taxes on top of it.
- LapsangGuzzler 3y agoVoters ultimately have to pay those taxes and politicians want to get reelected, so there’s a definite check there.
- waveBidder 3y agoHistorically, whoever controls the land also tends to control political power. But also, assessment is a really tricky proposition.
- hn_throwaway_99 3y ago> But also, assessment is a really tricky proposition. If anything it seems like it would be much easier than the current property tax assessment scheme.
- HDThoreaun 3y agoWell no, because people sell entire houses so you can use that to anchor valuations. LVT is only taxing part of the purchase, much harder to disentangle.
- hn_throwaway_99 3y agoNot at all, and any property assessor will tell you this (e.g. property assessments usually already separate land vs improvements). Nearly all houses are insured, so it's easy to calculate land value as sales price - insured value, basically because insurance only covers the cost of the house. Plus, nearly all locales either have empty lots that are sold, or if there is no more room have houses that are sold as teardowns, and in either case that gives you an unambiguous land value.
- HDThoreaun 3y agoThe thing about land is that there are a million reasons why one lot might be worth a different amount than one next door. A single lot selling in a neighborhood tells you little about the rest of the land prices in the area because of that. Maybe that lot is on a hill or next to a busy street or everyone knows the neighbor is a giant asshole. All these things change the price on a micro level and are impossible to disentangle.
- jjav 3y ago> If anything it seems like it would be much easier than the current property tax assessment scheme. Explain how it can be easier? If valuation is based on sale price of the property or nearby comparable properties, those are objective numbers. A sale actually happened, at that price. So it was worth that much to someone. No room for argument. A LVT gives power to the government to unilaterally declare that in some alternate universe, your plot of land might be worth a lot more, so they'll just go right ahead and tax you on that speculative amount in the absence of any evidence. That sounds very open to abuse.
- brutusborn 3y agoAssessment definitely isn't easy, but some fairly simple solutions exist. For example, people could self-assess their land's value. To stop people low-balling the assessment, the Government could have an option to purchase the land at some % above the assessed price and then on-sell it. This way all valuations are linked to a market price rather than a bureaucratic process.
- Kinrany 3y agoHere's one idea. Effective land tax drives the sale price to 0, so it may be better to make taxes absolute, not relative to value. When someone wants to give up land because the taxes are too high, they just tell the city government. From that point, the tax goes down over time until someone decides to take the land at the current (absolute) tax rate. The old owner still pays the tax and can use the land in the meantime.
- quickthrower2 3y agoIs that cat a meme from the 1890s?
- dkbrk 3y agohttps://www.astralcodexten.com/p/your-book-review-progress-and-poverty https://www.astralcodexten.com/p/your-book-review-progress-a...
- Brycee 3y agoThis is well worth a read, as is the Progress and Poverty substack if you're curious about the subject. https://progressandpoverty.substack.com/ https://progressandpoverty.substack.com/
- Stevvo 3y agoI remember high-school economics class, every lesson the teacher would relate how georgism was a solution to the problem at hand. It sounded like a panacea for all society's economic woes.
- brutusborn 3y agoOnce you understand George's complaints about rent seeking you begin to see it everywhere. I don't think his proposals are a panacea but they would help with most problems in our society (e.g. housing affordability, income inequality). His theory is accepted by both heterodox and orthodox economists but unfortunately hasn't had enough mainstream political interest to prove its utility.
- zdragnar 3y agoHow ironic that a campaign with "free land" in the slogan treated land as a public commodity and sought to make land the entire basis of the government's tax income.
- letmeinhere 3y agoOnly ironic to those whose concept of "freedom" is "private and enclosed".
- zdragnar 3y agoIf your idea is that free means that it is something the government taxes, then I don't think I'd care for what the other two parts of the slogan (free speech and free men) might mean. If you mean "free use" then land and speech are okay, but I still don't like the idea being applied to people.
- ctoth 3y agoBy George! this sure sounds like a good idea!
- deleted 3y ago[deleted]
- aspenmayer 3y agoIs that a pun on Georgism? https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- chipsa 3y agoBy George, I think it is.
- thinkerswell 3y agoI thought Detroit has been in decline for decades. If anything, you’d think they’d want to attract people back with _less_ taxes.
- VirusNewbie 3y agoLess taxes are good, but if the taxes are there to help remove negative externalities from the market it will be a net win. I wouldn't mind paying a bit more property taxes if it meant property values weren't sky high and it discouraged land hoarding. Land tax is good in that it still rewards developers for creating value, but not speculators or people who buy land and don't actually provide value.
- slashdev 3y agoThis is not a problem Detroit has
- myself248 3y ago40% of all land parcels in downtown are _parking lots_. Tell me more about how nobody's hoarding land.
- phkahler 3y agoHave you tried to park downtown? If you want fewer lots it's gonna need structures.
- jackson1442 3y agoThis is exactly what LVT is supposed to incentivize.
- phkahler 3y ago>>> Have you tried to park downtown? If you want fewer lots it's gonna need structures. >> This is exactly what LVT is supposed to incentivize. How? If people don't think building a parking structure is going to be more profitable than keeping a parking lot, how is raising their cost going to change their mind? I suppose some of the lots might be sold as unprofitable which might lead to less parking and higher prices, which might lead to someone building a structure. Is that the logic? It seems pretty flimsy, but I don't otherwise see how LVT would incentivize building parking structures.
- water9 3y agoSo Detroit will be offering refunds given the dismal state of real-estate there
- deleted 3y ago[deleted]
- mjamesaustin 3y agoI'm a big proponent of Land Value Tax. In theory it is one of the healthiest forms of taxation since supply is fixed. It encourages efficient use of land and discourages owners from squatting on undeveloped land just to reap value from its location. https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
- rationalfaith 3y ago[dead]
- slashdev 3y agoI’ve heard economists champion the idea, but I’ve heard little talk about what the tradeoffs are. What are the downsides?
- ntonozzi 3y ago> Residents interested in adding vacant lots or side lots to their properties objected that those additions would have increased their tax bills as if there were a house on the added land, even if it was just an empty lot. From https://www.washingtonexaminer.com/the-short-life-of-pennsylvanias-radical-tax-reform https://www.washingtonexaminer.com/the-short-life-of-pennsyl....
- groby_b 3y agoThat's an upside, not a downside.
- caminante 3y agoYes, LOL. It's a "local" downside, but if you subscribe to the land tax idea, it's part of the process. These same people could just build "up" on their property, instead. But they want to cut grass. FTA: > The bigger immediate benefit, though, comes from reducing taxes on most [Detroit] residents. The city argues that 97% of homeowners will get a tax cut. Lower tax rates on improvements ought to encourage people to invest in properties
- josh_today 3y ago[dead]
- jmatthews 3y agoVirtually every effective hedge against inflation is taxed heavily. There is no respite from dilution. When you look at it from that perspective you see a systematic attack against any safe harbor.
- edrxty 3y agoMunicipal bonds?
- salamanderss 3y ago[flagged]
- xboxnolifes 3y agoWhich, from some points of view, is the point. The government wants money to be going toward investments (real, productive kinds), not sitting around as an inflation hedge.
- phkahler 3y agoIt's not the governments job to care about that.
- xboxnolifes 3y agoIt very much is the government's job to deal with tragedy of the commons situations. It's arguably it's only job, outside of contract enforcement and national defense.
- alexfromapex 3y agoSince people can barely afford land and homes as it is, I’d love to hear how this will help make land more affordable or available.
- lokar 3y agoIt would tend to pressure owners of land that is undeveloped or undeveloped (parking lots) to either build or sell to someone who will.
- MattGaiser 3y agoIn theory by encouraging more efficient use of land, i.e. denser building. So you make land more affordable by using less of it per person for apartments.
- jonhohle 3y agoSo tax incentives for land lords? We have more housing units per capita than any time in US history. Why do you think we need more?
- MattGaiser 3y agoFar fewer people are partnered, so that alone doesn't mean there is sufficient housing. Divorce/not marrying probably means we need 30% more bedrooms than previously required.
- jonhohle 3y agoThe average household size has not decreased significantly in the last 40 years (from 2.75 to 2.5), but units per capita has increased (currently around 0.425 units per person). We went from around 1.5% unit surplus to 6% unit surplus during that time. You do bring up a good point, however. Nuclear families use housing much more efficiently than singles. For the good of the planet and others, perhaps people should consider the benefits of committed relationships.
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- TulliusCicero 3y agohttps://web.archive.org/web/20231016235131/https://www.economist.com/united-states/2023/10/05/detroit-wants-to-be-the-first-big-american-city-to-tax-land-value https://web.archive.org/web/20231016235131/https://www.econo...
- woliveirajr 3y agoPufff, Brazil does that since forever. By paying some tax over your land, basically your government is taking it from you every generation or two. Roughly, 2% each year and in 50 years and it's gone.
- groby_b 3y agoGiven that it was never "your" land to begin with (what, did you create it?), that's not an unreasonable approach.
- WorkerBee28474 3y agoThe government didn't create it either. The only reasonable recipient of the 2%/year tax is God.
- Gigachad 3y agoAt the core of it, land ownership is really about who has the resources to defend it. Since you are relying on the government and surrounding society to defend the land, it’s up to society to define how that ownership works.
- quickthrower2 3y agoThe government is meant to represent the commons. God doesn’t need money. Money is a human concept!
- epistasis 3y agoAs someone who is kept off of that land by somebody else's ownership of it, I am personally the reasonable recipient of a share of that 2%. As is everyone else, including the owner of the land. That share could come as government services, or it could come as a paycheck. But in either case that 2% belongs to all of us equally.
- causality0 3y agoThe people you're paying taxes to didn't create it either.
- ejstronge 3y agoPerhaps someone who has thought about this more can explain how a 'land value tax' differs from existing property tax regimes that explicitly examine the value of improvements and the value of land... This Detroit case is interesting because there are different rates of taxation on the land, but the difference in rate could also be obtained by increasing the land component of a parcel's value.
- TulliusCicero 3y agoLand value taxes don't factor in improvements. Improving the land results in no property tax change, so they incentivize doing more useful things with the land.
- ses1984 3y agoDon’t improvements in nearby plots change the value of a plot of land?
- josnyder 3y agoYes, by design. One major goal is to prevent a landowner from squatting on an empty lot while their neighbors build prosperity around it. The "squatter" then cashes in, having done nothing themselves. "Everyone works but the empty lot" is the commonly used phrase. The goal of an LVT is to insulate a landowner's tax bill from being affected by their own improvements. Its anti-goal is to insulate a landowner from changes in land use around them.
- Gigachad 3y agoAnother benefit is that it encourages more efficient use of land. Existing taxes mean that if you demolish a high density retail strip and replace it with a McDonald’s or Walmart with large parking lot/drive thru, the tax income plummets while the cost to maintain the roads and plumbing remains the same.
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- andreygrehov 3y agoI'm confused. How will this make things better? Does that mean a Detroit house-owners will suddenly have to pay more taxes? Isn't Detroit barely breathing?
- saxonww 3y agoI've spent 5 minutes reading about this, but the key difference between this and regular property tax that most of us are used to (in the US anyway) is that it taxes the value of the land, irrespective of any buildings on it. So it encourages land owners to maximize the utility of land they own, vs. leaving it underdeveloped. Right now, there's less incentive to improve or repair buildings on existing land if taxes are high, since those improvements would make taxes go even higher. By tying it to the land value irrespective of improvement, the thinking is that it should encourage development. As a homeowner, this sort of thing does concern me, though. I live in a low density, single-family area. A taxing authority might decide that my area is worth more - e.g. politically if there was a push for higher density housing - and proceed to value the land higher and my taxes would go up. This might make it unappealing to own and live in the house, and I would have to leave. Of course, this is seen as the correct outcome by a lot of people.
- ItsMonkk 3y agoNo. The way taxes work is first you work out how much taxes need to collect, then you work out how much weight everyone has afterwards and split it all up according to that weight. This plan plans to reduce the weight of property and more than double the weight for land. The city forecasts[0] that the average Detroit homeowner will get a 17% permanent property tax cut in 2025. 97% of all Detroit homeowners will get a tax cut. [0]: https://detroitmi.gov/departments/office-chief-financial-officer/land-value-tax-plan https://detroitmi.gov/departments/office-chief-financial-off...
- andreygrehov 3y agoOk, this is rebalancing. Thanks for the explanation. This shift in 'weight' may potentially deter large developers or businesses from investing in land within the city, especially if they're looking at larger parcels for development.
- asow92 3y agoI like this. It's like "use it or lose it".
- phkahler 3y agoBecause living in your home isn't a good enough use?
- asow92 3y agoI think it's more like: "Hey vacant property owner downtown, we'd like this vacant property to be developed into apartments, shops, cafés, business, etc. But, you have no intention of improving this land or maybe you're waiting for a grant you'll never get. You're welcome to keep this land, but we're going to tax you at a rate that we as a municipality think this land should be worth" I don't about increasing taxes on home owners, but more so disincentivizing siting on vacant property that could otherwise be used better. You're welcome to sit on that property, but you're incentivized to get it rented instead of not developing it.
- asow92 3y agoThis also fixes an issue that property owners in my own locale express, which is that they are nervous to improve a property in fear of its tax assessment increasing.
- segmondy 3y agoSince Detroit's population has been declining, from 1.5 million to under 700k, revenue will keep falling. What would they do if they lost more people? Increase taxes?
- Gigachad 3y agoThe city sets a budget first, then calculates the value of all land being managed, and sets a tax per land value dollar that matches their budget. The actual value of the land doesn’t matter at all, only the relative value between properties.
- Proziam 3y agoIf a person's primary residence isn't given an exception this will guarantee that people get kicked out of their homes once the land value increases too much. Similarly, if the tax on a rental property becomes too great the rent will rise to meet it. And again, people will be priced out of their homes.
- causality0 3y agoRight. If this is aimed squarely at blighted and/or unused lots I fully and completely support it. If this applies to retired people living in family homes it can fuck off.
- Proziam 3y agoThe history of property tax involves quite a bit of taxing "intangible property" such as corporate stock. It has obviously evolved dramatically from its original purpose. Similarly, the income tax in the US was started to pay for the Civil War. It wasn't until the early 1900s that income (both corporate and individual) got federally instituted. In essence, the tax history of the US reads "At first there were only excise/consumption taxes, and then the government granted itself powers it never gave back. And now here we are." As such, my expectation is that the notoriously-super-high-integrity government of Detroit won't do anything that isn't in the best interest of the people. Surely.
- jackson1442 3y ago> people get kicked out of their homes once the land value increases too much This is already possible with property taxes. FTA the city claims that 97% of homeowners will see a reduction in taxes. Typically, LVT is highest in areas more central to the city (think downtown) and lowers as you move outwards. This means that, for example, a multitenant strip mall neighboring an Arby’s on a plot of the same size will pay similar amounts of tax. With property tax, the strip mall would be paying significantly more in taxes even though it is a more productive use of land because the development has more value to its owner.
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- gred 3y agoI hope they do try it. If they do, one of two thing will happen. Either it will fail dramatically, in which case the LVT muppets can finally shut up about it... or it will succeed, all of our cities will migrate to this new utopian taxation scheme, and the LVT muppets can finally shut up about it.
- cosmojg 3y agoIndeed, I can't wait to shut up about this!
- huytersd 3y agoOr a third way which would be the most reasonable, if it succeeds only those cities that are derelict and need to turn things around would implement this.
- bigDinosaur 3y agoThere are many ways of implementing it and many reasons it may fail or succeed, but you've made your extreme bias clear. What was the purpose of your comment? To feel superior despite not having the slightest actual argument to present? Let me guess, you feel the same way about congestion taxes.
- s_dev 3y ago>LVT muppets You're attacking the person rather than the idea. Experiments are good, even if they fail to confirm a hypothesis because we can learn more. Sounds like your mind is made up before the experiment though.
- Tiktaalik 3y agoFolks already ventured the idea in Henry George’s own time and after then. For some weird reason (laziness?) no one is going back to see why in these cases the idea was repealed.
- adverbly 3y agoMuppet here :D It has been tried previously and had success. https://m.youtube.com/watch?v=h59se33UCK4 https://m.youtube.com/watch?v=h59se33UCK4
- ab_goat 3y agoI've been thinking about local taxes a lot recently (I've been a locally elected selectman for a tiny town in MA) and realized that the automobile ruined the way we value land, which ultimate ruined the way that municipalities are able to control costs and spend their taxes to add value. I'd write more, but only if someone responds to this.
- chrisweekly 3y agoI'm a homeowner in MA interested to hear more.
- ab_goat 3y agoI come from Western Massachusetts, which is characterized by smaller populations and lower budgetary allocations. The most significant budget item in most municipalities here is education, followed by road maintenance, which is often extremely costly. In Massachusetts, the basic cost estimate for repaving a standard road is approximately $1 million per mile, and this investment typically only lasts about a decade before it requires another round of expensive repairs. Bridges are even more financially burdensome. Recently, we replaced a culvert that was so small I could easily jump over it, and yet it set us back $700,000. Keep in mind; we're talking about a town with a population of around 1,000 people, and we have over 30 of these culverts and bridges scattered across our approximately 80 miles of road within a 55-square-mile area. If you're familiar with the region, you might even be able to pinpoint which town I'm referring to. To add to the challenge, not only do we have to repave our roads every 7-10 years to prevent them from falling into disrepair, but we also have to maintain them for safety, plow them, and salt them for safe travel. Over the past three decades, the expectations for maintaining these infrastructures have significantly increased. The problem lies in the way taxes are structured, which is based on the combined value of land and improvements (buildings). Particularly in smaller towns and cities, most people are trying to get the most affordable option. This approach encourages sprawl, resulting in substantial infrastructure construction and maintenance costs. In larger cities (unlike mine), the upkeep of water and sewer lines are another considerable addition. In more suburban communities, we're witnessing the aging of infrastructure that was originally constructed during the early days of the automobile era. The cost of replacing this aging infrastructure is substantial, but growth expectations, which used to help fund these projects, are dwindling. Many people who moved a few miles outside the city center still expect the same level of services without understanding the financial implications. This situation places a significant strain on tax funds, leaving us with limited resources to invest in valuable critical community needs and values. We now live in a small city in multi-unit building that has ~60 ft of road frontage, and is right in downtown. The building has 6 apartments so has considerable value. But our _infrastructure_ costs are tiny compared to those that live in suburbia. Why are we paying more taxes for helping the city be efficient? MA GL says you have to tax everyone on their property value - so someone in a 250K house out in suburbia that costs the town huge amounts to maintain their roads, sewers and water, actually costs the town money -- while a downtown 6-unit $1.5M building next to others that use the same services, is a boon. And what made that possible? The proliferation of the automobile. We need our tax system to promote density - which means you can spend more tax money on things that matter. (this has been edited in places by ChatGPT)
- smutlord2099 3y agoYes!! The system works... eventually!! Let's go, Georgism!
- friend_and_foe 3y agoOh man, I was hoping that this would be one of those things where they tax land to encourage new building, but it's just another city hurting for revenue looking to squeeze it's population a little more. Not that it won't spur development. It will. But not as much as anyone hopes. They have to eliminate taxes on all improvements to the land and tax the land itself only. Also remove code and zoning restrictions on it. They could rebuild the city if they got serious about it.
- dheera 3y agoYep, if I own something I'd better own it. I shouldn't have to pay rent for owning land, or pay rent for owning a house. I'll just keep renting, I guess, since it makes no difference.
- Gigachad 3y ago>I shouldn't have to pay rent for owning land That land is provided ongoing services, security, and utilities which cost money each year to maintain. Ownership is not some fundamental law of physics. It's a made up concept which is defined however the society you live in wants to define it.
- dheera 3y ago> That land is provided ongoing services, security, and utilities which cost money each year to maintain Yeah, and I already pay PG&E, Comcrap, and whoever else is maintaining those services, I don't need to pay it again to the IRS. The IRS wouldn't do jack shit on land I own.
- selectodude 3y agoGood news, the IRS doesn’t levy property taxes.
- nemo44x 3y agoThe IRS has nothing to do with property taxes. Property taxes mainly go to your town and some to your state. They mainly fund your local schools, streets, parks, maintenance, etc. Do you think all these things just magically exist?
- nickik 3y agoWhile I love this in general. It should also be mentioned that there are systematic falures in how land valuation works in the US currently. While in general taxing land value makes much more sense, with a proper system of land value valuation this is still far from optimal. There is a real question on how utilities and services should be paid for. There are places where water is really cheap to provide and then subburbs that require multible expensive pump stations yet they pay the same amount for water. This incurages building in the wrong places and a land value tax by itself does not fix these things. In addition the city also needs to strongly evaluate how it uses its land, specially things like on street parking. Check out some of the work by Urban3 on land value, tax income and so on. Thy have fantastic visualisation that have changed my view on some things. So yeah, land value tax, go for it, much better system. It allignes insentives better, but there are many otjer distorting effects. Its one piece of a much larger puzzle in terms of how to make great cities with great urbanism.
- throwawa14223 3y agoGeorgism has always felt like a big step in the wrong direction to me. It moves us away from what little concept of personal ownership we have left to more of a collective ownership.
- bagels 3y agoCan you legally relinquish ownership of a parcel to no longer have the tax burden of the empty land in a dying city?
- TapWaterBandit 3y agoInteresting question. I think in this scenario there'd be a couple of options: 1. The land is worth a lot. If that is the case, you should be able to sell it reasonably easily. 2. The land is worth very little. In that case the tax would be insignificant because the land has so little value.
- xyzzy123 3y agoThe problem is if the state doesn't see eye to eye with you on the value. This can happen for all sorts of reasons, they might be using a simple algorithm that takes into account nearby values / recent sales as comparables. Those lots might have subtle features which makes them much more valuable than yours. Etc. You get hit twice if over-assessed, first of all because you have to pay more, secondly because the high taxes act as a drag on what you can sell it for. In theory this can result in "negative value", ie, the land generates less income under any plausible use than the property taxes cost. Then you're stuck! What idiot will buy your white elephant now? How can you stop paying the taxes if no one will buy it? Which is why any fair lvt proposal needs at least an out where landowners can hand stuff back to the state.
- TapWaterBandit 3y agoI'm trying to imagine the context where there is a property in an area with high sales pushing the price of land tax up but this property isn't worth a similar amount for being in the same area. If people are buying in an area and that drives up prices because it shows the area is valuable, in what conditions would your land not be worth a similar (ish) value?
- xyzzy123 3y agoYou might have a heritage building, you might have some kind of natural feature that needs to be preserved, you might have some kind of issue like site contamination, there are lots of ways. If you're lucky the tax ratings might take them into account, if you're not, they won't.
- readthenotes1 3y agoThis is called Georgism, https://en.m.wikipedia.org/wiki/Georgism https://en.m.wikipedia.org/wiki/Georgism. It was proposed over 100 years ago and apparently has been endorsed by most economists as the least distorting tax.
- seanmcdirmid 3y agoSeattle (and maybe Washington state) has been changing the formulas to tax land more and improvements. So given my townhome on a small parcel of land, my property taxes have actually been falling for the last few years. It is a bit weird, but I guess this encourages improvements over hoarding land. I bet that my tax break is being paid by WFHs on larger parcels. Nothing as drastic as Detroit, of course, and I don't think Seattle is alone in moving the bar gradually to taxing land more and improvements less.
- superb-owl 3y agoACX primer on Land Value Tax: * Original book review: https://www.astralcodexten.com/p/your-book-review-progress-and-poverty https://www.astralcodexten.com/p/your-book-review-progress-a... * Follow-up part 1: https://www.astralcodexten.com/p/does-georgism-work-is-land-really https://www.astralcodexten.com/p/does-georgism-work-is-land-... * Part 2: https://www.astralcodexten.com/p/does-georgism-work-part-2-can-landlords https://www.astralcodexten.com/p/does-georgism-work-part-2-c... * Part 3: https://www.astralcodexten.com/p/does-georgism-work-part-3-can-unimproved https://www.astralcodexten.com/p/does-georgism-work-part-3-c... The first review is very much worth a read--well written, entertaining, and informative.
- pfannkuchen 3y agoDetroit is an interesting example of a North American disposable city. Conditions changed and everyone left. Could this even happen somewhere like Europe where land is more scarce?
- seabird 3y agoSaying "conditions changed and everyone left" is extremely reductive.
- jmyeet 3y agoWhehter you property value or land value pales in comparison to other aspects of your taxation system. Basically, do the complete opposite of what California has done. A summary: 1. Prop 13 in the 1970s was the incumbent homeowners voting in a massive generational tax break. It capped annual property tax raises for really no reason. Worse, it allowed your children to inherit those tax rates (as well as inherit your property on a stepped up basis so you didn't pay any CGT either). Only in recent years did this get cut back slightly. If you own multiple properties, only one (the primary residence) gets to have its beneficial tax rate inherited. And that measure only passed by (IIRC) 51%; 2. Corporations get the same capped tax increases and don't have to worry about inheritance. Disney World had its tax rate set in the 1960s so it paying a pittance. The LLCs can get bought and sold without resetting the property tax rate to assessed value as would happen if the property was sold; 3. For old people who may be sitting on massive land value that you may not want to evict straight away, just do what Texas does: accrue property tax but defer it to their death with a lien on the property. This gives people a choice between staying and paying later or downsizing. Prop 13 may seem great if you're a longstanding homeowner but the thing is, it's a trap. You can't move because if you sell your property you lose your beneficial tax status. People should have mobility and generational wealth isn't who we should be giving massive tax breaks to anyway. If you get these things wrong property vs land value makes absolutely no difference.
- theptip 3y agoFor those looking for a primer on Land Value Tax / Georgism: https://www.astralcodexten.com/p/does-georgism-work-is-land-really https://www.astralcodexten.com/p/does-georgism-work-is-land-...
- exabrial 3y agoIf I were a resident of Detroit I would figure out how to fire literally everyone that runs the local government and return assets to the people.
- anjel 3y agoFinancial Times: The case for a land value tax is overwhelming https://archive.ph/bkS21 https://archive.ph/bkS21
- deleted 3y ago[deleted]
- AlbertCory 3y ago(I lived in the Detroit area for nine months) "Getting rid of the speculators" sounds good and might even BE good. But you know, Detroit's been in decline since the 1967 riots. No conceivable LVT is going to be a game changer. If the land isn't worth anything because no one wants to live there, that's the end of the story.
- Brycee 3y agoIf you dramatically reduce taxes to labour and capital, it quickly becomes a very attractive place to move your business or earn an income. And that's the start of a development flywheel. Instead of taxing productivity, land taxes reabsorb the value generated by the community (positive externalities), which would otherwise flow into the pocket of the guy who owns a parcel of land in proximity to the public good. You then use these tax revenues to produce more public goods, which benefit everyone, and then suck up the value that accrues to the land. rinse and repeat. I highly recommend grabbing a copy of land is a big deal. https://www.amazon.ca/Land-Big-Deal-wages-about-ebook/dp/B0BL8H6Y9S https://www.amazon.ca/Land-Big-Deal-wages-about-ebook/dp/B0B...
- AlbertCory 3y agoDoesn't it seem to you like ~50 years of decline are too much to erase with one tax law? Have you ever been to Detroit?
- AlbertCory 3y agoI take it the lack of response means No?
- Brycee 3y agoI think that certainly makes it harder. Never been to Detroit. Probably still more economic activity there than there was 200 years ago.
- AlbertCory 3y ago
- londons_explore 3y agoFrance does this. End result is that french people go to great lengths to make their house look un-valuable. For example, they never paint anything and never do repairs. Some even have holes in the roof so they can claim buildings are worthless when in fact there is some 2nd roof underneath keeping the inside dry.
- zone411 3y agoThat doesn't make sense. The building's value wouldn't affect the land tax.
- porb121 3y agoGo ahead and reread what a land value tax is
- BoiledCabbage 3y agoThis is a land value tax, not a building value tax. So essentially the exact opposite of what you say. It would solve the french problem. With an LVT they would be taxed identically regardless of if their building is in pristine shape or falling to shambles. Meaning there is now no longer any incentive to let the building rot.
- Ancalagon 3y agoThis really seems like a poor-and-generational-wealth tax
- londons_explore 3y agoOne approach to assessing land value is to have the property owner self declare. But then that self declaration gets published in an official register, and anyone offering 1.5x that declared value gets to buy the land without the owners ability to refuse.
- viknesh 3y ago…what? I get the idea, but having money shouldn’t mean you should be able to just choose someone’s land and decide its yours.
- londons_explore 3y agoWith enough money you can already do this. You just propose a road building scheme through your enemies garden, sponsor the scheme so it looks like a great deal to local government, and the government will compulsory purchase the garden.
- DavidKarlas 3y agoSo my house is worth 500k, someone looking for house in range 500k-700k, really really likes my house and just kicks me out for 750k? Sounds like terrible idea.
- londons_explore 3y agoIf you really don't like the idea of that happening, you can always self-declare a higher value. Then, not only is it less likley someone chooses your land to buy, but also if it does happen you get more compensation. But then you'll also have to pay matching higher property taxes.
- js8 3y agoThat sounds a bit extreme. What if your land suddenly appreciates without you knowing? I think this is not a very fair system and would cause lot of middle class people lose their home to large owners.
- krupan 3y agoIt's so weird to me that with our income tax laws we to try and make sure they are fair and taxing people according to their means. You make more income, you pay more taxes, you make less income, you pay less taxes. But then we layer on property/land taxes that absolutely do not follow that principle. Retired Grandma living off social security has land that she bought 50 years ago is now worth 50 times what it was? Too bad Grandma, gotta pay up or sell it and move!
- lliamander 3y agoWhile I share your reservations, I do prefer this to imminent domain (a practice I am not a fan of). I think it's more likely for the seller to get the best value for their property, and incentivizes the seller to make good use of the property.
- avar 3y agoIs imminent domain when the government's in a real hurry to grab your land? :-)
- krupan 3y agoYes
- krupan 3y agoAre those the only two options?
- lliamander 3y agoI'm not saying they are. I am just saying that imminent domain is what we have now, and that land-value tax is something that might be better. I'd rather the government not force people out of homes they paid for, but I don't think that's an option right now.
- VirusNewbie 3y agoThere are already laws that are written referencing primary residence. It’s not hard to imagine exempting that and just making sure grandma only pays for her 8 vacation homes.
- 10g1k 3y agoGoogle image search: Detroit abandoned neighbourhoods A city run completely by Democrats. Every policy they have is destructive.
- calgarymicro 3y agoSo if Detroit's economic collapse is the fault of local Democrats (and not, say, the death of large parts of the US auto industry), then does that mean we also have to credit local Democrats for Detroit's rapid economic recovery[0][1][2] over the past decade or so? [0]https://detroitmi.gov/news/u-m-economic-forecast-shows-detroits-economy-steady-growth-pattern-0 https://detroitmi.gov/news/u-m-economic-forecast-shows-detro... [1]https://www.detroitnews.com/story/business/2023/02/08/michigan-metro-detroit-topped-national-economic-recovery-report-says/69884479007/ https://www.detroitnews.com/story/business/2023/02/08/michig... [2]https://www.chicagofed.org/publications/chicago-fed-letter/2017/376 https://www.chicagofed.org/publications/chicago-fed-letter/2...
- 10g1k 3y agoYou should read the materials you linked. They literally fabricated a new economic indicators index to provide a better score than the one previously used.
- calgarymicro 3y agoWhere does it say that? Among the metrics they use are unemployment, job openings, and GDP growth. Seems pretty standard to me. The Fed article that discusses a new index isn't 'fabricating' a new index; they developed a way to separate the performance of the metropolitan area from the city proper so good performance for the overall metro area wouldn't give an I correctly rosy picture of the city proper. If you're gonna tell me to read my links, maybe you should make sure you read them first. Please do quote me exactly where it says this new Detroit-only metric shows the city doing better than the metro-inclusive metric. I'm particularly curious to see where it says that since the article explicitly points out that the Detroit-only index performed worse than the metro-inclusive index. > Moreover, the city’s economic growth more frequently dropped back into negative territory than the MSA’s:
- robocat 3y agoDo you see the cat: https://www.henrygeorge.org/catsup.htm https://www.henrygeorge.org/catsup.htm I mostly agree with the goal of Georgism: I've seen the wasteland that occurs when everyone is an investor waiting for the area to take off (New Brighton, Christchurch which has been slowly rotting over many decades because of investors IMHO). However an 11% tax on land value is completely whacko. There is already a holding cost for undeveloped land: either a mortgage or the opportunity cost (of not investing in say the stock market). (Albeit balanced somewhat by the benefits of using land as collateral for loans when interest rates are low). The clichéd story of Georgism is an undeveloped plot amidst developed land. I suspect that situation is not common: developers usually will develop if land is surrounded by valuable property! How much of central New York is blank property? Detroit: what happens when a whole area is blighted? The tax is just a way to steal the land value over time from the owners. 11% less CPI means devaluing at say 6% per annum so property has zero value after a couple of decades. That is definitely not capitslism and is not so far distant from communism (state owns private property over time, it just takes longer than a revolution to do so).
- hknmtt 3y agoStrangely, I am in europe and here there is separate property and land tax and as far as i know it always was like that. Land is based on size and property based on purchasing price. Although some politicians want to change the land tax(so people pay more).
- tlocke 3y agoOut of interest, whereabouts in Europe is that?
- cpursley 3y agoYou will own nothing and be happy
- knodi 3y agoGreat idea, hopefully this will cause people to no hold on to land for years without any development. Detroit has a huge problem with this.
- DrThunder 3y agoHow to ensure no one wants to live in your city 101.
- Yhippa 3y agoIt feels like very few people read the article, just the headline, and are arguing about that.
- inpdx 3y agoIt seems to me the idea is sound but the specific implementation very difficult to get exactly right. Tax it too much and no one will want the land. But unless you tax it enough to really spur development it won't have an effect. Finding that sweet spot is the key, but is also going to be a moving target.
- TimPC 3y agoI think the specific implementation isn't that hard. The main idea is to provide an incentive to build by not taxing structure value. If you're taxing a territory that is currently half structure value and half land value you can set the land tax that replaces the property tax to double the current rates. Then your city revenue is unchanged. If plenty of land is blighted or empty then the average increased tax on land should be less than the tax of a reasonable structure (SFH for example). Townhouses and condos save by having less land per unit.
- whoopsie 3y agoTaxing primary homes is regressive and counterproductive. Tax empty lots and commercial / industrial zones to encourage better uses. Tax personal income, not property.
- veritas20 3y agoin short, this is just squeezing the proverbial balloon...it moves the issue to a different area...over time, taxes have been high jacked and twisted into being used as incentives for influencing behaviors...the problem with that is that you need different behaviors at different times in development and there's an assumption that all parties will behave/think/execute in the same way given the same incentives...while more densely populated areas are more efficient and effective economically for some towns and municipalities, it's not necessarily the best use case for all scenario and all cases...at the end of the day, the goal for most municipalities is to cover the cost of goods and services (schools, infrastructure, fire & safety, parks & recreation, etc.)...if that's the goal, then we can quantify how much it costs per person/family/household to support these goods and services and that should serve as the baseline for the "tax"...your level of good and services should not depend on the market value of your land/property/house...in a recession or downturn with depressed property values, you still need the same level of goods and services if not more...
- gen220 3y agoOK, I’ve been cooking this idea for a while, curious to get others thoughts. What if we applied a nominal real estate tax, but applied a differential rate to real estate that’s used for rent seeking? i.e. if you rented your property for N/60 of the previous 60 months, you’re taxed progressively and exponentially. I know this would depress real estate prices and reduce the volume of housing available for rent. This is the goal: I want property to be owned by local residents and affordable to local residents, because I think it makes better communities and citizens. Can you all help me poke him in this idea?
- adverbly 3y agoThis is great news. LVT is the best. In the current economic and political climate I think it is probably our best chance for a major policy improvement. Both the left and the right and economists in general are in favor of it because it increases productivity and disincentivizes speculation.
- swsdsailor 3y agoWhen will people learn that more taxes make things more expensive? It's like people actually want to have world of obscenely rich and obscenely poor people... with nothing in the middle.
- jlhawn 3y agoLand Value Taxes are different. Nobody produces land so taxing it doesn't add to production costs and there is no deadweight loss. The economic burden of the tax falls only upon the land owner (in their role as a land owner) and cannot effectively be passed onto tenants. Land value is an economic rent which is arguably what we should tax more of and reduce taxes on consumption and income.
- mmsimanga 3y agoCan you explain how the landlord will be prevented from passing on the land tax to the tenant?
- jacobjjacob 3y agoIt’s basically a monthly occurrence that someone bulldozes and old building in Detroit to build a parking lot. The center of downtown is a crater of surface lots. The idea is that people would be more incentivized to build with the land, because it would impact taxes as much, but at the same time they would pay a higher base rate if they underutilize it.
- rmason 3y agoIf you want an in depth on why this is a bad idea look up Charlie LeDuff's videos on his No BS News Hour show on YouTube. No one covers both Detroit and Michigan politics any better. He has done several hour long shows on this tax scheme. In short the only big city to ever try it was Pittsburgh and they abandoned it after a few short years. https://www.youtube.com/@NoBSNewshour https://www.youtube.com/@NoBSNewshour
- poulsbohemian 3y agoReading the article and the threads below, I have to wonder if there's something unique to Detroit or other areas of the country exploring this land value taxation concept... for example, in my (WA) residential tax statement, there's already a breakdown of the value of the land from its enhancements (IE: my house). Similarly, an alfalfa field (bare land) is going to be taxed at a different rate than that same field having been rezoned as residential and ready for the construction of 200 new homes. That same lot, zoned commercial in the middle of our little town, would have still another tax rate. The state of Oregon is even so kind as to tell you both the value at which they are taxing your property, plus what they believe the market value for the property. So... does Michigan and/or the county and city do something different here? Really trying to understand whether there is an actual tax policy / structure problem, or as the quote at the bottom of the article indicates "We currently have an assessment division that’s not doing its job".
- mannyv 3y agoAssessment is the bugbear of any property tax system. The assessors are employed by the entity that will be harmed if the assessments go down, so they're obviously invented to keep assessments high. That said, it's good that Detroit understands its goals and is thinking of what levers are available. The problem is that you need structures. A city full of vacant lots isn't worth anything, and if you force people to build they won't. Why build when your building will never be worth anything?