4 ms·

Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners

Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well. LVT would increase due to land value increasing, and the current land owners may not be able to afford the increased tax. If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. In general, if your circumstances change unexpectedly then you might be unable to pay the tax and thus lose ownership of your property. This already is the case for renters, but it does mean a somewhat reduced sense of security for home owners too. Mind you, this is already the case for any existing property tax or council rates, which exist in many/most places, so it's also kinda a non-issue.

koolba 3y ago
> Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. Ah more carve outs for boomers. I knew it had to be in there somewhere.
- aldonius 3y ago
  I think deferment is reasonable. Especially if it makes the difference in getting real LVT over the line, politically.
- ensignavenger 3y ago
  A deferment should be allowed for anyone on one primary residence. Then it isn't a carve out just for boomers. Also, the deferment doesn't mean the taxes don't get paid- they just don't have to be paid until the person moves out or transfers the property (or dies, which triggers a transfer).
  - eru 3y ago
    A deferment isn't necessary. Banks are happy to do that kind of financial transformation for you via a reverse mortgage. (However, it might still be a vote winner. Voters aren't exactly the brightest.)
    - ensignavenger 3y ago
      Reverse mortgages are generally only available in the US after you reach a certain age.
      - eru 3y ago
        Interesting. Is that due to federal or state regulation? Or a choice by the banks?
        ensignavenger 3y ago
        I am not sure, it seems to be a combination. The FHA requires the homeowner to be 62 or older for an FHA reverse mortgage. I have never seen a private reverse mortgage advertised, but apparently they exist and from what I have read online, are offereed to those as young as 55- but apparently are marketed to those with fairly expensive homes.
- bigstrat2003 3y ago
  You realize that democratic government requires compromise, right? Scoff all you want, but this is the sort of measure which is required to get people to accept policies which directly cost them (but benefit everyone else).
- deleted 3y ago
  [deleted]
- jonhohle 3y ago
  My grandmother (greatest generation) built her house in the 50s and lives on a fixed income. Should she be forced to sell (assuming she couldn’t afford LVT) for an investment she took all the risk to develop? We’re so addicted to spending that anything that leads to generational wealth is fair game for governments to loot?
  - hahajk 3y ago
    Does she not already pay property tax on her home? And sales tax on her purchases?
  - J_Shelby_J 3y ago
    Where did the value of your grandmother's "generational wealth" come from? It came from renters and first time home owners putting money into the housing market. Your grandma is doing the looting.
    - jonhohle 3y ago
      She (and my grandfather) invested in building in an undeveloped area with their own money. They earned it by working and paying for their house and land. Now public spenders think she owes them what she spent her life building.
      - jncfhnb 3y ago
        The only world in which grandma cannot afford her LVT is if the value of her land has grown so high that she can make a disproportionately large gain by selling the house. This is very unlikely. And if it is the case, it’s not like the government is stealing her house, they’re just saying she has to realize some of her enormous unrealized gains.
  - harimau777 3y ago
    I think that it's less about being addicted to spending and more about people being able to meet their basic needs. With the gap between those with and without wealth growing and income falling behind cost of living, the only way to address people's desire to meet their basic needs is with plans like this. A much better option would be to target the wealth inequality that is driving a lot of these problems (e.g. by ensuring basic needs like medical care, encouraging unionization, etc.). However, there isn't the political will to do that.
- tzs 3y ago
  Most people I know who are younger than Boomers plan to someday retire, and so they too will benefit when that time comes.
lbarrow 3y ago
Yes, that's exactly the idea. In Chicago, where I live, there are surface parking lots in the middle of the downtown surrounded by skyscrapers. In a logical system, the owner of those parking lots would have to pay just as much in land taxes as the skyscraper owners next to them -- and since they couldn't possibly afford to do so, they'd be forced to sell to someone who would develop the land and put it to more productive use. Under the current system, though, the parking lot owner pays peanuts while the skyscraper owner is effectively penalized for putting the land to use. The gentrification situation is similar: if someone is living in a single-family home in an area that is filling up with apartments, they're using the land much less efficiently than a replacement structure would. As land values slowly increase, the owner would be prompted to eventually sell to someone who would put it to higher value use. You could have some speed bumps in the policy to make sure this doesn't happen too fast, but if you stop it entirely you're just giving up on productive land use. It's worth noting that property taxes have the same dynamic, since they also incorporate land value in them. The difference though is that _property taxes discourage development_, which contributes to higher rents. Land value taxes do not have this problem; a world where we suddenly swap to LVTs is a world with many more buildings and much lower average rents.
- balderdash 3y ago
  You realize all those parking lots are owned by big developers who want to develop the land, but are waiting for the right conditions…
  - lbarrow 3y ago
    And right now they can afford to wait forever! But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will. It's no coincidence that people who support LVTs are typically YIMBYs -- we want to reform urban planning and land use to make it easier to build things.
    - eru 3y ago
      > But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will. An LVT gives no such incentives. LVT is explicitly agnostic about how the land is being used. You pay the same, no matter how the land is being used. That's why it's economically efficient. However, a conventional property tax (and also income tax and capital gains tax etc) disincentivise developing. An LVT can help raise enough revenue to be able to lower or eliminate those other taxes, and thus indirectly help remove disincentives to developing.
waveBidder 3y ago
> Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well maybe this would encourage them to actually pay attention to the plight of their neighbors instead of the "fuck you, I've got mine" NIMBY attitudes they so regularly take.
eru 3y ago
Yes, gentrification replaces some existing tenants. But the new tenants might be renters as well? > If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. Otherwise, banks can do that kind of deferral for you with something called a reverse mortgage.

koolba 3y ago

> Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. Ah more carve outs for boomers. I knew it had to be in there somewhere.

aldonius 3y ago
I think deferment is reasonable. Especially if it makes the difference in getting real LVT over the line, politically.
ensignavenger 3y ago
A deferment should be allowed for anyone on one primary residence. Then it isn't a carve out just for boomers. Also, the deferment doesn't mean the taxes don't get paid- they just don't have to be paid until the person moves out or transfers the property (or dies, which triggers a transfer).
- eru 3y ago
  A deferment isn't necessary. Banks are happy to do that kind of financial transformation for you via a reverse mortgage. (However, it might still be a vote winner. Voters aren't exactly the brightest.)
  - ensignavenger 3y ago
    Reverse mortgages are generally only available in the US after you reach a certain age.
    - eru 3y ago
      Interesting. Is that due to federal or state regulation? Or a choice by the banks?
      - ensignavenger 3y ago
        I am not sure, it seems to be a combination. The FHA requires the homeowner to be 62 or older for an FHA reverse mortgage. I have never seen a private reverse mortgage advertised, but apparently they exist and from what I have read online, are offereed to those as young as 55- but apparently are marketed to those with fairly expensive homes.
bigstrat2003 3y ago
You realize that democratic government requires compromise, right? Scoff all you want, but this is the sort of measure which is required to get people to accept policies which directly cost them (but benefit everyone else).
deleted 3y ago
[deleted]
jonhohle 3y ago
My grandmother (greatest generation) built her house in the 50s and lives on a fixed income. Should she be forced to sell (assuming she couldn’t afford LVT) for an investment she took all the risk to develop? We’re so addicted to spending that anything that leads to generational wealth is fair game for governments to loot?
- hahajk 3y ago
  Does she not already pay property tax on her home? And sales tax on her purchases?
- J_Shelby_J 3y ago
  Where did the value of your grandmother's "generational wealth" come from? It came from renters and first time home owners putting money into the housing market. Your grandma is doing the looting.
  - jonhohle 3y ago
    She (and my grandfather) invested in building in an undeveloped area with their own money. They earned it by working and paying for their house and land. Now public spenders think she owes them what she spent her life building.
    - jncfhnb 3y ago
      The only world in which grandma cannot afford her LVT is if the value of her land has grown so high that she can make a disproportionately large gain by selling the house. This is very unlikely. And if it is the case, it’s not like the government is stealing her house, they’re just saying she has to realize some of her enormous unrealized gains.
- harimau777 3y ago
  I think that it's less about being addicted to spending and more about people being able to meet their basic needs. With the gap between those with and without wealth growing and income falling behind cost of living, the only way to address people's desire to meet their basic needs is with plans like this. A much better option would be to target the wealth inequality that is driving a lot of these problems (e.g. by ensuring basic needs like medical care, encouraging unionization, etc.). However, there isn't the political will to do that.
tzs 3y ago
Most people I know who are younger than Boomers plan to someday retire, and so they too will benefit when that time comes.

lbarrow 3y ago

Yes, that's exactly the idea. In Chicago, where I live, there are surface parking lots in the middle of the downtown surrounded by skyscrapers. In a logical system, the owner of those parking lots would have to pay just as much in land taxes as the skyscraper owners next to them -- and since they couldn't possibly afford to do so, they'd be forced to sell to someone who would develop the land and put it to more productive use. Under the current system, though, the parking lot owner pays peanuts while the skyscraper owner is effectively penalized for putting the land to use. The gentrification situation is similar: if someone is living in a single-family home in an area that is filling up with apartments, they're using the land much less efficiently than a replacement structure would. As land values slowly increase, the owner would be prompted to eventually sell to someone who would put it to higher value use. You could have some speed bumps in the policy to make sure this doesn't happen too fast, but if you stop it entirely you're just giving up on productive land use. It's worth noting that property taxes have the same dynamic, since they also incorporate land value in them. The difference though is that _property taxes discourage development_, which contributes to higher rents. Land value taxes do not have this problem; a world where we suddenly swap to LVTs is a world with many more buildings and much lower average rents.

balderdash 3y ago
You realize all those parking lots are owned by big developers who want to develop the land, but are waiting for the right conditions…
- lbarrow 3y ago
  And right now they can afford to wait forever! But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will. It's no coincidence that people who support LVTs are typically YIMBYs -- we want to reform urban planning and land use to make it easier to build things.
  - eru 3y ago
    > But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will. An LVT gives no such incentives. LVT is explicitly agnostic about how the land is being used. You pay the same, no matter how the land is being used. That's why it's economically efficient. However, a conventional property tax (and also income tax and capital gains tax etc) disincentivise developing. An LVT can help raise enough revenue to be able to lower or eliminate those other taxes, and thus indirectly help remove disincentives to developing.

waveBidder 3y ago

> Gentrification, which displaces renters (rents become too expensive for existing tenants so they need to leave the area), will start displacing some land owners as well maybe this would encourage them to actually pay attention to the plight of their neighbors instead of the "fuck you, I've got mine" NIMBY attitudes they so regularly take.

eru 3y ago

Yes, gentrification replaces some existing tenants. But the new tenants might be renters as well? > If you don't allow deferment of the tax, pensioners might have to move unwillingly (low income that may not cover the tax). Most proposals allow deferment for retirees until sale of the property, though, so it's kinda a non-issue. Otherwise, banks can do that kind of deferral for you with something called a reverse mortgage.