5 ms·

Land 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 ago
Don’t improvements in nearby plots change the value of a plot of land?
- josnyder 3y ago
  Yes, 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 ago
    Another 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.
    - eru 3y ago
      Just to be clear: land value taxes by themselves don't encourage more efficient use of land. Removing taxes on improvements (and on capital and labour) encourages more efficient use of land, and a land value tax can help finance those other tax reductions.
  - ses1984 3y ago
    It’s just strange phrasing that improvements increase the value of adjacent land but not the land they’re on.
    - enragedcacti 3y ago
      It increases the value of both equally
    - mikecoles 3y ago
      Think of it as part of a communist plan and you'll see the why and who start to make sense.
- TulliusCicero 3y ago
  True enough. It doesn't factor in land improvements directly into the calculations, but it could be affected indirectly by whatever the market seems something to be improving the neighborhood in general.
phkahler 3y ago
Land in Detroit is cheap already. This sounds like a way for investors to build big things and not increase their tax bill.
- lalaland1125 3y ago
  Giving investors a greater incentive to build big things is the exact point
- lbarrow 3y ago
  Yes, that's exactly the idea. We have a problem in the US where many metro areas do not have enough housing, in part because building big things is penalized by the tax code. By changing the tax code to not penalize construction, we hope to get more construction.
  - brianwawok 3y ago
    Detroit still has more houses than people wanting to live there.
    - epistasis 3y ago
      This is a great situation in which to use an LVT. Shifting the tax burden from homeowners and productive businesses onto idle land holders means that those that drive the community will penalize investment less and use limited resources in more effective ways. Efficiency helps the wealthy, but it can help those with less even more, as it matters more.
    - Qwertious 3y ago
      How many of those houses are on the fringes, and how many are in the CBD? If there's a vacant plot next to the town hall then it doesn't really matter how many vacant houses are a 1-hour drive out, that town-hall adjacent plot is being wasted.
      - xienze 3y ago
oh_sigh 3y ago
They don't directly factor in improvements, but the improvements are generally why land value increases/decreases.
- LVTfan 3y ago
  As the community grows in population, it behooves people to establish businesses to serve their various needs. This creates prosperity for all those business owners and employees who provide services to maintain and improve their homes, provide them with groceries and entertainment and restaurants and pharmacies. The provision of good transit increases the land value close to its stations; the provision of a highway to higher paying jobs increases the land value close to its exits. The provision of good emergency services and hospitals and libraries and other amenities raises the land values within their service areas. (They don't raise the value of the buildings.)
s1artibartfast 3y ago
They factor in both your improvements and all the improvements around you. If if someone in your neighborhood repaints their house, your land becomes more desirable. This is true for you and others!
lend000 3y ago
I've gone back and forth on LVT, but don't currently support it. The problem is determining what the land is worth. If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices), then you give the government and the wealthy extraordinary power to kick people out of their residences, even ones in which the tenants built the house. Good for the collective perhaps, but terrible for individual autonomy. This could be mitigated by auctioning off longer length (~say 30 year) leases, but you can end up with huge value mismatches after 30 years of change, just like today, and I suspect there would be other unintended consequences. For example, things wouldn't be built to last, they'd be built to generate as much value as possible before the lease is auctioned off again. And even then, you haven't really determined what the land is worth, since any rational auction participant is considering how much money can be made with the existing improvements on the property. That being said, I hope they do try it in Detroit, since I have no stake in the city and it seems like it has more to gain than to lose from such an experiment.
- shawabawa3 3y ago
  > If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices) This system wouldn't work, because you would be measuring the property value not land value
  - lend000 3y ago
    Exactly, there's no way to separate the value of the land from the value of existing improvements.
- gr__or 3y ago
  Implementation is also the only aspect that makes me question LVT, otherwise I'm pretty much sold (not an unimportant aspect it is). Wrt "even ones in which the tenants built the house": For me the baseline of implementing LVT is that ppl don't have to pay it for their primary housing (or a much lowered version of it). Is that controversial?
  - 3y ago

ses1984 3y ago

Don’t improvements in nearby plots change the value of a plot of land?

josnyder 3y ago
Yes, 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 ago
  Another 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.
  - eru 3y ago
    Just to be clear: land value taxes by themselves don't encourage more efficient use of land. Removing taxes on improvements (and on capital and labour) encourages more efficient use of land, and a land value tax can help finance those other tax reductions.
- ses1984 3y ago
  It’s just strange phrasing that improvements increase the value of adjacent land but not the land they’re on.
  - enragedcacti 3y ago
    It increases the value of both equally
  - mikecoles 3y ago
    Think of it as part of a communist plan and you'll see the why and who start to make sense.
TulliusCicero 3y ago
True enough. It doesn't factor in land improvements directly into the calculations, but it could be affected indirectly by whatever the market seems something to be improving the neighborhood in general.

phkahler 3y ago

Land in Detroit is cheap already. This sounds like a way for investors to build big things and not increase their tax bill.

lalaland1125 3y ago
Giving investors a greater incentive to build big things is the exact point
lbarrow 3y ago
Yes, that's exactly the idea. We have a problem in the US where many metro areas do not have enough housing, in part because building big things is penalized by the tax code. By changing the tax code to not penalize construction, we hope to get more construction.
- brianwawok 3y ago
  Detroit still has more houses than people wanting to live there.
  - epistasis 3y ago
    This is a great situation in which to use an LVT. Shifting the tax burden from homeowners and productive businesses onto idle land holders means that those that drive the community will penalize investment less and use limited resources in more effective ways. Efficiency helps the wealthy, but it can help those with less even more, as it matters more.
  - Qwertious 3y ago
    How many of those houses are on the fringes, and how many are in the CBD? If there's a vacant plot next to the town hall then it doesn't really matter how many vacant houses are a 1-hour drive out, that town-hall adjacent plot is being wasted.
    - xienze 3y ago

oh_sigh 3y ago

They don't directly factor in improvements, but the improvements are generally why land value increases/decreases.

LVTfan 3y ago
As the community grows in population, it behooves people to establish businesses to serve their various needs. This creates prosperity for all those business owners and employees who provide services to maintain and improve their homes, provide them with groceries and entertainment and restaurants and pharmacies. The provision of good transit increases the land value close to its stations; the provision of a highway to higher paying jobs increases the land value close to its exits. The provision of good emergency services and hospitals and libraries and other amenities raises the land values within their service areas. (They don't raise the value of the buildings.)

s1artibartfast 3y ago

They factor in both your improvements and all the improvements around you. If if someone in your neighborhood repaints their house, your land becomes more desirable. This is true for you and others!

lend000 3y ago

I've gone back and forth on LVT, but don't currently support it. The problem is determining what the land is worth. If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices), then you give the government and the wealthy extraordinary power to kick people out of their residences, even ones in which the tenants built the house. Good for the collective perhaps, but terrible for individual autonomy. This could be mitigated by auctioning off longer length (~say 30 year) leases, but you can end up with huge value mismatches after 30 years of change, just like today, and I suspect there would be other unintended consequences. For example, things wouldn't be built to last, they'd be built to generate as much value as possible before the lease is auctioned off again. And even then, you haven't really determined what the land is worth, since any rational auction participant is considering how much money can be made with the existing improvements on the property. That being said, I hope they do try it in Detroit, since I have no stake in the city and it seems like it has more to gain than to lose from such an experiment.

shawabawa3 3y ago
> If you use a periodic market-based auction system (the only known way that could possibly yield accurate prices) This system wouldn't work, because you would be measuring the property value not land value
- lend000 3y ago
  Exactly, there's no way to separate the value of the land from the value of existing improvements.
gr__or 3y ago
Implementation is also the only aspect that makes me question LVT, otherwise I'm pretty much sold (not an unimportant aspect it is). Wrt "even ones in which the tenants built the house": For me the baseline of implementing LVT is that ppl don't have to pay it for their primary housing (or a much lowered version of it). Is that controversial?
- 3y ago