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> They should implement a blight tax or a vacant land tax instead. A land value tax is a much more elegant solution. For one, it doesn't introduce the problem
by kaibee 3y ago
> They should implement a blight tax or a vacant land tax instead.
A land value tax is a much more elegant solution. For one, it doesn't introduce the problem of needing to define 'vacant land'. Is a parking lot vacant land? etc
- jrockway 3y agoI don't think tax law fears complexity. You make a table and there is an entry for "parcel of land with grass taller than 6 inches and containing one or more 1980s automobile with 3 or more tires" right alongside "parking lot" or "hospital".
- chongli 3y agoI don't think tax law fears complexity Of course it does. Complexity in the tax law is regressive. It lets wealthier people and businesses take advantage of more deductions and writeoffs to lower their tax burden, due to the ability to hire accountants full time to work on it. Simple taxes that are difficult to avoid (such as LVT) are best if you want a progressive tax regime. One of the best features of LVT is that it taxes unearned increases in the value of land. While you can do any improvements you want to the property without increasing the LVT, improvements made by the city or other private interests to the area around your land absolutely will increase its value, thus increasing your tax burden.
- eru 3y agoSimpler is not only less regressive, but also more efficient. Those lawyers and accountants freed up by simplicity can then go on to contribute to the economy in meaningful ways.
- jjav 3y ago> Simple taxes that are difficult to avoid (such as LVT) Can you explain how is it simple? Who gets to set the theoretical value of a plot of land, disconnected from all current uses? Since it's theoretical, it's very subjective. Who do we give this power to make or destroy the owners based on purely subjective speculation on what it might be worth? How do we guarantee that this entity won't abuse the power to set arbitrary tax valuations?
- reaperman 3y ago> How do we guarantee that this entity won't abuse the power to set arbitrary tax valuations? We don't. They already do that with "normal" property taxes. This wouldn't change that. Soon-to-be gentrified neighborhoods are often ignored by property tax assessors and code enforcement for many years, then one day a developer reaches out to the tax assessors and says "hey the taxable assessment values in this neighborhood should really be higher". Then the people living there have taxes raised 10-20% every year until they are forced to sell for low prices because they can't afford to hold onto their property until the gentrification is actually well underway when they'd finally see their property value actually go up. At least, that's how it goes in Texas. I don't think this system would be worse in that sense, probably roughly equivalent. But it makes sense to at least attempt to tax undeveloped and under-developed land at high enough rates to encourage at least some healthy amount of development. It won't be perfect, but it shouldn't be worse either.
- jjav 3y ago> I don't think this system would be worse in that sense, probably roughly equivalent. But it makes sense to at least attempt to tax undeveloped and under-developed land at high enough rates to encourage at least some healthy amount of development. It won't be perfect, but it shouldn't be worse either. I don't see how it can't not be much worse. If the tax is based on the actual value of the property, there are two important factors: 1- You can easily prove or disprove whether the valuation makes sense. Just look at comparable sales nearby. If in a neighborhood of similar houses, ten have been sold in the past year for 200K and your very similar house receives a tax bill saying it's worth 2M, you can easily protest and win since the sales records show it's only worth +/- 200K. 2- If it really is worth 2M based on comparable sales, in worst case you can then sell it for 2M. While it's terrible to kick people out of their homes via property taxes, at least the consolation is that it's actually worth that. So you don't go bankrupt, you can sell it for that price. With LVT the tax is supposed to be based on some theoretical projection of what it might be worth if a non-existing structure were to be there. What prevents the county from telling you that if only you built a ten story highrise there, it would be worth 10M? So now you have to pay tax on 10M. You can't easily disprove it because, well perhaps maybe it's true that if the highrise was there it might be worth 10M. But of course the building doesn't exist so it's all speculation. Also, since the building doesn't actually exist, you can't sell the property for 10M to pay the tax bill.
- orwell_bruh 3y agoOne implication of what you write seems to be that every property owner is incentevized to NIMBY any improvements to the area that they don't care about. For example, if I am "child free" I will now oppose the building of schools and playgrounds on the basis that they make my LVT go up with no benefit to me. This looks more like a way to destroy society than prudent tax policy.
- Kbelicius 3y ago> For example, if I am "child free" I will now oppose the building of schools and playgrounds on the basis that they make my LVT go up with no benefit to me. It would raise the value of your land.
- leoedin 3y agoI think the problem is, for many people, the value of their land is kind of irrelevant. If you are using land by living on it, and want to live on it because it's near your friends, family, community, place of work etc, then the value of that land to someone else doesn't really matter. Maybe when you die and pass it to your kids, it would be great if it was valuable. But in the mean time (which for most people is many decades), an increase in value only really means an increase in monthly outgoings with no financial benefit to you. Perhaps that's the point - in order for cities to stay dynamic and fair, we need to make everyone pay something close to market value for their land - even those who bought it a long time ago. But doing so is unlikely to make those people very happy.
- chongli 3y agoYou can’t make everyone happy all the time. I’m a lot more okay with a situation in which a person is compelled to sell their very valuable property because they can’t afford the taxes than I am with people being unable to afford housing. If LVT helps to loosen up some undeveloped/underdeveloped land and get it into the hands of a willing developer then that is a big win for the fight against the housing crisis.
- rtkwe 3y agoComplexity introduces additional chances of creating loopholes and allowing people with enough resources to game the definitions to avoid the LVT. More basic implementations are also preferable because they're easier to administer, with your definition (or any that depends on the current year to year usage of the lot) you have to create a whole cadre of inspectors to check on the lots to ensure compliance and check people aren't just lying on their taxes.
- adhesive_wombat 3y agoBRB setting up dewheelr.io, which will help you, a landowner besieged by toxic regulations threatening your eyesore vacant landbank, sorry, useful and beautiful community recycling zone. For a small monthly fee, we'll connect you with local freelance tax compliance consultants who will happily remove tyres from the vehicles until they slip through the gaps in the table in your local jurisdiction. We'll keep on top of the regulatory complexity (in fact, we lobbied to ensure that only we are allowed to, so you can trust that we know the rules), deal with the grotty human workers (we've never actually met or talked to any of them person-to-person, so we don't feel bad paying them below a living wage and withholding payment when we can get away with it) leaving you to focus on what matters most: letting that dead possum stuck in the frayed chainlink fence grow a really interesting plant in an eyesocket.
- jrockway 3y agoLove it. Possum plants are the best improvement you can make to your neighborhood.
- conductr 3y agoI agree simply on the fact my head filled with half a dozen loopholes within seconds of reading "blight" and "vacant" as measures for tax.
- jjav 3y ago> For one, it doesn't introduce the problem of needing to define 'vacant land'. But it introduces, unless I'm completely misunderstanding, the need to establish a theoretical value for a plot of land that's unrelated to any sale or use value we can objectively measure today. At best, it seems the assesment will be very wrong often. At worst, it'll be a political tool for local government to drive out whoever they want by overvaluing plots on purpose. A lot of the land around Detroit is nearly worthless given the blight. Will it be taxed at $0 or will they say that in an alternate universe someone could build a skyscraper there so it's worth millions? Even though nobody would actually fund that work. Taxing based on sale price isn't perfect, but at least it is much harder to game since it's based on a concrete market-clearing price that isn't up for debate.
- fastball 3y agoHow is an assessment which includes improvements (the status quo) less complicated than one which does not? Distinguishing between lot value and property value is already a very common exercise in the real estate business.
- robertlagrant 3y agoIn real estate property value is constantly being corrected by an actual market. Prices aren't set by bureaucrats; they're paid by people for whom that price is worth it.