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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

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?
- bombcar 3y ago
  I think that would be the way to start an implementation - have a generous enough homestead allowance that it really only affects investors and commercial interests. Of course, remember that apartment buildings are commercial businesses… Also excluding homesteads destroys the public schools, because they’re often in areas that really only have houses and a Walmart or two, and if the entire property tax burden is transferred to the Walmart it’ll just close.
- lend000 3y ago
  That addresses one issue, but I think you end up with similar (or worse) problems we have now w.r.t. housing density, where someone keeps their dingy old single story house in a valuable up and coming downtown neighborhood because they gain nothing by leaving it. At least in our current system, they can sell the property for a big profit if they aren't stubborn. This might even slow down densification more, since the only way rational people will leave land of increasing value is dying. Overall, I think there are so many impracticalities and second-order problems with implementing LVT that it seems like nothing more than a fantasy mental exercise.
konschubert 3y ago
You have the same problem with property taxes, no? Usually that is solved by various measure to slow down the tax increases for existing homeowners - which can be good or bad, depending on whether you're a homeowner or somebody looking for a home.
- lend000 3y ago
  No, there's a big difference. If someone bought a house and gets priced out of the house due to massive increases in value in the neighborhood and overall market, they reap the rewards of selling the house, because they owned the property. I don't believe tax increases should be slowed like they are in California -- that's a big part of the housing problem IMO. Whereas in an LVT system, a person just gets priced out as the neighborhood increases in value with nothing to show for it, even if they spent money to build or improve the house.
  - mactrey 3y ago
    No, you are wrong. The two cases are analogous. Under a LVT, if their tax goes up, it's because their land became more valuable. So when they sell they get more money. And under a LVT, if they spend money to build or improve a house, then they also get a benefit when they sell for a corresponding higher price. It's just that those improvements would not be reflected in a higher tax bill.
    - lend000 3y ago
      Sell what to who? Isn't everyone a lessor under Georgism? I don't see how having regular auctions to determine what the land is actually worth is compatible with true land ownership. You auction the land to determine the tax, someone pays more than the current lessor, then that highest bidder gets to lease the land from the government and kick out the old lessor. Where does ownership of land and ability to sell it and profit from improvements come into play? Unless you are in the Georgism-lite camp that says no auctions, just let government appraisers put value on the land as they do today and base the property tax on that exclusively instead of the current combined property tax. In this case you still have property ownership/buying/selling, which is far superior. I think the pros could outweigh the cons in limited situations, specifically downtown metro areas. But you have to accept a lot of bad pricing in this scenario, because these are the same assessors who allow all of those single story parking lots to profitably exist in downtown metros throughout the country. These appraisers would all of a sudden wield huge influence, and one appraiser's opinion of the value of being near trendy shops or a park or a waterfront could vary significantly from another's. At least now they can use market data from similar properties to come to a tax assessment, since the tax is being assessed on the full value of the property.

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?

bombcar 3y ago
I think that would be the way to start an implementation - have a generous enough homestead allowance that it really only affects investors and commercial interests. Of course, remember that apartment buildings are commercial businesses… Also excluding homesteads destroys the public schools, because they’re often in areas that really only have houses and a Walmart or two, and if the entire property tax burden is transferred to the Walmart it’ll just close.
lend000 3y ago
That addresses one issue, but I think you end up with similar (or worse) problems we have now w.r.t. housing density, where someone keeps their dingy old single story house in a valuable up and coming downtown neighborhood because they gain nothing by leaving it. At least in our current system, they can sell the property for a big profit if they aren't stubborn. This might even slow down densification more, since the only way rational people will leave land of increasing value is dying. Overall, I think there are so many impracticalities and second-order problems with implementing LVT that it seems like nothing more than a fantasy mental exercise.

konschubert 3y ago

You have the same problem with property taxes, no? Usually that is solved by various measure to slow down the tax increases for existing homeowners - which can be good or bad, depending on whether you're a homeowner or somebody looking for a home.

lend000 3y ago
No, there's a big difference. If someone bought a house and gets priced out of the house due to massive increases in value in the neighborhood and overall market, they reap the rewards of selling the house, because they owned the property. I don't believe tax increases should be slowed like they are in California -- that's a big part of the housing problem IMO. Whereas in an LVT system, a person just gets priced out as the neighborhood increases in value with nothing to show for it, even if they spent money to build or improve the house.
- mactrey 3y ago
  No, you are wrong. The two cases are analogous. Under a LVT, if their tax goes up, it's because their land became more valuable. So when they sell they get more money. And under a LVT, if they spend money to build or improve a house, then they also get a benefit when they sell for a corresponding higher price. It's just that those improvements would not be reflected in a higher tax bill.
  - lend000 3y ago
    Sell what to who? Isn't everyone a lessor under Georgism? I don't see how having regular auctions to determine what the land is actually worth is compatible with true land ownership. You auction the land to determine the tax, someone pays more than the current lessor, then that highest bidder gets to lease the land from the government and kick out the old lessor. Where does ownership of land and ability to sell it and profit from improvements come into play? Unless you are in the Georgism-lite camp that says no auctions, just let government appraisers put value on the land as they do today and base the property tax on that exclusively instead of the current combined property tax. In this case you still have property ownership/buying/selling, which is far superior. I think the pros could outweigh the cons in limited situations, specifically downtown metro areas. But you have to accept a lot of bad pricing in this scenario, because these are the same assessors who allow all of those single story parking lots to profitably exist in downtown metros throughout the country. These appraisers would all of a sudden wield huge influence, and one appraiser's opinion of the value of being near trendy shops or a park or a waterfront could vary significantly from another's. At least now they can use market data from similar properties to come to a tax assessment, since the tax is being assessed on the full value of the property.