9 ms·
Land value tax is an idea by Henry George - the guy who coined the phrase "the rent is too damn high". His idea is among other things that a property tax discou
by red_admiral 3y ago
Land value tax is an idea by Henry George - the guy who coined the phrase "the rent is too damn high". His idea is among other things that a property tax discourages investment - one way to make money as an investor is to hold a plot of empty land in a desirable city centre location, watch it go up in value, and neither pay tax on any development on it nor bother with messy things such as tenants. Taxing the land value, according to George, removes that perverse incentive.
For a more detailed overview, I recommend Lars Doucet's review of George's Progress and Poverty, which won the Astral Codex Ten book review contest a year ago: https://www.astralcodexten.com/p/your-book-review-progress-and-poverty https://www.astralcodexten.com/p/your-book-review-progress-a...
I really like the style, but you need to put an hour or so aside to read the whole thing. For me, it was definitely worth the time!
- malta_kano 3y agoIs that the problem though? Empty land held by speculators?
- red_admiral 3y agoGeorgist thinking, as far as I understand, is that taxing total property value disincentivises investment in a way that is worse for society overall. Empty land is just a subcase of that. That said, "everybody works but the vacant lot" is a Georgist slogan that has been seen on billboards before now: https://digitalcollections.nypl.org/items/510d47de-036a-a3d9-e040-e00a18064a99 https://digitalcollections.nypl.org/items/510d47de-036a-a3d9...
- Cymrukicks 3y agoHuge problem over in the UK, its called land banking. The scarcity of affordable property combined with some silly planning laws mean that you can double your money if you buy land and simply sit on it for a decade.
- bluGill 3y agoNot just empty land. The 'little old Lady' who lived happily in her small house for decades, while everything else developed bigger. At one time her house fit in, but now the rest of the block is bigger buildings worth a lot more. You decide if the above is good or bad.
- vitus 3y agoI'm sure your intent was to express a hypothetical that this might not be a net good, but... Something like 90% of boomers want to age in place (as opposed to moving in with family, or moving into some assisted living arrangement). This is a problem when that effectively locks up 40% of the housing stock. Does this "little old lady" need a 1-acre lot for her gardening when she can barely walk to the end of it and back? Or could that lot be parceled up into 4 single-family homes, or dozens of apartment units? Also: that small house will grow in value (along with the property taxes) until the value of the land almost entirely dominates. My parents are in one such situation -- anyone who would buy their house would assuredly tear it down to build something bigger.
- bluGill 3y agoThe little old ladies I know keep healthy in their garden. It is a gym program for them. Yes, they are slower than younger adults, but they are still active in that garden.
- inpdx 3y agoHow dare she live in a house she's been in her whole life when the government knows what's best!
- xp84 3y agoI get that you’re basically right in technical terms. A nice condo development could meet all their physical needs in far less space. And we would all be better off as a society if that is what happened, if it could just spontaneously, voluntarily happen. However it’s just not compatible with any concept of freedom, as understood by those people themselves. A lot of people have an expectation of fairness that they ought to be able to own a home of their choosing and stay in it until they’re ready to move (or dead). And they are sentimentally attached to their homes where they raised their children. We in the West have a society whose framework is roughly aligned with that idea. We could change it, but it would require lots of other “the government knows best” policies, and ultimately the massive empowerment of police to enforce those “best practices” when people object. Even one would agree with the outcomes in housing policy, it would be pretty risky to create that kind of totalitarian situation in general, because we might not like the other “most efficient best practices.”
- nisegami 3y agoEven if a plot of land isn't literally empty, the ideal behind a land value tax is that it incentivizes maximal utilization of land.
- e40 3y agoIn Oakland at 51st and Broadway there was 1/2 a city block that was empty. For almost 40 years (probably more, it was derelict when I got there in in 1980). A few years ago someone built a 5 story apt building on the land. It always seemed crazy to me that nothing was done on that very valuable corner for so long. There are other examples.
- xp84 3y agoAnd if I know the Bay Area, 47 people with pitchforks came to the community meeting where that development was being considered for approval, screaming about how “their neighborhood” was now being “overrun by gentrifiers,” right?
- pketh 3y agoAnecdotally, I live in corktown (a neighborhood right next to downtown), and while it’s overall a nice place to live and somewhat walkable. There are vacant lots everywhere. Some are totally fenced off and some used as free parking. I’m new to town but everyone else tells me that the area has massively improved in the last 5 years. Those lots are wasted potential.
- nonethewiser 3y agoWhat’s currently stopping people from developing them though? Detroit is a huge city and its population has largely vacated to the suburbs. Maybe they havent been developed because the current demand is already being met.
- mactrey 3y agoSure, that's possible. Or maybe Mr. Parking Lot Owner just likes the look of parking lots. But the key point is that today, improving the land is disincentivized because it would increase the owner's tax burden. So we don't know exactly what people would do with all those empty lots if improving them wasn't disincentivized.
- gyanreyer 3y agoYes, downtown Detroit is a wasteland of parking lots. Some incredibly beautiful old buildings have been demolished and turned into vacant lots, it's a real shame. Downtown really needs more development and I think this is a great way to force the issue. When I lived downtown, I had to drive 20 minutes to the suburbs for groceries. And now I have a house in the suburbs instead of Detroit because of that.
- bluedino 3y agoThink of that closed-down K-Mart that's been empty for 25 years on the main shopping drag in a medium-sized town. There's probably 25,000 of those across the USA.
- cwmma 3y agoit is specifically in Detroit, they have lots of empty lots as businesses fled the city proper for the suburbs, now as the city is bouncing back there is an incentive to just hold onto empty lots so that new buildings around you increase the value of your land.
- Double_a_92 3y agoI don't understand how that needs a special tax though. Wouldn't the more obvious choice be to just tax all wealth/assets? E.g. where I live it's just assumed that all your assets produce a yield of 4% yearly, and that is taxed as regular income. Makes the tax declaration also a lot easier, since people don't have to list all exact dividends and profits they might have gotten from investments.
- blagie 3y agoThe idea is to change incentive structures around specific types of assets, not to raise money. The idea of rent-collecting landed gentry is economically devastating. Adam Smith wrote extensively about the outcomes, and that is a natural path for economies to take. Wealth consolidates, buys landed, and becomes an informal nobility who collects land and does no work. At some point, it spirals, as rents lets real estate investors buy more land. Put another way: If I have $1B, and I buy $1B of land, that creates no value, and raises prices for everyone. If I have $1B and I start or fund a company which produces a new medical device, computer, or car, I've created massive economic value, both in the inputs (hiring people) and outputs (new technology). Land is also a scarce resource we all need to share fairly (for whatever 'fairly' means). If you have more, everyone else has less. On the other hand, if you're investing in making movies, I can make my own movies too. There is no fundamental limit to that sort of economic growth.
- tedk-42 3y agoLand specifically has uses (people live there, grow stuff, build a business on top of, have community things like a park etc). Most people won't care about some Rolex that someone around the world is willing to pay $100K for. Land has purposeful value rather than just 'worth'
- ajsnigrutin 3y agoThe problem is, what if it doesn't produce that much? What if it doesn't produce anything? Imagine someone buying a house somewhere cheap. Then some gentrification, a new microsoft campus built nearby, etc., and the price of the house jumps 10x+. You're on a fixed income, and your taxes are now higher then you can afford. If you have multiple houses, sure, tax the second, third, etc. one (evn though the taxes are then charged as higher rents if you lease those properties), but the first, primary residence should not be taxed as a "profit maker". Maybe it's a cultural difference, but here in the balkans, people rarely move, and telling a 75yo grandma that she'll have to move, since her socialist built apartment is now worth 500k eur+, because "investors" want it for airbnb, and she cannot afford taxes on it, is just evil.
- pmontra 3y agoIf you want to tax properties, why not taxing both the land and what is build upon it? And wardrobes, tables, books or computers (every year) but that's another story.
- bombcar 3y agoThe idea is that you tax the land only as if it was being used for best use - so that every property is encouraged to develop to maximum density. I suspect that in actual use it would end up having a small to no effect.
- flenserboy 3y agoIn actual use it would, in most cases, ensure that people would not, could not have long-term ownership of land passed down from generation to generation. There would be significant social downstream effects & likely upheaval caused by this, & that would be compounded by the deleterious results of forcing more & more people to live shoulder to shoulder in the name of that maximum density you mention. No system of taxation is going to be perfect, or even nearly so, but some significantly increase the likelihood of abuse & unintended consequences of bad ideas allowed to run wild. All this without the need for malicious or corrupt action on the part of those in charge of the system, though it strikes me that a system such as the one proposed here would treble the power of officials to strike at groups & ways of life with which they disagree.
- sheepshear 3y agoDetroit is a city. They already try to encourage high-density living through the types of zoning they have. I don't see a fundamental issue with aligning their taxes to better facilitate their development goals. Similar arguments would go for rural municipalities that might want to encourage multi-generational agricultural living, for example, if that's what you're getting at.
- closeparen 3y agoSomeone once remarked that American society is anti-Georgist, in that land speculation is actually seen as the only honorable engagement with real estate. Having un-utilized land in your family generation after generation codes as noble, but economically this is much worse than owning an AirBnb or a vacation home or being a Chinese investor who collects vacant luxury condos, or any of the other boogeymen of housing discourse. These people hold one unit off the market, and in the meantime they maintain it or finance its construction. The landowner builds and holds wealth for nothing but parasitism.
- deleted 3y ago[deleted]
- barfingclouds 3y agoMakes sense. I didn’t know taxing didn’t already work that way