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If a landlord has a storefront that he's letting sit empty, paying the mortgage on the property (and also the existing taxes, if they aren't part of the mortgag

If a landlord has a storefront that he's letting sit empty, paying the mortgage on the property (and also the existing taxes, if they aren't part of the mortgage), and the insurance, and the security... why do you think that a land tax is going to change things? Especially if a land tax replaces a land-plus-improvements tax, which may come out a wash for many storefront-owners? (And, if it's a ground-level storefront in a highrise, their taxes may go down, because the land is a lower part of the value of their property.) Don't change the incentives (very much) for this particular behavior, and watch the behavior not change.

jjk166 3y ago
They're probably not paying a mortgage on a property that may have been purchased decades ago, especially if they were buying cheap land before it came into high demand. Insurance and security for vacant buildings and especially vacant lots is pennies; certainly much cheaper than for a developed property with tenants. The only serious cost of a non-productive property for a landowner are property taxes, which are currently structured such that developing a property causes them to go up, while leaving a property undeveloped keeps taxes low. Taxing the land value is a major change to the incentive structure.
- bequanna 3y ago
  How does this change anything at all? The assessor determines the approximate value. That value is theoretically the same whether occupied or not and is already taxed. I don’t follow what this “land value tax” is proposing to change.
  - throwaway092323 3y ago
    If tax is based on land improvement, a flat parking lot in a busy area is profitable, even if it doesn't provide optimal value to the community. The owner may wish to add some buildings to the lot, but land improvement tax means they have to pay extra to have and keep those buildings, even if a recession keeps them empty. Land value tax flips this, removing some of the risk of adding value to a property while discouraging hoarding.
    - bequanna 3y ago
      Uh huh, so you’re taxing land based on some theoretical “highest and best use”? This will only serve to punish small businesses who will see a huge jump in taxes, forcing some of them to sell to some large developer. Pure academic nonsense. Punishing people for not doing what YOU want with THEIR land.
      - Kbelicius 3y ago
        > Uh huh, so you’re taxing land based on some theoretical “highest and best use”? No, they tax based on the value of the land... I mean, it's in the name.
        bequanna 3y ago
        We’re talking in circles then. Land value + improvements is already taxed pretty much everywhere I am aware of.
        jjk166 3y ago
        Yeah, and the goal is to remove the "+ improvements" part of the tax.
      - throwaway092323 3y ago
        > Uh huh, so you’re taxing land based on some theoretical “highest and best use”? Someone has to eat the opportunity cost of sub-optimally used land. Would you rather it be corporations and house-flippers, or renters and homeowners? > Pure academic nonsense. Several places have implemented LVT (eg Pennsylvania). What's nonsense is treating it like idle theory-crafting when there's evidence to judge. > Punishing people for not doing what YOU want with THEIR land. Not all societies believe in land ownership to begin with. Owning land keeps other people from using it, so it should come with a sense of duty. Also, no one under either system is arbitrating the correctness of land use to pick winners and losers. The free-market still decides what is or isn't effective land use; it's just that under LVT people are disincentivized from speculating on empty land.
- storf45 3y ago
  At that point couldn’t the local government use eminent domain and just seize the property? Then build public housing units that benefit all instead of the landlord sitting on a vacant lot.
  - jjk166 3y ago
    That assumes the government will make optimal use of the land. With a land value tax, there is still total freedom to do whatever you want to improve the land, you just make more money if you use it more efficiently. A landlord can still sit on a vacant lot if they so wish, or do any other inefficient thing with the land, but they are constantly feeding money into the public coffers for the privilege of doing so. Perhaps the money could be spent on affordable housing projects, but it could also be spent on any number of different things that may be more useful. The system is fundamentally flexible to a community's needs.
- sroussey 3y ago
  Insurance for vacant building is e pensive and net impossible to acquire.
refurb 3y ago
You have a point. A good example is the Additional Buyer's Stamp Duty (ABSD) in Singapore. It's an additional tax on foreigners or Singaporeans who buy multiple homes. There is a normal stamp duty when you buy a home, which is 5%. In order to "tamp down" the housing market, the ABSD in Singapore is now 60% for foreigners. Yeah, the tax on a home is 60% of the purchase price. So a $1M home would have a $650,000 tax when you purchase it ($50,000 BSD + $600,000 ABSD). Does that stop rich foreigners from buying multi-million dollar properties as investments? Nope. In fact, one wealthy Chinese guy bought a whole building for $293M and had to pay $60M in ASSD (it was only 20% back then). https://coconuts.co/singapore/news/mystery-chinese-family-drops-s300m-to-buy-entire-orchard-condo-building/ https://coconuts.co/singapore/news/mystery-chinese-family-dr... So the argument that a Georgist land tax will magically fix the "unproductive land" problem is a bit naive.
- fragmede 3y ago
  Say, how does housing get built in Singapore? Do they have weird taxes and just hope that developers deign to build housing, or does the government there do something more direct, in order to get housing built?
  - refurb 3y ago
    The government auctions off land for development. All on 99 year leases, so the government gets it back in the end for further development. There is enough demand for housing that developers keep building.

jjk166 3y ago

They're probably not paying a mortgage on a property that may have been purchased decades ago, especially if they were buying cheap land before it came into high demand. Insurance and security for vacant buildings and especially vacant lots is pennies; certainly much cheaper than for a developed property with tenants. The only serious cost of a non-productive property for a landowner are property taxes, which are currently structured such that developing a property causes them to go up, while leaving a property undeveloped keeps taxes low. Taxing the land value is a major change to the incentive structure.

bequanna 3y ago
How does this change anything at all? The assessor determines the approximate value. That value is theoretically the same whether occupied or not and is already taxed. I don’t follow what this “land value tax” is proposing to change.
- throwaway092323 3y ago
  If tax is based on land improvement, a flat parking lot in a busy area is profitable, even if it doesn't provide optimal value to the community. The owner may wish to add some buildings to the lot, but land improvement tax means they have to pay extra to have and keep those buildings, even if a recession keeps them empty. Land value tax flips this, removing some of the risk of adding value to a property while discouraging hoarding.
  - bequanna 3y ago
    Uh huh, so you’re taxing land based on some theoretical “highest and best use”? This will only serve to punish small businesses who will see a huge jump in taxes, forcing some of them to sell to some large developer. Pure academic nonsense. Punishing people for not doing what YOU want with THEIR land.
    - Kbelicius 3y ago
      > Uh huh, so you’re taxing land based on some theoretical “highest and best use”? No, they tax based on the value of the land... I mean, it's in the name.
      - bequanna 3y ago
        We’re talking in circles then. Land value + improvements is already taxed pretty much everywhere I am aware of.
        jjk166 3y ago
        Yeah, and the goal is to remove the "+ improvements" part of the tax.
    - throwaway092323 3y ago
      > Uh huh, so you’re taxing land based on some theoretical “highest and best use”? Someone has to eat the opportunity cost of sub-optimally used land. Would you rather it be corporations and house-flippers, or renters and homeowners? > Pure academic nonsense. Several places have implemented LVT (eg Pennsylvania). What's nonsense is treating it like idle theory-crafting when there's evidence to judge. > Punishing people for not doing what YOU want with THEIR land. Not all societies believe in land ownership to begin with. Owning land keeps other people from using it, so it should come with a sense of duty. Also, no one under either system is arbitrating the correctness of land use to pick winners and losers. The free-market still decides what is or isn't effective land use; it's just that under LVT people are disincentivized from speculating on empty land.
storf45 3y ago
At that point couldn’t the local government use eminent domain and just seize the property? Then build public housing units that benefit all instead of the landlord sitting on a vacant lot.
- jjk166 3y ago
  That assumes the government will make optimal use of the land. With a land value tax, there is still total freedom to do whatever you want to improve the land, you just make more money if you use it more efficiently. A landlord can still sit on a vacant lot if they so wish, or do any other inefficient thing with the land, but they are constantly feeding money into the public coffers for the privilege of doing so. Perhaps the money could be spent on affordable housing projects, but it could also be spent on any number of different things that may be more useful. The system is fundamentally flexible to a community's needs.
sroussey 3y ago
Insurance for vacant building is e pensive and net impossible to acquire.

refurb 3y ago

You have a point. A good example is the Additional Buyer's Stamp Duty (ABSD) in Singapore. It's an additional tax on foreigners or Singaporeans who buy multiple homes. There is a normal stamp duty when you buy a home, which is 5%. In order to "tamp down" the housing market, the ABSD in Singapore is now 60% for foreigners. Yeah, the tax on a home is 60% of the purchase price. So a $1M home would have a $650,000 tax when you purchase it ($50,000 BSD + $600,000 ABSD). Does that stop rich foreigners from buying multi-million dollar properties as investments? Nope. In fact, one wealthy Chinese guy bought a whole building for $293M and had to pay $60M in ASSD (it was only 20% back then). https://coconuts.co/singapore/news/mystery-chinese-family-drops-s300m-to-buy-entire-orchard-condo-building/ https://coconuts.co/singapore/news/mystery-chinese-family-dr... So the argument that a Georgist land tax will magically fix the "unproductive land" problem is a bit naive.

fragmede 3y ago
Say, how does housing get built in Singapore? Do they have weird taxes and just hope that developers deign to build housing, or does the government there do something more direct, in order to get housing built?
- refurb 3y ago
  The government auctions off land for development. All on 99 year leases, so the government gets it back in the end for further development. There is enough demand for housing that developers keep building.