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Wow, another problem that the Land Value Tax solves
by ethanbond 3y ago
Wow, another problem that the Land Value Tax solves
- pstuart 3y agoI was under the impression that LVT was not without concerns, but when I looked it up again to find such issues I didn't seen anything that was all that worrying. So yes, this would be a perfect application of a LVT.
- BirAdam 3y agoWell… except that a land value tax would only make home affordability far worse than it already is.
- astrange 3y agoIt would make it better, because a property tax punishes improving your property and a land value tax doesn't, so it would make it easier to build apartments where the land value is high and reduce competition for houses where it isn't.
- bsjaux628 3y agoHaven't read the whole LVT thing too deeply but wouldn't it make single households a time bomb? Say I buy a house on the suburbs of a city, 20 years later the city has grown to the point that I'm no longer part of the suburb but inside the city, which means that my taxes would skyrocket because I have an "underdevelop" lot, even though, as a single individual, I don't have the capital to build a higher density complex to cope with the higher taxes
- spiralx 3y agoBut that already happens with property taxes - just look at all the people in California who can only afford to live where they do because their property taxes are fixed at their original rate, and so they cannot afford to move anywhere else within the same area.
- astrange 3y agoThe best approach there isn't to lower taxes (although a deduction for a primary household is fine of course) but to allow them to defer payment until it's sold/they die. Since in this situation their house is also worth several million dollars.
- spiralx 3y agoWhich then significantly exacerbates the potential for a negative equity trap, because moving now requires paying all of those deferred taxes. So the longer you've lived somewhere the more you need to down-value when you move...
- rat87 3y agoI think that's the point. If you live in a high cost of living area you would sell your house and it would be replaced with multi unit housing that would bring down the local cost of living
- rat87 3y agoI think that's the point. If you live in a high cost of living area you would sell your house and it would be replaced with multi unit housing that would bring down the local cost of living
- namlem 3y agoYes but that means your home is now worth a fortune and you can sell it for a windfall.
- BirAdam 3y agoYou’re making the assumption that the current property tax would end and be replaced. Unless this was all done at the county level, that most likely wouldn’t happen. Even then, many jurisdictions would just double tax. They’d argue that one tax was for land and the other for the dwelling. For the poor who lived in an area that was once cheap, they’d simply lose their homes if they haven’t already as they’d be unable to pay these taxes.
- astrange 3y agoI don't think anyone has ever wanted both a land and building value tax. Well, there are wealth tax proponents but I don't believe in those - land taxes are the only good kind of them.
- staticautomatic 3y agoTrue. We should do the opposite and eliminate property taxes on primary residences.
- pbjtime 3y agoBye, schools
- whythre 3y agoSure, why not. American public schools are terrible self-protecting bureaucratic monstrosities. I would be fine with scrapping their funding and reworking the whole system.
- MandieD 3y agoStop relying on local property taxes to fund the schools. That’s a US thing that isn’t replicated in most other well-off countries. The closest thing Germany has to US-style annually-billed property tax is Grundsteuer, and for homeowners, it’s low triple digits at most. It pays for neighborhood streets, sidewalks, storm drains, and (I think) the fire department. We do pay a pretty hefty transfer tax when we buy property - I think it was about 5% of the purchase price, but that’s a one-time thing. Schools are funded out of general revenues, mostly personal and corporate income taxes, assessed nationally. Each state has its own school system, with differing structures and standards.
- alasarmas 3y agoWhat’s more, funding schools from local property taxes keeps the good schools in the rich communities and the bad schools in the poor communities. It prevents equality of opportunity. It is cynical, mean-spirited, and appalling.
- pstuart 3y agoThis is true, having split kids between two districts I've seen this first hand. Funding from state would equalize it, and the rich communities can do their gilding via the PTA. I'd much rather have that then them pulled out of public education entirely.
- namlem 3y agoNo it wouldn't. Homes generally pay less tax. The biggest tax increases by far fall on parking lots. LVT improves home affordability.
- 4death4 3y agoHow does a LVT solve this? If anything, with property taxes, the owners should be incentivized to destroy their mall to pay less taxes. With LVT, they would pay the same tax whether or not the mall still stands. This assumes, of course, the mall has positive value (for tax purposes)
- ethanbond 3y agoThe idea is for the LVT to be high enough to make this behavior infeasible. So yes, they’d pay the same tax rate, but that rate is high enough that it’d be prohibitively expensive to keep it in its current state for very long. They’d have to either turn it into something useful for the community (bring in more businesses or allow people to live there), or sell it to someone who will.
- hakfoo 3y agoI prefer the variant where nobody owns land-- the local government can lease it out on a term basis. Homes might be leased on a long term-- 10-20-100 years, but commercial land should be on 5 years or less. This gives the local government an opportunity to identify properties that are going into decline and intervene quickly. It also creates an incentive for developers. Any money they put into improvements disappears if they don't meet a minimum anti-blight standard for lease renewal. My city spent decades playing chicken with the owners of a dead strip mall. This wasn't even "dead" as in "down to a Spirit Halloween and seven smoke shops", it was "fully fenced off and crumbling." This was a decent location-- right opposite a major mall (when they first boarded things up, but finally closed around 2020), 2km from a freeway, 2km from a community college, but the buildings were circa 1979, and the owners really wanted to get the local government to pay part of the cost to renovate it. Since there was no "normal process" way to regain control of the situation, there were just years of simmering squabbling and occasional legal nastiness, that ended with the city handing out some tax incentive, and suddenly the blight was knocked over for fancy condos inside of 6 months. Now imagine if that property had been leased from the city. The mall owners close the doors in 1996 or whatever. By 2001, the lease would have expired, and the city could either say "you let it rot, no renewal", retaining an asset with only a few years of decline to repair, or the lessee would have to present-- and deliver-- a compelling refurbishment plan if they expected to keep the lease.
- devwastaken 3y agoThe reason this is not done is for the same reason HOA's are nightmares. It's a conflict of interest to committee others private property. Government becomes incentivized to look for and generate infractions. If you are wondering why politics never truly changes it's because gov power actively suppresses competition.
- busterarm 3y agoDemolition costs can be very expensive. You don't want that to be taxpayer responsibility.
- KingMob 3y ago> I prefer the variant where nobody owns land-- the local government can lease it out That means the government de facto owns all land.