5 ms·

A land value tax would fix this.

by epistasis 3y ago

bobthepanda 3y ago
They’re currently exempt from any taxes on the land, so literally anything would be a start.
- epistasis 3y ago
  Yes, I was hoping that if they started a land value tax, it would be applied to non-profits as well. There's also an argument for LVT applying to government land, just so that the public and decision makers are acutely aware of the rents being extracted from the public, if it's a parking lot or something like that.
  - AnthonyMouse 3y ago
    > There's also an argument for LVT applying to government land, just so that the public and decision makers are acutely aware of the rents being extracted from the public, if it's a parking lot or something like that. How is that supposed to work, you tax the government and give the money to the public? It's not really going to affect their behavior if they're just paying a tax to themselves.
    - epistasis 3y ago
      It's an accounting measure, to help people evaluate the use of land and whether it makes sense or not. For example, if a public surface parking lot in a downtown area is owned by a city, and brings in $1M in revenue, but is taxed at $3M for its land values it's very clear what the subisidt is and who the beneficiaries are. And perhaps that might motivate the city to make better use of the lot, decide that there would be more public value as a park, or to build offices or housing on it.
      - AnthonyMouse 3y ago
        The ability for land value tax to even generate estimates like that still seems counterintuitive to me. Suppose you pass a law prohibiting anyone from constructing buildings with more than two stories. Well then you've just made the land artificially scarce because you need more of it to build the same amount of indoor space. Land value tax is useless in that situation because then all the land will end up with a two story building on it, they'll all be valued about the same (or someone would buy the cheapest one for the land and build a more expensive one), and you've effectively just reinvented property tax. And aren't really achieving the benefits a land value tax is supposed to bring, e.g. reduce housing scarcity by increasing the incentive to build housing, because it can't do that when building more housing is still separately prohibited by law. Now suppose you don't do that. Anybody can build a ten or twenty story building anywhere, and there would be enough indoor space to satisfy local demand if every lot had a three story building on it. Since there is no additional tax on a tall building, people start putting them up until local rents fall to no longer cover the construction cost. Okay, working as intended. But that happens well before all the lots have a 10+ story building on them, so there are still plenty of lots available. The question is, what happens to the other lots? Their value would be negative. You can't profitably put up a building there now that local rents are too low to cover the construction cost, but you'd still be paying the land value tax. Unless that's the endgame. Negligible land value, and therefore negligible land value tax?
        IG_Semmelweiss 3y ago
        Solid idea. Have you considered the additional carrying cost of treating two tracts of land thr same despite having massively different structures on top? For example, higher capacity for roads congestion, sewage, electricity connection etc. At some point it almost seems like the tall building is freeriding on taxpayers. Curious how you would address that?
        epistasis 3y ago
        I would think that the vacant lots are the ones freeloading, keeping people from living in, working in, or otherwise being able to access an extremely high value area. The expenses of running roads and sewer are completely dwarfed by the gain in economic activity. Dense, high land value areas are the tax bases that subsidize the far less utilized and more-expensive-per-connection sprawl.
IG_Semmelweiss 3y ago
Instead of adding complexity, why not remove complexity? Instead of creating new tax rules, why not remove 501c nonprofit status from all univesities or maybe from those with significant endownment or balance sheet? Thats where the value really is. The land is just a subset of the overall assets. Or if you want to be ambitious, just get rid of 501c for universities, period?

A land value tax would fix this.

bobthepanda 3y ago

They’re currently exempt from any taxes on the land, so literally anything would be a start.

epistasis 3y ago
Yes, I was hoping that if they started a land value tax, it would be applied to non-profits as well. There's also an argument for LVT applying to government land, just so that the public and decision makers are acutely aware of the rents being extracted from the public, if it's a parking lot or something like that.
- AnthonyMouse 3y ago
  > There's also an argument for LVT applying to government land, just so that the public and decision makers are acutely aware of the rents being extracted from the public, if it's a parking lot or something like that. How is that supposed to work, you tax the government and give the money to the public? It's not really going to affect their behavior if they're just paying a tax to themselves.
  - epistasis 3y ago
    It's an accounting measure, to help people evaluate the use of land and whether it makes sense or not. For example, if a public surface parking lot in a downtown area is owned by a city, and brings in $1M in revenue, but is taxed at $3M for its land values it's very clear what the subisidt is and who the beneficiaries are. And perhaps that might motivate the city to make better use of the lot, decide that there would be more public value as a park, or to build offices or housing on it.
    - AnthonyMouse 3y ago
      The ability for land value tax to even generate estimates like that still seems counterintuitive to me. Suppose you pass a law prohibiting anyone from constructing buildings with more than two stories. Well then you've just made the land artificially scarce because you need more of it to build the same amount of indoor space. Land value tax is useless in that situation because then all the land will end up with a two story building on it, they'll all be valued about the same (or someone would buy the cheapest one for the land and build a more expensive one), and you've effectively just reinvented property tax. And aren't really achieving the benefits a land value tax is supposed to bring, e.g. reduce housing scarcity by increasing the incentive to build housing, because it can't do that when building more housing is still separately prohibited by law. Now suppose you don't do that. Anybody can build a ten or twenty story building anywhere, and there would be enough indoor space to satisfy local demand if every lot had a three story building on it. Since there is no additional tax on a tall building, people start putting them up until local rents fall to no longer cover the construction cost. Okay, working as intended. But that happens well before all the lots have a 10+ story building on them, so there are still plenty of lots available. The question is, what happens to the other lots? Their value would be negative. You can't profitably put up a building there now that local rents are too low to cover the construction cost, but you'd still be paying the land value tax. Unless that's the endgame. Negligible land value, and therefore negligible land value tax?
      - IG_Semmelweiss 3y ago
        Solid idea. Have you considered the additional carrying cost of treating two tracts of land thr same despite having massively different structures on top? For example, higher capacity for roads congestion, sewage, electricity connection etc. At some point it almost seems like the tall building is freeriding on taxpayers. Curious how you would address that?
        epistasis 3y ago
        I would think that the vacant lots are the ones freeloading, keeping people from living in, working in, or otherwise being able to access an extremely high value area. The expenses of running roads and sewer are completely dwarfed by the gain in economic activity. Dense, high land value areas are the tax bases that subsidize the far less utilized and more-expensive-per-connection sprawl.

IG_Semmelweiss 3y ago

Instead of adding complexity, why not remove complexity? Instead of creating new tax rules, why not remove 501c nonprofit status from all univesities or maybe from those with significant endownment or balance sheet? Thats where the value really is. The land is just a subset of the overall assets. Or if you want to be ambitious, just get rid of 501c for universities, period?