4 ms·

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.
        AnthonyMouse 3y ago
        > For example, higher capacity for roads congestion, sewage, electricity connection etc. But what does this have to do with property tax? Roads can be funded by fuel taxes or car taxes, if not income taxes. Sewage and electrical systems are billed monthly to their users. Presumably a larger building will have a higher electric bill and if it doesn't it will be from devising a way of not using more electricity.
      - epistasis 3y ago
        Yes, a well functioning land value tax will drive down land values and make land far more liquid, maximizing the best possible use of a finite resource. There's the carrot of cheap purchase price of land, and the stick of high taxes if the land is being hoarded and underutilized. When there are extreme restrictions on what you can build, such as a maximum of two stories, then that "ability to build" has itself been turned into a finite resource; at that point both the structures and the land are economic land: finite resources that are not easily expanded. This is in contrast to capital, for which a person could theoretically build more of that asset.
        3y ago
    - bobthepanda 3y ago
      Combined with the cash-strapped bean-counting tendencies of local governments this sounds like a recipe for suburbanizing services into cheaper land, at great cost to municipal inhabitants. As a general example, there are one million public schoolchildren in New York City, many who attend schools in some of the hottest real estate in the country. Requiring cities to put that on their balance sheet would mean that governments are highly incentivized to make children commute an hour into cheaper suburbs to get schooling.
      - AnthonyMouse 3y ago
        > Requiring cities to put that on their balance sheet would mean that governments are highly incentivized to make children commute an hour into cheaper suburbs to get schooling. Or move the school into a floor of a multi-story building which would significantly reduce its proportion of land value tax and in so doing consume less of that hot real estate and contribute less to housing scarcity.

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.
      - AnthonyMouse 3y ago
        > For example, higher capacity for roads congestion, sewage, electricity connection etc. But what does this have to do with property tax? Roads can be funded by fuel taxes or car taxes, if not income taxes. Sewage and electrical systems are billed monthly to their users. Presumably a larger building will have a higher electric bill and if it doesn't it will be from devising a way of not using more electricity.
    - epistasis 3y ago
      Yes, a well functioning land value tax will drive down land values and make land far more liquid, maximizing the best possible use of a finite resource. There's the carrot of cheap purchase price of land, and the stick of high taxes if the land is being hoarded and underutilized. When there are extreme restrictions on what you can build, such as a maximum of two stories, then that "ability to build" has itself been turned into a finite resource; at that point both the structures and the land are economic land: finite resources that are not easily expanded. This is in contrast to capital, for which a person could theoretically build more of that asset.
      - 3y ago
  - bobthepanda 3y ago
    Combined with the cash-strapped bean-counting tendencies of local governments this sounds like a recipe for suburbanizing services into cheaper land, at great cost to municipal inhabitants. As a general example, there are one million public schoolchildren in New York City, many who attend schools in some of the hottest real estate in the country. Requiring cities to put that on their balance sheet would mean that governments are highly incentivized to make children commute an hour into cheaper suburbs to get schooling.
    - AnthonyMouse 3y ago
      > Requiring cities to put that on their balance sheet would mean that governments are highly incentivized to make children commute an hour into cheaper suburbs to get schooling. Or move the school into a floor of a multi-story building which would significantly reduce its proportion of land value tax and in so doing consume less of that hot real estate and contribute less to housing scarcity.