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Land Value Tax: Make it financially unfeasible to speculate, to withhold units from the market, and to withhold unused land from the market. Let prices freely f

Land Value Tax: Make it financially unfeasible to speculate, to withhold units from the market, and to withhold unused land from the market. Let prices freely fluctuate with the market. Increases in rent derived from externalities (i.e. Amazon HQ2 setting up shop nearby or a new subway station) go back into public coffers, while increases in rent derived from landlord actions (i.e. renovations, building bigger, better units that command higher prices) go directly into their pockets.

zemvpferreira 3y ago
I'm a fan as long as we also continue building. Build, build, build as long as demand is there.
- kurthr 3y ago
  They did that in China and housing prices are still sky high. As long as "number go up" is the belief in housing you'll have speculators and empty housing. Now you could tax empty (non-rented dwellings without a declared tax residence) and that would lower prices and increase supply.
  - zemvpferreira 3y ago
    Fair enough though there's a lot more behind China's construction boom than just market forces. Property taxes + ease of building still seems like a panacea for the rest of the world to me.
username332211 3y ago
The end result: By the end of year 5 of it's implementation, the local tax authority shall determine the land owned by politically connected investment funds is virtually worthless, while ordinary citizen's derive virtually no value from any improvements they construct on their properties. Where this love for arbitrary taxation comes from? How much have you donated to your mayor's electoral campaign? Do you golf with aldermen?
conductr 3y ago
I'm in Texas, a state with pretty high property tax. We've also seen a ton of appreciation in recent years. Booming economy, transplants from other states, then the COVID factor. We also have a near free market on rent; I've been a landlord and not aware of any limitations. There are a couple limits on property taxes (namely a cap of 10% increase per year on "homesteads", and an Agriculture exemption for rural properties). But for most people in the towns and cities, this means our property tax bills have been growing 10% a year for probably the last 15+ years. So, the problem we're having now is people that have owned a home for decades or even just 5 years are finding they get forced to sell because they can't afford the tax bill. Since housing has appreciated, they're not just forced to sell, they're likely forced to leave their community for another cheaper place. I don't think it's right to lock up land/property forever, but I do think people buying property should be able to predict whether they will be able to afford to continue living there as they age. Even rather young families are dealing with this. I personally think it's awful to see elderly people getting priced out of a house they've owned for decades, young families have to move their kids in their high school years because the taxes have become unmanageable, how it disproportionately impacts POC as gentrification occurs, and all the other ways it impacts people's lives who just thought they were buying a house to set roots for their lives/families but then externalities cause it to suddenly become unaffordable. It's extremely perverse when you consider that these people's tax dollars are often used by politicians to encourage the very "growth" that contributes to their affordability problem. They court corporations and give huge tax breaks to move their offices/factories to Texas, which drives up the demand for housing, etc.
- grugagag 3y ago
  Yeah, that could be adjustated with lower fees for the first/main property/residence.
  - carom 3y ago
    Then you just have a city full of single family homes.
- ikiris 3y ago
  All of this sounds well and good until you see the natural conclusion of those policies to keep old people from having to pay for their dragon hoarde. It turns your city into the Bay area where no one can afford to live there except the landed gentry you've created.
ch4s3 3y ago
As a percentage of total units in NYC there are effectively no rent-able units withed from the market. The total vacancy rate is about 1.4% right now and and for anything under about $3k/mo it's sub 1%. There are probably a few thousand units being held to get buildings out from under rent control, but the city has 2.1 million or so renter occupied housing units. Even during the height of the pandemic when the well off were fleeing the city, vacancy topped out at ~4%.
hakfoo 3y ago
You're making it too complex. Enforce owner-occupancy aggressively. You can own two housing units untaxed, as long as you can produce evidence you spent at least 30 days a year in each of them. This doesn't disrupt non-speculators-- even the modest rich with a single vacation home, or the snowbirds who have a home in Minnesota and a winter place in Arizona don't see an impact. Anything beyond that? Annual tax of 70% of its appraised value. Nothing appreciates fast enough to justify holding it at that cost, so you'd see a fire-sale on housing. Add some cheap state-backed credit to lubricate the transition period, and unoccupied units glut the market while renters become owners. Multi-family structures might create some interesting situations. With the landlord effectively forced to divest himself of properties, he has to reinvent himself as a service contractor, bidding for the maintenance contract on the buildings he once owned. This would be a great moment for karmic feedback against the ones who had neglected quality and safety-- who'd contract for $200/month maintenance from the same firm that never fixed anything when you paid $1500/month for maintenance-plus-land-access?
- carom 3y ago
  Do you just hate renters? This sounds like everyone and their child will own a single family home while running an apartment becomes too expensive. Spoiler, the apartments will just become single family homes. LVT only works if it is applied uniformly and with zoning reform. It will actually be a tax break for landlords because they are utilizing their property near the limit of its value.
- ethanbond 3y ago
  What you’re describing is far more complex than an LVT. Interstate records of property ownership and interstate reconciliation of “presence?” Do children or family members using a property for 30 days count?
  - hakfoo 3y ago
    We already have a fair amount of that infrastructure: * Land ownership is generally public record, or at least orchestrated at local government levels for property tax assessment, school enrollment eligiblity, and other similar local services. * Some states already have concepts of presence-- different tax regimes for part-year residents versus full-year. I'd expect that this would end up being relevant in only a very narrow set of cases. Most cases are slam-dunk clearly "owner occupier" versus "investor-owned", and hopefully they'd put more than a HN post worth of effort trying to define rules that handle the ambiguous cases. I tend to be a bit suspicious of the LVT, because it can create toxic consequences for individual landowners. Sure, if I have an empty lot and a new Job Factory opens next door, a rising LVT creates incentive for me to build. But if I already had a house there, my LVT has tripled and my house is no longer affordable. Locking the LVT to the current owner might prevent that toxicity, but it also encourage all sorts of evasion strategies.
mutatio 3y ago
Occupancy rate for commercial property is mostly over 90% in London, and I believe the residential market is even more efficient. How would LTV help if occupancy is so high? Don't forget occupancy rate also highlights slack in the market allowing for the dynamism you need, if you punish that I suspect the unintended consequences would be less desirable than any tax proceeds, after all, all forms of rent control invariably disadvantage the renter the most - and I don't see this being any different - the market would absorb the risk and rental prices would likely increase.
IG_Semmelweiss 3y ago
Why punish a low income grandma who put roots into a community that she contributed towards? Why punish people who helped build the place? Why would you want to steal value from people who simply want to be left alone? If you want to buuld you dont need to kick people out that have less than you. Instead, you have to make it easier for others to build. If the state makes that impossible via state taxes and regulation, blame the state not the citizen that simply wants to live happy.

zemvpferreira 3y ago

I'm a fan as long as we also continue building. Build, build, build as long as demand is there.

kurthr 3y ago
They did that in China and housing prices are still sky high. As long as "number go up" is the belief in housing you'll have speculators and empty housing. Now you could tax empty (non-rented dwellings without a declared tax residence) and that would lower prices and increase supply.
- zemvpferreira 3y ago
  Fair enough though there's a lot more behind China's construction boom than just market forces. Property taxes + ease of building still seems like a panacea for the rest of the world to me.

username332211 3y ago

The end result: By the end of year 5 of it's implementation, the local tax authority shall determine the land owned by politically connected investment funds is virtually worthless, while ordinary citizen's derive virtually no value from any improvements they construct on their properties. Where this love for arbitrary taxation comes from? How much have you donated to your mayor's electoral campaign? Do you golf with aldermen?

conductr 3y ago

I'm in Texas, a state with pretty high property tax. We've also seen a ton of appreciation in recent years. Booming economy, transplants from other states, then the COVID factor. We also have a near free market on rent; I've been a landlord and not aware of any limitations. There are a couple limits on property taxes (namely a cap of 10% increase per year on "homesteads", and an Agriculture exemption for rural properties). But for most people in the towns and cities, this means our property tax bills have been growing 10% a year for probably the last 15+ years. So, the problem we're having now is people that have owned a home for decades or even just 5 years are finding they get forced to sell because they can't afford the tax bill. Since housing has appreciated, they're not just forced to sell, they're likely forced to leave their community for another cheaper place. I don't think it's right to lock up land/property forever, but I do think people buying property should be able to predict whether they will be able to afford to continue living there as they age. Even rather young families are dealing with this. I personally think it's awful to see elderly people getting priced out of a house they've owned for decades, young families have to move their kids in their high school years because the taxes have become unmanageable, how it disproportionately impacts POC as gentrification occurs, and all the other ways it impacts people's lives who just thought they were buying a house to set roots for their lives/families but then externalities cause it to suddenly become unaffordable. It's extremely perverse when you consider that these people's tax dollars are often used by politicians to encourage the very "growth" that contributes to their affordability problem. They court corporations and give huge tax breaks to move their offices/factories to Texas, which drives up the demand for housing, etc.

grugagag 3y ago
Yeah, that could be adjustated with lower fees for the first/main property/residence.
- carom 3y ago
  Then you just have a city full of single family homes.
ikiris 3y ago
All of this sounds well and good until you see the natural conclusion of those policies to keep old people from having to pay for their dragon hoarde. It turns your city into the Bay area where no one can afford to live there except the landed gentry you've created.

ch4s3 3y ago

As a percentage of total units in NYC there are effectively no rent-able units withed from the market. The total vacancy rate is about 1.4% right now and and for anything under about $3k/mo it's sub 1%. There are probably a few thousand units being held to get buildings out from under rent control, but the city has 2.1 million or so renter occupied housing units. Even during the height of the pandemic when the well off were fleeing the city, vacancy topped out at ~4%.

hakfoo 3y ago

You're making it too complex. Enforce owner-occupancy aggressively. You can own two housing units untaxed, as long as you can produce evidence you spent at least 30 days a year in each of them. This doesn't disrupt non-speculators-- even the modest rich with a single vacation home, or the snowbirds who have a home in Minnesota and a winter place in Arizona don't see an impact. Anything beyond that? Annual tax of 70% of its appraised value. Nothing appreciates fast enough to justify holding it at that cost, so you'd see a fire-sale on housing. Add some cheap state-backed credit to lubricate the transition period, and unoccupied units glut the market while renters become owners. Multi-family structures might create some interesting situations. With the landlord effectively forced to divest himself of properties, he has to reinvent himself as a service contractor, bidding for the maintenance contract on the buildings he once owned. This would be a great moment for karmic feedback against the ones who had neglected quality and safety-- who'd contract for $200/month maintenance from the same firm that never fixed anything when you paid $1500/month for maintenance-plus-land-access?

carom 3y ago
Do you just hate renters? This sounds like everyone and their child will own a single family home while running an apartment becomes too expensive. Spoiler, the apartments will just become single family homes. LVT only works if it is applied uniformly and with zoning reform. It will actually be a tax break for landlords because they are utilizing their property near the limit of its value.
ethanbond 3y ago
What you’re describing is far more complex than an LVT. Interstate records of property ownership and interstate reconciliation of “presence?” Do children or family members using a property for 30 days count?
- hakfoo 3y ago
  We already have a fair amount of that infrastructure: * Land ownership is generally public record, or at least orchestrated at local government levels for property tax assessment, school enrollment eligiblity, and other similar local services. * Some states already have concepts of presence-- different tax regimes for part-year residents versus full-year. I'd expect that this would end up being relevant in only a very narrow set of cases. Most cases are slam-dunk clearly "owner occupier" versus "investor-owned", and hopefully they'd put more than a HN post worth of effort trying to define rules that handle the ambiguous cases. I tend to be a bit suspicious of the LVT, because it can create toxic consequences for individual landowners. Sure, if I have an empty lot and a new Job Factory opens next door, a rising LVT creates incentive for me to build. But if I already had a house there, my LVT has tripled and my house is no longer affordable. Locking the LVT to the current owner might prevent that toxicity, but it also encourage all sorts of evasion strategies.

mutatio 3y ago

Occupancy rate for commercial property is mostly over 90% in London, and I believe the residential market is even more efficient. How would LTV help if occupancy is so high? Don't forget occupancy rate also highlights slack in the market allowing for the dynamism you need, if you punish that I suspect the unintended consequences would be less desirable than any tax proceeds, after all, all forms of rent control invariably disadvantage the renter the most - and I don't see this being any different - the market would absorb the risk and rental prices would likely increase.

IG_Semmelweiss 3y ago

Why punish a low income grandma who put roots into a community that she contributed towards? Why punish people who helped build the place? Why would you want to steal value from people who simply want to be left alone? If you want to buuld you dont need to kick people out that have less than you. Instead, you have to make it easier for others to build. If the state makes that impossible via state taxes and regulation, blame the state not the citizen that simply wants to live happy.