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I really hate sounding like a broken record but this is just another instance of how low property taxes and the absence of land value taxes massively benefits l

• thatguy0900 3y ago
  Out of curiosity, do you live in a high snow area? I wash my car pretty regularly once the road salt starts coming out, most car washes here do some manner of undercoat to help with the salt rust.
• _heimdall 3y ago
  When you see a solution here of higher property taxes, is it focused on the raw land value or on the value of "improvements?" I've never been a fan of taxing the value of raw land, mainly because it creates incentives for destroying natural land and extracting as much value as possible from the space. Taxing structures based on the expected economic value can make sense, though even then if its a business there are more direct ways to tax the business's realized revenue or profits.
  • mdasen 3y ago
    Land value taxes aren't about destroying natural land to extract value. The point of taxing the value of the land in urban areas is that a lot of the time places essentially squat on land that could be better used. A car wash building will have a low assessed value for its improvements compared to a biotech building. For example, in my city we have a carwash with its improvements valued at $400,000 and a biotech building with its improvements valued at $275,000,000. The biotech building uses only double the land, but pays a ton more taxes. In my city, there are lots where they're basically abandoned. The owners know that they can just sit on the land and it'll increase in value over time even if it isn't used for a productive purpose. During this time, people need housing, businesses need office space, etc. This isn't "natural land", they're gravel pits. In fact, lack of a land value tax causes us to destroy natural land. Instead of using land well, we sprawl and pave our way into the suburbs and beyond. Not all land is equally valuable and land can be made non-valuable from the standpoint of a land value tax like parks and nature reserves. A land value tax isn't really meaningful in rural areas where the land isn't really that valuable due to its location. Where a land value tax is meaningful is in cities where land is scarce and we want to put it to good use. In a city, we don't want someone keeping an empty lot for decades so they can become richer based off the hard work of others around them - productive investors creating housing and office space, workers and artists making an area more desirable, etc. They sit on their empty lot paying nothing in taxes while others make them richer. A land value tax says: put that land to good use or your investment won't pay off that well. Under the current system based on improvements, they pay almost nothing and leech off the hard work of everyone else. Land value taxes don't destroy natural land. They'd probably preserve it. A land value tax might destroy surface parking lots in dense cities, but that isn't "natural land". They're a poor use of space. I live in one of the densest cities in the US and around the corner from a lot of 1-story retail. It would be better for the community if that retail had housing on top and a land value tax would encourage that. The alternative to encouraging good land use is having sprawl. Sprawl doesn't preserve natural land, it destroys it. It also destroys our climate with the carbon emissions from people who then drive everywhere. A land value tax isn't about taxing all land equally across the US. If you have land in an area where land is plentiful, then it doesn't have a high value (because it's plentiful) and it doesn't need to have a lot of value extracted from it. If you buy land in Manhattan, Boston, etc. and decide that you like it as an abandoned piece of property, that's not good for the community and there should be pressure on you to put it to better use or sell it to someone who will put it to good use. A land value tax is about taxing land in a way that prevents someone profiting off squatting on land.
    • _heimdall 3y ago
      Thanks for all the details! Limiting a land value tax to densely populated areas is a great detail here. Sorry if I end up with a long list of follow-up questions here, this is really interesting. So my main concern related to destruction of natural land is that there is a disincentive to keep land natural if you have to pay the tax anyway. In dense areas that wouldn't be nearly as much of an issue, but it would still mean that parks would be an unlikely occurrence and likely only feasible when run by the government. I assume most parks in these areas are anyway, so the loss may be limited to smaller neighborhood parks, courtyards, etc. Finding a clear way to draw a line between what area is dense enough to be taxed and what isn't seems like it would be an ongoing challenge. Not only would you have to define specific measures and thresholds, you would have to eventually move the line as the city evolved. Any thoughts on his this would be done, or already is in areas with a similar tax? When it comes to "best use" of a piece of land, who decides this? Does that measure really just boil down to whatever spends the most capital to build on the land, without regard for economic or social value, environmental impacts on the land and surrounding area, etc? It seems like this would lead to a lot of economic and social impacts that aren't necessarily desirable. Is there a clear way to guard this system from building higher and higher economic centers, inflating incomes and forcing even more of a wedge into the wealth gap? In you example, a car wash would be able to employee people at a lower once level in the area where a much more expensive biotech building would mostly employ highly educated people who bring much higher price pressure to the area. Can that be avoided with a tax that incentivizes building more expensive, and likely more technical/specialized, businesses on every plot of land? Related to that, what's the solution for infrastructure and resource requirements? Large biotech facilities would likely require more power, transportation and delivery access, maintenance, and building materials. If we are simultaneously concerned with environmental impact, creating incentives to build much larger building with much higher resource requirements flies in the face of this. Would we be creating a situation where businesses are pushed to use more energy, concrete, steel, and glass partly because a tax makes smaller businesses less feasible? --- Well that ended up being a bit of a brain dump with questions mixed in. If you made it this far, thanks for playing along!
      • Retric 3y ago
  • hn_throwaway_99 3y ago
    To be honest, I think you have it exactly backwards, and a land value tax isn't about taxing "raw land" (that is, land with no improvements), it's about taxing the value of the land without regard to improvements. See https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax and https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
    • _heimdall 3y ago
      Would the land go untaxed until there are improvements? If not, the raw land value itself is being taxed.
      • GeneralMayhem 3y ago
        No. The land would be taxed whether it has improvements or not, and in fact would be taxed the same amount whether improved or not. That's how such a tax incentivizes improvement - if you're paying the tax either way, you want to do as much as possible with it to get your money's worth.
        • sethammons 3y ago
          Which encourages destruction of natural lands
          • alexb_ 3y ago
            "Land" is shorthand for all of the natural resources on this earth. That means space, but it also means clean air and anything else extracted. Pollution and extraction taxes are different forms of land taxes.
            • Gormo 3y ago
              So the proposal is that people should never be able to use the land they own for their own purposes without the threat of being dispossessed because strangers are willing to pay more for it, even if they don't want to sell? That sounds like a horrible situation, and it seems clear why real-world tax systems don't take this approach to its ultimate conclusion. There's also something very objectionable about attempting to use taxation as a tool to manipulate behavior and engineer outcomes. Where taxation is justifiable, it is justifiable solely as a pragmatic means to fund the necessary operations of government, and never as an end in itself.
  • notjulianjaynes 3y ago
    I'm not agreeing or disagreeing with you, but your comment reminded me of this tax loophole, which fills me with rage everytime I see a new self-storage style business being "constructed." https://boxwell.co/section-179-tax-benefit-for-relocatable-storage-units/ https://boxwell.co/section-179-tax-benefit-for-relocatable-s... >Relocatable storage units are portable and moveable. Therefore, they can be classified as equipment instead of as a building or permanent structure. Not only does this help self-storage operators bypass the lengthy process of permitting and zoning. But it’s also a great tax advantage when classifying these convenient storage units as equipment. In most cases, the units are eligible for 100% deduction after just one year. edit typo
    • _heimdall 3y ago
      When houses this are you enraged at the storage facility or the legislators and tax authorities? There are so many loopholes and games that can be played with US taxes that I've gotten to the point where I can't blame anyone for trying. We need a much simpler tax code that can be easily understood and enforced IMO. In other words, with taxes I ended up landing on "don't hate the player, hate the game"
• gunapologist99 3y ago
  > I take pride in the fact I haven't been to a car wash in probably 3 years and have likely gone myself less than 10 times total. You don't come off here as well as you think you do.
  • paulmd 3y ago
    Ya, he’s bragging about letting his frame and underbody rust out. (must be nice to live in a place without salt on the roads!)
    • smt88 3y ago
      Most of humanity lives in a place without salt on roads (or doesn't own a car). I've never washed a car I've owned and my frame is fine.
      • pixl97 3y ago
        Depends where you live. In Texas you want to wash occasionally and reapply some type of wax or you'll lose your clear coat in a few years to UV damage.
    • carlosjobim 3y ago
      Sand on roads, no rust.
  • Spivak 3y ago
    I really don't get what this is implying, commuter cars are essentially self-cleaning. You're driving on roads where the worst that's gonna happen is some salt buildup in winter that isn't worth washing off in winter (and isn't rusting in winter) and then it washes itself off first rain of spring. This feels like one of those iceberg tips where I'm really glad I'm not in the kind of social circle where having a spotless car matters at all. I've driven four going on five cars to 200k miles having never gave any shits about car washes and haven't had any problems.
    • 3weeksearlier 3y ago
• 55555 3y ago
  can you please elaborate on this? i don’t understand exactly. “The real business of car washes is real estate, it's profitable enough to get 3-4x leverage with a low interest loan”
  • killingtime74 3y ago
    The OP asserts (I agree) that the real profit from running a car wash is not the daily turnover of car washing, but the capital appreciation of the land the car wash sits on. The part about leverage assumes you are able to get a loan/mortgage to purchase the land the car wash sits on. In effect you are using the car wash as a reason to justify a mortgage you wouldn't otherwise be able to get for real estate speculation alone.
    • sydbarrett74 3y ago
      Correct. Just as the McDonald's Corporation is really in the real estate business. Burgers and fries are just their side line.
• coldtea 3y ago
  >this is just another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses Thank god we haven't optimized that fully. This is how small businesses like local cafes, delis, bookstores, and "mom and pop" stores are able to survive in cities. I wouldn't want to live in any capitalist shit-hole where land value taxes force high-value businesses.
  • 3weeksearlier 3y ago
    I used to live in an expensive/touristy area that became more so over time, and it was annoying how every unique shop that closed get replaced by a fancy clothing store.
  • lmm 3y ago
    > This is how small businesses like local cafes, delis, bookstores, and "mom and pop" stores are able to survive in cities. Nonsense. Those aren't the businesses that take up masses of land - hell, a lot of the best of those are run by people who live above the store, meaning the extra land use is zero. The businesses that benefit from a lack of land value tax are parking lots, drive thrus, distribution centres, that sort of thing.
    • coldtea 3y ago
      >Nonsense How about starting with the actual argument to make it less rude? >Those aren't the businesses that take up masses of land Which is neither here, not there. They are still types of businesses gravely affected by high property taxes and land value taxes (the parent even spells it out: "low property taxes and generous loan terms" (...) primarily benefited small businesses, individuals, etc"), and are also what the parent calls "low-value business" (low monetary value, of course).
      • lmm 3y ago
        > They are still types of businesses gravely affected by high property taxes and land value taxes Don't conflate two very different things. A business is affected by land value taxes to the extent that it uses expensive land (that's the point). A business that takes up zero land, such as one that can be run from the same building you live in, ipso facto pays zero land value tax.
• sytelus 3y ago
  This doesn't make sense. There are tons of other business which will have higher day to day return and property appreciation. I don't think anyone was craving for car wash subscription and I don't know of anyone having car wash in their checklist monthly item. Those people exist for sure but not in that kind of demand that a town needs even two of them. I think this is just another instance where private equity is creating imaginary business model of subscriptions and selling it to its investors. The money managers will get huge management fees and will disappear before the whole thing collapses in coming years. Meanwhile, they will run a lot of good and necessary businesses out of town.
  • BirdieNZ 3y ago
    It's hard to think of many businesses that require lower capital investment and maintenance than a car wash. The ones I see in my city that look like land banking are a big plot with asphalt covering it (don't even need to mow lawns), a few awnings with some plumbing for hoses and soap and other gear, and nothing else. Even a laundromat would cost more to set up.
    • frumper 3y ago
      https://www.carwashadvisory.com/learning/how-much-costs-build-car-wash https://www.carwashadvisory.com/learning/how-much-costs-buil... These car washes are not simple, nor cheap. They aren't talking about places where you wash your own car, they're talking about the increase in automated ones.
• c_o_n_v_e_x 3y ago
  >...this is just another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses. The government also benefits from sales taxes, licenses, permitting fees, etc.
  • lmm 3y ago
    > The government also benefits from sales taxes, licenses, permitting fees, etc. They won't be getting much in the way of sales tax if the business is low-value, by definition.
• dinp 3y ago
  Somehow the idea of perpetually paying property taxes and land value taxes doesn't sound appealing to me, especially since businesses already pay taxes. I don't understand the argument of designing a system to hurt a specific business type such as low value businesses. If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even. If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing? Introducing additional property and land value taxes might discourage low value businesses, but what are the 2nd and 3rd order effects of such a change?
  • lmm 3y ago
    > I don't understand the argument of designing a system to hurt a specific business type such as low value businesses. The argument is that good business spots are a limited community resource that it makes sense to tax, like radio spectrum. If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space. If anything taxing space use makes more sense than taxing profits; a profitable business is probably one that's serving the community well, whereas a business that takes up space and doesn't generate much profit is no good for anyone. From the article: > “A car wash does not provide a lot of jobs for the community, and they take up a lot of space,” Broska said. “If you want to invest your dollars into a car wash, then God bless you. But at the same time, I’m responsible for 17,500 people and have to be cognizant of their wishes.” > the largely automated facility wasn’t the best use for a prominent Main Street site
    • BenFranklin100 3y ago
      To add to this, LVTs encourage more homes near job rich areas of the city. This in turn means more people can live nearby and have a shot at a job.
    • brailsafe 3y ago
      > a profitable business is probably one that's serving the community well, whereas a business that takes up space and doesn't generate much profit is no good for anyone. I think that attributes a lot more to profitability than such a metric deserves. Perhaps in a more narrow and ruthlessly capitalistic sense profitability signifies that a business is doing what it's trying to do well, but it's a big leap to get from there to how well its serving whatever is considered to be a community these days. Among other problems, just because some tiny amount of that money conceivably stays around in the region and people can buy stuff does not mean that the cost of the business being there isn't quite a lot higher, hence the term tragedy of the commons and the hollowing out of let's say America
• onionisafruit 3y ago
  Land value tax is turning out to be this year’s universal basic income.
  • mindslight 3y ago
    When the wish for a positive solution doesn't pan out, people turn to the spiteful negative. Turn up the pain on others, that will solve things. Never mind that many real estate tax regimes already include a component based on the land value. Presumably to LVT enthusiasts those just aren't high enough. When the right level of pain has created the perfect incentives, wasteful duplexes will vanish and high density arcologies will spring forth out of the ground! The real root of the problem was touched upon by the OP - the past two plus decades of ridiculously low interest rates as set by the Fed in support of one talking-head crisis or another. Borrowed money can only be invested in things banksters can understand, which given their limited imaginations is chiefly single family beige spec homes.
    • ufocia 3y ago
      Not just bankers. REITs also don't invest in groundbreaking endeavors, or do they?
    • Gormo 3y ago
      > Never mind that many real estate tax regimes already include a component based on the land value. It's strange, because almost all property tax systems in the US are based on ad valorem taxation. I'm personally opposed to the concept as a matter of fundamental principle. Society can't function if people's property rights are constantly under the threat of being usurped by someone whose intended uses might generate more tax revenue for the state. People should have a right to use the property they own in the way that generates maximum value for them -- that's the point of property ownership. It's also why real-world ad valorem tax regimes usually include homestead exemptions or something similar. Some of these LVT proposals amount to just turning the whole of society into a tax farm, and suppressing all variation and outlier use cases in the name of maximizing tax revenue. Georgism is fundamentally flawed in its precepts, and would result in a rent-seeking political state acting as a monopolist landlord.
• helsinkiandrew 3y ago
  > The real business of car washes is real estate. Is there any evidence of this? Companies like Mister Carwash lease nearly all their properties and when they purchase plots seem to alway try to do a sale and lease. Their latest results claim they run 436 sites and lease 427: https://ir.mistercarwash.com/news-events/press-releases/detail/108/correcting-and-replacing-mister-car-wash-announces-fourth https://ir.mistercarwash.com/news-events/press-releases/deta...
  • zharknado 3y ago
    Extra Space Storage will buy your self-storage outfit for cash, or give you “ operating partnership units in Extra Space Storage’s REIT [Real Estate Investment Trust].” $5B in closed transactions in the last 5 years. https://www.extraspace.com/acquisition/ https://www.extraspace.com/acquisition/
    • ThrowawayTestr 3y ago
      That explains why there's half a dozen self storage buildings within 5 feet of my apartment.
      • idiotsecant 3y ago
        I am trying to imagine what kind of lovecraftian geometry you have the misfortune to live in
        • ThrowawayTestr 3y ago
          I'm barely even exaggerating. There's literally 5 within walking distance.
          • zharknado 3y ago
            “And although the space they occupy isn’t like normal space, nevertheless they are packed in tightly. Not a cubic inch there but is filled by a padlock, a garage door, a wheeled cart, the tip of a key code pad, so the effect is like one of those trick drawings and your eyeballs eventually realize that the space between each self-storage is, in fact, another self-storage.” Adapted from Pratchett, “Guards, Guards!” https://www.goodreads.com/quotes/7949916-and-although-the-space-they-occupy-isn-t-like-normal-space https://www.goodreads.com/quotes/7949916-and-although-the-sp...
• j-a-a-p 3y ago
  > for a depreciating asset. I don't see a correlatiopn between depreciation and the cleaning of the asset. My body for example started to depreciate after it was appr. 30 years old, but I still wash it every day. I think cleaning is an operational expense that does not support the lifespan of the object, it merely maintains an experience threshold. And about experience, I also never washed my car until I got kids: car washes are an experience in its own right nowadays.
  • ufocia 3y ago
    Lifespan is a factor in depreciation, not the other way around, although many people believe it is, i.e. depreciated equipment may still have usefulness though some people (businesses) rush to replace equipment once it's depreciated. In case of real estate, depreciation offers income tax deferral because real estate retains much of its value and sometimes even appreciates despite being fully depreciated. It may be a part of or analogous to the borrow and die scheme of tax avoidance.
  • Sohcahtoa82 3y ago
    To some people, a car is essentially nothing more than an appliance for transporting people and things. To others, it's a source of pride. They love driving a car that still look factory new despite being 15+ years old. And others, it's a source of fun. I'm in both of the latter two. I drive a performance EV because it's fun, and I really like it being clean and shiny. I got it wrapped in paint protection film, then covered in ceramic, to help keep it looking its best. Will it help it maintain value? Not really. Certainly won't get any of the $6,000 I spend on the PPF and ceramic back. But I don't care. Not everything you buy needs to be considered an "asset" that you worry about losing value on. It's okay to buy things purely because you enjoy them.
• aaron695 3y ago
  [dead]
• timwaagh 3y ago
  I think this is just pushing so called georgist ideology literally nothing else.
• a_gnostic 3y ago
  > another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses. How are other businesses excluded from low property taxes? This is clearly unfair, and could be easier addressed by removing barriers instead of erecting new ones.
• closeparen 3y ago
  The other explanation for the mysterious presence of sprawling low-value business premises in extremely high demand neighborhoods is that planners zone for them explicitly to take up space so yuppies can't have it.
• seanmcdirmid 3y ago
  I don't think Brown Bear Car wash is taking a loss on $20 automated car washes. Also, Seattle has a rule in place that we can't wash our cars at home, so we have to go to an automated or DIY manual car wash if we want to wash our cars are all, making the business an essential here. If they someday redevelop the car washes, they will just be replaced with a tall building that has a car wash on the first floor, well, when all cars are electric that will be feasible.
• galdosdi 3y ago
  I suggest getting an undercarriage wash once a year at the end of winter if you live where salt is used on roads, to reduce rusting away of your chassis. Still just once a year so you can keep feeling pretty smug about not washing, but, you get most of the benefit of the wash, which is longer rust free body life. It has quite an impact -- this is why it's much harder to find intact cars older than a couple decades or so in the north as opposed to the desert west. > Rain and the occasional wet rag is good enough for a depreciating asset.
• BobbyTables2 3y ago
  About 25 years ago, an automated car wash cost $2-3, the price of 1-2 gallons of gas. Now they cost $10-15 at least! I have to wonder if they are actually making profit without the real estate games too!