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One limitation I have not seen discussed is LVT's self-defeating nature, and it's an important one to figure out if land value taxes are to succeed in practice.

One limitation I have not seen discussed is LVT's self-defeating nature, and it's an important one to figure out if land value taxes are to succeed in practice. An upside and downside of LVT, depending on your perspective, is that the imposition of a LVT would seriously lower land values. The inverse is also true: removing an established LVT carries a significant upside for the affected landowners. Property that had been acquired for cheap under a LVT would be freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce, and some of it would be gradual as people resume buying land because land value always goes up (which causes land values to go up). This creates a powerful incentive to undo any progress that a LVT campaign might accomplish. I doubt that anything short of a revolution would be able to overpower the wealthy landowning class who like their unearned rents and inflated asset values very much thank you, but you don't just need to beat them once, you need to be able to hold their political, economic, and intellectual influence at bay permanently or we end up right back where we started in a matter of years.

EdwardDiego 2y ago
Good thing that developers aren't elected lol. Not sure if there's a word for a dictatorship, but you're totally able to just leave if it's not your thing. Most of the real world ones tend to put up walls and guards facing inwards. Or hold your family hostage. Which hopefully doesn't give Blizzard any ideas.
- jnordwick 2y ago
  Phil Spencer is already trying to move development to Alcatraz island. -- likely true.
aeternum 2y ago
Unearned rents is questionable. People have always understood the value of land and have worked hard to be able to purchase it and vote + participate in local government to help protect the value of that land. Especially in the US, that mostly worked quite well. We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Done right, an LVT can actually increase land value. Suppose you are a developer that owns a plot of land in a desirable area but there are some abandoned building nearby that a stingy owner refuses to sell. With a regular property tax, if you make significant improvements like add park space, nice trees, landscaping, etc. to your building you pay much more property tax while the stingy owner pays nothing but benefits from increased property value. LVT at least partially penalizes the freeloaders. They must pay more LVT if the area around them improves. It prices an unpriced externality which is generally a good thing. There might be one thing the rich dislike more than taxes: freeloaders
- kaibee 2y ago
  > We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Land is made desirable mostly from what productive use it has. ie: being near jobs. There's not really any hard work any one individual can do to make some random plot of land in Kansas more valuable than its current market price. > participate in local government to help protect the value of that land. This is a nice euphemism for blocking new construction and restricting housing supply.
  - kjkjadksj 2y ago
    Not only being near jobs but being developable at all. There are lots in the hollywood hills that go for $40k. Why that low for such prime land you might ask? I’d assume you’d find out the reason fast as soon as the current owner unloads their lemon onto you for a mere $40k.
- AnthonyMouse 2y ago
  > Done right, an LVT can actually increase land value. Land value is a measure of supply and demand. But most of the demand isn't for land in particular, it's for indoor space. If you have LVT and don't have density restrictions -- or just don't have density restrictions regardless of LVT -- then people are going to build until the cost of indoor space falls to the construction cost. Then land values will be low because it's being used efficiently, and there is a de facto ceiling on the price -- if you want to add 100 stories of new space and land is dirt cheap then you might build a hundred single-story buildings, but if land gets even slightly more expensive than that you can just build twenty 5-story buildings instead, which is what people would do rather than paying for five times more land unless it's prohibited. LVT increases this incentive even more, because not only would you have to pay for more land, you would have to pay the LVT on more land, so now it makes sense to build ten or twenty story buildings. Meanwhile if you're not going to build a ten or twenty story building (or in a place like NYC, a hundred story building), holding onto an underutilized lot will cost more than it's worth, so the land values become negligible. This ignoring the overall premise of LVT which is that the tax should be equal to the land value, so even if land values were high, the tax would just offset them and zero them out -- until the high tax incentivized even more construction. But there is a different reason the argument doesn't apply to this -- or to any other tax. Governments have budgets. If they currently get money from a tax, and you propose to get rid of the tax, and your proposal is to cut spending, the people currently receiving the money (often politically connected corrupt industries or government unions) will fight you. If you propose to get rid of the tax without cutting spending by instituting or raising some other tax, the people you propose to tax instead will fight you. The status quo is sticky.
randunel 2y ago
Unearned rents? Do you consider the salary you work for an unearned social benefit?
- kaibee 2y ago
  I inherited three properties. I pay a property management company to do everything on them, all I get is a regular check in the mail. Please explain how I have earned this?
  - pulvinar 2y ago
    You haven't earned it, your ancestors did. But your inheritance of this property is only a small fraction of your unearned benefits. Ask a dung beetle how fair life is.
  - chii 2y ago
    how did you get the cash to pay said property manager? How did your ancestor get to own the property in the first place? Nothing is unearned, except perhaps gov't welfare.
    - Kbelicius 2y ago
      > how did you get the cash to pay said property manager? He said he'd give them a cut of the rent. > How did your ancestor get to own the property in the first place? So his parents earned it, not him.
      - vintermann 2y ago
        Or they took it by force, or stole it. Doing genealogy, one of the most interesting ancestors I have actually got mentioned in a discussion in parliament for his real estate shenanigans. His wife had inherited some small but vaguely defined land from her first husband. He then became mayor and land assessor, and drew up ridiculously generous borders (and low tax assessments) for that land. No one thought to stop him. At one point during a sale, some officials had commented that they couldn't find that he had title to this land, but they didn't follow up. By the time they complained about it in parliament, it was two generations and many land transfers ago so they didn't think it was worth it to try to unwind it.
MostlyStable 2y ago
The easiest answer to this is a very slow phase in. LVT doesn't need to be 100%. You can start it at 1% and have it set to increase slowly over time. This means that, for currenty owners, it will come into effect so slowly that it doesn't matter. You can even phase it in so slowly that on the timelines that they might want to sell it, it doesn't matter too much. And, at every point along that phase in, you get incremental improvements.
- chabons 2y ago
  This doesn't resolve the ongoing incentive to remove the LVT, creating immediate value for the current land-owners.
  - orangesite 2y ago
    [flagged]
    - andriesm 2y ago
      [flagged]
      - vincnetas 2y ago
        When you have nothing to eat, and the rules that are in play are so complicated that you need team of layers to understand them, "playing by the rules" does not sound really valid argument.
    - vincnetas 2y ago
      In olden days when chopping of heads was more acceptable, smart people understood that "debt relief" was a way to somehow decrease a chance of loosing they'r heads :) Now, when technology (military) enables to control the masses more strictly this approach has fallen in popularity. https://en.wikipedia.org/wiki/History_of_debt_relief https://en.wikipedia.org/wiki/History_of_debt_relief
  - pydry 2y ago
roenxi 2y ago
You could make the same theoretical argument against most taxes though. If it were possible to unwind corporate taxes through raw political connections it'd have happened by now for example. Or capital gains tax in its entirety. That is actually a great theoretical argument against taxes generally by the way - there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support.
- AnthonyMouse 2y ago
  > If it were possible to unwind corporate taxes through raw political connections it'd have happened by now for example. Or capital gains tax in its entirety. But this has more or less been done for the most powerful, e.g. corporate income tax exists but Apple doesn't pay it, capital gains tax exists but is deferred until you sell the shares and then rich people don't do that. So then Rockefellers don't pay the tax, but you do as an ordinary peon who has a good run messing around on Robinhood, or when you start making withdrawals from your IRA. Meanwhile we can't get rid of the tax which now only applies to the middle class because people claim that you're trying to give a tax cut to the billionaires who aren't actually paying it. > there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support. It's really an argument for tax simplification. As far as I can tell the way tax policy works is that rich people hire lawyers and PR firms to cast the forms of taxation they would actually have to pay as regressive (e.g. consumption taxes, because you can't register the Rolls Royce without paying the tax and you can't sell into the jurisdiction without collecting VAT) and the forms they can avoid through shell games and accounting tricks as The One True Way To Tax The Rich (e.g. "profit" taxes, because profit is fuzzy around the edges and has high inter-region liquidity), which the rich then weasel out of and leave only the middle class paying the tax.
  - andrepd 2y ago
    Excellent comment
  - roenxi 2y ago
    I looked for some reliable numbers on Apple's tax payment and didn't find any, so I won't comment on that, but I do want to say some things about... > capital gains tax exists but is deferred until you sell the shares and then rich people don't do that This gets pretty quickly into the philosophical what-are-we-doing-here-exactly of taxes, but: 1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them. I imagine there are some gaping loopholes involving charities and debt, but that isn't anything to do with the deferment of the tax. 2) Because of inflation - and asset inflation is markedly higher than CPI - CGT is effectively a wealth tax because fairly quickly most of the value of an asset is the inflationary component. I've got gold bars where I allegedly am making a 100-and-something% return and that just flies in the face of the inert reality of the metal itself. The tax is markedly unfair, anyone trying to be a responsible saver ends up paying much more of their income in tax than someone who just spends it on the day and it effectively becomes a wealth tax that stops anyone in the middle class moving up over time. Moving wealth between assets is catastrophic to your financial health once CGT is a factor. There are a bunch of quirky distortions in the tax system. CGT might even be one of the contributing factors to why people don't tend to have savings (although the biggest factor is probably psychology). Rationally speaking saving is quite an inefficient use of money if you end up paying CGT.
qznc 2y ago
Some states of Germany are currently introducing it. I don’t see any land owners revolting about long term implications. Many bitch about the transition because reevaluating land is some paper work. Everybody seems to believe that it will not make much of a difference. I assume it depends on the municipalities to raise it in the future.
- bboygravity 2y ago
  When is the last time (a subset of) Germans revolted about anything though?
  - dxdm 2y ago
    1989 was a major one that a lot of people have heard of
  - qznc 2y ago
    A few months ago there were big demos against AfD and also farmers against some subsidy cuts.
- RandomLensman 2y ago
  What new tax is that? Or do you mean the changes to the Grundsteuer (which is more like an update to the value that is being taxed, I think, and it was a forced change).
  - qznc 2y ago
    Baden-Württemberg does it right. The other states not (yet). This seems to be the German Georgists: https://www.grundsteuerreform.net/ https://www.grundsteuerreform.net/
    - RandomLensman 2y ago
      A lot of the costs for the state, city etc. are billed separately in a lot of places. Also, given the demographic projections, land will not be a limiting factor in the long-term anyway.
lettergram 2y ago
The way I see land value tax and taxes in general is different. Tax is someone taking money by force. Supposedly this tax is then used to protect the land / assets from being seized. Over time every country seemingly has increased taxes as stability increased (not the other way around), so in reality — it’s extortion. Give us money or we take your stuff, your “protector” takes more because you don’t have other options. Back to the land value tax, why bother? It’s the same fundamental issue; why are we paying these taxes? And before we get into “but the services”. I moved somewhere that has approximately zero taxes and zero services. It’s great - safer, cheaper, better run. A lot of community stuff is ran by parents or churches, people tend to just “figure it out”. The idea of a land value tax is insane because it robs you of assets faster the more valuable it is. We had this in the past, feudal Europe, it sucked. What it will end up being is just like Europe some random person will dictate what you owe and if you don’t pay it, then someone else is granted it at a discount. Probably the bureaucrats cousin.
- contrarian1234 2y ago
  The libertarian notion that taxes are extortion is frankly childish in how overly simplistic it is. You get all sorts of benefits in return for your taxes. You can't realistically opt out of them. You can't live without using roads or being defended by the military. You can't tell society at large that when you get hit by lightning that you want they to leave you to die and not call an ambulance Since you can't opt out, a nontaxpayer ends up being a freeloader and social parasite. The only just option is to have to contribute to the imperfect system The whole idea of extortion is premises that people can exist somehow outside of society which is disconnected from reality.. No man is an island
  - whywhywhywhy 2y ago
    I agree libertarianism is a tad silly, but really are those "benefits" you list not paid for by inflation rather than taxes.
    - arlort 2y ago
      > paid for by inflation rather than taxes How does inflation pay for services and infrastructure?
tossandthrow 2y ago
Continuing to be an equal society, or not seeing that reverse, requires strong institutions (as in culture). You are right. And right now we see so much institutional deconstruction due to lobbying, fear of being anti dogmatic, and straight up propaganda that this should concern everybody. This is also why regulation and transparency is needed for massive social networks.
rcpt 2y ago
This is what happened in NZ.
failuser 2y ago
You need to fight for keeping any accomplishments you’ve got. US rolled back many child labor regulations, so we have 14 years old killed by sawmills again. It’s not like the US banned children from mines because it was economically more profitable.
- deleted 2y ago
  [deleted]
- johnnyanmac 2y ago
  it was indirectly more profitable. no child labor -> children would have no distractions for grade school -> more chldren graduate -> graduates tend to contribute more to the national economy. At least that was the theory. Clearly private lobbyists and various interests groups who want to erode the country don't care about such factors.
  - willis936 2y ago
    As does a healthy middle class who get what they want (e.g. homeownership).
  - n4r9 2y ago
    AFAIK modern capitalism doesn't incentivise behaviours that cause broad economic growth over a long period without any short-term profit. That's what governments are needed for.
  - gwd 2y ago
    > it was indirectly more profitable. Exactly: Child labor laws are more profitable for society; child labor is more profitable for a small set of individuals. Lobbying by interest groups is often pushing away from the former and towards the latter. ETA: In line with this sub-thread, I'd say: There are and always will be private interest groups lobbying against the former and towards the latter; and so there will always need to be public interest groups lobbying against the latter and towards the former. That applies to LVT as much as environmental and labor protections.
afiori 2y ago
Under a full LVT system the price of the land itself should be 0.
schnitzelstoat 2y ago
As Tony Benn said: "There is no final victory, as there is no final defeat. There is just the same battle. To be fought, over and over again."
oldsecondhand 2y ago
You can say the same thing about workers' rights and environmental protection laws too. Progress shouldn't be taken for granted.
CuriousSkeptic 2y ago
Tying ownership to a market determined LVT has been my goto. That is, when “buying” land you don’t bid on the one time transaction, instead you directly bid on the rent. In practice it could perhaps be implemented such that it would still look like the current market where a private bank loan determines the rent, only you shift the loan to a central bank like institution for collecting on it as rent.
peoplefromibiza 2y ago
there's a middle ground: LVT could be progressive, like income taxes. In that way owning a small/not valuable piece of land would generate little or no taxes, while wealthy landowners, with large very valuable assets, would be required to contribute back much more.
ossobuco 2y ago
> freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce Oh not again with the trickle-down story. It doesn't work, it never worked. The only way that money trickles is in the pockets of the landowners, from there it will be used to lobby politicians or stored in some fiscal haven. On the other hand, as long as that money is taxed it can be used by the state for the people. Build infrastructure, improve education, healthcare, etc. That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich.
- robertlagrant 2y ago
  > That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich. If you won't trust in the state parentally taking from some and giving to others, nor trust in people making transactions between each other on what they find valuable, what do you want? Is there a third option?
  - ossobuco 2y ago
    I don't see any other option. We should remember that we are the state, in theory. It's the whole point of a state. If that isn't the case anymore, we should fix it. The main problem is that nowadays states operate on the basis of the same false trickle-down fable. They don't build stuff, they pay corporations to do it for them and expect that money to somehow flow down to the people. We can clearly see that doesn't happen as inequality keeps growing.
    - robertlagrant 2y ago
      We aren't the state, though. The state is the governing body and its surrounding entities, funded through taxes, that controls the justice system and the military. I don't think it's a good idea to conflate "the state" and "the country" or "society". The state is the most powerful entity in the country, but it's not the only one. And I've probably said this elsewhere, but inequality is not important. We keep hearing about it every day, so it sounds important, but it's not. Unless it's being done deliberately to keep people down, e.g. in a feudal or 20th century socialism country, but even then the fundamental problem is authoritarianism, not inequality. Inequality is a symptom, and not always of something bad. I don't care that Tesla owners in the early 2010s had Roadsters and I didn't. Roadsters paved the way for Model Ss, which paved the way for Model 3s, which - if the Cybertruck hadn't got in the way - paved the way for Model 2s. I don't care that at some point in history only rich people had (terrible) glasses. Basically everyone (outside of impoverished countries whose government officials absorb the cash from overseas to help) now has access to high quality lenses - far better than those the rich people of the past could access. Temporary inequality leads to - over time - an uplift of the fundamental things for everyone. That's the only thing that matters - the baseline now vs what it used to be. Not the difference between baseline and the rich. The rich will spend on a thousand trivial things that won't matter, but also on things that will eventually be accessible to everyone.
rocqua 2y ago
The article adresses this. The value of land you tax is not the sale value, but the productive value of the land. So the sale value drops, but the assesed value doesn't, and the raised taxes also remain fixed.
- RandomLensman 2y ago
  That pushes towards the most profitable use of the land. Not sure why that would generally be desirable.
  - scld 2y ago
    Because the most profitable use of private land is, almost by definition, the most desirable.
    - RandomLensman 2y ago
      Sarcasm?
      - scld 2y ago
        Why would it be? Price is simply the best information we have about the interaction millions of various desires, distilled into one number.
        RandomLensman 2y ago
        Things having a price isn't same as profit maximizing on everything. People don't purely profit maximize. Are you maximizing profit in your primary residence? You might derive pleasure from having a large garden instead of building an industrial plant of same sort there, for example, or not rent out rooms, or have more shirts than you need instead of investing those monies into a business.
        scld 2y ago
adverbly 2y ago
This comment is a bit surprising to me. Your point seems to be that strong policies which impose significant good will face significant resistance and so there's no point doing them. I don't think that makes any sense. Workers rights, regulations around dumping waste, capital gains taxes... There are a lot of things that we already have which some people with power have a strong incentive to remove. We had to fight to implement and to keep these, but goddamnit is it worth it! I don't see why we shouldn't be optimistic here because historically speaking things have gotten much much better! To me, a gradual and consistent ramping up lvt would be probably the most progressive policy a country could pass at this point :D
- HPsquared 2y ago
  Not everyone shares the same value judgements of what is good and bad.
  - adverbly 2y ago
    Are you trying to say that any kind of discussion around ethics or values is pointless because it's possible for people to disagree? I think it's much better to discuss actual policies rather than to question the point of even being able to have discussions around what people think would make for a better world.
    - whythre 2y ago
      I think they are pointing out that if the first principles are completely different, everything that follows after will be different also. What is good/bad determines what policies should be pursued, and those actual real-world police’s may be as different as night and day.
- mwigdahl 2y ago
  The problem (and for the record I favor LVT myself) is that many of the other things you mention -- the 8 hour workday, environmental regs, etc. -- have clear positive effects that an average person doesn't have to take action to benefit from. If you tried to take them away, people would notice and object. For a typical homeowner, the effect of LVT would be pretty neutral, by design. Proposals I've seen advocate changing the _distribution_ of single-family home taxes between land and improvements, but not the _total_. Yes, LVT would discourage speculators from buying land as an investment without improving it, which is a societal good. But it's not direct and short term like many of your other examples. I think GP's point stands that rolling back LVT would be highly desired by big landowners (who could then return to do-nothing land appreciation and rents for their profits rather than be required to actually _do something_ with the land to earn over its taxed value), while the average Jane couldn't care less, because it wouldn't really impact her tax bill. That sort of situation is not stable long term. To make it more stable, you'd need to set it up so that LVT lowered the average voter's tax bill. I'm not sure how feasible that is.
dionidium 2y ago
Rents are "unearned" in the same way all appreciation is unearned. You spend your money on something, anybody else could also have spent that money on it, but the person who does spend the money on it enjoys the appreciation, if any, because they pay the opportunity cost. > because land value always goes up Tell that to the people who left urban St. Louis and Detroit and Cleveland in droves over the last 75 years. Their land didn't just go down in value; it went to less than zero. You'd literally have to pay somebody to take it and it's a huge burden on those municipalities. The problem with Georgism is that, yes, land is different than other things in that you can't make more of it, but it's also the same as most things in most ways that matter.
- at_compile_time 2y ago
  So someone who buys and empty piece of land, and holds it while everyone else around them invests money in the neighbourhood, deserves the gain they realize. That's an interesting worldview. >Tell that to the people who left urban St. Louis and Detroit and Cleveland in droves over the last 75 years. Tell them that I was speaking in general? If the value of your home can explode or crater for reasons outside your control, perhaps it would be wiser for housing to not be so expensive so that families need to have everything invested in their home. >The problem with Georgism is that, yes, land is different than other things in that you can't make more of it, but it's also the same as most things in most ways that matter. That isn't really an argument that the fixed supply of land doesn't matter, you're just asserting that it doesn't. It also doesn't suggest anything we should be doing instead, so what are you contributing here?
  - dionidium 2y ago
    > It also doesn't suggest anything we should be doing instead We should just simply allow a free market in housing and housing construction. That's the obvious solution on the table and the one we should try before we bother revisiting eccentric tax schemes from the 19th Century.
PaulHoule 2y ago
Also it is not just the "landed gentry" who will feel like they lost their investments but also the 64% or so of Americans who own their own homes. [1] Ithaca NY has the unusual situation that much of the land is owned by universities, colleges and other non-profits that don't pay property taxes so residential property taxes are high. In recent years tenant organizations have come to perceive that any increase in property taxes is going to be added to their rent so in addition to trying to get more money out of Cornell they are becoming increasingly spending skeptic. [1] https://www.financialsamurai.com/u-s-homeownership-rate/ https://www.financialsamurai.com/u-s-homeownership-rate/
- at_compile_time 2y ago
  Yes, it would need to be implemented gradually. It would be enough to start by slowly shifting taxes from buildings and improvements and onto land values. This would only negatively affect those with a greater than average amount of their home value in the land rather than the house, and maybe those people should have a fire lit under them during an housing crisis. Everyone recognizes that housing should be cheaper, just so long as it's not their house that's cheaper, and they're too busy wondering why their children haven't started families yet to notice the contradiction. If you have an alternative solution that would drive investment and lower housing prices, I'd love to hear it. Most of the solutions I've seen proposed are some form of dumping money on the fire in the hopes of cooling things off. Housing too expensive? Here's a first-time home-buyer's tax credit. The tax exempt hedge funds that also provide post-secondary education are another matter entirely.
gen220 2y ago
I think you're right that it would require a revolution, but we've had those before and come out OK, so it's not so far-fetched or scary as it sounds. It's definitely not going to be voted into law by any local or state legislature without great civil unrest to motivate it. However, as the landowning class concentrates and we run out of valuable "frontier", it becomes an inevitability. As a history lesson, we used to have feudalism in New York from before the revolutionary war up into the 1800s. It was a grandfathered-in political-economic system initiated by the Dutch to encourage high-class immigration and patronize friends of the governor, which the English expanded and the nascent U.S. extended to curry favor with the wealthy families who'd supported the revolution. That system, too, was really valuable for the people who had that privilege. But eventually they were outnumbered and overthrown, in a movement that was pretty revolutionary [1]. By the time it happened, we had innovated new ways to develop wealth that didn't require rent-seeking landlordship and monopolies (this was the era of the industrial revolution), so it'd become significantly less politically-tasteful, even in comparatively bourgeois and aristocratic circles, to depend on these ancient monopolies for access to wealth. But, ultimately, it was a popular (and, at times, violent) revolution that tipped the scales towards reform. I think it'll probably happen at the municipal or state level before it happens at the federal level. Most likely in NY (again!) or CA, if I were a betting person. [1]: https://en.wikipedia.org/wiki/Anti-Rent_War https://en.wikipedia.org/wiki/Anti-Rent_War
- at_compile_time 2y ago
  That's a fun piece of history, thanks.
Manuel_D 2y ago
> An upside and downside of LVT, depending on your perspective, is that the imposition of a LVT would seriously lower land values. I would really like you to elaborate on this point. Sure, I guess if land comes with an extra $X of tax attached to it, the net value of land is lower. But it encourages things like building taller buildings, because a 2 story apartment building can't break even with the land tax but a 20 story building can. Land in the middle of SF's financial district or Manhattan isn't cheap: a strong argument can be made that building taller denser buildings increases land value.
- at_compile_time 2y ago
  Just summarize Progress and Poverty, okay. One important note is the "land value" always refers to the undeveloped value of the land. The tax pretends that it's an empty lot with no improvements, taken in the context of its district or neighbourhood. We want the land developed to it's best use, so we make sure not to tax those improvements. Do land values encourage density, or does density increase land values? It's the productivity of the surrounding society that drives both. Land is valuable because people want to live and work there, and because the land is valuable it makes sense to build up, and as more people live there more culture and services become available, attracting more people. It's a virtuous cycle. If the rental value of the land is taxed away, the only income a property can generate is based on the rental of the buildings on it. The first order effect is that the stream of rental income is diminished, lowering its value as an asset. Landowners would try to pass the taxes along to their tenants, but the taxes are not evenly distributed on all landowners, so doing so would only drive people renting houses into more land-efficient options and would skew the rental vs ownership decision wildly in favour of ownership. Because development becomes the only means of generating income from a property, undeveloped property becomes a tax liability instead of being a speculative asset that appreciates over time. Land that had been held out of use enters the market, lowering prices further. This surface-level parking lot in SF's financial district [1] and the thousands like it across North America become something more useful. Because the speculative value of land is being taxed away, land appreciates as its potential for productive use increases, not merely because everyone is buying land because land goes up in value because everyone is buying land. [1] - https://maps.app.goo.gl/Wtfts56A72BCkmvP8 https://maps.app.goo.gl/Wtfts56A72BCkmvP8 The more developed a piece of land is, the lower its effective tax rate becomes because the taxable value of the land does not include improvements. This incentivizes development, and disincentivizes sprawl. gets on soapbox If you want a small house and a big yard, nobody is telling you that you can't do that, but that's land that other people can't use, and I think that society has more right to tax you for holding a fixed and finite resource for your own use (land value taxes) than it does to tax the the products of your hard work and enterprise (taxes on income, commerce, and property). We want people to use the land wisely so that is some of it for everyone, and we want people to work hard and invest their resources, so why do we tax things exactly the other way around? It's a multivariate differential field equation. I've summarized it as briefly as I can.
jayd16 2y ago
I wonder if this could be solved with a local maxima. Let the established landowners keep a (much smaller) benefit to align incentives. Spitballing... I wonder if it could be balanced to give an LVT discount for holding on to land for 5+ years or some such thing. In this system, we still have reduced land prices because of LVT but there's still a benefit that old money has over the default and can clutch tightly to. Suddenly, long term owners have an incentive to keep such a system else they be set at the same level as new owners.
- at_compile_time 2y ago
  That would be a disincentive to land ever being sold and I don't think we want that. It's gameable too: you just have one entity own the land, and then rather than buying and selling the land, you just buy and sell the entity.
  - jayd16 2y ago
    That's all fine because we're still in a world where LVT is above zero even while gaming it.
dwallin 2y ago
You solve this by implementing the LVT as a small tax rebate on top of traditional property taxes. Something along the lines of an "Improvements Rebate" or whatever polls best. This is much more politically palatable, you can pair it with a small increase in tax to some currently unpopular sector. Very slowly over time you can increase the property tax, while increasing the LVT rebate. Now those who might want to kill LVT now have a more complicated job of negotiating simultaneously to remove a popular benefit while adjusting overall tax rates, a much more complicated proposal. LVT also has the drawback of being more complicated to calculate than property taxes, and therefore makes convincing constituents that it is being implemented fairly harder. When it is a negative (cost), this complexity makes it easy to attack, while a positive is more defendable (sure it's a tricky calculation, but it gives me money back in my pocket).

EdwardDiego 2y ago

Good thing that developers aren't elected lol. Not sure if there's a word for a dictatorship, but you're totally able to just leave if it's not your thing. Most of the real world ones tend to put up walls and guards facing inwards. Or hold your family hostage. Which hopefully doesn't give Blizzard any ideas.

jnordwick 2y ago
Phil Spencer is already trying to move development to Alcatraz island. -- likely true.

aeternum 2y ago

Unearned rents is questionable. People have always understood the value of land and have worked hard to be able to purchase it and vote + participate in local government to help protect the value of that land. Especially in the US, that mostly worked quite well. We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Done right, an LVT can actually increase land value. Suppose you are a developer that owns a plot of land in a desirable area but there are some abandoned building nearby that a stingy owner refuses to sell. With a regular property tax, if you make significant improvements like add park space, nice trees, landscaping, etc. to your building you pay much more property tax while the stingy owner pays nothing but benefits from increased property value. LVT at least partially penalizes the freeloaders. They must pay more LVT if the area around them improves. It prices an unpriced externality which is generally a good thing. There might be one thing the rich dislike more than taxes: freeloaders

kaibee 2y ago
> We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Land is made desirable mostly from what productive use it has. ie: being near jobs. There's not really any hard work any one individual can do to make some random plot of land in Kansas more valuable than its current market price. > participate in local government to help protect the value of that land. This is a nice euphemism for blocking new construction and restricting housing supply.
- kjkjadksj 2y ago
  Not only being near jobs but being developable at all. There are lots in the hollywood hills that go for $40k. Why that low for such prime land you might ask? I’d assume you’d find out the reason fast as soon as the current owner unloads their lemon onto you for a mere $40k.
AnthonyMouse 2y ago
> Done right, an LVT can actually increase land value. Land value is a measure of supply and demand. But most of the demand isn't for land in particular, it's for indoor space. If you have LVT and don't have density restrictions -- or just don't have density restrictions regardless of LVT -- then people are going to build until the cost of indoor space falls to the construction cost. Then land values will be low because it's being used efficiently, and there is a de facto ceiling on the price -- if you want to add 100 stories of new space and land is dirt cheap then you might build a hundred single-story buildings, but if land gets even slightly more expensive than that you can just build twenty 5-story buildings instead, which is what people would do rather than paying for five times more land unless it's prohibited. LVT increases this incentive even more, because not only would you have to pay for more land, you would have to pay the LVT on more land, so now it makes sense to build ten or twenty story buildings. Meanwhile if you're not going to build a ten or twenty story building (or in a place like NYC, a hundred story building), holding onto an underutilized lot will cost more than it's worth, so the land values become negligible. This ignoring the overall premise of LVT which is that the tax should be equal to the land value, so even if land values were high, the tax would just offset them and zero them out -- until the high tax incentivized even more construction. But there is a different reason the argument doesn't apply to this -- or to any other tax. Governments have budgets. If they currently get money from a tax, and you propose to get rid of the tax, and your proposal is to cut spending, the people currently receiving the money (often politically connected corrupt industries or government unions) will fight you. If you propose to get rid of the tax without cutting spending by instituting or raising some other tax, the people you propose to tax instead will fight you. The status quo is sticky.

randunel 2y ago

Unearned rents? Do you consider the salary you work for an unearned social benefit?

kaibee 2y ago
I inherited three properties. I pay a property management company to do everything on them, all I get is a regular check in the mail. Please explain how I have earned this?
- pulvinar 2y ago
  You haven't earned it, your ancestors did. But your inheritance of this property is only a small fraction of your unearned benefits. Ask a dung beetle how fair life is.
- chii 2y ago
  how did you get the cash to pay said property manager? How did your ancestor get to own the property in the first place? Nothing is unearned, except perhaps gov't welfare.
  - Kbelicius 2y ago
    > how did you get the cash to pay said property manager? He said he'd give them a cut of the rent. > How did your ancestor get to own the property in the first place? So his parents earned it, not him.
    - vintermann 2y ago
      Or they took it by force, or stole it. Doing genealogy, one of the most interesting ancestors I have actually got mentioned in a discussion in parliament for his real estate shenanigans. His wife had inherited some small but vaguely defined land from her first husband. He then became mayor and land assessor, and drew up ridiculously generous borders (and low tax assessments) for that land. No one thought to stop him. At one point during a sale, some officials had commented that they couldn't find that he had title to this land, but they didn't follow up. By the time they complained about it in parliament, it was two generations and many land transfers ago so they didn't think it was worth it to try to unwind it.

MostlyStable 2y ago

The easiest answer to this is a very slow phase in. LVT doesn't need to be 100%. You can start it at 1% and have it set to increase slowly over time. This means that, for currenty owners, it will come into effect so slowly that it doesn't matter. You can even phase it in so slowly that on the timelines that they might want to sell it, it doesn't matter too much. And, at every point along that phase in, you get incremental improvements.

chabons 2y ago
This doesn't resolve the ongoing incentive to remove the LVT, creating immediate value for the current land-owners.
- orangesite 2y ago
  [flagged]
  - andriesm 2y ago
    [flagged]
    - vincnetas 2y ago
      When you have nothing to eat, and the rules that are in play are so complicated that you need team of layers to understand them, "playing by the rules" does not sound really valid argument.
  - vincnetas 2y ago
    In olden days when chopping of heads was more acceptable, smart people understood that "debt relief" was a way to somehow decrease a chance of loosing they'r heads :) Now, when technology (military) enables to control the masses more strictly this approach has fallen in popularity. https://en.wikipedia.org/wiki/History_of_debt_relief https://en.wikipedia.org/wiki/History_of_debt_relief
- pydry 2y ago

roenxi 2y ago

You could make the same theoretical argument against most taxes though. If it were possible to unwind corporate taxes through raw political connections it'd have happened by now for example. Or capital gains tax in its entirety. That is actually a great theoretical argument against taxes generally by the way - there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support.

AnthonyMouse 2y ago
> If it were possible to unwind corporate taxes through raw political connections it'd have happened by now for example. Or capital gains tax in its entirety. But this has more or less been done for the most powerful, e.g. corporate income tax exists but Apple doesn't pay it, capital gains tax exists but is deferred until you sell the shares and then rich people don't do that. So then Rockefellers don't pay the tax, but you do as an ordinary peon who has a good run messing around on Robinhood, or when you start making withdrawals from your IRA. Meanwhile we can't get rid of the tax which now only applies to the middle class because people claim that you're trying to give a tax cut to the billionaires who aren't actually paying it. > there'd be a lot more money in people's pockets if they didn't have to get bureaucrats to agree on what they should be working to support. It's really an argument for tax simplification. As far as I can tell the way tax policy works is that rich people hire lawyers and PR firms to cast the forms of taxation they would actually have to pay as regressive (e.g. consumption taxes, because you can't register the Rolls Royce without paying the tax and you can't sell into the jurisdiction without collecting VAT) and the forms they can avoid through shell games and accounting tricks as The One True Way To Tax The Rich (e.g. "profit" taxes, because profit is fuzzy around the edges and has high inter-region liquidity), which the rich then weasel out of and leave only the middle class paying the tax.
- andrepd 2y ago
  Excellent comment
- roenxi 2y ago
  I looked for some reliable numbers on Apple's tax payment and didn't find any, so I won't comment on that, but I do want to say some things about... > capital gains tax exists but is deferred until you sell the shares and then rich people don't do that This gets pretty quickly into the philosophical what-are-we-doing-here-exactly of taxes, but: 1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them. I imagine there are some gaping loopholes involving charities and debt, but that isn't anything to do with the deferment of the tax. 2) Because of inflation - and asset inflation is markedly higher than CPI - CGT is effectively a wealth tax because fairly quickly most of the value of an asset is the inflationary component. I've got gold bars where I allegedly am making a 100-and-something% return and that just flies in the face of the inert reality of the metal itself. The tax is markedly unfair, anyone trying to be a responsible saver ends up paying much more of their income in tax than someone who just spends it on the day and it effectively becomes a wealth tax that stops anyone in the middle class moving up over time. Moving wealth between assets is catastrophic to your financial health once CGT is a factor. There are a bunch of quirky distortions in the tax system. CGT might even be one of the contributing factors to why people don't tend to have savings (although the biggest factor is probably psychology). Rationally speaking saving is quite an inefficient use of money if you end up paying CGT.

qznc 2y ago

Some states of Germany are currently introducing it. I don’t see any land owners revolting about long term implications. Many bitch about the transition because reevaluating land is some paper work. Everybody seems to believe that it will not make much of a difference. I assume it depends on the municipalities to raise it in the future.

bboygravity 2y ago
When is the last time (a subset of) Germans revolted about anything though?
- dxdm 2y ago
  1989 was a major one that a lot of people have heard of
- qznc 2y ago
  A few months ago there were big demos against AfD and also farmers against some subsidy cuts.
RandomLensman 2y ago
What new tax is that? Or do you mean the changes to the Grundsteuer (which is more like an update to the value that is being taxed, I think, and it was a forced change).
- qznc 2y ago
  Baden-Württemberg does it right. The other states not (yet). This seems to be the German Georgists: https://www.grundsteuerreform.net/ https://www.grundsteuerreform.net/
  - RandomLensman 2y ago
    A lot of the costs for the state, city etc. are billed separately in a lot of places. Also, given the demographic projections, land will not be a limiting factor in the long-term anyway.

lettergram 2y ago

The way I see land value tax and taxes in general is different. Tax is someone taking money by force. Supposedly this tax is then used to protect the land / assets from being seized. Over time every country seemingly has increased taxes as stability increased (not the other way around), so in reality — it’s extortion. Give us money or we take your stuff, your “protector” takes more because you don’t have other options. Back to the land value tax, why bother? It’s the same fundamental issue; why are we paying these taxes? And before we get into “but the services”. I moved somewhere that has approximately zero taxes and zero services. It’s great - safer, cheaper, better run. A lot of community stuff is ran by parents or churches, people tend to just “figure it out”. The idea of a land value tax is insane because it robs you of assets faster the more valuable it is. We had this in the past, feudal Europe, it sucked. What it will end up being is just like Europe some random person will dictate what you owe and if you don’t pay it, then someone else is granted it at a discount. Probably the bureaucrats cousin.

contrarian1234 2y ago
The libertarian notion that taxes are extortion is frankly childish in how overly simplistic it is. You get all sorts of benefits in return for your taxes. You can't realistically opt out of them. You can't live without using roads or being defended by the military. You can't tell society at large that when you get hit by lightning that you want they to leave you to die and not call an ambulance Since you can't opt out, a nontaxpayer ends up being a freeloader and social parasite. The only just option is to have to contribute to the imperfect system The whole idea of extortion is premises that people can exist somehow outside of society which is disconnected from reality.. No man is an island
- whywhywhywhy 2y ago
  I agree libertarianism is a tad silly, but really are those "benefits" you list not paid for by inflation rather than taxes.
  - arlort 2y ago
    > paid for by inflation rather than taxes How does inflation pay for services and infrastructure?

tossandthrow 2y ago

Continuing to be an equal society, or not seeing that reverse, requires strong institutions (as in culture). You are right. And right now we see so much institutional deconstruction due to lobbying, fear of being anti dogmatic, and straight up propaganda that this should concern everybody. This is also why regulation and transparency is needed for massive social networks.

rcpt 2y ago

This is what happened in NZ.

failuser 2y ago

You need to fight for keeping any accomplishments you’ve got. US rolled back many child labor regulations, so we have 14 years old killed by sawmills again. It’s not like the US banned children from mines because it was economically more profitable.

deleted 2y ago
[deleted]
johnnyanmac 2y ago
it was indirectly more profitable. no child labor -> children would have no distractions for grade school -> more chldren graduate -> graduates tend to contribute more to the national economy. At least that was the theory. Clearly private lobbyists and various interests groups who want to erode the country don't care about such factors.
- willis936 2y ago
  As does a healthy middle class who get what they want (e.g. homeownership).
- n4r9 2y ago
  AFAIK modern capitalism doesn't incentivise behaviours that cause broad economic growth over a long period without any short-term profit. That's what governments are needed for.
- gwd 2y ago
  > it was indirectly more profitable. Exactly: Child labor laws are more profitable for society; child labor is more profitable for a small set of individuals. Lobbying by interest groups is often pushing away from the former and towards the latter. ETA: In line with this sub-thread, I'd say: There are and always will be private interest groups lobbying against the former and towards the latter; and so there will always need to be public interest groups lobbying against the latter and towards the former. That applies to LVT as much as environmental and labor protections.

afiori 2y ago

Under a full LVT system the price of the land itself should be 0.

schnitzelstoat 2y ago

As Tony Benn said: "There is no final victory, as there is no final defeat. There is just the same battle. To be fought, over and over again."

oldsecondhand 2y ago

You can say the same thing about workers' rights and environmental protection laws too. Progress shouldn't be taken for granted.

CuriousSkeptic 2y ago

Tying ownership to a market determined LVT has been my goto. That is, when “buying” land you don’t bid on the one time transaction, instead you directly bid on the rent. In practice it could perhaps be implemented such that it would still look like the current market where a private bank loan determines the rent, only you shift the loan to a central bank like institution for collecting on it as rent.

peoplefromibiza 2y ago

there's a middle ground: LVT could be progressive, like income taxes. In that way owning a small/not valuable piece of land would generate little or no taxes, while wealthy landowners, with large very valuable assets, would be required to contribute back much more.

ossobuco 2y ago

> freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce Oh not again with the trickle-down story. It doesn't work, it never worked. The only way that money trickles is in the pockets of the landowners, from there it will be used to lobby politicians or stored in some fiscal haven. On the other hand, as long as that money is taxed it can be used by the state for the people. Build infrastructure, improve education, healthcare, etc. That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich.

robertlagrant 2y ago
> That's how you get money to "trickle down". That is, of course, if the state isn't to o busy making arms manufacturers rich. If you won't trust in the state parentally taking from some and giving to others, nor trust in people making transactions between each other on what they find valuable, what do you want? Is there a third option?
- ossobuco 2y ago
  I don't see any other option. We should remember that we are the state, in theory. It's the whole point of a state. If that isn't the case anymore, we should fix it. The main problem is that nowadays states operate on the basis of the same false trickle-down fable. They don't build stuff, they pay corporations to do it for them and expect that money to somehow flow down to the people. We can clearly see that doesn't happen as inequality keeps growing.
  - robertlagrant 2y ago
    We aren't the state, though. The state is the governing body and its surrounding entities, funded through taxes, that controls the justice system and the military. I don't think it's a good idea to conflate "the state" and "the country" or "society". The state is the most powerful entity in the country, but it's not the only one. And I've probably said this elsewhere, but inequality is not important. We keep hearing about it every day, so it sounds important, but it's not. Unless it's being done deliberately to keep people down, e.g. in a feudal or 20th century socialism country, but even then the fundamental problem is authoritarianism, not inequality. Inequality is a symptom, and not always of something bad. I don't care that Tesla owners in the early 2010s had Roadsters and I didn't. Roadsters paved the way for Model Ss, which paved the way for Model 3s, which - if the Cybertruck hadn't got in the way - paved the way for Model 2s. I don't care that at some point in history only rich people had (terrible) glasses. Basically everyone (outside of impoverished countries whose government officials absorb the cash from overseas to help) now has access to high quality lenses - far better than those the rich people of the past could access. Temporary inequality leads to - over time - an uplift of the fundamental things for everyone. That's the only thing that matters - the baseline now vs what it used to be. Not the difference between baseline and the rich. The rich will spend on a thousand trivial things that won't matter, but also on things that will eventually be accessible to everyone.

rocqua 2y ago

The article adresses this. The value of land you tax is not the sale value, but the productive value of the land. So the sale value drops, but the assesed value doesn't, and the raised taxes also remain fixed.

RandomLensman 2y ago
That pushes towards the most profitable use of the land. Not sure why that would generally be desirable.
- scld 2y ago
  Because the most profitable use of private land is, almost by definition, the most desirable.
  - RandomLensman 2y ago
    Sarcasm?
    - scld 2y ago
      Why would it be? Price is simply the best information we have about the interaction millions of various desires, distilled into one number.
      - RandomLensman 2y ago
        Things having a price isn't same as profit maximizing on everything. People don't purely profit maximize. Are you maximizing profit in your primary residence? You might derive pleasure from having a large garden instead of building an industrial plant of same sort there, for example, or not rent out rooms, or have more shirts than you need instead of investing those monies into a business.
        scld 2y ago

adverbly 2y ago

This comment is a bit surprising to me. Your point seems to be that strong policies which impose significant good will face significant resistance and so there's no point doing them. I don't think that makes any sense. Workers rights, regulations around dumping waste, capital gains taxes... There are a lot of things that we already have which some people with power have a strong incentive to remove. We had to fight to implement and to keep these, but goddamnit is it worth it! I don't see why we shouldn't be optimistic here because historically speaking things have gotten much much better! To me, a gradual and consistent ramping up lvt would be probably the most progressive policy a country could pass at this point :D

HPsquared 2y ago
Not everyone shares the same value judgements of what is good and bad.
- adverbly 2y ago
  Are you trying to say that any kind of discussion around ethics or values is pointless because it's possible for people to disagree? I think it's much better to discuss actual policies rather than to question the point of even being able to have discussions around what people think would make for a better world.
  - whythre 2y ago
    I think they are pointing out that if the first principles are completely different, everything that follows after will be different also. What is good/bad determines what policies should be pursued, and those actual real-world police’s may be as different as night and day.
mwigdahl 2y ago
The problem (and for the record I favor LVT myself) is that many of the other things you mention -- the 8 hour workday, environmental regs, etc. -- have clear positive effects that an average person doesn't have to take action to benefit from. If you tried to take them away, people would notice and object. For a typical homeowner, the effect of LVT would be pretty neutral, by design. Proposals I've seen advocate changing the _distribution_ of single-family home taxes between land and improvements, but not the _total_. Yes, LVT would discourage speculators from buying land as an investment without improving it, which is a societal good. But it's not direct and short term like many of your other examples. I think GP's point stands that rolling back LVT would be highly desired by big landowners (who could then return to do-nothing land appreciation and rents for their profits rather than be required to actually _do something_ with the land to earn over its taxed value), while the average Jane couldn't care less, because it wouldn't really impact her tax bill. That sort of situation is not stable long term. To make it more stable, you'd need to set it up so that LVT lowered the average voter's tax bill. I'm not sure how feasible that is.

dionidium 2y ago

Rents are "unearned" in the same way all appreciation is unearned. You spend your money on something, anybody else could also have spent that money on it, but the person who does spend the money on it enjoys the appreciation, if any, because they pay the opportunity cost. > because land value always goes up Tell that to the people who left urban St. Louis and Detroit and Cleveland in droves over the last 75 years. Their land didn't just go down in value; it went to less than zero. You'd literally have to pay somebody to take it and it's a huge burden on those municipalities. The problem with Georgism is that, yes, land is different than other things in that you can't make more of it, but it's also the same as most things in most ways that matter.

at_compile_time 2y ago
So someone who buys and empty piece of land, and holds it while everyone else around them invests money in the neighbourhood, deserves the gain they realize. That's an interesting worldview. >Tell that to the people who left urban St. Louis and Detroit and Cleveland in droves over the last 75 years. Tell them that I was speaking in general? If the value of your home can explode or crater for reasons outside your control, perhaps it would be wiser for housing to not be so expensive so that families need to have everything invested in their home. >The problem with Georgism is that, yes, land is different than other things in that you can't make more of it, but it's also the same as most things in most ways that matter. That isn't really an argument that the fixed supply of land doesn't matter, you're just asserting that it doesn't. It also doesn't suggest anything we should be doing instead, so what are you contributing here?
- dionidium 2y ago
  > It also doesn't suggest anything we should be doing instead We should just simply allow a free market in housing and housing construction. That's the obvious solution on the table and the one we should try before we bother revisiting eccentric tax schemes from the 19th Century.

PaulHoule 2y ago

Also it is not just the "landed gentry" who will feel like they lost their investments but also the 64% or so of Americans who own their own homes. [1] Ithaca NY has the unusual situation that much of the land is owned by universities, colleges and other non-profits that don't pay property taxes so residential property taxes are high. In recent years tenant organizations have come to perceive that any increase in property taxes is going to be added to their rent so in addition to trying to get more money out of Cornell they are becoming increasingly spending skeptic. [1] https://www.financialsamurai.com/u-s-homeownership-rate/ https://www.financialsamurai.com/u-s-homeownership-rate/

at_compile_time 2y ago
Yes, it would need to be implemented gradually. It would be enough to start by slowly shifting taxes from buildings and improvements and onto land values. This would only negatively affect those with a greater than average amount of their home value in the land rather than the house, and maybe those people should have a fire lit under them during an housing crisis. Everyone recognizes that housing should be cheaper, just so long as it's not their house that's cheaper, and they're too busy wondering why their children haven't started families yet to notice the contradiction. If you have an alternative solution that would drive investment and lower housing prices, I'd love to hear it. Most of the solutions I've seen proposed are some form of dumping money on the fire in the hopes of cooling things off. Housing too expensive? Here's a first-time home-buyer's tax credit. The tax exempt hedge funds that also provide post-secondary education are another matter entirely.

gen220 2y ago

I think you're right that it would require a revolution, but we've had those before and come out OK, so it's not so far-fetched or scary as it sounds. It's definitely not going to be voted into law by any local or state legislature without great civil unrest to motivate it. However, as the landowning class concentrates and we run out of valuable "frontier", it becomes an inevitability. As a history lesson, we used to have feudalism in New York from before the revolutionary war up into the 1800s. It was a grandfathered-in political-economic system initiated by the Dutch to encourage high-class immigration and patronize friends of the governor, which the English expanded and the nascent U.S. extended to curry favor with the wealthy families who'd supported the revolution. That system, too, was really valuable for the people who had that privilege. But eventually they were outnumbered and overthrown, in a movement that was pretty revolutionary [1]. By the time it happened, we had innovated new ways to develop wealth that didn't require rent-seeking landlordship and monopolies (this was the era of the industrial revolution), so it'd become significantly less politically-tasteful, even in comparatively bourgeois and aristocratic circles, to depend on these ancient monopolies for access to wealth. But, ultimately, it was a popular (and, at times, violent) revolution that tipped the scales towards reform. I think it'll probably happen at the municipal or state level before it happens at the federal level. Most likely in NY (again!) or CA, if I were a betting person. [1]: https://en.wikipedia.org/wiki/Anti-Rent_War https://en.wikipedia.org/wiki/Anti-Rent_War

at_compile_time 2y ago
That's a fun piece of history, thanks.

Manuel_D 2y ago

> An upside and downside of LVT, depending on your perspective, is that the imposition of a LVT would seriously lower land values. I would really like you to elaborate on this point. Sure, I guess if land comes with an extra $X of tax attached to it, the net value of land is lower. But it encourages things like building taller buildings, because a 2 story apartment building can't break even with the land tax but a 20 story building can. Land in the middle of SF's financial district or Manhattan isn't cheap: a strong argument can be made that building taller denser buildings increases land value.

at_compile_time 2y ago
Just summarize Progress and Poverty, okay. One important note is the "land value" always refers to the undeveloped value of the land. The tax pretends that it's an empty lot with no improvements, taken in the context of its district or neighbourhood. We want the land developed to it's best use, so we make sure not to tax those improvements. Do land values encourage density, or does density increase land values? It's the productivity of the surrounding society that drives both. Land is valuable because people want to live and work there, and because the land is valuable it makes sense to build up, and as more people live there more culture and services become available, attracting more people. It's a virtuous cycle. If the rental value of the land is taxed away, the only income a property can generate is based on the rental of the buildings on it. The first order effect is that the stream of rental income is diminished, lowering its value as an asset. Landowners would try to pass the taxes along to their tenants, but the taxes are not evenly distributed on all landowners, so doing so would only drive people renting houses into more land-efficient options and would skew the rental vs ownership decision wildly in favour of ownership. Because development becomes the only means of generating income from a property, undeveloped property becomes a tax liability instead of being a speculative asset that appreciates over time. Land that had been held out of use enters the market, lowering prices further. This surface-level parking lot in SF's financial district [1] and the thousands like it across North America become something more useful. Because the speculative value of land is being taxed away, land appreciates as its potential for productive use increases, not merely because everyone is buying land because land goes up in value because everyone is buying land. [1] - https://maps.app.goo.gl/Wtfts56A72BCkmvP8 https://maps.app.goo.gl/Wtfts56A72BCkmvP8 The more developed a piece of land is, the lower its effective tax rate becomes because the taxable value of the land does not include improvements. This incentivizes development, and disincentivizes sprawl. gets on soapbox If you want a small house and a big yard, nobody is telling you that you can't do that, but that's land that other people can't use, and I think that society has more right to tax you for holding a fixed and finite resource for your own use (land value taxes) than it does to tax the the products of your hard work and enterprise (taxes on income, commerce, and property). We want people to use the land wisely so that is some of it for everyone, and we want people to work hard and invest their resources, so why do we tax things exactly the other way around? It's a multivariate differential field equation. I've summarized it as briefly as I can.

jayd16 2y ago

I wonder if this could be solved with a local maxima. Let the established landowners keep a (much smaller) benefit to align incentives. Spitballing... I wonder if it could be balanced to give an LVT discount for holding on to land for 5+ years or some such thing. In this system, we still have reduced land prices because of LVT but there's still a benefit that old money has over the default and can clutch tightly to. Suddenly, long term owners have an incentive to keep such a system else they be set at the same level as new owners.

at_compile_time 2y ago
That would be a disincentive to land ever being sold and I don't think we want that. It's gameable too: you just have one entity own the land, and then rather than buying and selling the land, you just buy and sell the entity.
- jayd16 2y ago
  That's all fine because we're still in a world where LVT is above zero even while gaming it.

dwallin 2y ago

You solve this by implementing the LVT as a small tax rebate on top of traditional property taxes. Something along the lines of an "Improvements Rebate" or whatever polls best. This is much more politically palatable, you can pair it with a small increase in tax to some currently unpopular sector. Very slowly over time you can increase the property tax, while increasing the LVT rebate. Now those who might want to kill LVT now have a more complicated job of negotiating simultaneously to remove a popular benefit while adjusting overall tax rates, a much more complicated proposal. LVT also has the drawback of being more complicated to calculate than property taxes, and therefore makes convincing constituents that it is being implemented fairly harder. When it is a negative (cost), this complexity makes it easy to attack, while a positive is more defendable (sure it's a tricky calculation, but it gives me money back in my pocket).