3 ms·

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

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.
HDThoreaun 2y ago
Done right land is worthless under land value tax. Ideally the vast majority of then unimproved lands rents will flow to the government through the tax. An asset with no profits is worthless.
- aeternum 2y ago
  Is there some rationale for setting the LVT rate so that the land is worthless? That seems unnecessary and counter-productive. If I were designing the system, I would want both the government and the landowner to share in the appreciation of the land. If a nice park is to be built next to some land in a city, interests are more aligned if both the city and the landowner share in the benefit.
  - HDThoreaun 2y ago
    Because land belongs to society at large. The entire idea that someone can own land is nonsensical. Private ownership exists to encourage people to create stuff but land can not be created. When land value increases it is not because of anything the landowner did, but because of what society did. The gains should go to society. Its also more effective at removing speculation the higher it is. LVT is one of the few taxes with no deadweight loss, so even if it wasnt the most morally acceptable tax it still is the most economically beneficial one so we should try to collect as much as possible through it.
    - aeternum 2y ago
      >When land value increases it is not because of anything the landowner did, but because of what society did. The gains should go to society. Nicely landscaping your home can increase the surrounding home values, especially when other neighbors do it also. Conversely if neighbors have junker cars and trash on their property or if you're in a city surrounded by abandoned buildings, land value decreases.
      - deleted 2y ago
        [deleted]

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.

HDThoreaun 2y ago

Done right land is worthless under land value tax. Ideally the vast majority of then unimproved lands rents will flow to the government through the tax. An asset with no profits is worthless.

aeternum 2y ago
Is there some rationale for setting the LVT rate so that the land is worthless? That seems unnecessary and counter-productive. If I were designing the system, I would want both the government and the landowner to share in the appreciation of the land. If a nice park is to be built next to some land in a city, interests are more aligned if both the city and the landowner share in the benefit.
- HDThoreaun 2y ago
  Because land belongs to society at large. The entire idea that someone can own land is nonsensical. Private ownership exists to encourage people to create stuff but land can not be created. When land value increases it is not because of anything the landowner did, but because of what society did. The gains should go to society. Its also more effective at removing speculation the higher it is. LVT is one of the few taxes with no deadweight loss, so even if it wasnt the most morally acceptable tax it still is the most economically beneficial one so we should try to collect as much as possible through it.
  - aeternum 2y ago
    >When land value increases it is not because of anything the landowner did, but because of what society did. The gains should go to society. Nicely landscaping your home can increase the surrounding home values, especially when other neighbors do it also. Conversely if neighbors have junker cars and trash on their property or if you're in a city surrounded by abandoned buildings, land value decreases.
    - deleted 2y ago
      [deleted]