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Because all taxes have the downside that they reduce the thing being taxed. One example was the window tax. People started to build houses without taxes. LVT

Because all taxes have the downside that they reduce the thing being taxed. One example was the window tax. People started to build houses without taxes. LVT is unique that it doesn't reduce the thing it taxes because land is constant. If you would tax the combined value of the property then people would avoid to improve the land.

gwd 2y ago
> If you would tax the combined value of the property then people would avoid to improve the land. But isn't it the case that currently, in most places (at least in the US), property taxes do tax the total value of the land? And yet people still build and improve houses; which would seem to contradict this thesis.
- _nalply 2y ago
  They do it less than if it were not taxes. One example are vacant lots which are held only for speculation.
  - gwd 2y ago
    > They do it less than if it were not taxes. Do you have any evidence of that whatsoever? I've never heard anyone say, "Well, I would build an extension to my house, but that would raise my property taxes." > One example are vacant lots which are held only for speculation. Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? The whole point of speculation is to make money with a minimum of cost and effort, both up-front and ongoing. Building something on an empty property increases all of those.
    - adverbly 2y ago
      > "Well, I would build an extension to my house, but that would raise my property taxes." Yep, I hear it all the time! Keep in mind that effects here will be related to property values and improvement values. One of the most common things people consider when renovating is how it will impact resale value. If taxes only impacted land then you would see a much better return on investment for every single renovation because your building/renovation is not taxed anymore, so the sale value of a property will increase by a larger amount than it currently does if you where to improve it.
    - adverbly 2y ago
      > Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? I'm a bit confused by this. Do you mean to say if there were land taxes instead of building taxes? Assuming that is what you meant, I think realistically an lvt would be implemented by slowly changing tax rates over time. Large landowners would likely sell part of their portfolio to get the capital required to improve the most profitable lots. So there would be a gradual mix of selling and building.
      - gwd 2y ago
        So we're comparing "property taxes", which are on the value of the empty land + any improvements, against "land value taxes", which are just on the value of the empty land. _naply asserted that one reason to favor LVT over property taxes is that property taxes discourage people from building on it; and gave "speculators" as an example. We didn't flesh out exactly what that meant, but I took it to mean people who bought some area of land which right now is close to worthless, in the hopes that in the future might be worth a lot more. (One alleged example of this is in Detroit city proper: allegedly, people bought broken-down old houses near the city center for a song, but didn't actually repair the property; they were just hoping that in a couple of decades things might turn around -- based on the efforts of other people to make Detroit better, naturally -- at which point they could sell the land at a massive profit without having to invest anything themselves.) At any rate, the argument is that such speculators would otherwise build something useful there, but had decided not to because then they'd be paying more property taxes. I don't buy it: As long as whatever they built brought in more money than the property taxes, there's more money to be had from building than from not building. The hypothetical speculators in Detroit could certainly build a single-family dwelling and rent it out for 30 years, and extra property taxes would almost certainly be outweighed by the additional rental income. But the value of speculation is that it's low-cost and low-effort, and low-income rental is distinctly neither. Why bother dealing with contractors and repairs and tenants and whatever before selling it for 20x what you bought it for, when you can just do absolutely nothing and get almost the same return?
        adverbly 2y ago
treis 2y ago
>LVT is unique that it doesn't reduce the thing it taxes because land is constant. This may be technically true but the important thing is productive use of land. And that is as susceptible to tax influences as windows are.
- _nalply 2y ago
  And that's the idea behind LVT: it tries to separate the use of land from its naked value. The corollary is that LVT shouldn't hinder the productive use of land.
  - treis 2y ago
    >it tries to separate the use of land from its naked value Which is effectively impossible to do because in modern times the value of land is almost entirely based on the use of that land.
    - at_compile_time 2y ago
      The surface level parking lots downtown are worth a lot more than their use indicates.
_nalply 2y ago
EDIT: ... build houses without WINDOWS.

gwd 2y ago

> If you would tax the combined value of the property then people would avoid to improve the land. But isn't it the case that currently, in most places (at least in the US), property taxes do tax the total value of the land? And yet people still build and improve houses; which would seem to contradict this thesis.

_nalply 2y ago
They do it less than if it were not taxes. One example are vacant lots which are held only for speculation.
- gwd 2y ago
  > They do it less than if it were not taxes. Do you have any evidence of that whatsoever? I've never heard anyone say, "Well, I would build an extension to my house, but that would raise my property taxes." > One example are vacant lots which are held only for speculation. Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? The whole point of speculation is to make money with a minimum of cost and effort, both up-front and ongoing. Building something on an empty property increases all of those.
  - adverbly 2y ago
    > "Well, I would build an extension to my house, but that would raise my property taxes." Yep, I hear it all the time! Keep in mind that effects here will be related to property values and improvement values. One of the most common things people consider when renovating is how it will impact resale value. If taxes only impacted land then you would see a much better return on investment for every single renovation because your building/renovation is not taxed anymore, so the sale value of a property will increase by a larger amount than it currently does if you where to improve it.
  - adverbly 2y ago
    > Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? I'm a bit confused by this. Do you mean to say if there were land taxes instead of building taxes? Assuming that is what you meant, I think realistically an lvt would be implemented by slowly changing tax rates over time. Large landowners would likely sell part of their portfolio to get the capital required to improve the most profitable lots. So there would be a gradual mix of selling and building.
    - gwd 2y ago
      So we're comparing "property taxes", which are on the value of the empty land + any improvements, against "land value taxes", which are just on the value of the empty land. _naply asserted that one reason to favor LVT over property taxes is that property taxes discourage people from building on it; and gave "speculators" as an example. We didn't flesh out exactly what that meant, but I took it to mean people who bought some area of land which right now is close to worthless, in the hopes that in the future might be worth a lot more. (One alleged example of this is in Detroit city proper: allegedly, people bought broken-down old houses near the city center for a song, but didn't actually repair the property; they were just hoping that in a couple of decades things might turn around -- based on the efforts of other people to make Detroit better, naturally -- at which point they could sell the land at a massive profit without having to invest anything themselves.) At any rate, the argument is that such speculators would otherwise build something useful there, but had decided not to because then they'd be paying more property taxes. I don't buy it: As long as whatever they built brought in more money than the property taxes, there's more money to be had from building than from not building. The hypothetical speculators in Detroit could certainly build a single-family dwelling and rent it out for 30 years, and extra property taxes would almost certainly be outweighed by the additional rental income. But the value of speculation is that it's low-cost and low-effort, and low-income rental is distinctly neither. Why bother dealing with contractors and repairs and tenants and whatever before selling it for 20x what you bought it for, when you can just do absolutely nothing and get almost the same return?
      - adverbly 2y ago

treis 2y ago

>LVT is unique that it doesn't reduce the thing it taxes because land is constant. This may be technically true but the important thing is productive use of land. And that is as susceptible to tax influences as windows are.

_nalply 2y ago
And that's the idea behind LVT: it tries to separate the use of land from its naked value. The corollary is that LVT shouldn't hinder the productive use of land.
- treis 2y ago
  >it tries to separate the use of land from its naked value Which is effectively impossible to do because in modern times the value of land is almost entirely based on the use of that land.
  - at_compile_time 2y ago
    The surface level parking lots downtown are worth a lot more than their use indicates.

_nalply 2y ago

EDIT: ... build houses without WINDOWS.