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How do values get set for a land value tax without effectively still speculating? Is the idea usually that the tax would be based on what the potential value of

How do values get set for a land value tax without effectively still speculating? Is the idea usually that the tax would be based on what the potential value of the land is, for example to incentivize building businesses rather than parking lots? Investors will always speculate. A land value tax just adds another cost they have to account for, it doesn't prevent them from speculating and doing with thr land whatever they think most benefits them.

lotsofpulp 2y ago
We already do it with property tax, there is a land portion of the property value assessment. It is not perfect, but it is easily doable. The only work that happens is that land value gets multiplied by another number. Any dispute about assessed land price gets adjudicated like it does now with any property assessment dispute.
- _heimdall 2y ago
  That's an estimate of the current fair market value of the property though, not the value of the potential producible value. I'm probably describing that poorly, but when I've seen arguments for land value tax its meant to tax what the property could be worth if optimally developed, incentivizing banks over parking lots for example. We already do a questionable job valuing tax assessments for current value, coming up with future value will be a lot harder. I'd honestly expect them to just make some blanket multiplier over current value which seems pretty useless.
  - lotsofpulp 2y ago
    Potential producible value is fair market value. That is the price someone would pay for land, presumably calculating the potential income they can earn from building (or buying) a business on it. I think it is close enough to move things in the right direction. The desirable end result is to make high transit, high impact land used more productively, rather than leave it as a patch of weeds for 1 person’s benefit when they sell it at an appreciated price in the future. And obviously this number is constantly moving, just like property tax assessments move.
    - _heimdall 2y ago
      If we want to assume that today's fair market value is already adjusted for expected potential value, don't we already have this land value tax then? Is the argument here that we just need higher property taxes rather than a new type of tax or a new type of property valuation?
      - lotsofpulp 2y ago
        The idea is to disincentivize using land to hoard wealth at the expense of society, for example an empty plot or abandoned building in the middle of a busy city or intersection. Tens of thousands of people could benefit by making it a destination, versus being harmed by making it extra distance to travel around to get to a destination. So the tax is on the land instead of the improvement on the land. A person who sits on it and a developer who builds something like apartments with shops underneath pay the same property tax (aka land value tax).
        _heimdall 2y ago
        Are you just describing property tax as we have it today then? We already pay property taxes as a combination of the estimated raw land value and "improvements" made to the land. If that's the case I don't really have a problem here, but there's also no debate to since we already impose that tax on land owners.
        lotsofpulp 2y ago
        Property tax as we have it does not punish leaving land empty or underutilized. Property tax needs to be updated so that it is a land value tax, so people cannot use prime real estate as a piggy bank at the expense of everyone else.
        _heimdall 2y ago
        > So the tax is on the land instead of the improvement on the land. Your last comment seems to contradict this one though. You were describing a tax based on the value of the land rather than the value of improvements. That's precisely what we have today. If you're wanting to punish people for leaving land underutilized you do in fact need to tax based on what the potential value of the land is when fully utilized. Thst runs smack into the challenge of how to value potential value if the land was fully utilized and the question of whether we can be so sure that high density is the answer that we disincentivize lower density living. Edit: reading this again I think we're either saying the same thing in slightly different ways or I just misunderstood you. When I'm talking about improvements I do mean potential future improvements that could be made to the land, I think that's what most people mean by a land value tax. Meaning, taxing a person for the value of a piece of land as if there were already a condo on it because we'd rather them build that than leave it empty or build a single family home. I see that as a huge problem, both because it requires a massive amount of accurate (and oppressive) central planning and because it's impossible to know what the land would be worth when "fully utilized". We would have to define what fully utlizied means, accepting that it's entirely based on personal preference, and then envision what the whole community would look like if built out that way and what that would then be valued at.

lotsofpulp 2y ago

We already do it with property tax, there is a land portion of the property value assessment. It is not perfect, but it is easily doable. The only work that happens is that land value gets multiplied by another number. Any dispute about assessed land price gets adjudicated like it does now with any property assessment dispute.

_heimdall 2y ago
That's an estimate of the current fair market value of the property though, not the value of the potential producible value. I'm probably describing that poorly, but when I've seen arguments for land value tax its meant to tax what the property could be worth if optimally developed, incentivizing banks over parking lots for example. We already do a questionable job valuing tax assessments for current value, coming up with future value will be a lot harder. I'd honestly expect them to just make some blanket multiplier over current value which seems pretty useless.
- lotsofpulp 2y ago
  Potential producible value is fair market value. That is the price someone would pay for land, presumably calculating the potential income they can earn from building (or buying) a business on it. I think it is close enough to move things in the right direction. The desirable end result is to make high transit, high impact land used more productively, rather than leave it as a patch of weeds for 1 person’s benefit when they sell it at an appreciated price in the future. And obviously this number is constantly moving, just like property tax assessments move.
  - _heimdall 2y ago
    If we want to assume that today's fair market value is already adjusted for expected potential value, don't we already have this land value tax then? Is the argument here that we just need higher property taxes rather than a new type of tax or a new type of property valuation?
    - lotsofpulp 2y ago
      The idea is to disincentivize using land to hoard wealth at the expense of society, for example an empty plot or abandoned building in the middle of a busy city or intersection. Tens of thousands of people could benefit by making it a destination, versus being harmed by making it extra distance to travel around to get to a destination. So the tax is on the land instead of the improvement on the land. A person who sits on it and a developer who builds something like apartments with shops underneath pay the same property tax (aka land value tax).
      - _heimdall 2y ago
        Are you just describing property tax as we have it today then? We already pay property taxes as a combination of the estimated raw land value and "improvements" made to the land. If that's the case I don't really have a problem here, but there's also no debate to since we already impose that tax on land owners.
        lotsofpulp 2y ago
        Property tax as we have it does not punish leaving land empty or underutilized. Property tax needs to be updated so that it is a land value tax, so people cannot use prime real estate as a piggy bank at the expense of everyone else.
        _heimdall 2y ago
        > So the tax is on the land instead of the improvement on the land. Your last comment seems to contradict this one though. You were describing a tax based on the value of the land rather than the value of improvements. That's precisely what we have today. If you're wanting to punish people for leaving land underutilized you do in fact need to tax based on what the potential value of the land is when fully utilized. Thst runs smack into the challenge of how to value potential value if the land was fully utilized and the question of whether we can be so sure that high density is the answer that we disincentivize lower density living. Edit: reading this again I think we're either saying the same thing in slightly different ways or I just misunderstood you. When I'm talking about improvements I do mean potential future improvements that could be made to the land, I think that's what most people mean by a land value tax. Meaning, taxing a person for the value of a piece of land as if there were already a condo on it because we'd rather them build that than leave it empty or build a single family home. I see that as a huge problem, both because it requires a massive amount of accurate (and oppressive) central planning and because it's impossible to know what the land would be worth when "fully utilized". We would have to define what fully utlizied means, accepting that it's entirely based on personal preference, and then envision what the whole community would look like if built out that way and what that would then be valued at.