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Henry George wrote about this a hundred years ago in Progress and Poverty! His solution: a tax on land (not buildings) to encourage building up. Economists say

• amazingamazing 2y ago
  Developers already want to build. The problem is the law.
  • tptacek 2y ago
    The Georgists agree!
  • analog31 2y ago
    Indeed, my state's constitution severely restricts how cities can tax themselves.
  • majormajor 2y ago
    Developers want to build because building will increase the value of property. If the value of property is constantly increasing through development, how are you solving the affordability problem? The development is attracting and facilitating activity that drives more demand. What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town?
    • sooheon 2y ago
      > What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Wrong question; dense cities with thriving economies are more valuable, so they should be more expensive. The question is who collects the rent? Land title holders, or builders and value creators?
    • Qwertious 2y ago
      >What dense city with a thriving commercial and business/industrial base is cheaper to live in than a less-developed rural small town? Um, any city whose residents want services? Does your rural small town need a plumber? That plumber can offer lower costs if there's a wider, more predictable userbase for him than in the small town. This applies to any store selling specialist goods, too - if the small town only has a single store, which stocks something that's only bought once a decade, then the buyer pays the cost of the good plus an entire decade's worth of interest. If the city can have a specialist good that sells that stuff one a month, then it'll be cheaper.
      • sarchertech 2y ago
        If you aren’t buying something frequently, you drive to the big city when you need it, or you order it. Most specialist goods just aren’t available in a small town same day at any price. Plumbers and other non niche service providers are also generally cheaper in small towns because cost of living is higher for the plumber too, all potential customers have less disposable income, and because the market isn’t perfectly efficient. Housing and basic necessities like groceries are so much more expensive in thriving dense cities than in rural small towns, that they swamp out any costs for the vast majority of people.
  • mperham 2y ago
    Correct. Zoning code prevents building density and building codes force building crappy multi-family housing with tons of parking everywhere. Sprawl and car-dependency are bankrupting America.
  • adverbly 2y ago
    Nope. The law is sometimes a large barrier, but there are plenty of places in the world with high housing costs which have minimal regulations. The problem is the cost of land. Developers are severely capital constrained. They take massive loans from Banks. Most of those loans go to paying for the land. Additionally, a large portion of their profits come from the increase in land value that they create from building. Land prices per unit area are higher in a new subdivision than they are in an undeveloped lot(Obviously the majority of the property price increase comes from the building, but the land also increases is my point). It doesn't cost anything to squat on the empty lots while building, so developers purchase multiple undeveloped lots near each other to capture this increase and minimize their purchase cost. Unfortunately, a side effect to this is that the developer basically becomes a monopoly on that area and no other developers or builders can compete with them. This lack of competition is one of the reasons that quality of new build construction has been on decline. In a world with a land value tax, the acquisition cost of land is significantly lower, but holding it is significantly more expensive. This means that a builder is incentivized to purchase smaller tranches, and hold each lot for less time before starting construction. They will be able to invest more into larger teams because they did not need to loan as much to pay for the land. This will speed up development and also improve efficiency by allowing for more competition.
• greenie_beans 2y ago
  how does that work with agriculture or other land uses that don't build? do those people get taxed higher because they don't build?
  • xvedejas 2y ago
    Land that is far away from developed land will tend to have lower land values, so farmland would not be so highly taxed under LVT. It's mostly land that benefits from being close to development that would be taxed higher.
  • hibikir 2y ago
    Agricultural land is far from large population centers, so the value is relatively constrained. The real losers on an LVT is not those owning rural land, but the operators of a surface lot near a stadium, or people living in mansions in the innermost suburb ring.
    • greenie_beans 2y ago
      what about urban agriculture and public parks etc? buildings are not thing only valuable land use in an urban center.
      • AlexandrB 2y ago
        I don't imagine the government is going to collect taxes from itself for public parks. There is the opportunity cost of lost revenue of course.
        • greenie_beans 2y ago
          what about privately owned parks or nature centers? i lived in an urban area with a privately held non-profit nature center nearby and it was an important component in my quality of life.
    • fknorangesite 2y ago
      i.e., people for whom my violin is very tiny.
• scythe 2y ago
  I thought of a slightly milder version of the tax, which I call a land wealth tax. Fix a certain maximum value of land owned by a single person which would not be taxed. In theory this might be some quantile, like the 80th percentile of land value owned per person. (I'm pretty sure you would still be taxing the majority of land using this threshold! At least at first.) Then everything owned above that is taxed by value. This avoids a rebellion of the most vulnerable and sympathetic homeowners. Of course land owned through opaque ownership structures must be assumed to be above the limit. Corporations with transparent ownership structures might see their land divided up (a likely intractable math problem if you included publicly traded companies) or some approximation applied, or the land simply taxed. One advantage of taxing land wealth versus wealth in general (a la Piketty) is that land — "real" property — is much harder to hide in offshore corporate holdings than general wealth. It is all documented by necessity. I have no expectation, unlike George, that taxes on land could fully satisfy the general fund. But they could certainly play a significant part. A significant difficulty with land value taxes in general is the assessment of land value, which is a difficult problem and has caused controversy in the past due to fluctuations and apparent inconsistencies. My preferred approach in the United States would be a Constitutional Amendment, which would allow centralizing the necessary expertise with the resources of the federal government.
  • sooheon 2y ago
    This is called means testing, and it's a poor way to design policy because it creates step functions and breakpoints, distorting the market.
    • scythe 2y ago
      The tax I described is not a step function. It is a ramp function. By your definition, the progressive income tax would also be "means testing".
      • sooheon 2y ago
        What you described ("minimum value that is not taxed...") is the definition of a step function. But yes, binned income brackets is also a form of means testing, and a poor way to design taxes.
• hliyan 2y ago
  Thought experiment: if all habitable land on the planet is surveyed and transferred to private ownership, all subsequent generations that are born from that point on, will be doomed to rent-based servitude. Forgetting all political theory, it seems that planet-bound species with a positive population growth rate must not rely on socioeconomic systems that exclusively (or heavily) favour private ownership of land.
  • sooheon 2y ago
    > Give me the private ownership of all the land, and will I move the earth? No; but I will do more. I will undertake to make slaves of all the human beings on the face of it. From "Archimedes", by Mark Twain, 1889
  • klipt 2y ago
    Georgism stipulates that it doesn't matter who owns the land so long as they pay a tax on it that goes back to the people. You could say that the people really own the land and call it "land rent" instead of "land tax" but mathematically its the same thing.
    • tmnvix 2y ago
      What I appreciate about Georgism is that it can neatly avoid the difficult issue of justifying exclusive use of land without resorting to ideas like 'First Occupation' or vindicating violent acquisition. Essentially, you could say that all land starts out as - and remains - common property (because nobody created it) but a land value tax allows an individual to 'purchase' the exclusive rights to a natural resource by compensating the owners (i.e. everyone else) for their exclusion. In George's terminology 'land' effectively includes all natural resources. This gives us a good analogy that most people might not consider when thinking about private ownership of land. The radio spectrum. We generally do not allow private ownership of a portion of the radio spectrum but instead ask for payment for exclusive use of the resource for a determined amount of time. To allow ownership in perpetuity based on a one-off payment seems simply wrong in this case. Land, water, etc are similar.
• master_crab 2y ago
  It’s called land use taxes. It’s probably one of the best ways to change the most negative behaviors that brought about this situation (if combined with less regulated zoning)
• gknapp 2y ago
  I don't have a great sense as to how this works across the world, but where I'm at (Seattle) your property tax is a factor of both the improved and unimproved aspects of your parcel. The improved ones being the value of the buildings and the unimproved being the value of the land itself. If you had a massive plot in an urban area, undeveloped, presumably the unimproved portion of your property tax would be quite high! But, the issue is that restrictive zoning means that typically the unimproved value of your tax assessment are pretty low. For example, if you live on 2 acres, but zoning says that you can only put 1 dwelling unit per 5 acres, then you can't really do much with the remaining acres. As a result, the remaining land has little value, and the tax on it is low. This is especially true in areas of little industry, where the same zoning regulations might also prohibit industrial or agriculture uses on that same plot of land! This is all to say that the structure you're looking for may already exist, but the issue is still in zoning.
  • adverbly 2y ago
    I don't think you disagree here... Zoning changes and land value tax are both beneficial. In some cases like the example you gave where you can only build one dwelling per 5 acres, zoning would be a more significant problem. That's an extreme hypothetical though. In other cases, taxation incentives are more significant. We absolutely need to push for BOTH zoning reform and taxation reform. They will work really well together :)