10 ms·

Modeling land value taxes

58 points by surprisetalk 1y ago

Aurornis 1y ago
> The method presented here relies on assessor data and valuations of land and improvement value. One analysis I’d like to see is how a pure LVT tax shifts the tax burden toward people with less valuable homes while giving a break to people with nicer homes. One of the overlooked upsides of taxing land and improvements separately is that it’s more progressive: People with more expensive houses pay more in taxes than their neighbors with less expensive houses. Shifting to a pure LVT ignores the house because, of course, it’s a land value tax. So if you have the most expensive house in the neighborhood your taxes go down, but if you have the cheapest house on the block your taxes go up (assuming similar lot sizes and such).
- protocolture 1y ago
  >it’s more progressive Taxation based on realised employment income is more progressive. Any taxation based on unrealised gains/value is regressive, because it will be levied against people who may not have the income to support the taxation. And yes, forcing people to move also costs money and can be seen as an extra levee against poor people who need to move to accommodate your new taxation model. Proponents of LVT really hate poor and retired people, and tend to make up reams of excuses when this is put to them. That might actually be the goal, to remove the last remaining poor people from gentrifying neighborhoods. All you have to do is build more expensive services, and subject the land to a new valuation and there you go, self removing poor people from your rich neighborhood.
  - natrius 1y ago
    Most poor people rent. They are already forced to move when the land they live on gets more valuable and they can't afford the new lease. Taxing land redirects part of the rent they already pay to serve their interests (assuming good government). Land value taxes are politically impossible in America, so there's no need to make the people who like LVT look bad. We already look bad!
    - protocolture 1y ago
      >Taxing land redirects part of the rent they already pay Taxing land will be passed through 100% to the renter. >We already look bad! With good reason.
      - nmhancoc 1y ago
        > Taxing land will be passed through 100% to the renter Replies like this genuinely confuse me. How do you think rent prices are set now? I’ll tell you, they’re generally set to maintain a given occupancy rate, which is to say, they’re set as high as the market allows. The market being a group of renters which make an income, of which landlords generally take a third or more. If we implemented a LVT tomorrow, the renters don’t get additional capacity to pay rent as mana from heaven. The rents wouldn’t budge. Any claim otherwise requires it be the case that there’s capacity to raise rents that landlords aren’t currently utilizing, i.e. that landlords are undercharging renters en masse. I have never seen evidence in support of such a claim.
        genewitch 1y ago
        Let's assume what you say is true. Then the reason it's impossible in the US is because landlords would do everything in their power to stop it, because they'd be the ones eating the cost.
        nmhancoc 1y ago
        I don’t think so, actually. Real estate is a pretty small sector of the economy (maybe 13 or 14% of GDP according to Google. That’s about as much as manufacturing, but not politically unassailable. The real reason these sorts of reforms will never kick in is that roughly 2/3 of Americans are in owner occupied housing, it’s the largest asset on most of their balance sheets, and an LVT will in many cases effectively zero that out. So it’s the homeowners (particularly the older cohorts) which will vote against this policy to the detriment of the younger cohort.
        1y ago
  - eru 1y ago
    > Any taxation based on unrealised gains/value is regressive, because it will be levied against people who may not have the income to support the taxation. You can borrow against unrealised gains. That's a key part of the 'buy, borrow, die' tax strategy. People who sit on hugely appreciated land ain't 'poor'. > Proponents of LVT really hate poor and retired people, and tend to make up reams of excuses when this is put to them. Haha, right.
    - protocolture 1y ago
      >You can borrow against unrealised gains. That's a key part of the 'buy, borrow, die' tax strategy. Borrowing and taxation are completely different concepts. Unless I am the only idiot who hasn't asked for their tax back with interest. Possible. >People who sit on hugely appreciated land ain't 'poor'. They aren't poor in that they have at least one valuable asset. The kind of asset that helps people stay afloat when they have issues with income or domestic violence. Regressive taxes are regressive because they simply do not look at income. Someone can be retired, living on nearly no income, and have a single valuable asset. It is not the role of government to significantly disrupt peoples lives because they have 1 good thing going. IIRC home ownership is the single best indicator of mental health. My memory (going on 10 years I have been having this conversation with Georgists) is that George was largely enraged with Private US railways. From memory they would be automatically granted the land immediately adjacent the track they laid. Sometimes they would develop this land, sometimes they would sell it, but largely they banked it. Because that land was adjacent to, the railway, it was quite valuable, but often underused. The problem with Georgists, is that the context their ideas were formed under is no longer relevant. The people who will be punished by these ideas are not the railways, but people who are just holding on to their property, people who bought cheaply (ie made an intelligent forward thinking decision for their future) and find themselves surrounded by new services that raise their properties value. Thats what gets me, is that property value is not something you can consent to or plan for. Its arbitrary subjective market valuation, and asking people to lose their homes (homes are houses that humans have a relationship with) because of a subjective market valuation is bad. Its bad when variable mortgages do it, and its bad when georgists roll up and propose the same.
      - 1y ago
  - deleted 1y ago
    [deleted]
  - throw8283933i 1y ago
    > on realised employment income is more progressive Most of income from employment is "unrealised". Employment comes with expenses such as car for commuting, rent in expensive part of town (where jobs are), clothes... Big part of "income" does not even land on a bank account (mandatory insurances, taxes, child support, alimony....) If we will apply logic from property tax, to employment income tax, everyone would pay 100 USD tax every year. Because that was tax of 20 years old in their first job, and raising taxes is horrible!
    - protocolture 1y ago
      >Most of income from employment is "unrealised". What? You realise income in trade for your labor. Its immediately realised. It is a realised gain.
      - throw8283933i 1y ago
        And expenses do not exist? Just getting into location, to be at workplace on a first day, is a huge upfront investment! That is even before first minute of labour happened! Some positions have negative net income!
        protocolture 1y ago
        I literally deduct those expenses from my income on my yearly tax bill.
- preisschild 1y ago
  > Shifting to a pure LVT ignores the house because, of course, it’s a land value tax. So if you have the most expensive house in the neighborhood your taxes go down, but if you have the cheapest house on the block your taxes go up (assuming similar lot sizes and such). As it should be. Land is a finite resource and taxing based on the value of the land instead of the thing you build on your land makes sense.
- AnthonyMouse 1y ago
  > One analysis I’d like to see is how a pure LVT tax shifts the tax burden toward people with less valuable homes while giving a break to people with nicer homes. In practice this would end up being the opposite. Right now if you have two plots of land of the same size and one of them has a single big mansion while the other has a condo tower with 50 units, the mansion is valued at a million dollars and the condo tower is valued at 25 million dollars, implying that each of the condo units is $500k. So each of the condo units is being taxed half as much as the mansion, but the total for that plot of land is really 25 times as much. Under LVT they both pay the same for the land, but then the owner of the mansion is paying 100% of the tax on the land and each of the condo owners is paying 2% as much instead of 50% as much. You only get the result you're referring to if you have people building a single small house on a plot of land big enough for a mansion or large multi-unit building. But in that case why are they consuming so much land for such a small structure? Making inefficient use of high-value land is a luxury.
deleted 1y ago
[deleted]
gardnr 1y ago
New Zealand had an LVT for ~100 years. I always like to share this thesis document when the conversation comes up: https://openaccess.wgtn.ac.nz/articles/thesis/The_Use_of_Land_Value_Taxation_In_New_Zealand_1891_-_1991_/17147717 https://openaccess.wgtn.ac.nz/articles/thesis/The_Use_of_Lan...
- deleted 1y ago
  [deleted]
- eru 1y ago
  Singapore has a sort-of LVT if you squint hard enough: They auction off land for 99 year leases at a time.
- apexalpha 1y ago
  Part of the summary: The way land tax was designed resulted in a limited focus on results. This created a tax system that was largely ineffective; it was too narrow to work as either a revenue or social policy tool and for decades persisted without any obvious purpose. Attempts to revitalise it in the 1980s had some success but did not fix most of its underlying problems. Ultimately land tax was abolished in 1990; not for ideological or functional reasons but because it, and the Fourth Labour Government, were unpopular, an election was imminent and abolition was seen as a way to reduce the chance of the government losing.
  - robocat 1y ago
    Here's a biased article on the historical political failure of land-value-taxes in Britain: https://worksinprogress.co/issue/the-failure-of-the-land-value-tax/ https://worksinprogress.co/issue/the-failure-of-the-land-val...
dedicate 1y ago
Am I the only one thinking about the folks who played by the current rules their whole lives? Just feels like 'sorry, new game!' could be a rough ride for many, even if the destination is 'better'.
- bjackman 1y ago
  Any solution to a problem that fundamentally comes down to undue privilege for incumbency, is gonna harm incumbents some way or another. I don't think there's much you can do about that, and it doesn't mean you shouldn't solve the problem. Still, you're right that you need to think about how to avoid harming those interests in a way that's actively unfair or overly disruptive. I don't think people talk about this very much, because not many people are seriously talking about solving the problems LVT targets. E.g. everyone says "tackle the housing crisis, build more houses!" but very few people actually seem interested in doing anything that would have any downside at all. At least with e.g. climate change people say "we have to make some sacrifices". Anyway I guess the basic solution has to be that you solve the problem very slowly so people have a chance to adjust to the new regime?
- kaibee 1y ago
  No. Obviously the tax would be phased in over a long period of time and for political reasons probably include some recompense to current owners. But what, are we doomed for all time because of decisions made in the past? There will always be a new cohort of people who played by the rules of the current system and oh won't it be unfair to them. What about the people who are suffering because of the current system?
  - creer 1y ago
    > phased in over a long period of time Obviously?! Phasing in changes over long periods would solve lots of problems - at usually low cost to society it seems. You could - if anyone cared - educate the population on the time frame for the deployment, and you could - if anyone cared - advertise the time-value of the change, for example on the valuation of property before, through and after the change. And things would be fine. But the reality of things seems to be that a politician will be in power for just a few years. So that either they need the change to go in effect so they can claim the deed and the effects (alleged - because who cares if it's real?), or they prefer the change to happen just after they have left (so the change / effect can be blamed on the next guy? or can be postponed should they get re-elected.) Nobody (?) looks to make the change "fair" to the population. There is no electoral value in that. This shows up everywhere: agricultural subsidies, tax rate changes, property tax changes, construction / permitting / zoning changes, usage of an area (similar to zoning see construction or extension of an airport and residential nuisance), planned future freeway path, legalization or criminalization of any activity, climate change rules. So that some industries become perpetually on the lookout for the next cycle (mining, oil, finance?), while others constantly get away with claiming unawareness (zoning, permitting?)
ReptileMan 1y ago
The fundamental problem comes from the fact that the value of land in a center of a city is O(n^2) on the number of inhabitants. The only option is to limit the influx of people in the city either by carrot or by stick. Managing the size of cities is something that the government should be more involved in to get to optimal for the state situation. There are cases where 30 or 40 percent of the population is in the capital of a country. That is not a country that is a city state with extra steps.
- kubb 1y ago
  Or have polycentric cities like Tokyo…

58 points by surprisetalk 1y ago

> The method presented here relies on assessor data and valuations of land and improvement value. One analysis I’d like to see is how a pure LVT tax shifts the tax burden toward people with less valuable homes while giving a break to people with nicer homes. One of the overlooked upsides of taxing land and improvements separately is that it’s more progressive: People with more expensive houses pay more in taxes than their neighbors with less expensive houses. Shifting to a pure LVT ignores the house because, of course, it’s a land value tax. So if you have the most expensive house in the neighborhood your taxes go down, but if you have the cheapest house on the block your taxes go up (assuming similar lot sizes and such).

protocolture 1y ago
>it’s more progressive Taxation based on realised employment income is more progressive. Any taxation based on unrealised gains/value is regressive, because it will be levied against people who may not have the income to support the taxation. And yes, forcing people to move also costs money and can be seen as an extra levee against poor people who need to move to accommodate your new taxation model. Proponents of LVT really hate poor and retired people, and tend to make up reams of excuses when this is put to them. That might actually be the goal, to remove the last remaining poor people from gentrifying neighborhoods. All you have to do is build more expensive services, and subject the land to a new valuation and there you go, self removing poor people from your rich neighborhood.
- natrius 1y ago
  Most poor people rent. They are already forced to move when the land they live on gets more valuable and they can't afford the new lease. Taxing land redirects part of the rent they already pay to serve their interests (assuming good government). Land value taxes are politically impossible in America, so there's no need to make the people who like LVT look bad. We already look bad!
  - protocolture 1y ago
    >Taxing land redirects part of the rent they already pay Taxing land will be passed through 100% to the renter. >We already look bad! With good reason.
    - nmhancoc 1y ago
      > Taxing land will be passed through 100% to the renter Replies like this genuinely confuse me. How do you think rent prices are set now? I’ll tell you, they’re generally set to maintain a given occupancy rate, which is to say, they’re set as high as the market allows. The market being a group of renters which make an income, of which landlords generally take a third or more. If we implemented a LVT tomorrow, the renters don’t get additional capacity to pay rent as mana from heaven. The rents wouldn’t budge. Any claim otherwise requires it be the case that there’s capacity to raise rents that landlords aren’t currently utilizing, i.e. that landlords are undercharging renters en masse. I have never seen evidence in support of such a claim.
      - genewitch 1y ago
        Let's assume what you say is true. Then the reason it's impossible in the US is because landlords would do everything in their power to stop it, because they'd be the ones eating the cost.
        nmhancoc 1y ago
        I don’t think so, actually. Real estate is a pretty small sector of the economy (maybe 13 or 14% of GDP according to Google. That’s about as much as manufacturing, but not politically unassailable. The real reason these sorts of reforms will never kick in is that roughly 2/3 of Americans are in owner occupied housing, it’s the largest asset on most of their balance sheets, and an LVT will in many cases effectively zero that out. So it’s the homeowners (particularly the older cohorts) which will vote against this policy to the detriment of the younger cohort.
        1y ago
- eru 1y ago
  > Any taxation based on unrealised gains/value is regressive, because it will be levied against people who may not have the income to support the taxation. You can borrow against unrealised gains. That's a key part of the 'buy, borrow, die' tax strategy. People who sit on hugely appreciated land ain't 'poor'. > Proponents of LVT really hate poor and retired people, and tend to make up reams of excuses when this is put to them. Haha, right.
  - protocolture 1y ago
    >You can borrow against unrealised gains. That's a key part of the 'buy, borrow, die' tax strategy. Borrowing and taxation are completely different concepts. Unless I am the only idiot who hasn't asked for their tax back with interest. Possible. >People who sit on hugely appreciated land ain't 'poor'. They aren't poor in that they have at least one valuable asset. The kind of asset that helps people stay afloat when they have issues with income or domestic violence. Regressive taxes are regressive because they simply do not look at income. Someone can be retired, living on nearly no income, and have a single valuable asset. It is not the role of government to significantly disrupt peoples lives because they have 1 good thing going. IIRC home ownership is the single best indicator of mental health. My memory (going on 10 years I have been having this conversation with Georgists) is that George was largely enraged with Private US railways. From memory they would be automatically granted the land immediately adjacent the track they laid. Sometimes they would develop this land, sometimes they would sell it, but largely they banked it. Because that land was adjacent to, the railway, it was quite valuable, but often underused. The problem with Georgists, is that the context their ideas were formed under is no longer relevant. The people who will be punished by these ideas are not the railways, but people who are just holding on to their property, people who bought cheaply (ie made an intelligent forward thinking decision for their future) and find themselves surrounded by new services that raise their properties value. Thats what gets me, is that property value is not something you can consent to or plan for. Its arbitrary subjective market valuation, and asking people to lose their homes (homes are houses that humans have a relationship with) because of a subjective market valuation is bad. Its bad when variable mortgages do it, and its bad when georgists roll up and propose the same.
    - 1y ago
- deleted 1y ago
  [deleted]
- throw8283933i 1y ago
  > on realised employment income is more progressive Most of income from employment is "unrealised". Employment comes with expenses such as car for commuting, rent in expensive part of town (where jobs are), clothes... Big part of "income" does not even land on a bank account (mandatory insurances, taxes, child support, alimony....) If we will apply logic from property tax, to employment income tax, everyone would pay 100 USD tax every year. Because that was tax of 20 years old in their first job, and raising taxes is horrible!
  - protocolture 1y ago
    >Most of income from employment is "unrealised". What? You realise income in trade for your labor. Its immediately realised. It is a realised gain.
    - throw8283933i 1y ago
      And expenses do not exist? Just getting into location, to be at workplace on a first day, is a huge upfront investment! That is even before first minute of labour happened! Some positions have negative net income!
      - protocolture 1y ago
        I literally deduct those expenses from my income on my yearly tax bill.
preisschild 1y ago
> Shifting to a pure LVT ignores the house because, of course, it’s a land value tax. So if you have the most expensive house in the neighborhood your taxes go down, but if you have the cheapest house on the block your taxes go up (assuming similar lot sizes and such). As it should be. Land is a finite resource and taxing based on the value of the land instead of the thing you build on your land makes sense.
AnthonyMouse 1y ago
> One analysis I’d like to see is how a pure LVT tax shifts the tax burden toward people with less valuable homes while giving a break to people with nicer homes. In practice this would end up being the opposite. Right now if you have two plots of land of the same size and one of them has a single big mansion while the other has a condo tower with 50 units, the mansion is valued at a million dollars and the condo tower is valued at 25 million dollars, implying that each of the condo units is $500k. So each of the condo units is being taxed half as much as the mansion, but the total for that plot of land is really 25 times as much. Under LVT they both pay the same for the land, but then the owner of the mansion is paying 100% of the tax on the land and each of the condo owners is paying 2% as much instead of 50% as much. You only get the result you're referring to if you have people building a single small house on a plot of land big enough for a mansion or large multi-unit building. But in that case why are they consuming so much land for such a small structure? Making inefficient use of high-value land is a luxury.

deleted 1y ago

[deleted]

gardnr 1y ago

New Zealand had an LVT for ~100 years. I always like to share this thesis document when the conversation comes up: https://openaccess.wgtn.ac.nz/articles/thesis/The_Use_of_Land_Value_Taxation_In_New_Zealand_1891_-_1991_/17147717 https://openaccess.wgtn.ac.nz/articles/thesis/The_Use_of_Lan...

deleted 1y ago
[deleted]
eru 1y ago
Singapore has a sort-of LVT if you squint hard enough: They auction off land for 99 year leases at a time.
apexalpha 1y ago
Part of the summary: The way land tax was designed resulted in a limited focus on results. This created a tax system that was largely ineffective; it was too narrow to work as either a revenue or social policy tool and for decades persisted without any obvious purpose. Attempts to revitalise it in the 1980s had some success but did not fix most of its underlying problems. Ultimately land tax was abolished in 1990; not for ideological or functional reasons but because it, and the Fourth Labour Government, were unpopular, an election was imminent and abolition was seen as a way to reduce the chance of the government losing.
- robocat 1y ago
  Here's a biased article on the historical political failure of land-value-taxes in Britain: https://worksinprogress.co/issue/the-failure-of-the-land-value-tax/ https://worksinprogress.co/issue/the-failure-of-the-land-val...

dedicate 1y ago

Am I the only one thinking about the folks who played by the current rules their whole lives? Just feels like 'sorry, new game!' could be a rough ride for many, even if the destination is 'better'.

bjackman 1y ago
Any solution to a problem that fundamentally comes down to undue privilege for incumbency, is gonna harm incumbents some way or another. I don't think there's much you can do about that, and it doesn't mean you shouldn't solve the problem. Still, you're right that you need to think about how to avoid harming those interests in a way that's actively unfair or overly disruptive. I don't think people talk about this very much, because not many people are seriously talking about solving the problems LVT targets. E.g. everyone says "tackle the housing crisis, build more houses!" but very few people actually seem interested in doing anything that would have any downside at all. At least with e.g. climate change people say "we have to make some sacrifices". Anyway I guess the basic solution has to be that you solve the problem very slowly so people have a chance to adjust to the new regime?
kaibee 1y ago
No. Obviously the tax would be phased in over a long period of time and for political reasons probably include some recompense to current owners. But what, are we doomed for all time because of decisions made in the past? There will always be a new cohort of people who played by the rules of the current system and oh won't it be unfair to them. What about the people who are suffering because of the current system?
- creer 1y ago
  > phased in over a long period of time Obviously?! Phasing in changes over long periods would solve lots of problems - at usually low cost to society it seems. You could - if anyone cared - educate the population on the time frame for the deployment, and you could - if anyone cared - advertise the time-value of the change, for example on the valuation of property before, through and after the change. And things would be fine. But the reality of things seems to be that a politician will be in power for just a few years. So that either they need the change to go in effect so they can claim the deed and the effects (alleged - because who cares if it's real?), or they prefer the change to happen just after they have left (so the change / effect can be blamed on the next guy? or can be postponed should they get re-elected.) Nobody (?) looks to make the change "fair" to the population. There is no electoral value in that. This shows up everywhere: agricultural subsidies, tax rate changes, property tax changes, construction / permitting / zoning changes, usage of an area (similar to zoning see construction or extension of an airport and residential nuisance), planned future freeway path, legalization or criminalization of any activity, climate change rules. So that some industries become perpetually on the lookout for the next cycle (mining, oil, finance?), while others constantly get away with claiming unawareness (zoning, permitting?)

ReptileMan 1y ago

The fundamental problem comes from the fact that the value of land in a center of a city is O(n^2) on the number of inhabitants. The only option is to limit the influx of people in the city either by carrot or by stick. Managing the size of cities is something that the government should be more involved in to get to optimal for the state situation. There are cases where 30 or 40 percent of the population is in the capital of a country. That is not a country that is a city state with extra steps.

kubb 1y ago
Or have polycentric cities like Tokyo…